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Typically, in the early part of the year, I survey the broadband landscape and identify what I believe will be the year’s top trends and technology choices that will result in new product introductions and new service rollouts around the world.

In this 2019 broadband access market outlook series, I first discuss the high-level business and technology trends that will have an impact on network operators. Next, I describe the anticipated trends in broadband access and home networking. Finally, I review how two specific trends—edge computing and virtualization–address the larger business challenges, such as managing an expanded network of intelligent nodes. Here are the posts in my series:

Part 1 of 4: Macro Trends

The margins provided by the services network operators will continue to be squeezed by increased competition, market saturation, and pressure from OTT and cloud companies, which can often distribute similar services and applications at a reduced price. As a result, network operators will continue to reduce the cost of delivering services by:

  • Moving more layer 3 functionality from dedicated access platforms and routers to servers in the cloud.
  • Automating the provisioning, management, and troubleshooting of all network services; and using artificial intelligence to anticipate faults and other network-related issues.
  • Increasingly moving away from proprietary hardware platforms in their access, edge, and core networks toward COTS hardware and servers with media gateway functionality.

Along those lines, a growing number of operators will divest their network assets and focus solely on content creation and distribution, while maintaining close relationships with underlying network operators to give them a competitive advantage over other OTT providers. Companies such as Crown Castle, American Tower, and other infrastructure providers are potential candidates for purchasing and managing network assets.

Those operators that don’t split out their network assets will continue to focus on the distribution of network platforms, intelligence, and workload processing. They will move away from centralized headends, data centers, and central offices to edge facilities, including hub sites, remote nodes, and modular edge data centers. Minimizing latency will become just as important to users as total broadband throughput. Operators that can deliver on both will secure the most subscribers and the highest revenue.

One ongoing challenge facing operators as they distribute more active electronics into their access networks is the scarcity of qualified labor to install, provision, and manage those platforms. Because of this labor shortage, operators will have to make smart and efficient decisions when it comes to deploying their technicians to install and provision these advanced platforms.

Though this is not an exhaustive list, I believe that these macro trends are under discussion among executives at many network operators. Operating a network is an extremely capital-intensive business. With the continued influx of software-based networking principles from the IT domain, data centers, and CDNs, service margins can certainly improve. Time will tell how quickly network operators embrace these principles throughout their access, edge, and core networks.

In Part 2, I discuss how cable operators use distributed access as their platform for edge computing and virtualization.

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First Commercial 5G Core expected in 2020

The latest Wireless Packet Core 5-Year Forecast report shows that the projected five-year compounded annual revenue growth rate (CAGR) for the Wireless Packet Core (WPC) market is 3 Percent (2018-2023).

“Initial 5G New Radio (5G NR) network launches are being implemented with 5G Non-standalone (5G NSA) architectures that utilize the 4G Evolved Packet Core (EPC); therefore we have pushed out by one year (from 2019 to 2020), our expectations of when we will see the first commercial deployments of 5G Core,” said Dave Bolan, analyst with the Dell’Oro Group.

“WPC revenue growth is expected to continue throughout the forecast period due primarily to subscriber growth, migration of more subscribers to VoLTE, and increasing data usage per subscriber. Other factors contributing to growth is the upgrade of EPC to a control and user plane separation (CUPS) architecture to handle 5G traffic and Internet of Things (IoT),” added Bolan.

Other highlights from the Wireless Packet Core 5-Year Forecast Report:

  • EPC will be the workhorse for the core throughout the forecast period. We expect it to peak in revenue in 2022. From a volume perspective, the number of sessions for EPC will increase through 2023.
  • The drive toward Network Function Virtualization (NFV) with cloud-native virtual network functions (VNFs) will continue in the forecast period increasing the share of the revenue to 88% in 2023.

The Dell’Oro Group Wireless Packet Core 5-Year Forecast Report offers a comprehensive overview of market trends by network function implementation (Non-NFV and NFV), covering revenue, sessions, average selling price, and regional forecasts for various network functions.

To access the full report, contact us at dgsales@delloro.com.

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The latest Dell’Oro Group Optical Transport 5-Year forecast report claims that the cumulative Optical Transport equipment spend is projected to approach $80 billion over the next five years. The majority of the Optical Transport revenue will be driven by demand for coherent 200+ Gbps wavelengths.

“The market demand for 100 Gbps will continue to be large, but all future optical transport market growth will be driven by sales of higher wavelength speeds,” said Jimmy Yu, Vice President at Dell’Oro Group. “We believe service providers are still motivated to chase better spectral efficiencies to economically increase network capacity while maintaining their capital spend. Hence, the desire to migrate to higher wavelength speeds such as 200 Gbps and 400 Gbps. Fortunately, component and system manufacturers are striving to deliver better coherent solutions with each new product generation.  As a result, optical routes that once were only serviced by 100 Gbps wavelengths are now serviceable by 200 Gbps wavelengths and 400 Gbps in the future,” continued Yu.

Additional highlights from the Optical Transport 5-Year Forecast Report:

  • The cumulative spend on Optical Transport equipment during the next five years is projected to grow 16 percent.
  • Revenue from coherent 200+ Gbps DWDM shipments is forecast to grow at a 30 percent compounded annual growth rate.
  • Disaggregated WDM systems will be a larger share of the market.

About the report – The Dell’Oro Group Optical Transport 5-Year Forecast Report offers a complete overview of the Optical Transport industry with tables covering manufacturers’ revenue, average selling prices, unit shipments, Tributary/Line or Wavelength shipments (by speed up to 600 Gbps).  The report tracks DWDM long haul terrestrial, WDM metro, multiservice multiplexers, and optical switch equipment.

To access the report, please contact us by email at dgsales@delloro.com.

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5G NR Expected to Advance at a Faster Pace Than LTE

The latest Mobile RAN 5-year forecast report claims the robust demand for 5G NR will propel the cumulative worldwide RAN market to nearly $160 B over the next five years.

“Even if 5G will be just another ‘G’ initially, the reality is that for the carriers with the right spectrum assets, the mid-band Massive MIMO business case can be extremely compelling for the MBB use case,” said Stefan Pongratz, analyst with the Dell’Oro Group. “At the same time, we are more optimistic today about the mmW opportunity than we were a year ago. But, clearly, it will take some with the current inter-site distances before the cost per GB economics will be as favorable with the mmW spectrum as the mid-band sub-6 GHz spectrum using the existing macro grid and Massive MIMO,” continued Pongratz.

Other highlights from the Mobile RAN 5-Year Forecast Report:

  • 5G NR will scale at a significantly faster pace than LTE.
  • Sub-6 GHz spectrum is expected to drive the lion share of the RAN capex (Figure 1).
  • New capex spending on IoT, Fixed Wireless Access, In-Building, and Public Safety opportunities for both private and public deployments will compose a double-digit share of the RAN market by 2023.
  • Sub-6 GHz Massive MIMO transceiver shipments are projected to eclipse 200 million.

Dell’Oro Group’s Mobile RAN 5-Year Forecast Report offers a complete overview of the Mobile RAN industry with tables covering manufacturers’ revenue, transceivers or RF carrier shipments, unit shipments for base station controllers, and base transceiver stations for 5GNR, 5G NR Sub 6 GHz, 5G NR mmW, LTE, LTE FDD, LTE TDD, WCDMA, GSM, CDMA, and WiMAX. The report also include splits for macro and non-residential small cells and Massive MIMO.

To access the report, please contact us by email at dgsales@delloro.com.

 

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Huawei captured 28 percent share of the telecom equipment market, increasing its market share by 4 percentage points since 2015.

We just wrapped up the 3Q 2018 reporting period for all the Telecommunications Infrastructure programs.

For the first nine months of 2018, the top five equipment manufacturers were Huawei, Nokia, Ericsson, Cisco, and ZTE. Combined these five companies accounted for about 75% of the worldwide service provider equipment market revenue.

Additional key takeaways from the reports period include:

  • The overall telecom equipment market declined 2 percent year-over-year for the 1Q 2018 through 3Q18 period. Robust demand for Optical Transport and Microwave Transmission equipment was not enough to offset declining Core and Service Provider Router revenues.
  • Huawei’s revenue share continued to improve in 2018—up around four percentage points between 2015 and the first nine months of 2018. During this period, Ericsson’s and Nokia’s market share declined one and three percentage points, respectively.
  • Huawei’s telecom equipment revenue is nearly as large as Nokia and Ericsson combined.
  • Huawei’s revenue share gains over the past four years have been most pronounced in the Core, Router, and Optical Transport Markets.

Dell’Oro Group telecommunication infrastructure research programs consist of the following: Broadband Access, Carrier IP Telephony, Microwave Transmission & Mobile Backhaul, Mobile Radio Access Network, Optical Transport, Router & Carrier Ethernet Switch, Telecom Capex, Wide Area IoT, and Wireless Packet Core.