10 Principles for Telecoms Vendor Diversification in the UK & Beyond

This was originally published as one of my newsletter articles on LinkedIn. Click here for discussion and commentary & to subscribe. 

 Introduction

The UK is currently a hive of activity for government and regulatory involvement in telecoms. I can’t remember a time when so much emphasis has been put on my domain – from election commitments on gigabit broadband, to concerns over “high risk vendors” (HRVs) – notably Huawei.

This week has seen further progress through Parliament of the Telecom Security Bill (link) which makes telcos face legislation on cybersecurity and HRVs. There has also been the linked publication of the 5G Supply Chain Diversification Strategy (link), which ties the removal of Huawei gear with the government’s intentions to expand operators’ choice of other vendors.

I’m going to be spending considerably more time on the policy aspects of telecoms in coming months – not just my normal areas like spectrum, but more broadly the intersection with geopolitics, technology evolution and industrial strategy, competition and trade.

This article focuses on the diversification aspects - my thoughts on the published strategy, plus what I’d like to see in recommendations from the Task Force and policies from government in 2021. It’s a follow-on from my recent post on interoperability. Note: I’m not revisiting the HRV or Huawei issue here.  

I should stress that this isn’t just parochial and UK-specific - it has wider ramifications on the global telecom market, and links up with activities in Brussels, Washington and elsewhere, such as the US Open RAN Policy Coalition, and the EU’s cybersecurity “toolbox” and upcoming European Cybersecurity Strategy review.

Disclosure – my advisory clients span a broad range of UK and international organisations, from startups to large vendors, service providers of numerous types, investors and branches of government. I work with companies and organisations that enable closed macro & small-cell networks, Open RAN, Wi-Fi, satellite connectivity and more. As people who know me will attest, my opinions are my own – and attempts to influence them will often backfire, even if made by paying clients. In fact, people pay me because I regularly say things they don’t want to hear. I like saying “no”.

Background

 Even before the pandemic there was huge UK government engagement – and manifesto commitments - on “full fibre”, 5G mobile networks, sponsored testbeds & trials, and even satellite communications with the investment in OneWeb.

A lot of my own focus in recent years has been triggered by the Future Telecom Infrastructure Review in 2018, which kicked off the current regulatory enthusiasm for localised spectrum, enterprise/private cellular and neutral host networks – although other commentators had also advocated this for some time previously (*coughs modestly*).

In the last 6-12 months, there has been a specific focus on “supply chain diversification”, and a desire by policymakers to increase the number of equipment/software vendors in the market for network infrastructure. This isn’t new – the Government published its initial Telecom Supply Chain Review in mid-2019 – but it has lately taken on greater urgency.

The largest catalyst has been the recent action taken on Huawei and what that means for supply of equipment in the UK as a result, particularly for national 5G RAN build-outs by the four main UK MNOs BT, Vodafone, Telefonica O2 and 3UK.

The net result of this has been the establishment of the UK Telecoms Diversification Task Force as an advisory group (link), aligned with an internal project to develop a strategy and policy for broadening the vendor base, being run by DCMS (Department of Digital, Culture Media & Sport).

The new strategy document highlights what it sees as a duopoly of Nokia and Ericsson, especially for macro RAN gear, and suggests that if that continues it implies a risk to future resilience of the supply-chain. During the various Science & Technology committee hearings this year, there has been input from vendors, operators, security officials, task force members and others.

The discussion has largely been 5G-dominated, although the strategy document also mentions fixed-infrastructure diversification (subject to ongoing consultation and review). Many of the parliamentarians seem to think 5G is something special, and have bought into the “unicorn” visions of GDP uplift and “ubiquity”. (My regular readers know that 5G is “just another G” – an important upgrade, but not something which will change the world).

The strategy proposes three areas of action:

• “Supporting incumbent suppliers” (Nokia and Ericsson) as major vendors, but suggests various approaches towards nudging them to greater levels of openness.
• “Attracting new suppliers into the UK market” – this essentially means working out ways to get Samsung, NEC & Fujitsu more involved, as well as others. The parliamentary debate’s speakers also name-checked Mavenir, Parallel Wireless, Rakuten’s platform business and others.
• “Accelerating open-interface solutions and deployment” – which refers more to the realm of industrial policy around Open RAN, and components such as semiconductors.

As you might imagine, I’ve got some fairly trenchant opinions on much of this.

Is the market that concentrated?

Clearly, the UK MNOs are today almost entirely dependent on Huawei, Nokia and Ericsson for their macro RAN deployments, although Samsung has previously been present in the 3UK’s 4G network, and Vodafone has recently started deploying gear from Mavenir in its Open RAN deployment.

However, some countries such as the US and Japan have maintained a greater diversity in macro RAN supply, despite a lack of Huawei gear - although there are some differences compared to the UK. Continued support of older 2G/3G services currently relying on combined “single RAN” infrastructures is a valid concern – and the Diversification report suggests it might be possible to sunset or improve interoperability there. The Samsung presentation and letter to the committee also had some suggestions about this (link).

I think there’s perhaps also a link to the historical “3GPP monoculture” in UK/Europe. Other regions had a mix of GSM, CDMA and local alternatives, which fostered greater supply fragmentation originally, which endured over time as the "single RAN" approach wasn't as much of an obvious win (or lock-in).

It is worth noting that there is already good diversity for private cellular networks and specific mobile products such as 4G/5G cores, indoor wireless and other niches such as fixed-wireless access. Many alternative suppliers are gaining traction first in rural and other “secondary” areas, rather than dense urban macro locations.

One aspect the government hasn’t appeared to consider is how much of the anticipated 5G “upside” (whether you believe the $billions GDP numbers or not) is conveniently located in these very contexts which have greater levels of supply diversity. Many of the expected new 5G applications are indoors (in factories, hospitals etc), or in sectors such as agriculture.

Another set of “advanced connectivity” applications have alternative technology options, especially over the 3-5 years it will take 5G to mature. WiFi 6/6E/7, LoRa, 60GHz FWA, new satellite constellations and proprietary platforms like Amazon Sidewalk all offer alternatives to 5G. Yet I still hear people talking about 5G for low-latency AR/VR in peoples’ homes when it’s obvious that 90%+ of that will use Wi-Fi, for multiple reasons.

Reading the report and listening to the debates, there seems to be a certain amount of hindsight here, with regrets that previous governments hadn’t thought through possible consolidation from three big cellular vendors to two, irrespective of which was taken out of the equation or how. Some speakers went back further, to the days of Nortel and Marconi, mourning the loss of greater diversity and national sovereign capability.

There’s also an implied sense of worry that one of the existing incumbents might make a mis-step. It’s notable that the “supporting incumbents” line was absent in January discussions, but was perhaps catalysed by Nokia’s 5G woes earlier in this year. The US Attorney General floating the possibility of a US company acquiring either Nokia or Ericsson, probably raised the stakes even further, even if that suggestion was rapidly shot down at the time.

Other concurrent drivers have related to Brexit, trade deals with Japan (and presumably EU, US and S Korea in future) and the enthusiasm of the current administration for more “industrial policy”. There is interest in state-aid for many areas of technology, ranging from hydrogen-powered aircraft (“Jet Zero”) to biotech to quantum computing, with the aim of improving the UK’s export and trading prospects in new and emerging areas. Telecoms technology needs to be seen in the context of a very expansive vision from artificial meat to nuclear fusion. (Wearing my futurist hat, I heartily approve of this).

Open RAN & disaggregation

Perhaps the least-cohesive part of the strategy document (and some initial actions like the testing and interoperability lab announcements) is the focus on Open RAN as the main saviour of supply-chain diversification. It got a huge amount of airtime in the DCMS report, as well as in politicians’ speeches.

In my view, Open RAN is similar to 5G more generally – important, but getting rather over-hyped. It’s going to be very important in future, but it's not the only game in town. Perhaps it will form the centrepiece of 6G, but for 5G macro – which is being deployed now – it’s going to be secondary, even if some of the Huawei rip/replace by 2027 uses it.

There seems to be quite a lot of disagreement between the MNOs as well – Vodafone is clearly a fan, while BT and 3UK seem more sceptical, with O2 somewhere in the middle.

I’m far from convinced that some of the detailed aspects in the document and annex – going as far as discussing eCPRI interfaces and 7.2 O-RAN splits – are the pivot-points for the overall diversification or resilience story. We don’t have TIP specs for OpenRAN 5G Massive MIMO yet, and may not get there for quite a while.

We’ll see a growing amount of vendor orientation on cloud and open RAN approaches anyway – Samsung, NEC and even Nokia are pursuing it. Ericsson and Huawei are being more diffident, but also seem to recognise that virtualisation is important, even if they’re not breaking open all bits of the RAN. Ericsson's recent Cloud RAN announcement could reasonably be described as "tentative" (link).

While there’s a lot of action and excitement with Rakuten, Dish and other greenfield networks, that doesn’t mean that operators in the UK or elsewhere would necessarily follow suit, even if they could do it tomorrow. It would be nice for the option to be there – but I’m a little concerned that the document asserts that interoperability should always be a default rather than a viable option. (If you haven’t seen my post on interop, have a scan through it here). Different operators have different views - and different legacy infrastructure.

Think of an analogy: should the government also suggest that Airbus planes should interoperate with Boeing avionics? Or, for that matter, how many of the advocates would accept Linux as the “default” OS for their laptops, rather than being able to choose Windows or MacOS if they prefer?

I expect we'll see a growing amount of Open RAN in rural and then perhaps suburban areas - but it's going to be a long time before it's common in existing MNOs' urban cores and high-density macro domains. It's an interesting platform for neutral host networks too, as the NEC trial points out. It is part of the overall “choice architecture” for future networks, but arguably the most interesting domains for advanced connectivity will get more choice / vendor competition from non-5G technology options. The normal 5G macro RAN is more about capacity for smartphone broadband, rather than clever new applications. 

What we should aim to see from future UK Diversification recommendations & policy

What comes next is the Diversification Task Force recommendations, which are expected early in 2021. This will feed into the policies and actions taken by the rest of government – potentially DCMS, although some have suggested aspects should reside with Ofcom, the security agencies or other departments.

As some external input, I thought I’d lay out some my own preferences, principles and what I’d like to see. (I may also submit more formal comments into the consultation process).

• Clarity of purpose(s): There is a tendency in the report and parliamentary debate to conflate security, supply resilience, competition, innovation, export opportunity and other drivers for telecoms (de)regulation. All are valid concerns and thus represent areas for government to become involved – but any individual recommendations or rules should break out the underlying purpose(s) clearly. Obviously, few politicians or media commentators are experts in telecoms networks arcana – so communications across Westminster and beyond needs to be crisp, and misconceptions and misrepresentations pointed out swiftly. Soundbites and spin always get attention – but must be rooted in technical reality rather than convenience and media-friendliness.
• Technology neutrality: While there are specific concerns about 5G RAN as it’s a major current focus of investment – and because the intelligence/core functions are increasingly distributed – it’s far from the only important telecom technology, or the only one with a concentrated supplier base. 4G mobile, fibre and fixed-line broadband infrastructure, satellite and assorted other wireless technologies should also be considered as part of diversification. There’s no major UK Wi-Fi player, for instance, which ideally would be rectified. At a component level, we should rightly be considering semiconductors, but also many areas of cloud and software elements involved in ever-more-virtualised telecom networks as well.
• Business model neutrality: This links to my recent post on interoperability. Governments shouldn’t mandate either proprietary or interoperable interfaces, or vertically-integrated or disaggregated solutions – as long as there’s enough competition. Openness is good – but both highest-performance and lowest-cost options may involve “black boxes”. Open RAN (which in any case needs more careful definitions and comes in multiple variants) has huge promise, but shouldn’t be a political football either. We should be encouraging market forces to operate effectively, in the demand side of telecoms networks. Choice is imperative. (You could say the same about net neutrality: if customers have a choice of 10+ ISPs, it doesn't really matter if one of them sells "Ain'ternet" as long as it's accurately marketed & distinguished from the real thing).
• Realistic time horizons & paths: Regular readers of my posts may have noticed increasing mentions of “path dependence”. Timelines matter. If there’s an awkward 4-year gap between promise and reality for a given technology, for instance because of lengthy testing and commercialisation, that needs to be recognised upfront. We can’t leap straight to 6G, terabit FTTx or massive LEO satellite constellations, even if the UK might have an edge in specific components. The new rules need to reflect realistic time horizons – including buffers for delays. That’s especially relevant for things like Massive-MIMO 5G radios.
• Removing obstacles: The UK’s telcos will continue to need large and medium sized international vendors for the foreseeable future. Ericsson and Nokia will obviously remain central, and we should be looking to encourage Samsung, NEC and Fujitsu in 5G – as well as the continued roles for Mavenir, AirSpan, Parallel Wireless, Commscope, Cisco, Juniper, Microsoft and so on. We need to address why, for instance, Samsung is largely absent from UK MNOs’ networks, despite its profile in Korea and the US. If it is about the need for continued support of 2G/3G and other legacy systems (for instance to support eCall), then we should be considering creative solutions for this. I could even imagine a government-sponsored 2G shared network to support M2M and emergency calls, leaving MNOs to focus on 4G/5G differentiation (and reclaiming spectrum).
• Global vision: While I can understand why government likes the idea of home-grown UK telecom startups thriving, this vision needs to be tempered with reality. It isn’t realistic to expect UK firms to tackle all aspects of network infrastructure at the scale and expertise needed by major telcos. This doesn’t just mean “heavy iron” macro 5G networks, but also future elements such as fibre transport or hyperscale cloud for next-generation platforms. There won’t be a UK (or European) equivalent to AWS or Azure any time soon, nor a Qualcomm equivalent. If domestic self-sufficiency and ownership was a desire, there would have been obvious questions about recent sales of ip.access and Metaswitch. The diversification review should address areas where the UK should expect to collaborate internationally – as well as its contribution to new standards, for instance on 6G development.
• Supporting cast: For all the various reasons mentioned above – security, supply resilience, export opportunity and so forth – the “leading actors” of MNOs, semiconductor designers and network hardware/software vendors will need other sets of market players to evolve in tandem. Government is right to be creating testing labs, but should also look at training centres for engineers and installers, university courses, systems integrators, infrastructure financiers, insurance providers and many others. It doesn’t have to (and probably shouldn’t) fund all of these, but it can perhaps advocate for their growth, and help remove barriers if they exist. How many indoor mmWave 5G URLLC vertical specialist engineers - or OpenRAN Massive MIMO maintenance teams - are there in the UK? How can we multiply that by 100x?
• Flexibility to respond to emergent events: Linked to path-dependence is the concept of protecting “optionality”. I can come up with a range of scenarios under which the world might evolve in surprising directions, both technologically and geopolitically. China might reach a different set of compromises with Joe Biden on network vendors, components and trade. Brexit and new UK trade deals may impact supply chains and telecoms demand in unexpected ways – positive or negative. New cybersecurity vulnerabilities might come to light – or new safeguards developed. Any new policies on diversification should aim to enable new vendors and standards, rather than add constraints such as mandating specific interfaces.
• Industry verticals & new applications: The UK authorities, like others around the world, seem focused on Industry 4.0, automation, IoT and the potential benefits of greater network-intensity in many sectors. This filters through to the idea of private networks, cloud/edge computing and other adjacent domains. It may also feature high on the telecoms diversification agenda. My view is that this should revolve around a general principle of “advanced connectivity”, rather than specifically relating to 5G and its supply chain. Wi-Fi, fibre, LoRa, Bluetooth and even proprietary network solutions have equally-important roles to play, and as before, neutrality of policy is desirable. The government should consider technology substitution between options, as well as vendor choice within one technology.
• Awareness of energy & CO2 implications: One of the trade-offs of “abstraction layers” and simplicity/flexibility can sometimes be increased power consumption. “Software-defined X” or “Adaptive Y” can involve lower efficiency than something optimised or hardware-based. The UK should be thinking about a future of networks where everything has a CO2 budget – perhaps with cascading carbon taxes built in. Rather than least-cost routing, we might find networks built around lowest-energy optimisation. I didn't see anything about energy or CO2 in the strategy document.

Overall, as a UK-telecom industry analyst and advisor, I see this as both worthwhile and exciting – and I’m keen to participate in one way or another when possible. I’m certainly intending to check up on how the ongoing pronouncements fit with the principles I’ve outlined here. (I'll also be pondering the international ramifications and linkages).

I think the existing Diversification Strategy makes some good points and has clearly taken inputs from numerous well-placed and knowledgeable sources. However, it’s a bit too focused on 5G, Open RAN and macro networks, rather than the broader realm of “Advanced Connectivity”. I'd like to see more technology neutrality and optionality across the board.

It also blends together multiple issues – cybersecurity, resilience, UK industrial policy, competition, technical philosophy and so on – when they sometimes only have tenuous or debatable links. Interoperability is used as a “glue” to stick together the separate parts. I’d rather see broad top-level goals such as “security” and “optionality” and separate self-consistent analysis for each purpose.

As always, I'll aim to respond to the comments and discussion as much as possible. And please get in touch via email or LinkedIn, if you'd like a deeper dive on any of these areas.

#5G #policy #DCMS #wireless #telecoms #regulation #openran #interoperability #wifi #fibre #broadband #IoT #neutralhost #6G

Mobile standards may fragment again, driven by geopolitics

I think we might see a return to the old days of multiple competing mobile standards.

But rather than the US/Europe technical war of 2G/3G over the nuances of GSM & CDMA, this time I see a scenario driven more by US/China geopolitics and ideology, enabled by various technology catalysts.

[This is an extended and more nuanced version of a post of mine on LinkedIn - link, which I edited to fit the 1300chrs limit. It's worth looking at the discussion in the comments there]

The past: how LTE and 5G became global standards

To understand how we got here, and why we might diverge in future, we need to look at the past. Historically, there were two main competing camps for 2G and 3G networks:

• GSM/UMTS, championed by 3GPP and Europe-centric players such as Ericsson, Nokia and major European operator groups such as Vodafone & Telefonica.
• CDMA, driven by US companies, especially Qualcomm and Verizon, plus also Sprint, Lucent, Nortel and others, organised via 3GPP2

Back around 2006-7, when 4G was being designed and specified, a number of options were proposed:

• LTE was the 3GPP's option
• UMB was the CDMA/3GPP2 approach, leaning heavily on Qualcomm's acquisition of Flarion, which was developing an IEEE 802.20 wireless system.
• WiMAX, which came from vendors with a Wi-Fi background, notably Intel. That was an IEEE technology too - 802.16.

For various reasons, LTE won, and the others disappeared. (I wrote plenty about this at the time, if you want to go through my archived posts, such as here and here). 

IEEE still technologies dominate in local networks such as Wi-Fi and "personal area networks" such as Bluetooth, but for wide-area mobile, the 3GPP dynasty rules supreme.

But there's a back-story to LTE's success, and its rise as the single global standard for 4G.

In the 3G era, it wasn't just UMTS vs. CDMA2000, but also the Chinese TD-SCDMA standard. (& minor proprietary techs, such as Nextel's & Motorola's iDEN)

TD-SCDMA never gained traction outside China's domestic market, but it helped build the local industry to scale and then evolved into TD-LTE for 4G, which was folded in as part of the global LTE story.

The world's mobile-dedicated spectrum comes in two varieties - FDD (frequency-division duplexing) which uses separate 'paired' bands for uplink and downlink, and TDD (time-division duplexing) which uses a single 'unpaired' band, alternating between up/down slices of time. 2G and 3G were dominated by FDD radios. The inclusion of TD-LTE enabled 4G to access both categories. (WiMAX was TDD-only, a major failing).

The Europe+China combination made 3GPP / LTE unstoppable, especially given the extra scale in terms of both market size and spectrum it enabled. It also cemented Huawei's role as a powerhouse, and partly led to Alcatel's acquisition by Nokia and Nortel's cellular business by Ericsson. Qualcomm's conversion to the LTE cause helped too.  

In parallel to the radio, the 4G cellular core network (EPC) also rose in perceived importance compared to 2G/3G eras, as it allowed MNOs much greater control over data flows. It also allowed vendors easier lock-in.

For the last 11 years, the mobile industry has exploded, partly because of LTE's ubiquity and scale economies, and partly because of the simultaneous rise of the iPhone and Android. It's worth noting that 3GPP's original vision for 3G and 4G didn't see access to the "public Internet" as a core part of the service, although it now dominates usage and value.

In recent years, we have seen the 3GPP "global standard" continue to evolve to 5G, with Huawei, Nokia, Ericsson, Qualcomm dominating the landscape again, plus Samsung and a few others following behind them. At the moment, most 5G is "non-standalone", using the existing 4G cores - and thus again locking-in the established vendors, and the existing powerful core and exclusive national-licence philosophy favouring traditional large MNOs.

However, the 5G vision of many of the industry "old guard" is still centres on the them vs. us approach to network control and "native" (ie telco-delivered) services. There's still the almost-bigoted rhetoric and lobbying about so-called "OTTs" (an obsolete and self-damaging term, in my view), and the attempt to dilute - or at least monitor - the user's desire & ability to access open Internet applications and even connect independently via Wi-Fi.

___________________________________________________________

But now, I see clouds gathering - or new rays of sunshine, depending on your perspective.

I think that geopolitics may undermine the "single global standard" for mobile, along with some conveniently-timed technical evolution paths. This is not a forecast, or even the most likely outcome - but I believe it is solidifying into a much more realistic scenario.

For the later stages of 5G (from Release 17 onwards), and then beyond that with the evolution of 6G, I think the US might be about to diverge from the last decade's consensus.

The Sino-US politics were already stark, even before the COVID19 pandemic added more fuel to the fire. We have already seen massive pressure with regard to Huawei, not just in North America but across Europe and other OECD countries such as Japan and Australia. The US has previously taken action against ZTE as well, and more recently has started even discouraging interconnection with Chinese telcos (link). 

Apparently, the US tech industry is now being pushed/advised to avoid working with China, even on standards development (see this Economist article, although it may be behind a paywall for some - link). That potentially weakens US influence at 3GPP, and could prompt it to seek alternative paths forward. We can expect the US Presidential campaign to focus on this theme as well, over the next 6 months - although both major US political parties have been fairly unified on the ongoing trade disputes with China.

There are also some signs of tougher views in Europe. Even though the UK and EU have allowed continued limited engagement with Huawei, the politics is still hardening, especially in the wake of the virus' trajectory (link).

But this is not just about geopolitics. It is also about technology "philosophy". I see something of a divide here, too. In a way, it's a modern-day version of the Bellheads vs. Netheads battle of the past (link):

• Control: On one side is a vision of mobile world with strong vendor / MNO / national control, evolved from today's 3GPP & GSMA vision. This has
• Strong policy control - and eventually network-slicing - delivered from a powerful core network. 
• Deep reach down into devices, from SIMs to connectivity management, and perhaps surveillance options. 
• A big focus on optimised & automated infrastructure, which probably favours single-vendor (or at least big-vendor) approaches. 
• An expectation of exclusive national spectrum licenses, with limited scope for local or enterprise networks which do not also lean on MNOs' services. 
• There's also a lot of work aimed at reinventing TCP/IP in ways that give telcos more control, as well. 
• Edge-computing is integrated into the telco domain as much as possible, and delivered as part of a "slice" or MNO service.
• Openness:The other world vision has a more open / Internet-centric approach. It's more "permissionless" with vendor or even operator lock-ins of any sort being anathema. There's:
• Less core-network control, favouring local breakout & device-led multiple connections, without the MNO (or government) having a panopticon view of traffic. 
• An emerging focus on disaggregated & open RAN models (O-RAN, TIP, OpenRAN etc), favouring multivendor- and IT/cloud -centric architectures. 
• An expectation of Wi-Fi indoors, often owned and controlled by a non-MNO. 
• Growing availability of more-open spectrum with dynamic / local licenses, as well as traditional exclusive bands as a foundation. 
• Edge computing is primarily an enabler of telecom networks, not delivered by them - and the expectation is that most will be neutral or independent, in local 3rd-party datacentres/modules or on enterprise premises.
  

In a way, this is almost a 3GPP vs. IEEE/IETF divide, but just as politics has shifted from a left/right axis to open/closed, perhaps something similar is happening here too.

It's not clear that the wireless world will cleave cleanly along this divide, especially in the near future as 5G is still being deployed. AT&T and Verizon will not be happy relinquishing control-points, either. So today, we have some fairly messy - and maybe unworkable - hybrids. There's lots of talk about opening APIs for enterprises to configure their own 5G slices. We have some grudging approaches to blending cellular and Wi-Fi, and various moves to enable "non-public networks" for enterprise in Release 16 & 17 of the 5G standards. But even that phrasing is awkward and somewhat derisive - as is the term "non-trusted" to describe other access networks.

But the technology forces are clear, even beyond the politics. In the last year or so we have seen:

• CBRS launching, with dynamic spectrum and a focus on new use-cases and business models, especially enterprise/local networks. It is catalysing a new vendor ecosystem of small cell suppliers, cloud EPCs and specialised SPs and integrators.
• Huge interest in local/private spectrum and networks in Germany, UK, Japan and elsewhere
• Rakuten, Dish and other operators validating the vRAN model and working with new US-centric vendors like Altiostar and Mavenir. (Rakuten is, like Softbank, an Internet company diversifying into cellular. Dish isn't "old school" mobile, either, but a satellite TV provider).
• Huge upswing of presence of IT/cloud players in cellular infrastructure, including acquisitions. IBM/RedHat, Dell/VMware, Microsoft/Affirmed, HPE, Oracle - plus AWS and Google taking various roles from RAN to core, as well as Facebook with TIP and its new stake in Reliance Jio
• A massive tranche of 6GHz spectrum being made available on an unlicensed basis in the US, primarily for Wi-Fi6E, but also maybe 5G variants in future as well. This has further killed off the (already implausible) idea that cellular-based LANs might edge out Wi-Fi
• Fragmentation of the EPC / 5G Core marketplace, with low-cost / cloud-based / programmable / "light" variants that look like a normal piece of the IT stack, rather than arcane telco wizardry. (I wonder if we'll see "core-optional" mobile networks - but that's for another post).
• More interest in mmWave in the US and South Korea, including for indoor use.
• FCC and the White House have taken a close interest in 5G and next-gen wireless, and seem keen to foster a local technology ecosystem for mobile (link)
• Innovation in satellite constellations such as SpaceX's Starlink
• Plenty of other big US-centric technology players watching closely, such as Cisco, Juniper and of course Apple.
• (I know there's also various moves around evolving TCP/IP, but I haven't had a chance to get my head around them yet).

We might still see 5.5G and 6G world emerge as an elegant hyper-converged version of these two philosophies. And we'll certainly see firms such as Ericsson and Huawei try to continue the 3GPP/control vision, while also exploring the opportunities and tools from the other side. Neither seems especially happy with the rise of local/private spectrum or pure-play enterprise and neutral-host providers. It's easier to sell direct to 100s of MNOs, than 10000s of enterprises via a myriad of new channels and integrators.
 
I'm also interested to see what happens with ownership of Nokia (which seems a bit more open to the new realities) given its financial woes - and also how the European governments and regulators act. Is Europe a bridge between the two worlds, or does it fall in the gap? 

In many ways, I see the EU model lean more towards MNO control, with governments happier to focus regulation on competition at commercial levels, rather than technical - it tends to push harmonisation heavily, as a consequence of its previous success with GSM which catalysed the whole sector. There is more wiggle-room around enterprise and local spectrum licensing, given the strong lobbies for manufacturing and other industrial sectors., plus more emphasis on privacy.

I can imagine Japan aligning more with the US vision, but South Korea in a similar position to Europe. A year ago, Samsung was the obvious beneficiary of Huawei's problems. Now, it's probably the OpenRAN ecosystem that's the effective #3 choice.

At the moment, I'd rate the chances of a more-serious and clearer split at 30% and rising. It won't happen overnight - I think that Release 17 is probably the trigger-point. By the time we get to 2030 and 6G though, I wouldn't be surprised to see a revival of something that looks like 3GPP2, or perhaps (whisper it, as many will cringe) WiMAX2. At the very least, it will be more Internet-flavoured.

If the "old guard" vendors and their institutional peers within 3GPP, GSMA, ETSI etc. want to avoid this bifurcation, they are going to have to make some difficult decisions, and soon. Otherwise the potential to be disrupted from adjacency will grow. They need to be genuinely open, and start loosening the vision of pure "end-to-end control", and embracing imperfect, inelegant pragmatism about network design, operation and ownership. Exactly how that fits with the worsening geopolitical landscape is a problem I'll leave for the diplomats and spin-doctors.

Note: If you are interested in understanding more about this scenario, or are looking for an analyst or advisor to help formulate strategy in the wireless technology space, please get in touch with me. I can be reached via LinkedIn, @disruptivedean on Twitter, or via information at disruptive-analysis dot com.

From pixabay.com

Huawei Connect: IT services, Enterprise Cellular, video analytics, AI and more

I spent most of last week in Shanghai, attending Huawei's Connect conference and trade show. It was a good chance to get a deep-dive into the company's enterprise activities, as well as get my head around China's broader trends and influences around the technology sector.

I normally engage with Huawei through its analyst relations function, but this trip was organised by a different team. The company apparently considers me a "KOL" ("key opinion leader"), which is a rather diffuse bucket used for a mix of outspoken independent analysts, public-facing academics, video/social bloggers and assorted others. I'm not sure I set out to lead opinions, but I'm certainly happy to voice my own.

(Unlike the analyst events I usually attend, the KOL group isn't really made up of direct competitors, so there's a more collegiate atmosphere - and a very lively WeChat group, partly with logistics about meeting times/locations but also sharing photos or thoughts about the event).

Connect is mostly driven by Huawei's enterprise business unit, which is growing fast (about $6bn revenues in 2016, up 47% [link]), and focuses on cloud and big "infrastructure-led" IT and networking projects. So sectors like smart cities, advanced manufacturing, oil and gas IoT, systems for transport sectors like rail and ports and so on. There's a heavy emphasis on IoT platforms and networks, cloud and storage, video/image surveillance analysis and a lot of AI. 

It clearly intends to be a very significant player in its chosen sectors, using its existing high IT profile in China, plus its global telecom footprint, as a springboard for other international ICT theatres. Unlike Europe, North America and India, China has few global-scale IT companies, especially in systems integration or outsourcing. The closest to a "Chinese version of IBM" is probably ChinaSoft, which has a deep partnership with Huawei anyway, and in which Huawei owns a significant shareholding.

Thinking more about technology-sector comparables, very few have a similar blend of infrastructure/network/telecom expertise, systems integration/services scale and cloud capabilities. Given Ericsson's recent announcements of pulling back on direct enterprise-related initiatives to focus on CSPs and its Cisco partnership as channels (a strategic error, I feel), it's only really Nokia and maybe NEC that have the scope to push the same big-infrastructure enterprise "ICT" vision, although even it doesn't have the full-scale IT services business that Huawei does. Perhaps there's yet more scope for consolidation between traditional IT companies and networks. (Ericsson+IBM? Nokia+HP? NEC+Tata? Who knows....)

One other thing stood out about the event: there was very little spoken about telco networks, Huawei's main business, or the synergies between that business unit and its faster-growing enterprise sibling. 

There was much more about robots and face-recognition than network-slicing and NFV. The main mention of IMS that I saw was in the context of critical communications for public safety, eg push-to-talk. The X-Labs group assessing possible future 5G use-cases was talking about connected drones, or cloud-integrated video-enabled helmets for the blind. There was a "carrier" section in the vertical-industries show hall, but that seemed mostly focused on cloud solutions for telcos.

Conspicuously, there was almost no reference to delivery models for network or IoT capabilities for enterprises. There was no assumption that everything would be provided "as a service", or in particular, delivered by a CSP. There was tacit recognition that some organisations want to own their own infrastructure / private clouds, some may go to a specialist integrator (eg an automation/IoT specialist like Honeywell or GE), and some might use an arm of a telco. For example, T-Systems, Deutsche Telekom's IT unit, was there talking about a Huawei-based storage cloud, deployed for CERN, the leading nuclear and particular research institution on the Swiss/French border.

Huawei also offers its own cloud services, but is quite self-effacing about it, only wishing to become "one of the top 5 clouds" (presumably along with Amazon, Google, IBM and maybe Microsoft - which it also partners) and saying that "1% is enough for us". I don't think Jeff Bezos is going to have too many sleepless nights, although Alibaba, Cisco and Oracle may have different opinions on the top tier's members, the former especially in China itself.

In terms of specific takeouts on my normal coverage areas, a few things stood out:

• Enterprise Cellular: This was everywhere at the event, under the brand eLTE. This is a sort of pre-cursor to a MuLTEfire / CBRS model of non-carrier cellular networks. There's a quite large eLTE ecosystem, especially around public-safety networks but also manufacturing, transport and other verticals. There was a demo of a robot connected with private cellular. There are 3 variants:
• An unlicensed LTE-U version that doesn't need a licensed "anchor" like LAA, so can be deployed by any organisation
• A licensed-band version, where organisations (such as law-enforcement or utilities) can manage to get dedicated spectrum by one means or another
• A narrowband version, which is essentiially NB-IoT in unlicensed bands such as ISM spectrum (which in China, is in the 500MHz range, or 900MHz in the US)
• All of these were targeted at industry verticals. There wasn't any mention of other use-cases like neutral-host providers, hybrid MNO/MVNOs, mesh networks, or consumer-oriented plays. 
• There wasn't any explicit mention of shared-spectrum models like CBRS, but it seems to fit under the second category.
• This all fits nicely with the recent work I've done on private/enterprise cellular. It will be an ongoing theme as it is clearly "happening", including presentations at a few upcoming regulatory conferences, and another workshop with Caroline Gabriel in London on Dec 1 (link)

 

•  IoT networks: There was a huge emphasis on NB-IoT around the event, as well as broadband 4.5G/5G options for drones, connected vehicles and more demanding applications. I didn't see an mention of LoRA, SigFox, or even LTE-M or Cat1 though, but WiFi and ZigBee cropped up on various slides. Some interesting examples of NB-IoT deployments, notably for cities, or specific OEM-led integrations such as China's booming shared-bicycle sector.
• Video and facial networks/analytics: This was a huge theme, as it bridges Huawei's key domains of mobile broadband, cloud services and AI. A major focus is "safe cities", especially using networked video cameras to manage traffic, enforce public safety - and track/spot individual people, whether that is missing children, criminals, or attendees at a trade show. (I joked on Twitter that Huawei had probably been tracking people around the event itself - only for the next slide to reveal that it had been doing exactly that). Missing from most of the material was much mention of privacy - which appears to be less of a concern in China than it would be in much of Europe. That said, we may be fighting a losing battle on that front, as this week's Economist cover & feature articles on face-recognition point out (link).

 
 
 

• AI: Beyond video-analysis, a central thrust of the event was around machine-learning, graph analysis, image-recognition and other forms of AI.  I didn't get a chance to go into too much depth on this, but it's pretty clear this is central to Huawei's cloud ambitions, and probably will link into carrier-domain services like smart-home / personal voice assistants as well as "big data" corporate applications
• We also had a briefing with the handset unit, which discussed the new Kirin AI-oriented chip which includes a neural processing element, as well as CPU, GPU and DSP. This should enable better and more power-efficient local classification of images, without the need to send all data to the cloud. This fits into my ongoing debate on whether 5G's low-latency business case might be undermined by more edge-processing. (link)
• WiFi: Although not as big an emphasis as 4G/5G, Huawei nevertheless had a fair bit of WiFi on display, particularly for large-scale deployments in cities or large public venues like sports stadia. It also had an interesting hybrid WiFi / IoT networking unit, which for now focuses on Bluetooth, RFID and ZigBee but I guess could incorporate NB-IoT (or its eLTE variant), or even LoRa if a client wanted.
• UC/UCaaS: Although not a major focus of the event (itself quite telling) there was a fair bit of unified communications, conferencing and even cPaaS around the show. There was a Broadsoft-style UC platform for operators, and various tools for multi-party meetings. It's not obvious that Huawei is aiming to be a Twilio / Tokbox-style platform provider though, although it does have APIs (including WebRTC) for embedding communications in apps and websites. I didn't see any signs of a Slack/Spark/HipChat rival. Notably, Huawei is partnering Microsoft on Office365, so may not launch its own full UcaaS direct-to-enterprise product. 
• I liked one partner booth in particular "Call Cloud", which uses a crowd-style / sharing economy approach to sourcing customer-service reps, with in-app video. It apparently has 7 million (!) people signed up as potential providers of informal information or support.

Overall, an interesting few days for me, exploring a side to Huawei I hadn't seen before. It's always hard to get a full perspective from a single-vendor event, but it struck me as one of the only real, fully-encompassing examples I've seen of an acronym I normally dislike - ICT. That said, some more candour about positioning vs. competitors would have been welcome. We all know who they are - so descriptions of differentiation would have been useful, even if rose-tinted.

It's also brought home to me how important it is to have a captive market to drive scale, which can then improve adoption rates (and prices) elsewhere. Amazon does it with AWS - its own huge retail business is an "anchor tenant" which helps create traffic volumes that then became reinforced by third parties' cloud usage. Huawei appears to do something similar with domestic government and enterprise business - millions of CCTV cameras, or large-scale city networks, or local IoT uses are helping it exploit pre-existing scale and experience, and then apply elsewhere. There is also a sensible approach to partnering, for example around IoT, with the likes of GE collaborating on distinct parts of the market.

One final comment: the layout of the trade show was excellent. One hall was organised per-vertical, with sections on Manufacturing, Public Safety, Oil & Gas, Finance etc. The other hall was per-technology, with sections on Cloud, eLTE, WiFi, NB-IoT, Developers and so on. I wish other events were similarly well-structured.