Tag: 5G

Connected car: From mobile broadband to genuine V2X

Connected cars are moving fast

Over the past two decades, vehicles have been making increasing use of cellular connectivity for a variety of purposes from pay-as-you-drive insurance and rentals to remote (un)locking and automated emergency calls. Now automobiles are beginning to harness C-V2X – versions of LTE and 5G specifically designed to meet the needs of connected cars.

This report outlines the growing momentum behind V2X connectivity, the various connectivity options and the strategies of leading connected car makers, before providing some forecasts for the growth in connected vehicles between now and 2028. It then considers many of the key use cases, categorising them according to how frequently the vehicle needs to obtain new data from external sources. Finally, the report profiles the efforts of several telcos that have achieved scale in this market, before drawing some conclusions.

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Who is driving the connected car market?

C-V2X connectivity is now being built into vehicles by various Chinese automakers, as well as GM, Ford and Audi, according to the 5G Automotive Association (5GAA), which is a global, cross-industry organisation representing companies from the automotive, technology, and telecommunications sectors.

The 5GAA has described 2023 as “a pivotal year for V2X deployment”, partly because the technology is increasingly being standardised and partly because of the regulatory drivers discussed later in this section.

While cellular connectivity is already used by tens of millions of vehicles worldwide, the deployment of C-V2X is still very nascent.

Direct mode C-V2X clearly depends on the deployment of 5.9GHz modems inside vehicles and in roadside units and other public infrastructure. The latter will need to be densely deployed, as the range of each unit could drop to around 100 metres when buildings are in the way. These roadside units typically employ either an Ethernet cable or a wireless link for backhaul.

As the business case rests primarily on a reduction in congestion and accidents, the rollout of this infrastructure is likely to be funded primarily by general taxation and/or road tolls. Therefore, much of the direct mode infrastructure will probably be deployed and controlled by municipalities and road operators, but this responsibility could be outsourced to telcos. In China, where the government retains close control over both the telecoms and transport sectors, this infrastructure is already widely deployed in some cities.

Increasingly sophisticated roadside units are also becoming available in the rest of the world from specialist companies, such as Applied Information, Askey, Commsignia, Harman Automotive (part of Samsung) and Yunex Traffic. Other vendors supplying road-side unit (RSU) hardware – or software for inclusion on third-party hardware – include Cohda Wireless, Capgemini, Kapsch TrafficCom, Grand-Tek and others. Chinese telecoms equipment suppliers Huawei and ZTE had solutions listed by 5GAA in a 2021 list of RSU suppliers, but Ericsson and Nokia did not, and they may choose to license products from other vendors.

In May 2022, Yunex Traffic, for example, launched the RSU2X, which can use DSRC or C-V2X signals to transmit speed limits, red light notices and wrong-way warnings to the onboard units in automakers’ 2023 model vehicles. The RSU2X can also capture the car’s speed, direction, and location for use by connected safety systems. Yunex says the unit is capable of handling 4,000 message verifications and 130 message signature operations per second. The RSU2X has four times the computing power of Yunex’s previous model.

Yunex Traffic claims its new RSU2X can handle 4,000 messages per second

Source: Yunex Traffic

Some of the latest roadside units, such as Harman Automotive’s Savari StreetWAVE, include support for 5G, as well as C-V2X and DSRC (5.855 to 5.925GHz), Wi-Fi and LoRaWAN.

C-V2X is also being integrated into new vehicles. For example, in September 2022, Autotalks, a fabless semiconductor company based in Israel, said two Chinese automakers had ordered its V2X communication solutions. In the press release, Autotalks said the first V2X-enabled car brand will be launched in China in the second half of 2023, while the other automaker will roll out the V2X-enabled car in both China and Europe starting in early 2024.

“China’s V2X market continues gearing up towards implementation of the government’s ambitious intelligent transportation strategy,” Autotalks said at the time. “All leading automakers, local and global, are expected to start massive deployment of V2X technology in China in the coming years. The market is moving towards massive adoption of V2X as most OEMs are preparing to launch V2X-powered vehicles by 2025.”

Table of contents

  • Executive Summary
  • The road to automated driving
  • Introduction: V2X market momentum
    • Who is driving the market?
    • Regulatory moves on both sides of the Atlantic
  • V2X connectivity options
    • History and background to automotive connectivity
    • Dedicated and localised V2X networks
    • National and wide-area V2X
    • How much data traffic can be expected?
    • The role of private/non-public mobile networks
    • Spectrum considerations
    • Summary of the connectivity options
  • Automakers’ adoption of connectivity
    • Ford aims to monetise connectivity
    • BMW continues to champion connectivity
    • Audi looks to harness 5G
    • Baidu explores V2X for self-driving
    • How many connected vehicles are there?
    • SK Telecom looks skyward
  • Connected vehicle use cases
    • Batch-based use cases
    • Pulse use cases
    • High-frequency use cases
    • Real-time applications
    • Reducing the need for onboard compute
    • Avoiding collisions
  • Telcos connecting vehicles at scale
    • Vodafone Automotive: 5,000 alerts a day
    • AT&T: Serving more than 60 million vehicles
    • Mobile: Delivering the internet of vehicles
  • Conclusions
  • Index

Related research

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Network APIs: Driving new revenue streams for telcos

Network APIs promise new revenues for telcos

Since 2020 there has been a resurgent interest in applications interfacing with the network they run over. The exponential increase in the number of connected devices and complex traffic, particularly video, is exerting pressure on network resources. Applications must become more aware of network and edge compute resource availability to meet increasingly stringent customer requirements as well as energy efficiency targets – for example, by prioritising critical applications. MEC allows data to be collected and processed closer to the customer (more information on edge computing is available on our Edge hub).

STL Partners forecasts the revenue opportunity created by mobile network APIs to reach over $20 billion by 2028 (the full version of this report provides a breakdown of the opportunity for the top 11 network APIs), as well as enabling powerful new applications that leverage programmable, cloud-native networks.

Increased network programmability will enable developers to build applications that require guaranteed connection speed and bandwidth, giving users/providers the option to pay a premium for network resource when and where they need it. The network APIs fuelling this market fall into two broad categories:

  • Network information APIs: Basic network APIs that provide real-time information about the network will reach extremely high volumes over the next decade. These will gradually be consolidated into the core network offering as a hygiene factor for all operators. Examples include network performance (information only), hyper-precise location, real-time device status, etc.
  • Network configuration APIs: APIs that instruct the network will not reach the same volume of usage, instead offering a premium service to a smaller pool of users wanting to define their network environment. Examples of these APIs include quality-of-service on-demand, slice configuration and device onboarding. These APIs offer a longer-term monetisation opportunity for operators, although there is little visibility around what developers and enterprise will pay for these services (e.g., pay per use vs. monthly subscription, etc.).

In this report, we explore the work that is currently happening to develop network APIs from a technical and commercial point of view, surveying the telecoms industry consortia that are proactively building the technical and commercial tools to make network-as-a-service a revenue-driving success.

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Two API domains: The macro network and MEC

MEC APIs control both the compute and networking elements at the edge. In the instance that a telco is operating and managing the edge site, these APIs come under their remit. In some instances, however, the MEC APIs could be defining edge or cloud compute not operated by the telco. Therefore, we do not consider all MEC APIs to come under the umbrella of network APIs (See figure below).

MEC APIs vs. Network APIs

Source: STL Partners

A MEC API is a set of programming interfaces that allow developers to access and utilize the resources of mobile edge computing platforms. These resources include computing power, storage, and network connectivity, and can be used to run applications, services, and tasks at the edge of the network, closer to the end users. MEC APIs can provide a way to offload workloads from the cloud to the edge, reducing latency and improving the performance of applications and services. CSPs must make a strategic decision on where to focus their development: general network APIs (quality-on-demand, location, etc.) or MEC APIs (edge node discovery, intent-based workload placement, etc.).

Need for reliable, real-time connectivity across a wide area will drive demand

Based on our interviews with application developers, we developed a framework to assess the types of use cases network APIs are best suited to enable. This framework sets out the network API opportunity across two dimensions:

  • The geographic nature of the use case: Local area vs. wide-area use cases. This influences the type of edge that is likely to be used, with local-area use cases leveraging the on-premiseedge and wide-area use cases better suited to the network edge.
  • Need for real-time vs. non-real time insight and response: This depends on the mission criticality of the use case or the need from the application point of view to be dynamic (i.e., adapt to changing circumstances to maintain a consistent or enhanced customer experience).

As network operators, telcos’ primary value-add is the ability to provide quality connectivity. Application developers leverage awareness of the network throughout their development process, and the ability to define the network environment enables use cases which require constant, ultra-reliable connectivity (see figure below).

Importance of connectivity features for developers

Source: STL Partners Survey (December 2022), n=101

Table of Contents

  • Executive Summary
  • Network APIs promise new revenues for telcos
    • Two API domains: The macro network and MEC
    • Need for reliable, real-time connectivity across a wide area will drive demand
    • Layers of API needed to translate network complexity into valuable network functions
    • Cross-telco collaboration and engagement of developers
    • Each industry fora focuses on specific layers of the API value chain
  • Operators must leverage multiple distribution channels for network APIs
    • Failure to standardise quickly allows other distribution channels to achieve greater scale
    • Operators must engage the developer community to play an aggregator role
  • Challenges and barriers: What needs to change
  • Conclusion
  • Appendix
    • Understanding the fundamentals of APIs
    • What are network APIs and what has changed?

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Telco digital twins: Cool tech or real value?

Definition of a digital twin

Digital twin is a familiar term with a well-known definition in industrial settings. However, in a telco setting it is useful to define what it is and how it differs from a standard piece of modelling. This research discusses the definition of a digital twin and concludes with a detailed taxonomy.

An archetypical digital twin:

  • models a single entity/system (for example, a cell site).
  • creates a digital representation of this entity/system, which can be either a physical object, process, organisation, person or abstraction (details of the cell-site topology or the part numbers of components that make up the site).
  • has exactly one twin per thing (each cell site can be modelled separately).
  • updates (either continuously, intermittently or as needed) to mirror the current state of this thing. For example, the cell sitescurrent performance given customer behavior.

In addition:

  • multiple digital twins can be aggregated to form a composite view (the impact of network changes on cell sitesin an area).
  • the data coming into the digital twin can drive various types of analytics (typically digital simulations and models) within the twin itself – or could transit from one or multiple digital twins to a third-party application (for example, capacity management analytics).
  • the resulting analysis has a range of immediate uses, such as feeding into downstream actuators, or it can be stored for future use, for instance mimicking scenarios for testingwithout affecting any live applications.
  • a digital twin is directly linked to the original, which means it can enable a two-way interaction. Not only can a twin allow others to read its own data, but it can transmit questions or commands back to the original asset.

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What is the purpose of a digital twin?

This research uses the phrase “archetypical twin” to describe the most mature twin category, which can be found in manufacturing, operations, construction, maintenance and operating environments. These have been around in different levels of sophistication for the last 10 years or so and are expected to be widely available and mature in the next five years. Their main purpose is to act as a proxy for an asset, so that applications wanting data about the asset can connect directly to the digital twin rather than having to connect directly with the asset. In these environments, digital twins tend to be deployed for expensive and complex equipment which needs to operate efficiently and without significant down time. For example, jet engines or other complex equipment. In the telco, the most immediate use case for an archetypical twin is to model the cell tower and associated Radio Access Network (RAN) electronics and supporting equipment.

The adoption of digital twins should be seen as an evolution from today’s AI models

digital-twins-evolution-of-todays-ai-models-stl-partners

*See report for detailed graphic.

Source: STL Partners

 

At the other end of the maturity curve from the archetypical twin, is the “digital twin of the organisation” (DTO). This is a virtual model of a department, business unit, organisation or whole enterprise that management can use to support specific financial or other decision-making processes. It uses the same design pattern and thinking of a twin of a physical object but brings in a variety of operational or contextual data to model a “non-physical” thing. In interviews for this research, the consensus was that these were not an initial priority for telcos and, indeed, conceptually it was not totally clear whether the benefits make them a must-have for telcos in the mid-term either.

As the telecoms industry is still in the exploratory and trial phase with digital twins, there are a series of initial deployments which, when looked at, raise a somewhat semantic question about whether a digital representation of an asset (for example, a network function) or a system (for example, a core network) is really a digital twin or actually just an organic development of AI models that have been used in telcos for some time. Referring to this as the “digital twin/model” continuum, the graphic above shows the characteristics of an archetypical twin compared to that of a typical model.

The most important takeaway from this graphic are the factors on the right-hand side that make a digital twin potentially much more complex and resource hungry than a model. How important it is to distinguish an archetypical twin from a hybrid digital twin/model may come down to “marketing creep”, where deployments tend to get described as digital twins whether they exhibit many of the features of the archtypical twin or not. This creep will be exacerbated by telcos’ needs, which are not primarily focused on emulating physical assets such as engines or robots but on monitoring complex processes (for example, networks), which have individual assets (for example, network functions, physical equipment) that may not need as much detailed monitoring as individual components in an airplane engine. As a result, the telecoms industry could deploy digital twin/models far more extensively than full digital twins.

Table of contents

  • Executive Summary
    • Choosing where to start
    • Complexity: The biggest short-term barrier
    • Building an early-days digital twin portfolio
  • Introduction
    • Definition of a digital twin
    • What is the purpose of a digital twin?
    • A digital twin taxonomy
  • Planning a digital twin deployment
    • Network testing
    • Radio and network planning
    • Cell site management
    • KPIs for network management
    • Fraud prediction
    • Product catalogue
    • Digital twins within partner ecosystems
    • Digital twins of services
    • Data for customer digital twins
    • Customer experience messaging
    • Vertical-specific digital twins
  • Drivers and barriers to uptake of digital twins
    • Drivers
    • Barriers
  • Conclusion: Creating a digital twin strategy
    • Immediate strategy for day 1 deployment
    • Long-term strategy

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MWC 2023: You are now in a new industry

The birth of a new sector: “Connected Technologies”

Mobile World Congress (MWC) is the world’s biggest showcase for the mobile telecoms industry. MWC 2023 marked the second year back to full scale after COVID disruptions. With 88k visitors, 2,400 exhibitors and 1,000 speakers it did not quite reach pre-COVID heights, but remained an enormous scale event. Notably, 56% of visitors came from industries adjacent to the core mobile ecosystem, reflecting STL’s view that we are now in a new industry with a diverse range of players delivering connected technologies.

With such scale It can be difficult to find the significant messages through the noise. STL’s research team attended the event in full force, and we each focused on a specific topic. In this report we distil what we saw at MWC 2023 and what we think it means for telecoms operators, technology companies and new players entering the industry.

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STL Partners research team at MWC 2023

STL-Partners-MWC23-research-team

The diversity of companies attending and of applications demonstrated at MWC23 illustrated that the business being conducted is no longer the delivery of mobile communications. It is addressing a broader goal that we’ve described as the Coordination Age. This is the use of connected technologies to help a wide range of customers make better use of their resources.

The centrality of the GSMA Open Gateway announcement in discussions was one harbinger of the new model. The point of the APIs is to enable other players to access and use telecoms resources more automatically and rapidly, rather than through lengthy and complex bespoke processes. It starts to open many new business model opportunities across the economy. To steal the words of John Antanaitis, VP Global Portfolio Marketing at Vonage, APIs are “a small key to a big door”.

Other examples from MWC 2023 underlining the transition of “telecommunications” to a sector with new boundaries and new functions include:

  • The centrality of ecosystems and partnerships, which fundamentally serve to connect different parts of the technology value chain.
  • The importance of sustainability to the industry’s agenda. This is about careful and efficient use of resources within the industry and enabling customers to connect their own technologies to optimise energy consumption and their uses of other scarce resources such as land, water and carbon.
  • An increasing interest and experimentation with the metaverse, which uses connected technologies (AR/VR, high speed data, sometimes edge resources) to deliver a newly visceral experience to its users, in turn delivering other benefits, such as more engaging entertainment (better use of leisure time and attention), and more compelling training experiences (e.g. delivering more realistic and lifelike emergency training scenarios).
  • A primary purpose of telco cloud is to break out the functions and technologies within the operators and network domains. It makes individual processes, assets and functions programmable – again, linking them with signals from other parts of the ecosystem – whether an external customer or partner or internal users.
  • The growing dialogues around edge computing and private networks –evolving ways for enterprise customers to take control of all or part of their connected technologies.
  • The importance of AI and automation, both within operators and across the market. The nature of automation is to connect one technology or data source to another. An action in one place is triggered by a signal from another.

Many of these connecting technologies are still relatively nascent and incomplete at this stage. They do not yet deliver the experiences or economics that will ultimately make them successful. However, what they collectively reveal is that the underlying drive to connect technologies to make better use of resources is like a form of economic gravity. In the same way that water will always run downhill, so will the market evolve towards optimising the use of resources through connecting technologies.

Table of contents

  • Executive Summary
    • The birth of a new sector: ‘Connected technologies’
    • Old gripes remain
    • So what if you are in a new industry?
    • You might like it
    • How to go from telco to connected techco
    • Next steps
  • Introduction
  • Strategy: Does the industry know where it’s going?
    • Where will the money come from?
    • Telcos still demanding their “fair share”, but what’s fair, or constructive?
    • Hope for the future
  • Transformation leadership: Ecosystem practices
    • Current drivers for ecosystem thinking
    • Barriers to wider and less linear ecosystem practices
    • Conclusion
  • Energy crisis sparks efficiency drive
    • Innovation is happening around energy
    • Orange looks to change consumer behaviour
    • Moves on measuring enablement effects
    • Key takeaways
  • Telco Cloud: Open RAN is important
    • Brownfield open RAN deployments at scale in 2024-25
    • Acceleration is key for vRAN workloads on COTS hardware
    • Energy efficiency is a key use case of open RAN and vRAN
    • Other business
    • Conclusion
  • Consumer: Where are telcos currently focused?
    • Staying relevant: Metaverse returns
    • Consumer revenue opportunities: Commerce and finance
    • Customer engagement: Utilising AI
  • Enterprise: Are telcos really ready for new business models?
    • Metaverse for enterprise: Pure hype?
    • Network APIs: The tech is progressing
    • …But commercial value is still unclear
    • Final takeaways:
  • Private networks: Coming over the hype curve
    • A fragmented but dynamic ecosystem
    • A push for mid-market adoption
    • Finding the right sector and the right business case
  • Edge computing: Entering the next phase
    • Telcos are looking for ways to monetise edge
    • Edge computing and private networks – a winning combination?
    • Network APIs take centre stage
    • Final thoughts
  • AI and automation: Opening up access to operational data
    • Gathering up of end-to-end data across multiple-domains
    • Support for network automations
    • Data for external use
    • Key takeaways

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Transport and logistics: The role of private 4G/5G

A deep-dive into the transport and logistics sector

This report is a deep-dive into the transport and logistics vertical for private 4G/5G (P5G) cellular networks. It is intended to be both a specific examination of an important sector of opportunity for P5G and a more general example of the complexity of major industrial sectors, especially campus-based or larger-scale dedicated environments. It also covers opportunities for MNOs, and some of the public 5G angles, with additional references to alternative wireless networks such as Wi-Fi and satellite connectivity.

Often technology product and marketing executives think of industry sectors as monolithic (“finance”, “retail”, “oil and gas”, etc.), typically aligning with familiar industry classification codes. The truth is that each industry has multiple sub-sectors and varied site types, numerous applications, several user-groups, arrays of legacy systems and technology vendors, and differing attitudes and affordability of wireless solutions. This is especially true of transport and logistics, where railway stations share only limited technology or use case overlap with airports, or distribution warehouses.

The transport sector is further complicated by its overlap with the public sector – not only does it constitute an important part of countries’ critical national infrastructure, but in many cases major transport firms have a history of state ownership, or are still owned and run by governments today.

There are also numerous sector-specific regulatory angles, which often translate to conservatism about technology, and a tendency to develop custom solutions and standards. Investment cycles can be very long and sometimes politicised, with assets often expected to be in place for decades. On the positive side, the strategic importance of transport can mean that the sector receives special attention in areas such as spectrum allocations.

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Definition of the transport and logistics sector

There are numerous transport and logistics sub-sectors and site types covered in this report. Although there are some common features and market drivers, there are also clear differences in locations’ physical size and layout, as well as equipment and application platforms, legacy/alternative wireless technologies, regulatory oversight and technology conservatism.

Multiple sub-sectors for transport / logistics vertical

The key domains covered include:

  • Transportation hubs, which refers to sites like ports, airports, stations and railyards. They vary significantly in size.
  • Logistics, which relates to the centralised facilities for shipping, storage and sorting of containers and packages, such as warehouses and fulfilment / distribution centres. It also encompasses the wide-area / global transport of containers, packages and bulk products on trucks, trains and ships.
  • Transport networks including rail networks, metropolitan transit and light-rail systems, and road networks.

There are also often hybrid sites, such as FedEx’s huge logistics hub sites next to Memphis and Indianapolis airports.

In addition, there is also significant overlap with various other sectors, such as major manufacturing sites. For instance, aerospace manufacture and maintenance typically occurs at combined factories/airfields such as Boeing and Airbus’ facilities. Similar combined operations occur in ship-building and train production. Mining, steel and cement companies may even have their own private rail-lines, from remote sites or industrial zones, to multi-modal transit hubs at ports or cities.

For logistics sites, it should be noted that many facility owners also have large retail networks (such as Costco and Walmart), or other sites such as Amazon’s AWS datacentres. Those ancillary operations and their specific applications are not directly included here.

For metropolitan transit, various transport-related facilities may be under the ownership or control of local government and municipal bodies. Similar overlaps between transport-related sites and government occur for military, public safety and other agencies.

Transport / logistics intersects with several adjacent verticals

Sector trends and drivers affecting private networks

This report is not the appropriate venue for a full analysis of the transport and logistics industry, which is made up of multiple sub-sectors, as discussed above.

However, the demand for private networks for these sectors is ultimately driven by a number of top-level national and global changes, in addition to certain local factors such as political support for new metro transit systems, “free ports” or enterprise zones, or efforts to modernise railway networks.

Broadly speaking, these all create a greater requirement for connectivity, control and information flows – which then translates to more 4G and 5G networks, as well as Wi-Fi, fibre and wide-area network services. There are also various new greenfield infrastructure projects, which lend themselves well to ground-up design of fit-for-purpose communications systems.

Some of the key megatrends spanning all aspects of logistics and transportation include:

  • Automation and robotics: As discussed throughout this report, transport hubs and warehouses are becoming much more automated. Although mechanisation via port cranes, baggage-handling systems and automated guided vehicles is not new, the systems are being enhanced rapidly. In particular, sorting or control systems, robots and other forms of automation are using wireless video cameras for detecting packages, enabling remote-control by tele-operators and many other uses.
  • Data and analytics: Transport and logistics companies are at the forefront of data-rich applications, from digital twins of jet engines and rail locomotives, to optimised scheduling and packaging of goods in fulfilment warehouses. Better-connected equipment, IoT sensors and video input can improve turnaround times, reduce shipment errors, reduce energy consumption and much more. Passenger-led transportation should face fewer delays, more dispersed crowds and improved customer service.
  • Predictive maintenance and asset management: Transport systems are capital-intensive. The cost of downtime for a vehicle – or critical system in a warehouse or airport terminal – can be huge. There is a huge opportunity for using networked information and sensors to enable predictive maintenance – i.e. fixing emergent problems before they become critical, or scheduling regular maintenance when it is needed rather than just based on a generic schedule. For instance, anomalous readings from vibration and temperature sensors can give early warnings of issues. There are also obvious safety benefits in areas such as aviation and maritime fault-diagnosis.
  • Improved employee safety and productivity: There is far less tolerance of industrial accidents than in the past. Using automation and better information, transportation and logistics firms are looking to increase worker productivity at the same time as improving safety. This spans many aspects, from ensuring safe distances between workers and vehicles, to rapid reaction to any incident, plus improved recordkeeping and training. Reliable communication is essential, using both voice (often push-to-talk) and an increasing need for video communications and mobile access to enterprise application.
  • Climate change and decarbonisation: Over the next decade, many transport and logistics businesses will face profound change as the planet heads towards net zero carbon emissions. Ports, airports, distribution centres and other sites are likely to need new electrical sources such as wind and solar, onsite battery storage, maybe hydrogen facilities and fleets of electric (often autonomous) site vehicles and machines. Connectivity will be needed for all of this, plus energy use monitoring, control, data-collection and reporting.
  • Geopolitics, re-shoring and supply-chain resilience: Recent events such as the US-China trade war, the COVID pandemic and the Russia/Ukraine war have highlighted the risks of global (and often fragile) supply chains to disruptive external events. Traffic and passenger levels at many airports fell to 20% of pre-pandemic levels or lower. While demand is now recovering in many places, other issues have emerged as well – from economic fluctuations, to fuel price inflation and staffing shortages. As well as localised production, shipping and logistics will need to be much more efficient, automated and connected in order to re-route shipments, store inventory and deal with new paperwork and compliance requirements.
  • Cybersecurity: Transport hubs and warehouses are part of national critical infrastructure. The rise of automation and cloud-based functions poses security challenges as well as gains from efficiency. Old IT, network and operational systems will be strengthened or retired if they have vulnerabilities, while networks will need extra resilience and redundancy. Wireless networks may be used as backups in case of failure of fibre or other links.
  • New business models and vertical integration: Many transport companies are looking to extend their reach into adjacent industries, or via vertical integration within their own domain. Companies such as FedEx and UPS, as well as eCommerce players such as Amazon, have their own fleets of planes and on- or near-airport warehouse facilities. Rail companies are exploring new mixed use retail and office properties integrated with stations. Some are deploying dedicated energy infrastructure, ranging from solar farms to hydrogen electrolysis. All these facilities may be built as greenfield developments, with the project considering the latest connectivity options for IoT or other uses.
  • Enhanced customer / passenger experience: Both individual travellers and freight shippers have an expanded set of choices for travel and transport of goods. They make decisions not just on price, but also reliability / predictability, as well as up-to-date information about status and disruptions. There are expectations for easy Internet access, online portals for reservation and check-in, use of digital sign-boards onsite, accurate cargo tracking and condition-monitoring, simpler border and customs processes, and safe/secure travel environments. They also expect multi-modal transport to be made easier, with interchanges made more convenient and transparent for both goods and personal travel.

Transport / logistics megatrends and implications for connectivity

Source: STL Partners

Table of content

  • Executive Summary
    • Overview
    • Recommendations for traditional mobile operators
    • Recommendations for transportation operators
    • Recommendations for logistics companies
    • Recommendations for regulators and policymakers
    • Recommendations for vendors
  • Introduction
    • Definition of the transport and logistics sector
    • Sector trends and drivers affecting private networks
  • Use cases for 4G/5G in transport and logistics
    • Scale of transport sites and private networks
    • General use cases for private 5G in transport / logistics
    • Sector-specific issues and use cases for private networks
  • Building and running transport private networks
    • Supply-side evolution
    • Private vs. public cellular networks in transport
    • New service provider classes and delivery models
    • The vendor landscape
    • Regulatory and policymaking considerations
    • Wi-Fi, satellite and other wireless technologies
  • Conclusions and recommendations
    • Conclusion and long-term futures
    • Takeouts for traditional MNOs and telcos

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Capturing the 5G SA opportunity: towards a multi-vendor approach

The 5G SA opportunity

5G SA is an exciting prospect for telecoms operators. With many operators’ revenues from traditional connectivity beginning to stagnate, or even decline, there is increased pressure for operators to create differentiation and offer new services, including by expanding across the value chain from connectivity-only providers.

STL Partners has described this new era, whereby operators must shift their business models to adapt to the new demands, as the Coordination Age 2. From the 1850s until around 1990, the Communications Age enabled people to communicate over long distances via telephony. Next came the Information Age, in which people could directly access content and applications, increasingly provided by non-telecommunications players. In the Coordination Age, ‘things’ are increasingly connecting to other ‘things’, leading to an exponential increase in volumes of data, but thanks to advanced analytics and artificial intelligence (AI) we can also address some of the most pressing issues facing the world today: ensuring resource efficiency and improving productivity to help us to do more with less.

Operators need to define their role in the emerging coordination age


Source: STL Partners

Transitioning to the Coordination Age requires operators to shift their goals and business models accordingly. Operators will need to offer or enable tightly coupled network services and applications to different industries, and continue to refresh, optimise and scale at an unprecedented rate.

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The transformative potential of 5G SA

5G SA, in comparison to its NSA counterpart, is the evolution of 5G that can deliver on the promises associated with the next generation of cellular networking. 5G SA is intended to be cloud native and adopt cloud-native principles. Without SA, 5G networks are less able to quickly launch new services, enable new use cases, or introduce more scalable, automated operating models.

The opportunities to which 5G SA is expected to give rise have been explored extensively in previous STL research. The ‘full potential’ of 5G SA includes promises around higher throughput, greater capacity, the ability to leverage enhanced mobile broadband (eMBB), ultra-reliable low latency communications (URLLC), and massive machine type communications (mMTC). In summary; do more (including enabling more connections at any given time), faster (down to a latency of a few milliseconds) and at a lower cost (through a variety of actors, including lower power consumption than 4G). These new capabilities are exciting for operators: enabling operators to develop powerful new applications for their customers with truly differentiated use cases.

One particular opportunity that 5G SA represents is network slicing. Slicing can be defined as ‘a mechanism to create and dynamically manage functionally discrete, virtualised networks over a common infrastructure,’ and has been the subject of several STL reports. The increased flexibility and agility of network slicing can enable operators to provide unique policies and differentiated services to their enterprise customers and recoup the substantial investments that rolling out 5G SA requires. However, the benefits and opportunities of 5G SA have implications far beyond the new services it can enable. For the first time, 5G is cloud-native by design, with modular service-based architecture giving
rise to greater flexibility and programmability. Furthermore, it leverages IT concepts of virtualization, cloudification, and DevOps processes. This does not so much enable as actively encourage a more agile operating model. Some of the exciting features of 5G SA include:

  • Automation – Increased automation throughout the network, including deployment, orchestration, assurance, and optimisation can give rise to “zero touch” networks that do not require human intervention, and can self repair and update autonomously on an ongoing basis. The aim of network automation is to reduce human error and the time taken to resolve issues through closed-loop network assurance.
  • Disaggregation – Relies on an open standard network operating system whereby different functional components of networking equipment can be deployed individually and then combined in a modular, fit for purpose way, to suit the requirements of an operator’s network. This architecture relies on the interworking between the multi-vendor components within the 5G core. Disaggregation can allow vendors to offer best in class capabilities for each individual component, providing operators with unprecedented choice and customizability.
  • Avoiding vendor lock-in through a diversified supply base – One of the key benefits of a disaggregated approach to the 5G core is to break vendor lock-in that has tended to dominate legacy approaches. Vendor lock-in can be a key limitation on the speed of innovation and service deployment.
  • Agility – Adopting a continuous improvement and development means accelerated innovation and speed of deployment. A software-orientated infrastructure can enable changes in business processes such as product development management to happen at a greater pace and speed time to market for new revenue generating products and features.
  • Scalability through adopting ‘hyperscale economics’ – Explored by STL Partners in previous research, this term describes the emulation of business and software practices developed by hyperscalers to deliver service innovation at scale whilst simultaneously reducing the level of capex relative to revenue.

Cloud native is the only way to truly unlock the benefits of 5G thanks to the automation, efficiency,
optimisation and mode of delivery that it enables. Ultimately, it allows operators to maximise the
opportunity of 5G to develop differentiated services to consumer and enterprises customers.

 

Table of Contents:

  • Executive Summary
    • Recommendations
  • Preface
  • The 5G SA opportunity
    • The transformative potential of 5G SA
    • 5G SA requires operators to develop and foster a new set of skills
    • Some open questions remain around 5G SA
  • The early adopter 5G SA landscape
    • Orange
    • Vodafone
    • Dish
  • Tier 2 and Tier 3 operator approaches to 5G SA
    • Adherents to a single vendor approach
    • Proponents of a multi-vendor approach
    • Several factors can influence an operators’ vendor strategy
  • Recommendations

Related research

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Telecoms 2023: Meaningful growth in challenging times

The key pillars to change and growth 

Ten years from today, telcos could find themselves growing into national or regional champions of connected technologies, working with enterprises and governments to help the world run better. Or, they may find themselves becoming marginalised, with shrinking relationships with their customers, consigned to corners of the IT market specialising in low-cost connectivity. To establish a clear path to the more desirable option one, and sustainable growth, telcos need to commit to a long-term strategy that will require fundamental changes to their business. A long-term strategy that: 

  • Prioritises service innovation through strong investment in research and development 
  • Funds ongoing innovation by shifting away from the established capex heavy financial model 
  • Re-orientates company systems and culture to become an effective ecosystem player, adaptable and open to multiple ecosystem roles and business models. 

Commitment to this kind of strategy should happen now if it hasn’t already. But current macro-economic and societal challenges may make this focus difficult to achieve. Telcos need to find a way to deal with more immediate turmoil and challenges, and be ready to seize any opportunities they present, while also progressing towards their long-term goals. 

STL believes that the Coordination Age offers telcos a new context for growth. It is built upon demand for more flexible availability and more efficient use of all types of resources (energy, labour, time, etc), combined with multiple new technologies and capabilities (5G, fibre, AI, automation, virtualisation) approaching maturity. The resulting paradigm sees customers demanding coordinated outcomes and experiences, enabled through collaborative ecosystems, with business models spanning the digital and physical world. It is the context within which telcos can hope to become the champions of connected technologies helping the world run better mentioned earlier. 

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Figure 1: The Coordination Age thrives on innovation 

Source: STL Partners 

More immediate concerns – the energy crisis, high inflation, possible recession, the still lurking threat of new covid strains, war, climate change – demand immediate attention. Please see our Beating the crash: What’s coming? report for more details. For all that these can crowd out focus on a more long-term growth strategy and a drive to change the role and meaning of telecoms in society, these factors are actually accelerating changes and mean that a Coordination Age approach is needed more urgently. 

Figure 2: Accelerating changes means the Coordination is now a “must have” 

Source: STL Partners 

Telcos’ national scope and assets mean that they are well placed to take advantage of some of the new opportunities, boosting growth. But they are large and complex businesses with many departments and initiatives to co-ordinate, and broad organisational strategy has to be applied in different areas with a variety of specific goals and capabilities. In this report, STL addresses seven key strategic areas: transformation; consumer; enterprise; edge computing; networks; telco cloud; and sustainability. In each, we present our detailed assessment of how telcos can and should address current challenges and seize new growth opportunities, while building towards long term success in the Coordination Age, and how current and ongoing STL research can provide support and guidance. 

Table of Contents

  • Executive Summary 
  • The key pillars to change and growth
  • Transformation: How to adapt faster and better, collectively
    • Why does transformation matter?
    • Why is transformation difficult for telcos?
    • How telcos can operationalise adaptability
    • What must telcos do to capitalise on the adaptive opportunity?
  • Consumer: (Re)engaging through new needs
    • Why does the consumer business matter?
    • What challenges are telcos facing in the consumer market?
    • A three-pronged approach to winning with consumers
  • Enterprise: Becoming a transformative partner
    • Why does enterprise matter?
    • What challenges is the industry facing in enterprise?
    • What are the potential opportunities?
    • What must telcos do to capture the opportunities?
  • Edge computing: Getting compute to where the customer needs it
    • Why does edge computing matter?
    • The key challenges and opportunities the in edge market
    • So where to invest?
    • What must telcos (and others) do to capture the opportunities?
  • Networks: Developing and delivering the best tool for the job
    • The key challenge: Moving to a world of “network diversity”
    • It’s not about 5G, but the best tool for the job
    • What are the potential opportunities?
  • Telco cloud: Making the fabric customer-adaptable
    • Why does telco cloud matter?
    • What challenges is the industry facing in telco cloud?
    • What must telcos (and others) do to capture the opportunities?
  • Sustainability: Making it relevant for everyone
    • Why does sustainability matter?
    • What challenges is the industry facing in sustainability?
    • What are the potential opportunities?
    • How to move the industry forward on sustainability
  • Conclusion

Related research

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Network edge capacity forecast: The role of hyperscalers

Developers need to see sufficient edge capacity

Edge computing comprises a spectrum of potential locations and technologies designed to bring processing power closer to the end-device and source of data, outside of a central data centre or cloud. This report focuses on forecasting capacity at the network edge – i.e. edge computing at edge data centres owned (and usually operated) by telecoms operators. ​

This forecast models capacity at these sites for non-RAN workloads. In other words, processing for enterprise or consumer applications and the distributed core network functions required to support them. We cover forecasts on RAN as part of our Telco Cloud research services portfolio.

Forecast scope in terms of edge locations and workload types

Source: STL Partners

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The output of the forecast focuses on capacity: number of edge data centres and servers

STL Partners has always argued that for network edge to take off, developers and enterprises need to see sufficient edge capacity to transform their applications to leverage its benefits at scale. The forecast seeks to provide an indication for how this will grow over the next five years, by predicting the number of edge data centres owned by telecoms operators and how many servers they plan to fill these up with.​

Hardware vendors have been evolving their server portfolios for a number of years to fit the needs of the telecoms industry. This started with core network virtualisation, as the industry moved away from an appliance-based model to using common-off-the-shelf hardware to support the virtualised LTE core.​

As infrastructure moves “deeper” into the edge, the requirements for servers will change. Servers at RAN base stations will not have full data centre structures, but need to be self-contained and ruggedised. ​

However, at this stage of the market’s maturity, most servers at the network edge will be in data centre-like facilities. ​

There are three key factors determining a telco’s approach and timing for its edge computing data centres

Telecoms operators want to build their network edge capacity where there is demand. In general, the approach has been to create a deployment strategy for network edge data centres that guarantees a level of (low) latency for a certain level of population coverage. In interviews with operators, this has often ranged from 90-99% of the population experiencing sub-10 to 20 millisecond roundtrip latency for applications hosted at their network edge.​

The resultant distribution of edge capacity will therefore be impacted by the spread of the population, the size of the country and the telecoms operator’s network topology. For example, in well connected, small countries, such as the Netherlands, low latencies are already achievable with the current networks and location of centralised data centres.

Key factors determining network edge build​

Source: STL Partners

The actual number of sites and speed at which a telecoms operator deploys these sites is driven by three main factors: ​

Factor 1: edge computing strategy;​

Factor 2: the speed at which it has or will deploy 5G (if it is a mobile operator);​

Factor 3: the country’s geographic profile.​

Details on the evidence for the individual factors can be found in the inaugural report, Forecasting capacity of network edge computing.

Table of contents

  • Executive summary
  • Introduction to the forecast
  • Key findings this year
  • Regional deep-dives
  • Role of hyperscalers
  • Conclusions
  • Appendix: Methodology

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5G standalone (SA) core: Why and how telcos should keep going

Major 5G Standalone deployments are experiencing delays…

There is a widespread opinion among telco industry watchers that deployments of the 5G Standalone (SA) core are taking longer than originally expected. It is certainly the case that some of the world’s leading operators, and telco cloud innovators, are taking their time over these deployments, as illustrated below:

  • AT&T: Has no current, publicly announced deadline for launching its 5G SA core, which was originally expected to be deployed in mid-2021.
  • Deutsche Telekom: Launched an SA core in Germany on a trial basis in September 2022, having previously acknowledged that SA was taking longer than originally expected. In Europe, the only other opco that is advancing towards commercial deployment is Magenta Telekom in Austria. In 2021, the company cited various delay factors, such as 5G SA not being technically mature enough to fulfil customers’ expectations (on speed and latency), and a lack of consumer devices supporting 5G SA.
  • Rakuten Mobile: Was expected to launch an SA core co-developed with NEC in 2021. But at the time of writing, this had still not launched.
  • SK Telecom: Was originally expected to launch a Samsung-provided SA core in 2020. However, in November 2021, it was announced that SK Telecom would deploy an Ericsson converged Non-standalone (NSA) / SA core. By the time of writing, this had still not taken place.
  • Telefónica: Has carried out extensive tests and pilots of 5G SA to support different use cases but has no publicly announced timetable for launching the technology commercially.
  • Verizon: Originally planned to launch its SA core at the end of 2021. But this was pushed back to 2022; and recent pronouncements by the company indicate a launch of commercial services over the SA core only in 2023.
  • Vodafone: Has launched SA in Germany only, not in any of its other markets; and even then, nationwide SA coverage is not expected until 2025. An SA core is, however, expected to be launched in Portugal in the near future, although no definite deadline has been announced. A ‘commercial pilot’ in three UK cities, launched in June 2021, had still not resulted in a full commercial deployment by the time of writing.

…but other MNOs are making rapid progress

In contrast to the above catalogue of delay, several other leading operators have made considerable progress with their standalone deployments:

  • DISH: Launched its SA core- and open RAN-based network in the US, operated entirely over the AWS cloud, in May 2022. The initial population coverage of the network was required to be 20%. This is supposed to rise to 70% by June 2023.
  • Orange: Proceeding with a Europe-wide roll-out, with six markets expected to go live with SA cores in 2023.
  • Saudi Telecom Company (STC): Has launched SA services in two international markets, Kuwait (May 2021) and Bahrain (May 2022). Preparations for a launch in Saudi Arabia were ongoing at the time of writing.
  • Telekom Austria Group (A1): Rolling out SA cores across four markets in Central Europe (Bulgaria, Croatia, Serbia and Slovenia), although no announcement has been made regarding a similar deployment in its home market of Austria. In June 2022, A1 also carried out a PoC of end-to-end, SA core-enabled network slicing, in partnership with Amdocs.
  • T-Mobile US: Has reportedly migrated all of its mobile broadband traffic over to its SA core, which was launched back in 2020. It also launched one of the world’s first voice-over-New Radio (VoNR) services, run over the SA core, in parts of two cities in June 2022.
  • Zain (Kuwait): Launched SA in Saudi Arabia in February 2022, while a deployment in its home market was ongoing at the time of writing.
  • There are also a number of trials, and prospective and actual deployments, of SA cores over the public cloud in Europe. These are serving the macro network, not edge or private-networking use cases. The most notable examples include Magenta Telekom (Deutsche Telekom’s Austrian subsidiary, partnering with Google Cloud); Swisscom (partnering with AWS); and Working Group Two (wgtwo) – a Cisco and Telenor spin-off – that offers a multi-tenant, cloud-native 5G core delivered to third-party MNOs and MVNOs via the AWS cloud.
  • The three established Chinese MNOs are all making rapid progress with their 5G SA roll-outs, having launched in either 2020 (China Telecom and China Unicom) or 2021 (China Mobile). The country’s newly launched, fourth national player, Broadnet, is also rolling out SA. However, it is not publicly known what share of the country’s reported 848 million-odd 5G subscribers (at March 2022) were connected to SA cores.
  • At least eight other APAC operators had launched 5G SA-based services by July 2022, including KT in South Korea, NTT Docomo and SoftBank in Japan and Smart in the Philippines.

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Many standalone deployments in the offing – but few fixed deadlines

So, 5G standalone deployments are definitely a mixed bag: leading operators in APAC, Europe, the Middle East and North America are deploying and have launched at scale, while other leading players in the same regions have delayed launches, including some of the telcos that have helped drive telco cloud as a whole over the past few years, e.g. AT&T, Deutsche Telekom, Rakuten, Telefónica and Vodafone.

In the July 2022 update to our Telco Cloud Deployment Tracker, which contained a ‘deep dive’ on 5G core roll-outs, we presented an optimistic picture of 5G SA deployments. We pointed out that the number of SA and converged NSA / SA cores. We expect to be launched in 2022 outnumbered the total of NSA deployments. However, as illustrated in the figure below, SA and converged NSA/SA cores are still the minority of all 5G cores (29% in total).

We should also point out that some of the SA and converged NSA / SA deployments shown in the figure below are still in progress and some will continue to be so in 2023. In other words, the launch of these core networks has been announced and we have therefore logged them in our tracker, but we expect that the corresponding deployments will be completed in the remainder of 2022 or in 2023, based on a reasonable, typical gap between when the deployments are publicly announced and the time it normally takes to complete them. If, however, more of these predicted deployments are delayed as per the roll-outs of some of leading players listed above, then we will need to revise down our 2022 and 2023 totals.

Global 5G core networks by type, 2018 to 2023

 

Source: STL Partners

Table of contents

  • Executive Summary
  • Introduction
    • Major 5G Standalone deployments are experiencing delays
    • …but other MNOs are making rapid progress
    • Many SA deployments in the offing – but few fixed deadlines
  • What is holding up deployments?
    • Mass-market use cases are not yet mature
    • Enterprise use cases exploiting an SA core are not established
    • Business model and ROI uncertainty for 5G SA
    • Uncertainty about the role of hyperscalers
    • Coordination of investments in 5G SA with those in open RAN
    • MNO process and organisation must evolve to exploit 5G SA
  • 5G SA progress will unlock opportunities
    • Build out coverage to improve ‘commodity’ services
    • Be first to roll out 5G SA in the national market
    • For brownfield deployments, incrementally evolve towards SA
    • Greenfield deployments
    • Carefully elaborate deployment models on hyperscale cloud
    • Work through process and organisational change
  • Conclusion: 5G SA will enable transformation

    Related research

    Previous STL Partners reports aligned to this topic include:

  • Telco Cloud Deployment Tracker: 5G core deep dive
  • Telco cloud: short-term pain, long-term gain
  • Telco Cloud Deployment Tracker: 5G standalone and RAN

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Pursuing hyperscale economics

The promise of hyperscale economics

Managing demands and disruption

As telecoms operators move to more advanced, data intensive services enabled by 5G, fibre to the X (FTTX) and other value-added services, they are looking to build the capabilities to support the growing demands on the network. However, in most cases, telco operators are expanding their own capabilities in such a way that results in their costs increasing in line with their capabilities.

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This is becoming an increasingly pressing issue given the commoditisation of traditional connectivity services and changing competitive dynamics from within and outside the telecoms industry. Telcos are facing stagnating or declining ARPUs within the telecoms sector as price becomes the competitive weapon and service differentiation of connectivity services diminishes.A

The competitive landscape within the telecoms industry is also becoming much more dynamic, with differences in progress made by telecoms operators adopting cloud-native technologies from a new ecosystem of vendors. At the same time, the rate of innovation is accelerating and revenue shares are being eroded due to the changes in the competitive landscape and the emergence of new competitors, including:

  • Greenfield operators like DISH and Rakuten;
  • More software-centric digital enterprise service providers that provide advanced innovative applications and services;
  • Content and SaaS players and the hyperscale cloud providers, such as AWS, Microsoft and Google, as well as the likes of Netflix and Disney.

We are in another transition period in the telco space. We’ve made a lot of mess in the past, but now everyone is talking about cloud-native and containers which gives us an opportunity to start over based on the lessons we‘ve learned.

VP Cloudified Production, European converged operator 1

Even for incumbents or established challengers in more closed and stable markets where connectivity revenues are still growing, there is still a risk of complacency for these telcos. Markets with limited historic competition and high barriers to entry can be prone to major systemic shocks or sudden unexpected changes to the market environment such as government policy, new 5G entrants or regulatory changes that mandate for structural separation.

Source:  Company accounts, stock market data; STL Partners analysis

Note: The data for the Telecoms industry covers 165 global telecoms operators

Telecoms industry seeking hyperscaler growth

The telecoms industry’s response to threats has traditionally been to invest in better networks to differentiate but networks have become increasingly commoditised. Telcos can no longer extract value from services that exclusively run on telecoms networks. In other words, the defensive moat has been breached and owning fibre or spectrum is not sufficient to provide an advantage. The value has now shifted from capital expenditure to the network-independent services that run over networks. The capital markets therefore believe it is the service innovators – content and SaaS players and internet giants such as Amazon, Microsoft or Apple – that will capture future revenue and profit growth, rather than telecoms operators. However, with 5G, edge computing and telco cloud, there has been a resurgence in interest in more integration between applications and the networks they run over to leverage greater network intelligence and insight to deliver enhanced outcomes.

Defining telcos’ roles in the Coordination Age

Given that the need for connectivity is not going away but the value is not going to grow, telcos are now faced with the challenge of figuring out what their new role and purpose is within the Coordination Age, and how they can leverage their capabilities to provide unique value in a more ecosystem-centric B2B2X environment.

Success in the Coordination Age requires more from the network than ever before, with a greater need for applications to interface and integrate with the networks they run over and to serve not only customers but also new types of partners. This calls for the need to not only move to more flexible, cost-effective and scalable networks and operations, but also the need to deliver value higher up in the value chain to enable further differentiation and growth.

Telcos can either define themselves as a retail business selling mobile and last mile connectivity, or figure out how to work more closely with demanding partners and customers to provide greater value. It is not just about scale or volume, but about the competitive environment. At the end of the day, telcos need to prepare for the capabilities to do innovative things like dynamic slicing.

Group Executive, Product and Technology, Asia Pacific operator

Responding to the pace of change

The introduction of cloud-native technologies and the promise of software-centric networking has the potential to (again) significantly disrupt the market and change the pace of innovation. For example, the hyperscale cloud providers have already disrupted the IT industry and are seen simultaneously as a threat, potential partners and as a model example for operators to adopt. More significantly, they have been able to achieve significant growth whilst still maintaining their agile operations, culture and mindset.

With the hyperscalers now seeking to play a bigger role in the network, many telco operators are looking to understand how they should respond in light of this change of pace, otherwise run the risk of being relegated to being just the connectivity provider or the ‘dumb pipe’.

Our report seeks to address the following key question:

Can telecoms operators realistically pursue hyperscale economics by adopting some of the hyperscaler technologies and practices, and if so, how?

Our findings in this report are based on an interview programme with 14 key leaders from telecoms operators globally, conducted from June to August 2021. Our participant group spans across different regions, operator types and types of roles within the organisation.

Related research

Fibre for 5G and edge: Who does it and how to build it?

Opportunities for fibre network operators

4G/5G densification and the growth in edge end points will place fresh demands on telecoms network infrastructure to deliver high bandwidth connections to new locations. Many of these will be sites on the streets of urban centres without existing connections, where installation of new fibre cables is costly. This will require careful planning and optimum selection of existing infrastructure to minimise costs and strengthen the business cases for fibre deployment.

While much of the growth in deployment of small cells and edge end points will be on private sites, their deployment in public areas, in support of public network services, will pose specific challenges to providing the broad bandwidth connectivity required. This includes both backhaul from cell sites and edge end points to the fibre transport network, plus any fronthaul needs for new open RAN deployments, from baseband equipment to radio units and antennas. In almost all cases this will entail installing new fibre in areas where laying a new duct is at its most expensive, although in a few cases fixed point-to-point radio links could be deployed instead.

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Global deployments of small cells and non-telco edge end points
in public areas

Source: Small Cell Forum, STL research and analysis

In addition, operators of 5G small cells and public cloud edge sites will require access to fibre links for backhaul to their core networks to provide the high bandwidths required. In some cases, they may need multiple fibres, especially if diverse paths are needed for security and resilience purposes.

Many newer networks have been built for a specific purpose, such as residential or business FTTP. Others are trunk routes to connect large businesses and data centres, and may serve local, regional, national or international areas. In addition, changing regulations have encouraged the creation of new businesses such as neutral hosts (also called “open access” for wholesale fibre) and, as a result, the supply side of the market is composed of an increasing variety of players. If this pattern were to continue, then it would very likely prove uneconomic to build dedicated networks for some applications, such as small cell densification or some standalone edge applications.

However, provided build qualities meet the required standard and costs can be contained there is no reason why networks deployed to address one market cannot be extended and repurposed to serve others. For new fibre builds being planned, it is also important to consider these new FTTX opportunities upfront and in some detail, rather than as an afterthought or just a throw-away bullet point on investor slide-decks.  

This report looks at the opportunities these developments offer to fibre network operators and considers the business cases that need to be made. It looks at the means and scope for minimising costs necessary to profitably satisfy the widest range of needs.

The fibre market is changing

FTTH/P has been largely satisfied in many countries, and even in slower markets such as the UK and Germany, the bulk of the network is expected to be in place by 2025/6 for most urban premises, at least on the basis of “homes passed”, if not actually connected.

By contrast the requirement of higher bandwidth connectivity for mobile base stations being upgraded from 3G to 4G and 5G is current and ongoing. Demand for links to small cells needed to support 5G densification, standalone edge, and smart city applications is only just beginning to appear and is likely to develop significantly over the next 10 years or more. In future high speed broadband links will be required to support an increasing range of applications for different organisations: for example, autonomous and semi-autonomous vehicle (V2X) applications operated by government or city authorities.

Both densification and edge will need local connections for fronthaul and backhaul as well as longer connections to provide backhaul to the core network. Building from scratch is expensive owing to the high costs associated with digging in the public highway, especially in urban centres. Digging can be complex, depending on the surfaces and buried services encountered, and extensions after the initial main build can be very expensive.

Laying fibre and ducts are a long-term investment and can usually be amortised over 15 to 20 years.  Nevertheless, network operators need to be sure of a good return on their investment and therefore need to find ways to minimise costs while maximising revenues. In markets with multiple players, there will also be a desire by potential acquisition targets to underscore their valuations, by maximising their addressable market, while reducing any post-merger remedial or expansion costs. Good planning, including watching for new opportunities and trends and the smart use of existing assets to minimise costs, can help ensure this.

  • Serving multiple markets through good forecasting and planning can help maximise revenues.
  • Operators and others can make use of various infrastructure assets to reduce costs, including incumbents’ physical duct/pole infrastructure sewers, disused water and hydraulic pipes, neutral hosts’ networks, council ducts, and traffic management ducts. Obviously these will not extend everywhere that fibre is required, but can make a meaningful contribution in many situations.

The remaining sections of this report examine in more detail the specific opportunities offered to fixed network operators, by densification of mobile base stations and growth of edge computing. It covers:

  • Market demand, including drivers of demand, and end users’ and the industry’s needs and options
  • The changing supply side and regulation
  • Technologies, build options and costs
  • How to maximise revenues and returns on investment.

Table of Contents

  • Executive Summary
  • Introduction
    • The fibre market is changing
  • Small cell and edge: Demand
    • Demand for small cells
    • Demand for edge end points
  • Small cell and edge: Supply
    • The changing network supply structure
  • Build options
    • Pros and cons of seven building options
  • How do they compare on costs?
  • Impact of regulation and policy
  • How to mitigate unforeseen costs
  • The business case
  • Conclusions
  • Index

Related Research

 

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Will web 3.0 change the role of telcos?

Introduction

Over the past 12 months or so, the notion that the Internet is about to see another paradigm shift has received a lot of airtime. Amid all the dissatisfaction with way the Internet works today, the concept of a web 3.0 is gaining traction. At a very basic level, web 3.0 is about using blockchains (distributed ledgers) to bring about the decentralisation of computing power, resources, data and rewards.

STL Partners has written extensively about the emergence of blockchains and the opportunities they present for telcos. But this report takes a different perspective – it considers whether blockchains and the decentralisation they embody will fix the public Internet’s flaws and usher in a new era of competition and innovation. It also explores the potential role of telcos in reinventing the web in this way and whether it is in their interests to support the web 3.0 movement or protect the status quo.

Our landmark report The Coordination Age: A third age of telecoms explained how reliable and ubiquitous connectivity can enable companies and consumers to use digital technologies to efficiently allocate and source assets and resources. In the case of web 3.0, telcos could help develop solutions and services that can help bridge the gap between the fully decentralised vision of libertarians and governments’ desire to retain control and regulate the digital world.

As it considers the opportunities for telcos, this report draws on the experiences and actions of Deutsche Telekom, Telefónica and Vodafone. It also builds on previous STL Partners reports including:

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What do we mean by web 3.0?

The term web 3.0 is widely used to refer to the next step change in the evolution of the Internet. For some stakeholders, it is about the integration of the physical world and the digital world through the expansion of the Internet of Things, the widespread use of digital twins and augmented reality and virtual reality. This concept, which involves the capture and the processing of vast amounts of real-time, real-world data, is sometimes known as the spatial web.

While recognising the emergence of a spatial web, Nokia, for example, has defined web 3.0 as a “visually dynamic smart web” that harness artificial intelligence (AI) and machine learning (ML). It describes web 3.0 as an evolution of a “semantic web” with capacity to understand knowledge and data. Nokia believes that greater interconnectivity between machine-readable data and support for the evolution of AI and ML across “a distributed web” could remake ecommerce entirely.

Note, some of these concepts have been discussed for more than a decade. The Economist wrote about the semantic web in 2008, noting then that some people were trying to rebrand it web 3.0.

Today, the term web 3.0 is most widely used as a shorthand for a redistribution of power and data – the idea of decentralising the computation behind Internet services and the rewards that then ensue. Instead of being delivered primarily by major tech platforms, web 3.0 services would be delivered by widely-distributed computers owned by many different parties acting in concert and in line with specific protocols. These parties would be rewarded for the work that their computers do.

This report will focus primarily on the latter definition. However, the different web 3.0 concepts can be linked. Some commentators would argue that the vibrancy and ultimate success of the spatial web will depend on decentralisation. That’s because processing the real-world data captured by a spatial web could confer extraordinary power to the centralised Internet platforms involved. Indeed, Deloitte has made that link (see graphic below).

In fact, one of the main drivers of the web 3.0 movement is a sense that a small number of tech platforms have too much power on today’s Internet. The contention is that the current web 2.0 model reinforces this position of dominance by funnelling more and more data through their servers, enabling them to stay ahead of competitors. For web 3.0 proponents, the remedy is to redistribute these data flows across many thousands of different computers owned by different entities.  This is typically accomplished using what is known as decentralised apps (dapps) running on a distributed ledger (often referred to as a blockchain), in which many different computers store the code and then record each related interaction/transaction.

The spatial web and web 3.0 – two sides of the same coin?

Spacial-web-Web3-Deloitte

Source: Deloitte

For many commentators, distributed ledgers are at the heart of web 3.0 because they enable the categorisation and storage of data without the need for any central points of control. In an article it published online, Nokia predicted new application providers will displace today’s tech giants with a highly distributed infrastructure in which users own and control their own data. “Where the platform economy gave birth to companies like Uber, Airbnb, Upwork, and Alibaba, web 3.0 technology is driving a new era in social organization,” Nokia argues. “Leveraging the convergence of AI, 5G telecommunications, and blockchain, the future of work in the post-COVID era is set to look very different from what we’re used to. As web 3.0 introduces a new information and communications infrastructure, it will drive new forms of distributed social organisation…Change at this scale could prove extremely challenging to established organisations, but many will adapt and prosper.”

Nokia appears to have published that article in March 2021, but the changes it predicted are likely to happen gradually over an extended period. Distributed ledgers or blockchains are far from mature and many of their flaws are still being addressed. But there is a growing consensus that they will play a significant role in the future of the Internet.

Nokia itself is hoping that the web 3.0 movement will lead to rising demand for programmable networks that developers can harness to support decentralised services and apps. In June 2022, the company published a podcast in which Jitin Bhandari, CTO of Cloud and Network Services at Nokia, discusses the concept of “network as code” by which he means the creation of a persona of the network that can be programmed by ecosystem developers and technology application partners “in domains of enterprise, in domains of web 2.0 and web 3.0 technologies, in domains of industry 4.0 applications, in scenarios of operational technology (OT) applications.”  Nokia envisions that 5G networks will be able to participate in what it calls distributed service chains – the interlinking of multiple service providers to create new value.

Although blockchains are widely associated with Bitcoin, they can enable much more than crypto-currencies. As a distributed computer, a blockchain can be used for multiple purposes – it can store the number of tokens in a wallet, the terms of a self-executing contract, or the code for a decentralised app.

As early as 2014, Gavin Wood, the founder of the popular Ethereum blockchain, laid out a vision that web 3.0 will enable users to exchange money and information on the web without employing a middleman, such as a bank or a tech company. As a result, people would have more control over their data and be able to sell it if they choose.

Today, Ethereum is one of the most widely used (and trusted) blockchains. It bills itself as a permissionless blockchain, which means no one controls access to the service – there are no gatekeepers.

Still, as the Ethereum web site acknowledges, there are several disadvantages to web 3.0 decentralisation, as well as advantages. The graphic below which draws on Ethereum’s views and STL analysis, summarises these pros and cons.

Table of Contents

  • Executive Summary
    • Three ways in which telcos can support web 3.0
    • Challenges facing web 3.0
  • Introduction
  • What do we mean by web 3.0?
    • Transparency versus privacy
    • The money and motivations behind web 3.0
    • Can content also be unbundled?
    • Smart contracts and automatic outcomes
    • Will we see decentralised autonomous organisations?
    • Who controls the user experience?
    • Web 3.0 development on the rise
  • The case against web 3.0
    • Are blockchains really the way forward?
    • Missteps and malign forces
  • Ironing out the wrinkles in blockchains
  • Could and should telcos help build web 3.0?
    • Validating blockchains
    • Telefónica: An interface to blockchains
    • Vodafone: Combining blockchains with the IoT
  • Conclusions

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Telco Cloud Deployment Tracker: 5G core deep dive

Deep dive: 5G core deployments 

In this July 2022 update to STL Partners’ Telco Cloud Deployment Tracker, we present granular information on 5G core launches. They fall into three categories:

  • 5G Non-standalone core (5G NSA core) deployments: The 5G NSA core (agreed as part of 3GPP Release in December 2017), involves using a virtualised and upgraded version of the existing 4G core (or EPC) to support 5G New Radio (NR) wireless transmission in tandem with existing LTE services. This was the first form of 5G to be launched and still accounts for 75% of all 5G core network deployments in our Tracker.
  • 5G Standalone core (5G SA core) deployments: The SA core is a completely new and 5G-only core. It has a simplified, cloud-native and distributed architecture, and is designed to support services and functions such as network slicing, Ultra-Reliable Low-Latency Communications (URLLC) and enhanced Machine-Type Communications (eMTC, i.e. massive IoT). Our Tracker indicates that the upcoming wave of 5G core deployments in 2022 and 2023 will be mostly 5G SA core.
  • Converged 5G NSA/SA core deployments: this is when a dual-mode NSA and SA platform is deployed; in most cases, the NSA core results from the upgrade of an existing LTE core (EPC) to support 5G signalling and radio. The principle behind a converged NSA/SA core is the ability to orchestrate different combinations of containerised network functions, and automatically and dynamically flip over from an NSA to an SA configuration, in tandem – for example – with other features and services such as Dynamic Spectrum Sharing and the needs of different network slices. For this reason, launching a converged NSA/SA platform is a marker of a more cloud-native approach in comparison with a simple 5G NSA launch. Ericsson is the most commonly found vendor for this type of platform with a handful coming from Huawei, Samsung and WorkingGroupTwo. Albeit interesting, converged 5G NSA/SA core deployments remain a minority (7% of all 5G core deployments over the 2018-2023 period) and most of our commentary will therefore focus on 5G NSA and 5G SA core launches.

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75% of 5G cores are still Non-standalone (NSA)

Global 5G core deployments by type, 2018–23

  • There is renewed activity this year in 5G core launches since the total number of 5G core deployments so far in 2022 (effective and in progress) stands at 49, above the 47 logged in the whole of 2021. At the very least, total 5G deployments in 2022 will settle between the level of 2021 and the peak of 2020 (97).
  • 5G in whichever form now exists in most places where it was both in demand and affordable; but there remain large economies where it is yet to be launched: Turkey, Russia and most notably India. It also remains to be launched in most of Africa.
  • In countries with 5G, the next phase of launches, which will see the migration of NSA to SA cores, has yet to take place on a significant scale.
  • To date, 75% of all 5G cores are NSA. However, 5G SA will outstrip NSA in terms of deployments in 2022 and represent 24 of the 49 launches this year, or 34 if one includes converged NSA/SA cores as part of the total.
  • All but one of the 5G launches announced for 2023 are standalone; they all involve Tier-1 MNOs including Orange (in its European footprint involving Ericsson and Nokia), NTT Docomo in Japan and Verizon in the US.

The upcoming wave of SA core (and open / vRAN) represents an evolution towards cloud-native

  • Cloud-native functions or CNFs are software designed from the ground up for deployment and operation in the cloud with:​
  • Portability across any hardware infrastructure or virtualisation platform​
  • Modularity and openness, with components from multiple vendors able to be flexibly swapped in and out based on a shared set of compute and OS resources, and open APIs (in particular, via software ‘containers’)​
  • Automated orchestration and lifecycle management, with individual micro-services (software sub-components) able to be independently modified / upgraded, and automatically re-orchestrated and service-chained based on a persistent, API-based, ‘declarative’ framework (one which states the desired outcome, with the service chain organising itself to deliver the outcome in the most efficient way)​
  • Compute, resource, and software efficiency: as a concomitant of the automated, lean and logically optimal characteristics described above, CNFs are more efficient (both functionally and in terms of operating costs) and consume fewer compute and energy resources.​
  • Scalability and flexibility, as individual functions (for example, distributed user plane functions in 5G networks) can be scaled up or down instantly and dynamically in response to overall traffic flows or the needs of individual services​
  • Programmability, as network functions are now entirely based on software components that can be programmed and combined in a highly flexible manner in accordance with the needs of individual services and use contexts, via open APIs.​

Previous telco cloud tracker releases and related research

Each new release of the tracker is global, but is accompanied by an analytical report which focusses on trends in given regions from time to time:

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Enterprise Wi-Fi 6/7 is here to stay: 5G is not enough

Overview of Wi-Fi 6/7 for enterprises

This report is not a traditional analyst report on Wi-Fi covering market segments, shares and forecasts. Numerous peer organisations have a long tradition of quantitative marketing modelling and prediction; we are not intending to compete with them. For illustration purposes, we have used a couple of charts with the kind permission of Chris DePuy from 650 Group presented at a recent Wi-Fi Now conference, during a joint panel session with the author of this report.

Instead, this report looks more at the strategic issues around Wi-Fi and the enterprise – and the implications and recommendations for CIOs and network architects in corporate user organisations, opportunities for different types of CSPs, important points for policymakers and regulators, plus a preview of the most important technical innovations likely to emerge in the next few years. There may be some differences in stance or opinion compared to certain other STL reports.

The key themes covered in this report are:

    • Background to enterprise Wi-Fi: key uses, channels and market trends
    • Understanding “Wi-Fi for verticals”
    • Decoding the changes and new capabilities that come with Wi-Fi 6, 6E and 7
    • How and where public and private 5G overlaps or competes with Wi-Fi
    • CSP opportunities in enterprise Wi-Fi
    • Wi-Fi and regulation – and the importance of network diversity.

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Wi-Fi’s background and history

Today, most readers will first think of Wi-Fi as prevalent in the home and across consumer devices such as smartphones, laptops, TVs, game consoles and smart speakers. In total, there are over 18 billion Wi-Fi devices in use, with perhaps 3-4bn new products shipping annually.

Yet the history of Wi-Fi – and its underlying IEEE802.11 technology standards – is anchored in the enterprise.

The earliest incarnations of “wireless ethernet” in the 1990s were in sectors like warehousing and retail, connecting devices such as barcode scanners and point-of-sale terminals. Early leaders around 2000-2005 were companies such as Symbol, Proxim, 3Com and Lucent, supplying both industrial applications and (via chunky plug-in “PCMCIA” cards) laptops, mostly used by corporate employees.

During the 2003-2010 period, Wi-Fi exploded for both enterprises and (with the help of Apple and Intel) consumer laptops, and eventually early smartphones based on Windows and Symbian OS’s, then later iOS and Android.

The corporate world in “carpeted offices” started deploying more dedicated, heavyweight switched systems designed for dense networks of workers at desks, in meeting rooms and in cubicles. Venue Wi-Fi grew quickly as well, with full coverage becoming critical in locations such as airports and hotels, both for visitors and for staff and some connected IT systems. A certain amount of outdoor Wi-Fi was deployed, especially for city centres, but gained little traction as it coincided with broader coverage (and falling costs) of cellular data.

A new breed of enterprise Wi-Fi vendors emerged – and then quickly became consolidated by major networking and IT providers. This has occurred in several waves over the last 20 years. Cisco bought Airespace (and later Meraki and others), Juniper bought Trapeze and Mist Systems, and HP (later HPE) acquired Aruba. There has also been some telecom-sector acquisitions of Wi-Fi vendors, with Commscope acquiring Ruckus, and Ericsson buying BelAir.

While telcos have had some important roles in public or guest Wi-Fi deployments, including working with enterprises in sectors such as cafes, retail, and transport, they have had far less involvement with Wi-Fi deployed privately in enterprise offices, warehouses, factories, and similar sites. For the most part that has been integrated with the wired LAN infrastructure and broader IT domain, overseen by corporate IT/network teams and acquired via a broad array of channels and systems integrators. For industrial applications, many solution providers integrate Wi-Fi (and other wireless mechanisms) directly into machinery and automation equipment.

Looking to the future, enterprise Wi-Fi will coexist with both public and private 5G (including systems or perhaps slices provided by telcos), as well as various other wireless and fibre/fixed connectivity modes. Some elements will converge while others will stay separate. CSPs should “go with the grain” of enterprise networks and select/integrate/operate the right tools for the job, rather than trying to force-fit their preferred technical solution.

Roles and channels for enterprise Wi-Fi

Today, there are multiple roles for Wi-Fi in a business or corporate context. The most important include:

  • Traditional use in offices, both for normal working areas and shared spaces such as meeting and conference rooms. There is often a guest access option.
  • Small businesses use Wi-Fi extensively, as many workers rely on laptops and similar devices, plus vertical-specific endpoints such as payment terminals. Often, they will obtain Wi-Fi capabilities along with their normal retail business broadband connection from a service provider. This may include various types of guest-access option. Common use of shared buildings such as multi-tenant office blocks or retail malls means there may be a reliance on the landlord or site operator for network connectivity.
  • Working from home brings a wide range of new roles for Wi-Fi, especially where there is an intersection of corporate applications and security, with normal home and consumer demand. A growing range of solutions targets this type of converged situation.
  • Large visitor-led venues such as sports stadia, hotels and resorts are hugely important for the Wi-Fi industry. They often have guests with very high expectations of Wi-Fi reliability, coverage, and performance – and also often use the infrastructure themselves for staff, displays and various IoT and connected systems.
  • Municipal and city authorities have gone through two or more rounds of Wi-Fi deployments. Initial 2010-era visions for connectivity often stalled because of a mismatch between usage at the time (mostly on laptops, indoors) and coverage (mostly outdoors). Since then, the rise of smartphone ubiquity, plus a greater array of IoT and smart city devices has made city-centre Wi-Fi more useful again. Increasingly, it is being linked to 5G small cell deployments, metro fibre networks – and made more usable with easier roaming / logon procedures. Some local authorities’ scope also covers Wi-Fi use within education and healthcare settings.
  • Public Wi-Fi hotspots overlap with various enterprise sectors, most notably in transport, cafes/restaurants and hospitality sectors. Where organisations have large venues or multiple sites, such as chain of cafes or retail outlets, there is likely to be some wider enterprise proposition involved.
  • The transport industry is a hugely important sector for enterprise Wi-Fi solutions. Vehicles themselves (buses, planes, trains, taxis) require connectivity for passengers, while transport hubs (airports, stations, etc.) have huge requirements for ease-of-access and performance for Wi-Fi.
  • Wi-Fi technology is also widely used as the basis for fixed-wireless access over medium-to-wide areas. Sometimes using vendor-specific enhancements, it is common to use unlicenced spectrum and 802.11-based networks for connectivity to rural businesses or specific fixed assets. A new version of Wi-Fi technology (802.11ah HaLow) also allows low-power wide area applications for sensors and other IoT devices, which can potentially compete against LoRa and 4G NB-IoT, although it is very late to the market.
  • Niche applications for Wi-Fi technology also exist, for example backhauling other wireless technologies such as Bluetooth, for in-building sensing and automation. There are also emerging propositions such as using high-capacity 60GHz Wi-Fi to replace fibres and cabling inside buildings, especially for rapid installation or in environments where drilling holes in walls requires permits.

Enterprise Wi-Fi solutions cover a broad range of contexts and uses

Given the range of Wi-Fi enterprise market sectors and use cases, it is unsurprising that there are also multiple ways for companies and organisations to obtain the infrastructure, as well as operate the connectivity functions or services.

Some of the options include:

  • Self-provision: Many large organisations will source, install, and operate their own Wi-Fi networks via their IT and networking teams, as they do for fixed LAN and sometimes WAN equipment. They may rely on vendor or outsourced support and specific tasks such as wiring installation.
  • Broadband CSP: Especially for smaller sites, Wi-Fi is often obtained alongside business broadband connectivity, perhaps from an integrated router managed by the ISP.
  • Enterprise MSP: Larger businesses may use dedicated enterprise-grade service providers for their Internet connections, UCaaS services, SD-WAN / SASE networks and so on. These organisations may also provide on-site Wi-Fi installation and management services, or work with sub-contractors to deliver them.
  • Solution providers: Various IT and OT systems, such as building management systems or industrial automation solutions, may come with Wi-Fi embedded into the fabric of the proposition.
  • Managed Wi-Fi specialists: Especially for visitor-centric locations like transport hubs, Wi-Fi coverage and operation may be outsourced to a third party managed service operator. They will typically handle the infrastructure (and any upgrades), authentication, security and backhaul on a contractual basis. They will also likely provide staff/IoT connections as well as guest access.
  • Network integrators: Enterprises may obtain Wi-Fi installations as a one-off project from a network specialist (perhaps with separate maintenance / upgrade agreements). This may well be combined with fixed LAN infrastructure and other relevant elements. This may also be a channel for hybrid Wi-Fi / private cellular in future.
  • Vertical specialists: Various industries such as hotels, aviation, hospitals, mining and so on will often have dedicated companies catering to sector-specific needs, standards, regulations, or business practices. They may tie together various other technology elements, such as IoT connections, asset tracking, voice communications and so forth, using Wi-Fi where appropriate.
  • In-building wireless specialists: Various companies specialise in both indoor cellular coverage systems and Wi-Fi. Often linked to tower companies or neutral-host business models.

Table of Contents

  • Executive Summary
  • Introduction
    • Structure and objectives of this report
    • Background and history
    • Roles and channels for enterprise Wi-Fi
    • Recent enterprise Wi-Fi market trends
    • Note on terminology
  • The evolution of “Wi-Fi for verticals”
    • Understanding Wi-Fi “verticals”
    • Existing vertical-specific Wi-Fi solutions
    • Wi-Fi in industry verticals – building ecosystems
  • Wi-Fi 6, 6E & 7: Rapid cadence or confusion?
    • Continual evolution of Wi-Fi capabilities: 6, 6E, 7
    • Wi-Fi 7 may be a game-changer for enterprise
    • The long-term future: Wi-Fi 8 and beyond
    • Other Wi-Fi variants: 60GHz and HaLow
  • Where do Wi-Fi and 5G overlap competitively?
    • Does private 5G change the game?
    • Convergence / divergence
  • The political and regulatory dimensions of enterprise wireless
    • 6GHz spectrum
  • CSPs and enterprise Wi-Fi
    • CSPs and large enterprise / industrial Wi-Fi
    • Wi-Fi service value-adds
    • Wi-Fi and edge compute
  • Conclusions

Related research

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6G: Hype versus reality

What is 6G and why does it matter?

Who’s driving the 6G discussion?

There already are numerous 6G visions, suggested use-cases and proposed technical elements. Many reflect vendors’ or universities’ existing specialist research domains or IPR in wireless, or look to entrench and extend existing commercial models and “locked-in” legacy technology stacks.

Others start from broad visions of UN development goals and policymakers’ desires for connected societies, and try to use these to frame and underpin 6G targets, even if the reality is that they will often be delivered by 5G, fibre or other technologies.

The stakeholder groups involved in creating 6G are wider than for 5G – governments, cloud hyperscalers / tech-co’s, industrial specialists, NGOs and many other groups seem more prominent than in the past, when the main drivers came from MNOs, large vendors and key academic clusters.

Over time, a process of iteration and “triangulation” will occur for 6G, initially starting with a wide funnel of ideas, which are now starting to coalesce into common requirements – and then to specific standards and underlying technical innovations. By around 2024-25 there should be more clarity, but at present there are still many directions that 6G could take.

What are they saying?

Discussions with and available material from parties interested in 6G discusses a wide range of new technologies (e.g. ultra-massive MIMO) and design goals (e.g. speeds of 1Tbps). These can be organised into six categories to provide a high-level set of futuristic statements that underpin the concept of 6G,  as articulated by the various 6G consortia and governing bodies:

  1. Provision of ultra-high data rate and ultra-low latency: Provision of up to 1Tbps speeds and as low as 1 microsecond latency – both outdoors and – implicitly at least – indoors.
  2. Use of new frequencies and interconnection of new network types: Efficient use of high, medium, and low-frequency bands, potentially including visible light and >100GHz and even THz spectrum. This will include possible coordination between non-terrestrial networks and other existing networks, and new types of radio and antenna to provide ubiquitous coverage in a dispersed “fabric” concept, rather than traditional discrete “cells”.
  3. Ultra-massive MIMO and ultra-flexible physical and control layers: The combination of ultra-large antenna arrays, intelligent surfaces, AI and new sensing technologies working in a range of frequency bands. This will depend on the deployment of a range of new technologies in the physical and control layers to increase coverage and speed, while reducing cost and power consumption.
  4. High resolution location: The ability to improve locational accuracy, potentially to centimetre-level resolutions, as well as the ability to find and describe objects in 3D orientation.
  5. Improved sensing capabilities: Ability to use 6Gradio signals for direct sensing applications such as radar, as well as for communications.
  6. General network concepts: A variety of topics including the concept of a distributed network architecture and a “network of networks” to improve network performance and coverage. This also includes more conceptual topics such as micro-networks and computing aware networks. Finally, there is discussion on tailoring 6Gfor use of / deployment by other industries beyond traditional telcos (“verticals”), such as enhancements for sectors including rail, broadcast, agriculture, utilities, among others, which may require specific features for coverage, sector-specific protocols or legacy interoperability.

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How is 6G different to 5G?

In reality, the boundaries between later versions of 5G and 6G are likely to be blurred, both in terms of the technology standards development and in the ways marketers present network products and services. As with 5G, the development of 6G will take time to reach many of the goals above. From 3GPP Release 18 onwards, 5G is officially being renamed as “5G Advanced”, mirroring a similar move in the later stages of 4G/LTE development. Rel18 standards are expected to be completed around the end of 2023, with preliminary Rel19 studies also currently underway. Rel20 and Rel21 will continue the evolution.

Figure 1: Roadmap for 6G

Source: Slides presented by Bharat B Bhatia President, ITU-APT Foundation of India at WWRF Huddle 2022

However, from 2024 onwards, the work done at 3GPP meetings and in its various groups will gradually shift from enhancing 5G to starting the groundwork for 6G – initially defining requirements in 2024-25, then creating “study items” in 2025-26. During that time, new additions to 5G in Rel20/21/22 will get progressively thinner as resources are devoted to 6G preparations.

The heavy lifting efforts on “work items” for 6G will probably start around 2026-27, with 5G Advanced output then dwindling to small enhancements or maintenance releases. It is still unclear what will get included in 5G Advanced, versus held over until 6G, but the main emphasis for 6G is likely to be on:

  • Greater performance and efficiency for mobile broadband, with attention paid to MIMO techniques, better uplink mechanisms and improved cell-to-cell handover
  • Additional features for specific verticals, as well as V2X deployments and IoT
  • Support of new spectrum bands
  • Improvements in mapping and positioning
  • Enhanced coverage and backhaul, for instance by establishing “daisy-chains” of cell sites and extensions and repeaters, including using 5Gfor backhaul and access
  • More intelligence and automation in the 5Gnetwork core, including improvements to slicing and orchestration
  • Better integration of non-terrestrial networks, typically using satellites or high-altitude platforms
  • Capabilities specifically aimed at AR/VR/XR
  • Direct device-to-device connections (also called “sidelink”) that allow communication without the need to go via a cell tower.

We can expect these 5G Advanced areas to also progress from requirements, to study, and then to work items during the period from 2022-27.

However, these features will mostly be an evolution of 5G, rather than a revolution by 5G. While there may be a few early moves on areas such as wireless sensing, Releases 18-21 are unlikely to include any radical breakthroughs. The topics we discuss elsewhere in this report, such as potential use of terahertz bands, blending of O-RAN principles of disaggregation, and new technology domains such as smart surfaces, will be solidly in the 6G era.

An important point here is that the official ITU standard for next-gen wireless, likely to be called IMT2030, is not the same as 3GPP’s branding of the cellular “generation”, or individual MNOs service names. There may well be early versions of 6G cellular, driven by market demand, that don’t quite match up to the ITU requirements. Ultimately 3GPP is an industry-led organisation, so may follow the path of expediency if there are urgent commercial opportunities or challenges.

In addition, based on the experience of 4G and 5G launches, it is probable that at least one MNO will try to call a 5G Advanced launch “6G” in their marketing. AT&T caused huge controversy – and even lawsuits – by calling a late version of LTE “5Ge” (5G evolution), even including the icons on some phones’ screens, while Verizon’s early 5G FWA systems were actually a proprietary pre-standard version of the technology.

If you’re a purist about these things – as we are – prepare to be howling in frustration around 2027-28 and describing new services as “fake 6G”.

Table of Contents

  • Executive Summary
    • What is 6G?
    • Key considerations for telcos and vendors around 6G
    • What should telcos and vendors do now?
    • 6G capabilities: Short-term focus areas
    • Other influencing factors
  • What is 6G and why does it matter?
    • Who’s driving the 6G discussion?
    • What are they saying?
    • The reality of moving from 5G Advanced to 6G
    • Likely roll out of 6G capabilities
  • Regulation and geopolitics
    • The expected impact of regulation and geopolitics
    • Summary of 6G consortiums and other interested parties
  • 6G products and services
  • Requirements for 6G
    • AI/ML in 6G
    • 6G security
    • 6G privacy
    • 6G sustainability
  • Drivers and barriers to 6G deployment
    • Short-term drivers
    • Short-term barriers
    • Long-term drivers
    • Long-term barriers
  • Conclusion: Realistic expectations for 6G
    • The reality: What we know for certain about 6G / IMT2030
    • Possibilities: Focus areas for 6G development
    • The hype: Highly unlikely or impossible by 2030

Related research

 

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Four goals for the data-driven telco

Becoming a data-driven telco

There have been many case studies over the last five years demonstrating the disruption caused by “data-driven businesses”, i.e. those using insights to understand customers, automate processes, change their business models and drive new revenues. In the future, this concept will become an integral part of what it takes to compete successfully, allowing organisations to understand and run all parts of their operations, work with their customers and partners and take part in external activities in new ecosystems. This applies to telecoms operators as much as any other industry.

This research builds on a range of reports STL Partners has previously published on strategic topics related to telcos’ use of data, including:

This research turns to the practical topics of delivering on these strategic goals. The diagram below offers an overview of the drivers and barriers affecting delivery areas such as telco data management and machine learning (ML) in the short and longer term.

Drivers and barriers to being a data-driven telco

Source: STL Partners

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What capabilities should telcos develop?

Telcos are reasonably sophisticated users of data, but their particularly complex web of legacy systems requires a good deal of work around data management and governance to enable the extraction of data sets to give 360-degree view of the customer – and increasingly to provide training data for algorithms.

In the mid-term, telcos that are successful in selling IoT and becoming ecosystem players will require new A3 to deal with the increasing number of services, devices, price points and parties involved in providing service to a customer. Our research suggests that there is a range of new A3 technologies that can provide the automation and intelligence for this, as well as for the underlying data management processes.

In the longer-term, A3 will speed up decision making, impacting company strategy, new product and service creation, and customer experience. Humans will increasingly be supported by AI-, ML- and automation-powered tools in their decision-making. A similar progression will occur among competitors in telecoms, and in adjacent markets, increasing the complexity and speed of doing business. Besides integrating A3 into human workflows, working at increasing speed will depend on getting richer insights out of the available data with techniques such as small data and creation of synthetic data.

Capabilities for a data-driven telco

Source: STL Partners

 

Table of contents

  • Executive Summary
    • Capabilities telcos should develop over the medium term
    • What will telcos focus on in the mid-term?
    • Next steps
  • Becoming a data-driven telco
    • Short term drivers
    • Barriers in the short term
    • Long term drivers
    • Barriers in the long term
  • Availability of data
    • Use of data fabrics
    • Better data labelling
    • Rise of synthetic data
    • More intelligent data selection
    • Telco strategies for cloud usage
  • Equipping people
    • Augmented analytics and business intelligence
    • Decision intelligence
  • Work on governance
    • Governance across the telco
    • Agility in governance
    • Governance for AI and machine learning
    • Ethical governance
    • Improved measurement of governance
    • Governance in ecosystems
  • Index

Telco cloud: short-term pain, long-term gain

Telcos have invested in telco cloud for several years: Where’s the RoI?

Over a number of years – starting in around 2014, and gathering pace from 2016 onwards – telcos have invested a large amount of money and effort on the development and deployment of their ‘telco cloud’ infrastructure, virtualised network functions (VNFs), and associated operations: long enough to expect to see measurable returns. As we set out later in this report, operators initially hoped that virtualisation would make their networks cheaper to run, or at least that it would prevent the cost of scaling up their networks to meet surging demand from spiralling out of control. The assumption was that buying commercial off-the-shelf (COTS) hardware and running network functions as software over it would work out less costly than buying proprietary network appliances from the vendors. Therefore, all things being equal, virtualisation should have translated into lower opex and capex.

However, when scrutinising operators’ reported financials over the past six years, it is impossible to determine whether this has been the case or not:

  • First, the goalposts are constantly shifting in the telecoms world, especially in recent years when massive 5G and fibre roll-outs have translated into substantial capex increases for many operators. But this does not mean that what they buy is more (or less) expensive per unit, just that they need more of it.
  • Most virtualisation effort has gone into core networks, which do not represent a large proportion of an operator’s cost base. In fact, overall expenditure on the core is dwarfed by what needs to be spent on the fixed and mobile access networks. As a ballpark estimate, for example, the Radio Access Network (RAN) represents 60% of mobile network capex.
  • Finally, most large telco groups are integrated operators that report capex or opex (or both) for their fixed and mobile units as a whole; this makes it even more difficult to identify any cost savings related to mobile core or any other virtualisation.

For this reason, when STL Partners set out to assess the economic benefit of virtualisation in the first half of 2022, it quickly became apparent that the only way to do this would be through talking directly to telcos’ CTOs and principal network engineers, and to those selling virtualisation solutions to them. Accordingly, STL Partners carried out an intensive interview programme among leading operators and vendors to find out how they quantify the benefits, financial or otherwise, from telco cloud.

What emerged was a complex and nuanced picture: while telcos struggle to demonstrate RoI from their network cloudification activities to date, many other benefits have accrued, and telcos are growing in their conviction that further cloudification is essential to meet the business, innovation and technology challenges that lie ahead – many of which cannot (yet) be quantified.

The people we spoke to comprised senior, programme-leading engineers, executives and strategists from eight operators and five vendors.

The operators concerned included: four Tier-1 players, three Tier-2 and one Tier-3. These telcos were also evenly split across the three deployment pathways explained below: two Pathway 1 (single-vendor/full-stack); three Pathway 2 (vendor-supported best-of-breed); and three Pathway 3 (DIY best-of-breed).

Four of the vendors interviewed were leading global providers of telco cloud platforms, infrastructure and integration services, and one was a challenger vendor focused on the 5G Standalone (SA) core. The figure below represents the geographical distribution of our interviewees, both telcos and vendors. Although we lacked interviewees from the APAC region and did not gain access to any Chinese operators, we were able to gain some regional insight through interviewing a new entrant in one of the major Asian markets.

Geographical distribution of STL Partners’ telco cloud benefit survey

 

Source: STL Partners

Virtualisation will go through three phases, corresponding to three deployment pathways

This process of telco cloudification has already gone through two phases and is entering a third phase, as illustrated below and as decribed in our Telco Cloud Manifesto, published in March 2021:

Phases of telco cloudification

Source: STL Partners

Effectively, each of these phases represents an approximately three to five-year investment cycle. Telcos have begun these investments at different times: Tier-1 telcos are generally now in the midst of their Phase 2 investments. By contrast, Tier-2s and -3s, smaller MNOs, and Tier-1s in developing markets are generally still going through their initial, Phase 1 investments in virtualisation.

Given that the leading Tier-1 players are now well into their second virtualisation investment cycle, it seems reasonable to expect that they would be able to demonstrate a return on investment from the first phase. This is particularly apt in that telcos entered into the first phase – Network Functions Virtualisation (NFV) – with the specific goal of achieving quantifiable financial and operational benefits, such as:

  • Reduction in operational and capital expenditures (opex and capex), resulting from the ability to deliver and run NFs from software running on COTS hardware (cheaper per unit, but also more likely to attract economies of scale), rather than from expensive, dedicated equipment requiring ongoing, vendor-provided support, maintenance and upgrades
  • Greater scalability and resource efficiency, resulting from the ability to dynamically increase or decrease the capacity of network-function Virtual Machines (VMs), or to create new instances of them to meet fluctuating network capacity and throughput requirements, rather than having to purchase and maintain over-specified, redundant physical appliances and facilities to guarantee the same sort of capacity and resilience
  • Generation of new revenue streams, resulting from the ability that the software-centricity of virtualised networks provides to rapidly innovate and activate services that more closely address customer needs.

Problem: With a few exceptions, telcos cannot demonstrate RoI from virtualisation

Some of the leading telco advocates of virtualisation have claimed variously to have achieved capex and/or opex reductions, and increases in top-line revenues, thanks to their telco cloud investments. For example, in January 2022, it was reported that some technical modelling had vindicated the cost-reduction claims of Japanese greenfield, ‘cloud-native’ operator Rakuten Mobile: it showed that Rakuten’s capex per cell site was around 40% lower, and its opex 30% lower, than the MNO incumbents in the same market. Some of the savings derived from automation gains related to virtualisation, allowing cell sites to be activated and run remotely on practically a ‘plug and play’ basis.

Similarly, Vodafone claimed in 2020 that it had reduced the cost of its mobile cores by 50% by running them as VNFs on the VMware telco cloud platform.

The problem is that the few telcos that are willing to quantify the success of their virtualisation programmes in this way are those that have championed telco cloud most vocally. And these telcos have also gone further and deeper with cloudification than the greater mass of the industry, and are now pushing on with Phase 3 virtualisation: full cloud-native. This means that they are under a greater pressure to lay claim to positive RoI and are able to muster data points of different types that appear to demonstrate real benefits, without being explicit about the baseline underpinning their claims: what their costs and revenues would, or might, have been had they persisted with the old physical appliance-centric model.

But this is an unreal comparison. Virtualisation has arisen because telco networks need to do more, and different things, than the old appliance-dependent networks enabled them to do. In the colourful expression of one of the industry experts we interviewed as part of our research, this is like comparing a horse to a computer.

In the first part of this report, we discuss the reasons why telcos generally cannot unequivocally demonstrate RoI from their telco cloud investments to date. In the second part, we discuss the range of benefits, actual and prospective, that telcos and vendors have observed from network cloudification, broken down by the three main pathways that telcos are following, as referred to above.

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Table of Contents

  • Executive Summary
  • Telcos have invested in telco cloud for several years: Where’s the RoI?
    • Virtualisation will go through three phases, corresponding to three deployment pathways
    • Problem: With a few exceptions, telcos cannot demonstrate RoI from virtualisation
  • Why do operators struggle to demonstrate RoI from their telco cloud investments to date?
    • For some players, it is clear that NFV did not generate RoI
    • It has also proved impossible to measure any gains, even if achieved
  • Is virtualisation so important that RoI does not matter?
  • Short-term pain for long-term gain: Why telco cloud is mission-critical
    • Cost savings are achievable
    • Operational efficiencies also gather pace as telcos progress through the telco cloud phases
    • Virtualisation both drives and is driven by organisational and process change
    • Cloud-native and CI/CD are restructuring telcos’ business models and cost base
  • Conclusion: Telco cloud benefits are deferred but assured
  • Index

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