Tag: China Unicom

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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SDN / NFV: Early Telco Leaders in the Enterprise Market

Introduction

This report builds on a number of previous analyses of the progress and impact of SDN (Software-Defined Networking) and NFV (Network Functions Virtualization), both in the enterprise market and in telecoms more generally. In particular, this briefing aims to explore in more detail the market potential and dynamics of two new SDN / NFV-based enterprise services that were discussed as part of an analysis of revenue opportunities presented by ‘telco cloud’ services.

These two services are ‘Network as a Service’ (NaaS) and ‘enterprise virtual CPE’ (vCPE). ‘Network as a Service’ refers to any service that enables enterprise customers to directly configure the parameters of their corporate network, including via a user-friendly portal or APIs. This particularly involves the facility to scale up or down the bandwidth available on network links – either on a near-real-time or scheduled basis – and to establish new network connections on demand, e.g. between business sites and / or data centers. Examples of NaaS include AT&T’s Network On Demand portfolio and Telstra’s PEN service, both of which are discussed further below.

‘Enterprise virtual CPE’, as the name suggests, involves virtualizing dedicated networking equipment sited traditionally at the enterprise premises, so as to offer equivalent functionality in the form of virtual network appliances in the cloud, delivered over COTS hardware. Virtual network functions (VNFs) offered in this form typically include routing, firewalls, VPN, WAN optimization, and others; and the benefit to telcos of offering vCPE is that it provides a platform to easily cross- and upsell additional functionality, particularly in the areas of application and network performance and security.

The abbreviation ‘vCPE’ is also used for consumer virtual CPE, which involves replacing complicated routers, TV set-top boxes and gateway equipment used in the home with simplified devices running equivalent functions from the cloud. For the purposes of this report, when we use the term ‘vCPE’, we refer to the enterprise version of the term, unless otherwise stated.

The reason why this report focuses on NaaS and vCPE is that more commercial services of these types have been launched or are planned than is the case with any other SDN / NFV-dependent enterprise service. Consequently, the business models are becoming more evident, and it is possible to make an assessment of the revenue potential of these services.

Our briefing ‘New Revenue Growth from Telco Cloud’ (published in April 2016) modeled the potential impact of SDN / NFV-based services on the revenues of a large illustrative telco with a significant presence in both fixed and mobile, and enterprise and consumer, segments in a developed market similar to the UK. This concluded that such a telco introducing all of the SDN / NFV services that are expected to become commercially mature over the period 2017 to 2021 could expect to generate a monthly revenue uplift of some X% (actual figures available in full report) by the end of 2021 compared with the base case of failing to launch any such service.

Including only revenues directly attributable to the new services (as opposed to ‘core revenues’ – e.g. from traditional voice and data services – that are boosted by reduced churn and net customer additions deriving from the new services), vCPE and NaaS represent the two largest sources of new revenue: Y and Z percentage points respectively out of the total X% net revenue increase deriving from SDN / NFV, as illustrated in Figure 1 (Figure not shown – actual figures available in full report).

Figure 1: Telco X – Net new revenue by service category (Dec 2021)

Figure not shown – available in full report

Source: STL Partners analysis

In terms of NaaS and vCPE specifically, the model assumes that Telco X will begin to roll out these services commercially in January and February 2017 respectively. This is a realistic timetable for some in our view, as several commercial NaaS and vCPE offerings have already been launched, and future launches have been announced, by telcos across North America, Europe and the Asia-Pacific region.

In the rest of this briefing, we will:

  • present the main current and planned NaaS and vCPE services
  • analyze the market opportunities and competitive threats they are responding to
  • analyze in more detail the different types and combinations of NaaS and vCPE offerings, and their business models
  • assess these services’ potential to grow telco revenues and market share
  • and review how these offerings fit within operators’ overall virtualization journeys.

We will conclude with an overall assessment of the prospects for NaaS and vCPE: the opportunities, and also the risks of inaction.

  • Executive Summary
  • Introduction
  • Current and planned NaaS and vCPE products
  • Opportunities and threats addressed by NaaS and vCPE
  • NaaS and vCPE: emerging offers and business models
  • Revenue growth potential of NaaS and vCPE
  • Relationship between SDN / NFV deployment strategy and operator type
  • Conclusion: NaaS and vCPE – a short-term window of opportunity to a long-term virtual future

 

  • Figure 1: Telco X – Net new revenue by service category (Dec 2021)
  • Figure 2: Leading current and planned commercial NaaS and vCPE services
  • Figure 3: Cumulative NaaS and vCPE launches, 2013-16
  • Figure 4: Verizon SD-WAN as part of Virtual Network Services vCPE offering
  • Figure 5: COLT’s cloud-native VPN and vCPE
  • Figure 6: Evolution of vCPE delivery modes
  • Figure 7: SD-WAN-like NaaS versus SD-WAN
  • Figure 8: Base case shows declining revenues
  • Figure 9: Telco X – Telco Cloud services increase monthly revenues by X% on the base case by Dec 2021
  • Figure 10: NaaS and vCPE deployments by operator type and overall SDN / NFV strategy
  • Figure 11: Progression from more to less hybrid deployment of NaaS and vCPE across the telco WAN