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Operator Transitions to 5G SA Core Decline YoY in 2023

Operator migrations to 5G SA remained low in 2023, despite more than 60 operators investing.
Asia-Pacific continued to lead the deployment charts, while Europe gained momentum.
Total number of deployments between 2020 and 2023 reached 55.
Key deals in leading markets helped Ericsson maintain top spot, followed by Nokia, Huawei and ZTE.

Seoul, Beijing, Boston, Buenos Aires, Fort Collins, Hong Kong, London, New Delhi – February 29, 2024

The number of mobile operators transitioning to a dedicated 5G core decreased to 12 in 2023. Although numerous operators have been running 5G SA core pilots, they have yet to move forward with the transition because they believe the existing architecture is sufficient to meet the current network demand. Another reason for the staggered deployment is the prevailing macroeconomic headwinds and lack of monetization opportunities with 5G.

The transition should increase following the introduction of 5G Advanced starting in 2025, which promises a plethora of new features that will help improve device and network capabilities, lower OPEX costs and introduce new use cases. However, operators need to urgently prioritize the deployment of 5G SA cores to maximize the potential offered by 5G Advanced.

The delay in turning on 5G SA implies that we might see a bunch of rollouts in a shorter time starting H2 2024 and running into 2025, rather than steady rollouts spread out across the next three to four years.

The gradual penetration of 5G SA into Tier-2 operators and nations with smaller geographic areas appears to have begun as MNOs seek to improve user experience. According to Counterpoint Research, about 30 nations have at least one operator running a 5G SA network commercially. Counterpoint Research forecasts that transitions in H1 2024 will remain sluggish before gaining momentum in H2 2024, which will continue into 2025.

Exhibit 1: 5G SA Deployments by Region, by 2023

As indicated in Exhibit 1, the Asia-Pacific region had the highest number of deployments, followed by Europe. North America, Middle East and Africa, and Latin America trailing behind.

Key Points

Key points discussed in the report include:

Operators – 55 operators have commercially implemented 5G SA, with many more in the testing and trial stages. We are seeing a mix of countries adopting 5G Standalone, with some Tier-2 carriers in LATAM launching 5G SA services. The rate of deployment was slightly faster in H2 2023, with some important Tier-1 operators in developed nations shifting to 5G SA, although the list of MNOs currently in the trial phase is still quite extensive.
Vendors – Ericsson’s role as a leader in 5G SA is expanding, and the Swedish company has the largest market share among all cloud-native core providers. Nokia follows Ericsson in terms of the number of deployments of its 5G core. Both have a considerable number of vendor deals with operators that have not yet been commercialized. South Korea’s Samsung and Japan’s NEC are primarily focused on their respective domestic markets, but they are expanding their reach to Tier-2 operators as the focus shifts to vRAN and Open RAN solutions while emerging vendors Parallel Wireless and Mavenir are collaborating with operators in Europe, the Middle East, and Africa.
Spectrum – Most operators are installing 5G at mid-band frequencies (n78), which give higher speeds and better coverage. Some operators have also started offering commercial services in the mmWave wave n258 bands. FWA and other eMBB are currently the most common use cases, although edge services and network slicing are also gaining traction.
Use Cases – Operators are looking for ways to monetize 5G services, as they are struggling to make the ROI from their investments in 5G. Globally, operators are trying to extract better returns from consumer networks before taking their 5G services deeper into enterprises. Although FWA is a promising application for 5G SA monetization, there are many other use cases that operators can look into to increase their ROI, including network slicing, live broadcasting, XR applications, and private networks.

Report Overview:

Counterpoint Research’s 5G SA Core Tracker, January 2024 is a culmination of an extensive study of the 5G SA core market. It provides details of all operators with 5G SA cores in commercial operation at the end of 2023, covering market share by region, vendor, and the most popular deployed frequency bands. Further, the tracker provides details about the 5G SA vendor ecosystem split into two categories – public operator and private network markets and touches on the potential monetization opportunities for telecom operators across different domains and use cases.

Table of Contents:

Overview
Market Update
5G SA Market Deployments
- Commercial Deployment by Operators
- Network Engagements by Region
- Network Engagements by Deployments Status
- Leading 5G Core Vendors
- Mobile Core Vendor Ecosystem
- 5G Core Vendors Market Landscape
Outlook
5G Standalone Use Cases – Consumer and Enterprise

Background

Counterpoint Technology Market Research is a global research firm specializing in products in the TMT (technology, media and telecom) industry. It services major technology and financial firms with a mix of monthly reports, customized projects and detailed analyses of the mobile and technology markets. Its key analysts are seasoned experts in the high-tech industry.

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press(at)counterpointresearch.com

Huawei Zero Bit, Zero Watt Delivers Energy Savings And Increased Performance

Challenge for Operators

Mobile operators are under pressure. The 5G revolution is in full flow and is delivering significantly enhanced customer experiences for many users, who are now able to enjoy faster data speeds, reduced busy-time congestion and an enhanced range of services. This is leading to improved ARPUs for some operators, although for many revenue per user remains stubbornly flat.

And the migration is also adding cost pressures. New spectrum is often costly, depending on the system used to allocate it. The costs of building new networks is a further concern. Then the operating costs of new networks are also considerable. While 5G typically offers more data throughput per kW of power, the much greater overall throughput means energy use has increased – and this at a time when energy costs have been rising. For a typical operator, energy costs can account for between 20% and 40% of network operating costs. And beyond the cost to the business, operators are bound to also consider their social responsibility at a time of growing concern about the impact of energy use on the environment.

But does it have to be this way? Are there technical solutions that can help operators deliver higher network performance while also managing operating costs?

The simple answer is that there are solutions available and this report will consider those from Huawei.

Huawei has developed a series of innovative technologies that it is bringing to market with a simple and easily understandable phrase – zero bit, zero watt. So let’s dig into what this means and what the implications are for mobile operators able to take advantage of these new technologies.

What is zero bit, zero watt?

The proposition is straightforward, when the network is carrying no data, it will consume no power. It sounds easy but it’s not. In conventional networks, even when there is no traffic on a base station, it is still consuming a lot of power. There have been available techniques to reduce power consumption during low traffic periods, but these have been fairly blunt tools based on scheduling downtime that results in reduced performance for defined time periods. For many operators it isn’t possible to significantly reduce power consumption on the network due to equipment and performance constraints.

Zero bit, zero watt capability is the first of its kind to achieve almost zero energy consumption in idle state based on a 99% deep shutdown and then fast wakeup of equipment. By reducing network-wide energy consumption by over 35%, it encourages operators to widely deploy 5G with fewer concerns over power consumption.

Huawei’s zero bit for zero watt approach combines multiple techniques that combine to reduce power consumption dynamically, while also increasing the performance experienced by users. Huawei has achieved advances in several areas that combine to enable the power saving and performance increases. These include:

Materials – dynamic energy saving can cause significant changes in temperature within critical modules. This can result in issues such as condensation and thermal expansion and contraction that impacts the reliability of components. Huawei uses innovative materials that absorb moisture as condensation builds-up and then re-emits it when temperatures rise during times of higher power usage or when environmental conditions increase the ambient temperature. In addition, Huawei uses solder bonds that are designed to flex with wide temperature variations. This prevents mechanical stress that can cause failures and which contributes to an industry average failure rate of around 2%. By contrast, Huawei’s failure rate is 0.01%.

Architecture – Speed is essential when dynamically managing the network for energy optimisation. Huawei uses an architecture called iPowerStar that uses a Mobile Intelligent Engine to orchestrate energy savings based on deep understanding of traffic patterns, combined with the energy-saving features. This then flows to and from the key components to support rapid shutdown on varying network loads. This can be managed at the symbol, channel or entire carrier level, within milliseconds. And this level of power management granularity is achieved by atomising the power control and interface circuits so components can be managed on demand. The standard industry approach shuts down entire modules which limits the speed at which they can be brought back on line. In Huawei’s solution, for example, the power amplifier (PA) architecture achieves a 50% higher efficiency than the industry average in medium- and low-load scenarios.

Algorithms – Using innovative materials and architectures is only part of the story. Huawei’s solutions are also smart. Huawei has applied more than 10 years’ experience and around 700 mathematicians to optimise its software. This enables Huawei to uniquely overcome issues of power interference at channel edges. In addition it is the first in the industry to achieve service-based inter-site Transmission Time Interval (TTI) level power coordination by introducing intelligent grids and inter-site distributed energy efficiency gradient algorithms, minimizing inter-site interference and improving user experience by as much as 30%. It’s also the first to implement network-level online fast iterative simulation of multi-dimensional models (coverage, experience, and energy consumption) enabling 24/7 accurate collaboration between performance and energy savings, this means it can achieve around a 30% better user experience and a 30% lower energy consumption than the industry average.

For an operator using multiple frequency bands on a single site, zero bit for zero watt algorithms can progressively shut down different frequency bands until only, say, the 800MHz part of the network is operating, with other frequencies in a dormant state.

In addition, the zero bit, zero watt approach helps operators deliver superior performance, simplified deployments and energy-saving infrastructure when building 5G multi-band networks.

Deployments and current results

Huawei has achieved significant deployments already with more than 30 operators worldwide enabling over 40,000 sites. The ability to achieve a 99% deep shutdown of equipment reduces the power consumption of modules in idle state from hundreds of Watts to almost zero. When the service load on a live network reaches a pre-defined threshold, RF modules automatically wake up quickly, guaranteeing the service experience.

Different geographical locations provide different traffic profiles.

Business districts show typical daily tidal flows of traffic with high demand during the business day but falling off steeply during the night when traffic is low. Typical power savings in these areas are between 10% and 20%.
Sub-urban areas have lower overall demand with sparser network coverage and can achieve even higher energy savings. A network in China obtained up to 40% energy savings, while one in Kuwait managed over 20%.
Residential areas tend to have higher traffic demands in the evening but need balanced service levels throughout the day. A deployment in Cambodia has achieved up to 15% energy savings.

Various deployments show the potential to save significant energy costs while optimizing the customer experience.

China Mobile: China Mobile has deployed the solution on its commercial networks. Statistics over the first seven days after deployment showed that RF modules automatically entered ultra-deep dormancy during off-peak hours, with a power consumption of just 5W. The average daily dormancy duration reached 9.5 hours, reducing energy consumption by 38%. In addition, RF modules can quickly respond to user service requirements, which improves user experience by 12% compared with scheduled restarts.
Orange Group: Orange tested the solution for equipment-level energy saving in Romania. The result showed that the average daily energy consumption was reduced by 30% and the user throughput remained stable throughout a month long test period. Next generation AAUs will provide even greater energy savings and even faster wake-up speeds.
The operator also tested the solution for network-level energy saving in Spain. The result showed that the all-day energy saving improvements reached 15% without affecting user experience.
Zain Kuwait: Compared with conventional energy saving methods, the solution supports more flexible energy saving policy orchestration based on stable network KPIs, achieving an upgrade from off-peak to all-day energy saving. Zain has used the solution to achieve up to 22.9%, 12.9%, and 8.9% energy savings in its 5G, 4G, and 2G networks, respectively.
Germany: a test was conducted around Hamburg on a cluster of 38 typical sites across city, sub-urban and rural areas with varying frequency bands deployed in each area. Compared to the baseline the traffic volume increased almost 10%/day during the test period. The power saving gain achieved was around 7% per day with energy saving benefits estimated to be 8-10%. KPIs and user experience remained stable throughout the test phase. Extrapolating the energy savings to the whole network based on using the cluster savings as a reference translates to a net benefit of at least €4 million/year.

Summary and conclusion

Zero Bit for Zero Watt from Huawei is a comprehensive set of solutions that are able to help operators solve several significant issues simultaneously. While 5G delivers a premium user experience, its high bandwidth and Massive MIMO also increases power consumption. Huawei’s zero bit, zero watt solution enables modules to consume almost zero power under low load, reducing resource waste and operating expenditure. The solution also continuously minimizes energy consumption without compromising user experience under medium and high loads. It can serve as a key tool for operators to minimize energy consumption with the dual benefits of reduced operating costs and enhancing environmental responsibility.

This article is sponsored by Huawei.

LeapFrog Semiconductor develops RISC-V based AI-enhanced DSP for Wireless Infrastructure

Virtually all commercial open RAN deployments to date have used COTS server hardware based on Intel’s x86-based compute with or without FPGA hardware acceleration. While x86-based platforms are adequate for initial prototyping and low bandwidth deployments without acceleration, they are, however, expensive, power-hungry and highly inefficient for high-traffic, low-latency use cases requiring FPGA acceleration. Hence not the best choice for deployment at scale.

Open RAN’s Massive MIMO Challenge

Solving the massive MIMO performance deficit is one of the key issues inhibiting an industry wide transition to open RAN. This challenge must be resolved before mainstream adoption of massive MIMO radios can occur. However, this will require a new breed of merchant silicon solutions designed specifically to efficiently process real-time, latency-sensitive Layer-1 workloads such as beamforming, channel coding, etc.

In early 2023, a number of vendors demonstrated alternatives to Intel’s x86 platform at MWC in Barcelona based on ASICs, GPUs as well as RISC-V architectures. Late last year, an interesting new contender – LeapFrog Semiconductor – appeared on the market.

LeapFrog’s RISC-V Based Modular, Customizable And First Truly Software Defined Layer-1 Solution

LeapFrog Semiconductor is an early-stage fabless semiconductor company focused solely on developing next-generation Layer-1 silicon and software solutions for the mobile infrastructure and enterprise markets. Founded in 2020, it is funded and staffed by seasoned semiconductor veterans.

The San Diego-based start-up has developed a unique AI-enhanced DSP-based silicon platform based on the RISC-V architecture as well as a Network-on-Chip silicon design. The result is a multi-core, distributed 5G RAN silicon platform, which is modular, customizable and flexible, thus creating the first truly software defined, AI-enhanced RAN solution.

LeapFrog’s DSP Chip

Known as the LeapFrog Processing Unit (LPU), LeapFrog’s DSP core uses a specialized Instruction Set Architecture (ISA) developed in-house that natively supports fine-grain parallelism. This means that Layer-1 computation is broken down into a large number of small tasks, resulting in a high level of parallelism. Together with its programmable NOC architecture which minimises communication and synchronization overheads, LeapFrog’s Layer-1 chip results in several unique benefits:

Power and area efficient design – LeapFrog claims that its SoC is significantly smaller than rival designs and boasts single-digit (<10W) power consumption.
Software-based Layer-1 solutions – LeapFrog’s RU and DU Layer-1 solutions are 100% software-based and are thus fully programmable, with no requirements for hardware-based accelerators.
AI-enhanced L1 chip solution – the LeapFrog chip includes in-line processing of AI and L1 algorithms, which includes AI-based channel estimation and other L1 algorithms. This results in a low-latency chip solution and hence improved RAN system performance.
Tile and chiplet-based silicon design – resulting in a scalable, customizable and modular design which can be optimized for different deployment scenarios. For example, chiplets can be combined to make different functions such as L1, I/O, CPU, etc.

In contrast, many rival open RAN chip designs currently under development are based on coarse-grained parallelism, thus necessitating the use of hardware accelerators or hard IP blocks. These designs are not as scalable as LeapFrog’s solution and offer very little flexibility with respect to changes in the computation logic. As a result, a new chip tape-out would be needed if any architectural or logic changes are required.

LeapFrog Network-on-Chip (LNOC)

LeapFrog has also developed a highly power efficient, programmable LeapFrog Network-on-Chip (LNOC) chip design which connects multiple LPUs to create a multi-core, distributed 5G RAN silicon platform. Leveraging innovations in chiplet and Die2Die (D2D) technologies, this results in a highly scalable, modular and flexible chip design complying with all 5G O-RAN specifications (Exhibit 1).

©Leapfrog Semiconductor

Exhibit 1: LeapFrog Semiconductor’s RISC-V 5G Layer 1 Silicon Architecture

LeapFrog believes that its LNOC design is currently the only chiplet-based 5G open RAN chip platform with a fully software-based RU and DU L1 solution that can be easily customized to suit different 5G deployment scenarios. In addition, the company claims that its AI-enhanced L1 solution results in 50% to 100% better system performance and 10x lower cost and power compared to existing open RAN RU and DU platforms. Another benefit is that software development and testing can be performed on an FPGA platform, which is then transferred to LeapFrog’s silicon platform. This allows a faster time-to-market compared to alternative designs from other vendors.

Target Markets

LeapFrog is targeting multiple markets with its unique LPU design. Chiplet based productization allows the same platform to scale all the way from small cell, fixed wireless access (FWA) to macro cell RU and DU market with a major focus on massive MIMO networks. Potential customers include small and large 5G infrastructure vendors, greenfield CSPs as well as hyperscalers. The company is also pursuing an IP licensing model for its general-purpose DSP targeting consumer/industrial IoT modems, wireless CPEs/gateways, automotive connectivity/sensor fusion as well as mobile handset modems. The IP is ready on FPGA now and was recently demonstrated at the India Mobile Congress and the RISC-V Summit in 2023. The chip design was tested in H2 2023 and delivery of samples to customers is expected to start in Q2 2024.

3GPP’s Release 19 Continues 5G Advanced Standardization, Sets The Stage For 6G

After months of discussions and deliberations, the scope of 5G Advanced Release 19 was approved at the 3GPP’s Plenary Meeting in Edinburgh in December. Led by Wanshi Chen, Chair of 3GPP TSG RAN, Release 19 builds on Release 18 and focuses on enhancing 5G performance while expanding the capability of 5G across devices and deployments. In addition, it will establish the technical foundations for 6G and will include preliminary work on new 6G capabilities.

Release 19 will be followed by Release 20, the first 3GPP release for 6G studies. During the next few years, 5G Advanced will continue to evolve within 3GPP while the standardization of 6G officially starts to ramp up in parallel. Release 18 is expected to be finalized in mid-2024 with Release 19 following in late 2025.

Performance Enhancements

5G Advanced continues to push the spectral efficiency limits and coverage in both sub-7GHz and millimetre wave spectrum. In addition to continued enhancements to massive MIMO radios and mobility, Release 19 provides advancements for new use cases such as XR and Non-Terrestrial Networks.

Massive MIMO Radio – Release 18 introduced improvements to massive MIMO uplink and downlink throughput. Release 19 will boost capacity further by improving multi-user MIMO, which enables more UEs to share the same time and frequency resources.
Release 19 will also enable the cost-efficient realization of distributed transmitters and receivers, thus improving signal quality. This is an important step towards enabling fully distributed MIMO (D-MIMO) systems. Other enhancements include 5G beam management with UE-initiated measurement reporting, thus resulting in faster beam selection.
Mobility – 5G Advanced introduces a new handover procedure known as low-layer (i.e. L2) triggered mobility (LTM). In Release 18, LTM is supported between cells served by the same gNB. In Release 19, the LTM framework will be extended to support handover between cells served by different gNBs.
XR and the Metaverse – Release 19 builds on the low latency and power saving features of Release 18 by enabling higher XR capacity by adding improved uplink and downlink scheduling using packet delay information.
Non-Terrestrial Networks – 5G Advanced combines terrestrial and satellite communications under one standard for the first time. Release 19 will build on the enhancements introduced in Release 18 with a focus on increasing satellite downlink coverage, introducing UEs with higher output power and providing Redcap device support. It will also investigate whether additional support is required for regenerative payloads.

With a long history as an innovator in satellite communications, San Diego-based Qualcomm is leading the charge in non-terrestrial networking. In addition to its contributions to 5G NR NTN and 5G IoT NTN standards, the vendor recently launched two modems: the 212S modem, a satellite-only IoT modem and the 9205S modem. The latter connects to both terrestrial cellular and satellite networks and includes a Global Navigation Satellite Systems (GNSS) chip to provide location data.

Role of AI/ML in 5G Advanced

AI/ML will become a key feature of 5G networks with numerous applications ranging from network planning and network operations optimization to full network automation. Another important application is the use of AI/ML to improve the performance and functionality of the 5G air interface.

3GPP studied the use of AI/ML in the air interface in Release 18 and defined three use cases: channel state feedback (CSF) information, beam management and positioning. Based on the conclusions of Release 18 studies, Release 19 will specify a general AI/ML framework, i.e. actual specifications to support the above three use cases as well as specific support for each individual use case. Release 19 will also explore new areas in the AI/ML air interface such as mobility improvement and AI/ML-related model training, model management and global 5G data collection.

AI/ML is another major focus for Qualcomm. The company has dedicated significant technical resources to develop full-scale demonstrations of the three Release 18 defined use cases. For example, it recently demonstrated CSF-based cross-node machine learning involving E2E optimization between devices and the network. This reduces device communication overheads resulting in improved capacity and throughput. Qualcomm has also demonstrated the use of AI/ML to improve beam prediction on its 28GHz massive MIMO test network and is heavily involved in positioning technologies. For example, it has showcased its outdoor precise positioning technology, which uses multi-cell roundtrip (RTT) and angle-of-arrival (AoA) based technologies, as well as its RF finger printing technology operating in an indoor industrial private network.

Over the next few months, 3GPP will continue exploring the applicability of AI/ML based solutions for other use cases such as load balancing between cells, mobility optimization and network energy savings. For example, there will be support for conditional Layer 2 mobility in Release 19 and a new study item targeting new use cases designed to improve coverage and capacity optimization, such as AI-assisted dynamic cell shaping.

Enhancing Device and Network Sustainability

5G Advanced focuses on sustainability and introduces energy-saving features for devices and networks as well as exploring end-to-end energy saving opportunities that benefit devices. There are also improved features for RedCap and the study of ambient IoT as a new device type.

Power-optimized devices – Releases 18 and 19 build on existing energy saving features, for example, a new low-power wakeup signal (LP-WUS). A low-complexity, power-optimized receiver is specified to monitor low-power wake-up signals from the network which only wakes-up the main radio when data is available at the device. This avoids the significant power consumption required to keep the main radio monitoring control signals from the network.
Ambient IoT – enables new use cases enabled by very-low power devices that harvest energy from the ambient environment, for example, RF waves. Release 19 will investigate new architectures for ambient IoT devices and will include the development of a harmonized specification. Numerous use cases will be studied, including smart agriculture, industrial wireless sensor networks, smart logistics, warehousing, etc.
Network energy savings – 5G Advanced reduces network energy consumption by dynamically adjusting the network’s operation based on feedback from the device, i.e. shutting down parts of the network when idle and transmitting less power depending on the overall traffic load or using more efficient antennas.

Setting The Stage For 6G

Although Release 19 will be the last release focused on 5G, it will also include some longer-term technologies that will become the foundation of 6G, thus setting the direction for Release 20. For example, Integrated Sensing and Communications (ISAC), which combines wireless communications with RF sensing, will enable a raft of new position-based use cases. Release 19 will study channel characteristics suitable for the sensing of various objects, including vehicles, UAVs and humans. Full duplex, another 6G technology, allows transmitters and receivers to operate simultaneously on the same frequency, potentially resulting in a doubling of network capacity. Release 19 will study sub-band full duplex, a type of full duplex, which will improve capacity and latency, particularly for the uplink. Release 19 will also include channel model studies for the upper mid-band spectrum (7-16GHz), which will be supported by “Giga-MIMO” in the 6G timeframe, in order to enable wide-area coverage in this higher band.

Whereas AI/ML is a key pillar of 5G Advanced, it will be a core foundational technology of 6G and will underpin the key features that will make 6G revolutionary. For example, 6G will start to move away from the traditional, model-driven approach of designing communication systems and transition towards a more data-driven design. Indeed, it is likely that the 6G air-interface will be designed to be AI-native from the outset, thus signalling a paradigm change in the way communication systems are designed. An AI-native air interface could offer many benefits. For example, it could refine existing communication protocols by continuously learning and improving them, thereby enabling the air interface to be customized dynamically to suit local radio environments.

Analyst Viewpoint

Despite huge investments in 5G, network operators are still reliant on revenues from traditional voice and broadband data services and are struggling to increase ARPU. Clearly, operators will need to leverage the capabilities of 5G Advanced in order to realize the full potential of 5G.

Although Release 19 includes a focus on new 6G focused technologies, Counterpoint Research believes that 5G is currently only at the midpoint of its development. Over the next few years, 5G Advanced will offer a plethora of new features to improve device and network capabilities and lower OPEX costs. It will also offer innovative new use cases thus enabling operators to generate new revenue streams. Together, this should enable operators to drive up ARPU of existing customers, lower OPEX costs and to acquire new B2B customers across several verticals.

However, 5G Advanced requires operators to deploy 5G SA cores across their networks. While around 92% of all 5G devices support 5G SA, only 21% of operators have started to invest in 5G SA. Of these, only 47 have commercially deployed 5G SA cores in their networks to date[1]. In the short-term, operators need to urgently prioritize 5G SA core deployment in order to fully benefit from their 5G investments.

[1] Source: GSA, 5G Standalone, October 2023

This blog is sponsored by Qualcomm.

Ericsson, Nokia, Samsung Witness 2023 Revenue Slump to Mark 5G Era’s First Record Low Year

Ericsson, Nokia and Samsung reported a slump in 2023 revenue after hitting a peak in 2022.
Operators worldwide have been judicious in their spending and inventory management.
Uncertainty remains as the industry shows no immediate signs of revival in 2024.

Ericsson, Nokia and Samsung each announced a drop in overall 2023 sales in their earnings calls, citing macroeconomic challenges and a shrinking mobile network infrastructure market, as well as lower spending by operators, particularly in North America.

India was a silver lining for the Nordic vendors, as the unprecedentedly quick rollouts boosted their overall numbers. However, there was a slowdown among Indian operators during Q4 2023, as they plan to normalize their investments in 2024 following a capex-intensive 2023.

In 2023, suppliers made significant strategic decisions to reduce losses caused by external factors and transfer attention back to their core capabilities and cash-generating business sectors.

For the year 2023, Ericsson generated nearly $24.8 billion in revenue while its Finnish counterpart Nokia generated $24.1 billion in revenue. Samsung’s network division sales stood at $2.9 billion. Due to the changes in the business mix, its margin remained deflated.

Ericsson

Early adopters of 5G technology saw decreased sales, leading to a reported decline in revenue for Ericsson. MNOs in these areas continued to digest inventory and remained cautious with their spending.
Ericsson maintained its leadership in 5G Standalone deployments. Meanwhile, its cloud and network services business revenue remained unchanged YoY as the increase was offset in part by the decreased managed service revenues because of descoping and contract exits.

Enterprise Wireless Solutions (Cradlepoint) and the newly acquired Global Communication Platform Vonage helped drive growth in the enterprise category. Ericsson’s expansion into Enterprises will continue as it has made investments toward the development of the Global Networks Platform for Network APIs, which is viewed as a critical component in opening new revenue streams for customers.

Nokia

Nokia’s Mobile Network business had aimed for a resilient performance in 2023, despite the uncertain and challenging conditions in the worldwide RAN market. By the end of 2023, gross margin had improved significantly due to a shift in product mix towards software.
Nokia’s Cloud and Network Services business’ net sales were flat for the year but operating profit and margin improved due to digital asset sales and hedging. Nokia ranked second behind Ericsson in terms of the number of 5G Standalone core deployments.
The Network Infrastructure segment too saw revenue declines due to macroeconomic uncertainty and client inventory digestion. There was an increase in order intake in Q4 2023, which will be critical going into 2024. The performance of fixed, IP, and submarine networks deteriorated in 2023, while optical networks experienced small single-digit gains. Nokia anticipates some relief in H2 2024.
In 2023, revenue from enterprise customers increased by about 15% to $2.46 billion, with 151 new clients joining. Momentum in private networks continued with Nokia catering to more than 710 private wireless clients.

Samsung

In 2023, the South Korean technological leader reported $2.9 billion in revenue, down from $4.2 billion a year ago.
Samsung saw similar consequences as its Nordic peers, but it remains optimistic about landing key deals for vRAN and Open RAN networks in 2024. Samsung has been a big player in this area with a few greenfield and brownfield deployments in North America and Japan.

Key Takeaways

2023 was a challenging year for network equipment makers. Operators around the world are exercising extreme prudence and judiciousness when it comes to network expenditure.

The industry also saw a big event at the end of the year, with Ericsson signing a $14 billion deal with AT&T to become the provider of its Open RAN-compliant equipment, effectively reducing Nokia’s market share in the NAM region.

Suppliers are certain that demand will rise and market spending will stabilize as a result of capacity requirements, emerging use-cases, more data traffic, and the integration of more mid-band radios, but the timeline remains uncertain.

Operators and manufacturers are also putting a lot of effort toward enabling 5G Standalone, incorporating Open architecture into their network infrastructure, and monetizing 5G services. Tier-1 MNOs in several countries have risen to prominence as 5G FWA has grown in popularity, but they are yet to capitalize on URLLC or mMTC use cases.

Another significant aspect that has been identified as critical in effectively monetizing 5G networks is the ability to provide users with premium access while also improving their experience through network slicing and enhanced UE Route Selection Policy. However, these are actionable items for the future that will provide results in the long run.

The short-term gains will come from efficient cost reductions and relevant automation that can standardize operations to make them more efficient, continued investments in and divestitures from core competencies, and attempts to capture any new emerging markets that may open as a result of geopolitical sanctions on Chinese vendors.

On the other hand, operators will undoubtedly play a critical role in recovering the RAN market. However, these operators currently show no signs of an early revival in their market forecasts as they wait for the ecosystem to further develop before deploying their infrastructure.

Rapid Transition To L4 Automation Key To Successful 5G Network Monetization

Despite huge investments in 5G, network operators are still highly reliant on revenues from traditional voice and broadband data services and are struggling to increase ARPU. With 5G Advanced around the corner, they will need to continue investing heavily in new network infrastructure for many years to come, despite rising debt levels. As a result, the business models of many of these operators risk becoming unsustainable unless major changes are made.

Overcoming Operator Challenges

To survive financially and benefit from their 5G investments, operators need to develop new revenue streams while reducing OPEX costs. To achieve this, they need to radically transform the way they operate their networks. Instead of a fixed architecture, a fully flexible and agile service platform is required with the capability of delivering a wide variety of services on-demand. This means that networks need to be cloud-based, software defined, highly programmable and ultimately completely automated. By making their networks agile, operators will be able to deliver a huge variety of services with user experiences and connectivity dynamically tailored to individual use cases, or even individual users. Over the next few years, Counterpoint Research believes that AL/ML driven automation will play a critical role in facilitating this business model transformation, allowing operators to develop new revenue streams while significantly reducing OPEX costs.

Transition to L4 Automation

Autonomous networks are networks that can run with minimal (and ultimately zero, i.e. zero-touch) human intervention while leveraging technologies such as AI, machine learning and edge computing. Operators have already started the journey to automation, which they plan to implement in stages. For example, most Tier-1 operators have reached either Level 2 or Level 3 and many plan to reach Level 4 automation by the end of 2025/26.

Compared to L3 automation, L4 offers many new features and capabilities. With L3 networks, O&M updates are implemented into the network manually and run to gauge the network’s response. This typically involves multiple iterations. In contrast, L4 automation offers the capability of using a digital twin, i.e. a virtual or digital copy of the physical network. This is essentially a simulation environment which enables network changes to be run hundreds of times in isolation, enabling the optimum parameters to be identified before they are implemented into the physical network.

L4 automation also enables improved data collection processes allowing operators to have greater visibility into the network. For example, L4 offers the ability to collect more data from a base station compared to L3. L4 can also collect data more frequently. As a result, L4 automation can offer predictive and preventative capabilities, where potential faults are identified and rectified, thus ensuring that base stations are always online. Operators typically do not want to implement automation for everything, with most focusing on two processes: network deployment and fault monitoring and maintenance.

Huawei’s RAN Digital Twin

Huawei has developed a RAN Digital Twin System (RDTS) which is used in conjunction with its IntelligentRAN architecture to leverage the new capabilities of L4 automation. Central to its operation are the following four new innovative features:

Improved Data Collection – it typically takes around 15 to 30 minutes to collect historical data on a conventional mobile network. By implementing L4, Huawei is able to do this in around 10-200ms, i.e. effectively in real-time.
Predictive O&M Capabilities – maintenance costs can be significantly reduced by using RDTS. For example, RDTS enables operators to predict equipment failures due to overheating boards and detect faults in optical modules and back-up power supplies by up to seven days in advance. Faults can thus be rectified before they disrupt network operations. In contrast, a conventional network may require 4+ hour post processing after a fault is rectified in the field.
Transition from KPIs to SLAs (Service Level Agreements) – using the RDTS enables operators to offer SLAs to their customers, resulting in new business opportunities and higher revenues.
Single To Multiple Target Optimization – conventional networks can only handle single target optimization, for example, energy efficiency. However, by using the RDTS, Huawei’s IntelligentRAN is able to perform multiple target optimization, for example, simultaneously optimizing energy efficiency and user experience.

IntelligentRAN L4 i-series solutions

In early 2023, Huawei launched its 3-layer, hierarchical IntelligentRAN architecture which has been deployed to date by more than 30 operators worldwide. IntelligentRAN enables the key capabilities of L4 autonomous networks to be realised. This includes intent-driven networking, intelligent sensing, multi-target decision optimization and proactive/predictive O&M. At its recent Global Mobile Broadband Forum in Dubai, Huawei announced three additional L4 i-series solutions:

iLiveStreaming – by means of dynamic allocation of time, frequency and space resources coupled with intelligent SLA trend prediction, Huawei is able to offer deterministic experience assurance delivering a reliability higher than 95% for uplink livestreaming.
iKeyEvent – using spatiotemporal traffic prediction technology, iKeyEvent enables network risks to be identified and hence predicted and monitored at big events such as major sports meetings. Emergency plans are then generated automatically and the control loop-closed within seconds.
iPowerStar – uses intelligent algorithms to manage end-to-end energy consumption across multiple network channels, including the time, space, frequency and power domains. Multi-target optimization helps operators minimise energy consumption without compromising on network performance or user experience. Huawei claims that iPowerStar reduces carbon emissions by 30%.

Operator Examples

In recent months, Huawei has demonstrated the benefits of using the RDTS system operating within its IntelligentRAN architecture with several of its operator partners. For example:

In the Middle East – Huawei demonstrated how the RDTS eliminates the need to perform multiple iterations on a live network (typically 20+ times with conventional O&M over 20 days) to just once with a RDTS network. Huawei claims that this enables operators to deploy new features and services ten times faster than with conventional O&M.
In China – by using Huawei’s RDTS in conjunction with its IntelligentRAN system, a Chinese operator was able to reduce the number of O&M site visits from 29,000 to 780 visits per year. According to Huawei, this reduces maintenance inspection and passive analysis costs by up to 90%.
In Europe – guaranteeing the performance of a live streaming service is very challenging. Prior to using RDTS, an European operator was able to get a 5 times package gain compared to the traditional streaming package. However, by implementing Huawei’s Live Streaming Solution, the operator was able to increase its SLA assurance from 50% to 90% enabling it to generate $200 per hour per package compared to the original $40 live streaming package. This certainty of guaranteed service experience will open up new business opportunities for operators.

Viewpoint

The business models of many network operators risk become unsustainable unless they fully embrace automation. L4 autonomous networks will allow operators to deliver an experience that is far better than with previous generations of mobile networks. With L4, intent-driven networking replaces policy-based network management, deterministic service assurance replaces best-efforts approaches while proactive O&M (leveraging predictive/preventive capabilities) is used instead of responsive O&M. Together, these new capabilities will enable operators to significantly reduce OPEX costs as well as generate new revenues.

However, there are still challenges ahead. Standards, or specifically a lack of collaboration among standards bodies and open-source groups, is perhaps the biggest challenge. In particular, the industry needs to define data standards and formats. Another challenge is transforming company culture and skills, for example, with respect to network operations personnel. Linked with culture and skills is a lack of a common understanding of key technologies: for example, is there a precise, industry agreed definition for intent-driven management? The development of open APIs will also be very important. Collaboration with industry and ecosystem partners, including device manufacturers, equipment suppliers and developers will be essential in order to bring the economies of scale needed to benefit all players.

This blog is sponsored by Huawei.

Selected Highlights from ITU’s WRC-23 Meeting In Dubai

Held every four years, the ITU’s World Radio Conference (WRC) came to an end last week. During the 4-week long conference, 43 new resolutions were approved, 56 existing ones were revised while 33 resolutions were suppressed. Key highlights included:

4G/5G Spectrum – WRC-23 identified spectrum for 4G and 5G which will be crucial for expanding broadband connectivity and developing mobile services. The new spectrum includes the 3,300-3,400MHz, 3,600-3,800MHz, 4,800-4,990MHz and 6,425-7,125MHz frequency bands in various countries and regions.In particular, the decision to set aside the 6.425-7.125GHz band for licensed, mobile operations and to harmonise this band is very important for the mobile community. The 6GHz band is the only remaining midband spectrum currently available to respond to the data traffic growth in the 5G-Advanced era and is critical for manufacturers of the 6GHz equipment ecosystem.However, a compromise was adopted in ITU Region 1 and Region 3, which means that the 6,425-7,125MHz band can also be used by Wi-Fi. Individual administrations will have the freedom to decide what happens in this frequency range.
HIBS spectrum – WRC-23 also identified the 2GHz and 2.6GHz bands for using high-altitude platform stations as IMT base stations (HIBS) and established regulations for their operations. This technology offers a new platform to provide mobile broadband with minimal infrastructure using the same frequencies and devices as IMT mobile networks. HIBS can contribute to bridging the digital divide in remote and rural areas and maintain connectivity during disasters.
Low-bands – WRC-23 also defined mobile use of more low-band spectrum in the 470-694MHz band in the EMEA region (Europe, the Middle East and Africa).In the UK, Ofcom has already released spectrum down to the 700MHz (694-790MHz) band for use by mobile networks, by shifting Digital Terrestrial TV (DTV) services into the 600MHz band and lower (starting around 470MHz). DTV is going to be around for a number of years yet, but once it does end (i.e. once people have shifted to broadband-based TV) then it looks increasingly likely that the bands will be used for mobile.

6G Spectrum – prior to the start of WRC-23, the ITU adopted a resolution intended to guide the development of a 6G standard. During the conference, regulators agreed to study the 7-8.5GHz band for 6G in time for the next ITU conference in 2027. That spectrum band aligns with proposals from major incumbents for early 6G operations at spectrum bands between 7GHz and 20GHz.

The full version of this insight report, including a complete set of analyst takeaways, is published in the following report, available to clients of Counterpoint Research’s 5G Network Infrastructure Service (5GNI).

Report: Highlights from ITU’s WRC-23 Meeting In Dubai

Table of Contents

Key Highlights
Mobile Agreements
5G Spectrum
6G Spectrum
Terrestrial Broadcast Agreements
Satellite Agreements
Other Agreements
Analyst Viewpoint

Mobile Operators to Invest Over $30 Billion in Open RAN Networks by 2030

Accelerated growth is expected from 2025 onwards after stagnation in 2023 and 2024.
Open RAN network investments to grow at a CAGR of 24% during the forecast period.
Asia-Pacific and North America will remain the largest Open RAN markets in the forecast period.
Europe is expected to record the fastest growth with a CAGR of 108% during 2023-2030.

Open RAN network investments have increased steadily in recent years, driven primarily by greenfield network operators in the Asia-Pacific and North American regions. However, following this period of rapid network build-outs, greenfield operators are looking to lower capex in 2023 and 2024 and focus on network monetization. Some Tier-1 operators, notably Vodafone, have announced major plans recently to deploy open RAN, but most brownfield network operators remain very cautious about additional investments in 5G infrastructure, particularly Open RAN, due to the uncertain macroeconomic climate.

As a result, Counterpoint Research expects that the Open RAN market will stagnate during this and the next year. Investments will start to increase YoY after 2025 with network operators investing a cumulative total of more than $30 billion between 2022 and 2030. This represents a CAGR of 24% for the forecast period of 2023-2030.

Although the Asia-Pacific and North American regions will remain the largest Open RAN markets for most of the forecast period, Europe is expected to record the fastest growth with a CAGR of 108% between 2023 and 2030 as its Tier-1s finally start commercial deployments at scale, driven partly by the need to replace legacy Chinese 3G and 4G networks.

The Open RAN-compliant radio market to date has been dominated by Asian vendors Samsung, NEC and Fujitsu. However, Counterpoint Research expects that their market share will be impacted during the forecast period as other incumbents start offering Open RAN-compliant solutions.

Counterpoint Research’s recently published Open RAN Tracker is the culmination of an extensive study on the Open RAN market. The tracker provides details of all operators across different regions, covering both trial and commercially deployed networks, and market shares by region and by vendor.

Background

3GPP 5G NTN Standards Set To Dramatically Boost Mobile Satellite Addressable Market

Satellite communications is back in the limelight following the launch of Apple’s direct Satellite-to-Phone service earlier this year. Partnering with satellite operator Globalstar, the service provides SOS messaging for iPhone 14/15 users. Recently, the service was expanded to include roadside assistance via satellite as well. A host of similar services and partnerships have been announced between satellite operators and chip vendors/cellular operators during the past few months, including Inmarsat with Mediatek, Iridium with Qualcomm and most recently SpaceX with KDDI.

In addition to the incumbent operators, there are a number of new players such as AST SpaceMobile and Lynk Global. AST SpaceMobile has partnered with Rakuten Mobile and currently has one operational satellite in-orbit. It has been granted preliminary experimental licenses in Japan and in the US. Meanwhile Lynk launched a limited commercial “store-and-forward” service using three satellites in April. Both companies plan to launch full constellations over the next few years.

The Mobile Satellite Services (MSS) market has historically been a niche market due primarily to the fact that MSS is based on proprietary technologies. However, 3GPP is working with the satellite industry on a global standardized solution, called 5G Non-Terrestrial Networks (NTN). 5G NTN will enable seamless roaming between terrestrial and satellite networks, using largely standard cellular devices, i.e., eliminating the need for proprietary terminals and fragmented satellite constellations. This could dramatically increase the addressable market for mobile satellite services.

5G Non-Terrestrial Networks (NTN)

With the emergence of new Satellite-to-Phone services, there is now a widespread industry push to deploy NTN-based satellite networks as this would benefit the satellite industry and the wider mobile industry. However, 3GPP has been working on NTN for some time. For example, there has been an ongoing study on 5G NTN since 3GPP Release 15, while in 2022, 3GPP introduced two parallel workstreams in its Release 17 specifications addressing 5G satellite-based mobile broadband and low-complexity IoT use cases:

NR-NTN (New Radio NTN) – adapts the 5G NR framework for satellite communications, providing direct mobile broadband services as well as voice using standard apps. This will enable 5G phones operating on dedicated 5G NTN frequencies and existing sub-7GHz terrestrial frequencies to link directly with Release-17 compatible satellites. Release 17 also includes enhancements for satellite backhaul and the inclusion of 80MHz MSS uplink spectrum in L-band (1-2GHz) plus a similar amount of downlink spectrum in S-band (2-4GHz).
IoT-NTN – provides satellite support for low-complexity eMTC and NB-IoT devices, which expands the coverage for key use cases such as worldwide asset tracking (for example, air freight, shipping containers and other assets outside cellular coverage). IoT-NTN is designed for low data rate applications such as the transmission of sensor data and text messages.

Release 17 established the NR-NTN and IoT-NTN standards while the upcoming 5G Advanced Release 18 will introduce new capabilities, coverage/mobility enhancements and support for expanded spectrum bands. For example, there are plans to extend the NR-NTN frequency range beyond 10GHz by adding Fixed Satellite Services (FSS) spectrum in the 17.7-20.2GHz band for downlink and 27.5-30.0GHz for uplink.

Satellite IoT

Traditional mobile satellite operators such as Inmarsat, Iridium and Globalstar have been offering M2M/IoT type services for many years targeting various industry verticals, ranging from agriculture, construction and oil and gas to maritime, transportation and utilities. Some of the traditional FSS players, such as AsiaSat, Eutelsat and Intelsat, also offer M2M/IoT services over Ku or Ka bands.

Another player with a long history in satellite communications is San Diego-based chip vendor Qualcomm. The company was a founding partner and key technology provider in Globalstar and also developed satellite-based asset tracking service OmniTRACS. Qualcomm is still heavily involved in the satcom business and earlier this year announced Snapdragon Satellite, its Satellite-to-Phone service. More recently, it announced the availability of two Release 17 compatible GEO/GSO IoT-NTN satellite modems launched in collaboration with US-based Skylo, a NTN connectivity service provider, that enables cellular devices to connect to existing, proprietary satellite networks:

Qualcomm 212S Modem – a satellite-only IoT modem designed to enable stationary sensing and monitoring IoT devices to communicate with NTN-based satellites. The chipset is an ultra-low power device and can be powered from solar panels or supercapacitors.
Qualcomm 9205S Modem – enables IoT devices to connect to both terrestrial cellular and satellite networks and has integrated GNSS to provide location data. Typical applications include industrial applications requiring always-on, hybrid terrestrial and satellite connectivity for tracking assets such as agricultural machinery, shipping containers, livestock, etc.

Both devices are designed for low-power, cost optimized applications and support the Qualcomm Aware cloud platform, which provides real-time asset tracking and device management in off-grid, remote areas for IoT.

Most of the major chip vendors, such as MediaTek, Qualcomm and Sony Semiconductors, have already developed Release 17 compatible chipsets. This means that satellite-compliant 5G IoT devices could be available commercially by the end of 2023 and should become commonplace in 2024.

NTN Satellite Operators

Only a few NTN-based satellites have been launched to date. A noteworthy example is Spanish LEO operator Sateliot, the first company to deploy satellites complying with 3GPP’s Release 17 IoT-NTN standard. Sateliot currently has two satellites in orbit and recently carried out a successful roaming test between its satellite network and Telefonica’s 5G terrestrial network using an IoT device with a standard SIM card. Sateliot plans to start commercial activities in 2024. Ultimately, the company hopes to launch a total of 250 nanosatellites, which will enable it to offer global 5G IoT-NTN services.

No satellite operator presently supports 3GPP’s Release 17 NR-NTN standard for voice and data. Although AST SpaceMobile and Lynk Global have demonstrated two-way satellite-to-5G terrestrial communications, neither uses the NR-NTN standard, although they have plans to test the NR-NTN standard.

Satellite Déjà Vu?

Over two decades ago, the mobile satellite industry invested billions to launch a number of ground-breaking LEO-based voice and narrowband data constellations. Only a handful survived and even fewer have prospered. Will history repeat itself?

Although there are some parallels, Counterpoint Research believes that there are also some important differences this time. During the past 20 years, satellites have become much smaller, more capable and less expensive. Some of these satellites are based on CubeSat technology, which uses commercial, off-the-shelf (COTS) components, thus drastically reducing costs while accelerating time to market. This is particularly relevant to nanosatellites, many of whom are being developed to target the IoT-NTN market. Another important difference is that launch costs have decreased significantly due to the entry of new private launch companies, notably SpaceX.

Perhaps the most important differentiator between current and next-generation satellites, however, is that the latter will be based on 3GPP’s NTN standards. Historically, proprietary satellite systems have resulted in a limited range of low volume and hence expensive end user devices – a significant barrier to growth. As with 5G (and 4G before it), a common set of cellular-based standards will enable the mobile satellite industry – plus the vertical markets it serves – to benefit from the vast economies of scale of the cellular device ecosystem. This should result in higher volume chipset production, more affordable devices and services and hence a much larger market of end users. For instance, Sateliot estimates that the cost of satellite IoT connectivity will drop from hundreds of dollars per device per month to less than $10 per device per month.

Furthermore, the adoption of 5G NTN and its integration with terrestrial 5G will result in a truly seamless global telecoms network, with increased space segment capacity, resulting in more users benefiting from higher data rate services. This will lead to more applications and use cases thus creating more value-add for vertical market users. Clearly, this could lead to a significant expansion of the mobile satellite services market globally.

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Coverage: Networks and Infrastructure

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