Networks and Infrastructure Archives - Page 5 of 7

TELUS Picks Up Subscribers in Q3 After Rogers’ Network Outage

TELUS had an excellent third quarter with YoY growth across all segments. The earnings call focused on the lack of churn in this quarter and the dependability of TELUS’ network, with no direct reference to the Rogers nationwide outage that caused a standstill in the country at the beginning of July. But the mobile gross additions during Q3 2022 were at their highest for TELUS since before the pandemic. Even as TELUS saw great success in its mobile segment, its other segments like IoT, TV and wireline also saw significant growth this quarter.

Information Source: TELUS

TELUS continues to keep churn low; Expands 5G Coverage by 23%

While emphasizing on customer loyalty and lower churn, TELUS highlighted that this was the eighth quarter out of the last 11 where the postpaid churn was below 0.80%. The quarter saw 0.73% churn for the postpaid segment and 0.95% when combined with the prepaid segment.
Mobile phone ARPU increased 2.3% YoY. This was attributed to the adoption of 5G+ plans that customers are upgrading to. The early launch of the iPhone 14 series would also help boost ARPU as carriers are a dominant sales channel for these devices.
Service revenue was up 4.2% YoY. Mobile network revenue was also up 6.8%. Roaming revenues continued to increase to approach pre-pandemic levels as people continued to travel and absorb roaming fees. The upgrade to 5G+ plans also contributed to the increase in mobile network revenue.
5G expansion has been progressing fast for TELUS, with the total 5G population coverage increasing 22.8% to 29.6 million as against LTE’s 37 million.

Information Source: TELUS

Growth in connected devices category slowed down

Connected devices have been a large growing segment for TELUS in the past year, with the sales of smartwatches, tablets and other IoT devices increasing at the carrier. Connected device sales saw an increase of 15.1% from Q3 2021.
Wireline saw 36,000 internet net additions, not as strong as the 46,000 net additions last year. Total internet subscribers saw a YoY increase of 6.3% in Q3 2022.
TV net additions saw large growth at 18,000, up 8,000 from last year to result in a 4.9% increase YoY.

TELUS continues to strengthen its position in Healthcare and Security

Healthcare has been a growing focus for TELUS outside the wireless industry as COVID-19 proved the need for better connectivity within the healthcare system. TELUS has been able to add 1.7 million virtual healthcare members to its Lifeworks network in the past year. It can accommodate up to 60.4 million people.
Security devices and memberships have also seen a spike this year for TELUS, with total subscribers to the service now reaching 950,000, a 22.9% increase YoY. Ecosystem OEMs like Google have developed smart doorbells and house cameras with connectivity to smartphones, which has boosted this segment significantly.
New global metrics show a 19.3% revenue increase for the technology and games segments of TELUS. With cloud and mobile gaming gaining popularity, these metrics will invite an increased focus from carriers.

Overall, TELUS has had great success this year, not only boosting its wireless market but also quickly expanding its other businesses in sectors like healthcare and security. Apple iPhone 14 series significantly contributing the the late Q3 success of device sales, as per Counterpoints North America Channel Share Tracker. TELUS is on track to meet the 2022 guidance it had set at the end of last year. TELUS has already reached the goal of 10% growth in adjusted EBITDA and 9.9% growth in operating revenues YoY. The consolidated targets are attainable in Q4 as strong sales of flagship devices continue to drive the market and roaming fees continue to climb with travel becoming easier the world over with the gradual lifting of COVID-19 curbs.

5G Smartphone Sales Soar in Indonesia Despite Low Network Penetration

5G smartphone shipments in Indonesia rose 159% YoY in Q2 2022.
The growth was driven by the $150-$349 and >$500 price bands.
Samsung, OPPO, vivo and Xiaomi led the 5G smartphone sales growth.
Tie-ups between mobile operators and the industrial sector can push 5G smartphone use.

Jakarta, London, Boston, Toronto, New Delhi, Beijing, Taipei, Seoul – October 24, 2022

Indonesia’s 5G smartphone shipments grew 159% YoY in Q2 2022, according to Counterpoint Research’s Monthly Indonesia Smartphone Channel Share Tracker. Samsung, OPPO, vivo and Xiaomi led this growth.

Source: Counterpoint Monthly Indonesia Channel Share Tracker

5G smartphones come with better, newer specifications to support the latest connectivity technology. This makes them overall a better offering than a 4G smartphone in the same price segment. From consumers’ perspective, after deciding their preferences related to “usual” specifications like RAM, display and battery, they could consider 5G to keep their smartphone future-ready. Therefore, consumers treat 5G as a value addition till they are offered 5G services by the operators. It is this factor that is driving the growth of 5G smartphones.

Source: Counterpoint Monthly Indonesia Channel Share Tracker

Interestingly, 5G smartphone market growth is moving away from the mid-price segment, with the sub-$350 and >$500 price bands accounting for nearly three-quarters of all shipments. Last year’s dominant mid-band lost more than 50% of its share YoY in Q2 2022.

Growth in the lower tiers is being driven by Redmi and Samsung, with sustained consumer demand for their Note 10 5G and A22 series devices, both of which have been available since H1 2021. In the premium segment, Apple and Samsung dominate with almost 60% share.

The attractiveness of 5G smartphone specifications in the <$350 segment could lead to a shrinking of the mid-price tier. Given the competitive specifications for ROM, RAM and battery capacity, consumers prefer prices below $350 for a 5G smartphone.

Industrial sector can push 5G smartphone use

Ever since the introduction of 5G services in Indonesia in 2021, their spread has been selective, and the operators have chosen to focus more on serving the industrial sector. On the other hand, 4G has a much wider consumer base. But the country’s 5G smartphone shipments have continued to increase.

The aggressive promotion of 5G smartphones by OEMs, however, has failed to significantly convince the Indonesian mobile operators into expanding their 5G networks. This is mainly due to limited frequency availability and the absence of strong use cases on the consumer side. To resolve the frequency issue, the government recently conducted an auction for additional frequencies, such as 2.1 GHz which was won by Telkomsel. Another auction is expected soon for the low-band 700 MHz. The other option is to share frequencies among mobile operators.

Collaboration between mobile operators and enterprises (B2B) to utilize 5G for the industrial sector can increase demand on the consumer front as well. Advertising and marketing areas can prove to be low-hanging fruits in this direction. Enterprises can also leverage 5G to be used by consumers in Metaverse.

Considering that the mobile operators have been utilizing 4G and 5G together, OEMs need to keep dual SIM slots for both 4G and 5G. Also, this way a consumer can choose 4G and 5G services from different operators, considering limited 5G coverage. Smartphone OEMs should take into account what frequencies are available and what are in the regulatory pipeline. The current 5G network was built upon the existing 4G network and these frequencies are in low and mid bands. 2.3 GHz, 2.6 GHz and other high bands can be considered for future 5G use.

MWC-22 Las Vegas: Samsung Networks Makes Breakthrough In US Cable Market

Samsung Networks hit the headlines at MWC in Las Vegas with news of its first major contract with a US cable operator. The Korean vendor will provide 5G connectivity for Comcast across its 600 MHz and CBRS spectrum bands, which will include deployment of its new Strand small cell radio (Exhibit 1), developed specifically for the cable market in conjunction with Comcast.

Samsung Networks – Open RAN/vRAN Leader?

Samsung Networks first entered the mobile infrastructure market, primarily as a 4G network infrastructure vendor, around ten years ago. Since then, it has developed a portfolio of 4G and 5G products, with a major focus on the open RAN/vRAN based market. Counterpoint Research believes that Samsung is the undisputed leader in this emerging market at the present time, having won multi-billion dollar contracts with several major MNOs, including Verizon, Vodafone and most recently Dish.

However, Samsung is not just focused on the emerging open RAN/vRAN market. At the recent MWC event in Las Vegas, the vendor outlined its mobile infrastructure strategy to industry analysts, which encompasses targeting the cable and regional MNO markets in the US (and elsewhere), as well as the private networks market.

Exhibit 1: Samsung’s Strand 2TRx Small Cell Radio

The CBRS Market

The CBRS service provider ecosystem encompasses a diverse set of mobile and fixed operators as well as a host of enterprises and other organizations building their own private networks. Samsung sees opportunities in multiple CBRS markets, including the following:

Cable Market – cable operators made significant investment in CBRS spectrum back in 2020. However, they are only now starting to build their networks, typically offloading MVNO traffic in selected high-traffic regions, rather than building out nationwide mobile coverage.
Regional Operators – driven by digital divide stimulus funds from the US government, the rural broadband market will be a major opportunity during the next few years with many regional operators seeking to launch rural FWA services.
Private Networks – as well as private networks deployed by traditional mobile service providers, Samsung sees opportunities in serving a diverse range of customers in the CBRS band ranging from enterprises, schools and universities to industrial companies involved in energy and utilities, manufacturing, transportation and logistics, etc.

Key Takeaway No. 1: The Disruptive Incumbent

Samsung is a challenger vendor and sees an opportunity to disrupt the status quo. As the smallest of the Big 5 in terms of market share, it has less to lose by introducing open RAN based networks compared to rivals. And in contrast to many smaller, open-RAN only players, its can offer legacy as well as open RAN technology. With its own chip and foundry businesses – plus access to considerable technical and financial resources as part of a $260 billion cap industrial conglomerate – it is regarded as a reliable alternative to Ericsson and Nokia by many MNOs. However, with major rivals expected to launched “similar” products in 2023, the open RAN/vRAN market is set to become much more competitive.

Key Takeaway No. 2: CBRS Early Mover Advantage Paying Dividends

Samsung launched its first FCC-certified CBRS mMIMO radio in July 2019. Since then the vendor has developed an extensive range of CBRS radios, including products developed specifically for the cable and FWA markets. As a result, Counterpoint Research expects Samsung to benefit further from similar opportunities from other cable operators to complement its recent Comcast Xfinity Mobile win.

Buoyed by multi-billion dollar FCC funding, the rural FWA market is likely to be another major opportunity. Although there will be stiff competition from its Nordic rivals (plus some smaller vendors), Counterpoint Research believes that the Korean vendor is also well placed in this market, due primarily to its early mover CBRS advantage and backed by its growing reputation and track record as a reliable alternative to other incumbents in this market.

The complete version of this article, including the full set of key takeaways, is published in the following 5G Vendor Report, available to clients of Counterpoint Research’s 5G Network Infrastructure Service:

Samsung Outlines Mobile Networks Strategy at MWC, Las Vegas

Table of Contents

Snapshot

Introduction

Key Target Markets

Strand Small Cell Radio

Key Cable & Regional MNO Customers

-Comcast

-Mediacom

-Mercury Broadband

-Avista Edge

Key Takeaways

5G Infrastructure Vendors – Are They Immune To Recession

Rakuten Mobile – Time To Show That Disruptive Networks Can Deliver Disruptive Profits?

Private Networks Market: Operators, Vendors Rivals Beyond Partners?

In our last blog on operator-vendor partnerships for private networks, we discussed how operators leverage these partnerships to co-develop network solutions and gain access to new markets or verticals. Operators and vendors have their own sets of strengths and weaknesses and these partnerships appear to be a win-win situation. But it also leads to situations that turn them into competitors in the same marketplace.

Challenges with operators

Operators are usually focused on selling the latest ‘G’ instead of applications that solve enterprise pain points. Every enterprise has different needs and requires a customized but quick solution. It may get time-consuming and challenging for operators to understand the magnitude of customization involved. This can be viewed as a roadblock for vendors as they are quick to realize the value proposition for enterprise services.

There is an increasing number of markets allocating spectrum for private networks directly to industrial groups and enterprises. This primarily works in favor of vendors as they can directly engage with enterprises. But some use cases may require low band whereas others may require mmWave, which means enterprises may still have to depend on MNOs for the required spectrum. This works as a big advantage for operators as they have a range and massive amount of spectrum.

However, operators are progressing slowly and may focus on limited verticals instead of a range of verticals. Therefore, the downside for vendors is that it limits their sales channel and they must depend on MNOs for certain network deployment.

SWOT Analysis of Mobile Network Operators, Network Equipment Vendors

Go-to-market strategies of vendors

Nokia has more than 485 private network customers with double-digit order intake growth in Q2 2022. The vendor sells solutions with or without MNOs, with an increasing proportion of its sales coming from direct deals with enterprises that can access the spectrum without the operator.

Ericsson is also pushing hard into the space. The hardware vendor started with a slightly different approach as it focused on providing dedicated network solutions through partnerships with mobile operators. However, Ericsson has also started building an ecosystem of partners with specific vertical expertise or device capabilities.

The main differentiating factor between large vendors like Huawei, Nokia, Samsung and Ericsson and players like Airspan, Baicells and JMA is the different market segments targeted by them. Large vendors are experts in providing tailored solutions to enterprise customers in complex industrial environments such as factories, warehouses, ports, mines and mission-critical communications. On the other hand, smaller players are targeting the market’s low end, comprising mainly small and medium businesses. For example, Baicells has announced a cost-effective private LTE network that can be built for under $1,000 for wireless internet service providers (WISPs).

Why partner beyond operators?

Primarily, vendors are partnering with other ecosystem players beyond operators in an effort to sell private wireless solutions directly to enterprises in response to the slow start from the operators.

Furthermore, different verticals require different business models with specific expertise in consultancy, designing and managing the networks. It is not always viable for a single vendor to offer the complete stack of the solution. This leads to a variety of collaborations with system integrators, hyperscalers, enterprise connectivity solution providers, mobile core specialists and more to offer end-to-end managed solutions. Besides, it also opens more distribution channels for vendors to sell solutions.

Viewpoint

Vendors are determined to find ways to become the leading choice for network deployment partners and deliver true value to enterprises. They are partnering with system integrators as well as expanding their portfolio by introducing solutions for seamless interworking across both private 5G and Wi-Fi networks.

However, it is still a fragmented market and some vendors are trying to offer solutions at prices competitive with that of Wi-Fi. There are also some open RAN vendors involved as private networks are touted as their new playground after greenfield networks. But we are yet to see large-scale deployments from this expanding list of vendors.

Ultimately, a large portion of activity in the private network space will be conducted in the network equipment and enterprise solution provider ecosystems as they reduce their dependence on telcos. MNOs will have to evolve their business models to stay relevant as an increasing number of tech giants acquire spectrum and vendors up the ante.

UK Operators Face Tight Deadlines to Roll Out Shared Rural Network

Ensuring all citizens have access to mobile and fixed networks is a priority for many governments around the world. However, providing connectivity in sparsely populated rural regions of any country is usually commercially challenging. As a result, several governments – including the UK – are looking at Shared Rural Networks (SRN) as a solution to improve coverage in their countries.

Overview of UK SRN

The UK’s SRN project is a joint operator and government initiative designed to improve mobile coverage in the rural areas of the four nations of the UK: England, Northern Ireland, Scotland and Wales. The overall objective of the project is to increase total 4G coverage of the UK landmass to 95% by 2026. The SRN project is essentially divided into two parts as follows:

Phase 1: 4G Partial Not Spots (PNS) – defined as areas where at least one operator provides 4G coverage, but not all four of them.
Phase 2: 4G Total Not Spots (TNS) – defined as areas that currently do not receive 4G services from any operator.

The UK’s four operators – EE, O2, Three and Vodafone – are sharing the costs of rolling out the new infrastructure on an approximately 50:50 basis with the government, with the operators contributing to Phase 1 and the government financing Phase 2. Total cost of the project amounts to approximately $1.4 billion (£1.032 billion).

SRN Coverage Obligations

Although individual coverage targets vary from nation to nation, as shown in Exhibit 1, the goal is to raise 4G coverage from all four operators to 84% by the end of 2024 and ensure that 95% of the UK’s landmass is covered by at least one operator by the end of 2026. This should ensure 4G coverage to an additional 280,000 premises, 16,000 km of roads as well as improve indoor coverage in around 1.2 businesses and homes.

Three of the operators – O2, Three and Vodafone – have agreed to build a total of 222 new towers for Phase 1, of which 124 will be in Scotland, 54 in England, 33 in Wales and 11 in Northern Ireland, with each operator leading on 74 of the new sites. Although sharing towers and sites, each operator will procure and operate their own active equipment, i.e. antennas, radios, basebands, etc. However, the exact number and location of masts will depend on the ability to find suitable sites, obtaining power supply, backhaul services and securing the necessary planning permissions.

©Counterpoint Research; Source: Digital Mobile Spectrum Ltd.

Exhibit 1: SRN Coverage Obligations

EE is contributing to Phase 1 by expanding its existing 4G coverage – primarily through upgrades – to more than 2,000 sites by 2024. Since March 2020, a total 853 sites have been upgraded, including 449 in England, 254 in Scotland, 97 in Wales and 42 in Northern Ireland. A further 1,500 upgrades are expected by 2024.

Emergency Services Network

Separately, the UK government is financing the construction of a new emergency services network (ESN) across the UK. Built and operated by EE, with equipment provided by Motorola Solutions, the ESN will also consist of 292 Extended Area Service (EAS) sites financed by the UK government to ensure coverage in some of the most remote parts of the UK. These EAS towers will be available for other mobile operators to offer commercial services as part of their SRN network committment. Achieving the coverage data shown in Exhibit 1 will depend upon the availability of these EAS sites.

Project Status and Schedule

Operators in Phase 1 are in the process of securing sites, reaching rental and access agreements with site owners and obtaining the necessary permissions from planning authorities. Although a small number of PNS sites have already been deployed, the main build out is expected to start sometime in 2H 2022. Clearly, progress will depend on cooperation with the various rural communities. Counterpoint Research understands that two of the operators are expected to announce their preferred hardware vendors within the next month or so.

In the case of Phase 2, contracts to design and build the towers, install base station hardware and manage the TNS sites have been awarded with the winning bidders being: Clarke Telecom, Killarney Telecommunications, Mitie Technical Facilities Management and WHP Telecoms. In addition, a tender notice to supply the backhaul transmission network for the TNS sites was issued in May 2022.

Viewpoint

The UK’s operators have chosen not to adopt a neutral hosting approach, which involves the sharing of base station equipment. There is also no pooling of spectrum, resulting in less efficient spectrum utilization. In fact, sharing is largely limited to towers and sites. Counterpoint Research suspects that this was the only way to ensure operator agreement and committment to the project. In addition, the network is a mobile-only network and does not provide any provision for fixed broadband access. Other countries such as Finland and New Zealand have adopted combined mobile and broadband network designs, also with active equipment sharing and spectrum pooling.

Although the UK’s SRN project will undoubtedly improve 4G coverage across large swathes of the UK, it will not deliver coverage to all communities. In particular, aggregate 4G coverage in Scotland will only increase to 74% with limited, i.e. one operator, or no coverage at all across almost a quarter of its remaining landmass. In addition, the operators are up against some tight deployment deadlines, with Phase 1 scheduled to be completed by the end of 2024 – less than two and a half years away.

Finally, rural networks – whether shared or otherwise – should be a golden opportunity for open RAN to deliver on its many promises. Although the UK government is championing its use in the UK, there is, however, no obligation on operators to adopt the technology in this project. As a result, Counterpoint Research expects that all four operators will choose tried and tested, proprietary 4G infrastructure from established vendors Ericsson and Nokia – with perhaps an outside chance that Vodafone will plump for open RAN compliant tech from existing supplier Samsung Networks at some of its sites.

Related Blogs And Reports

Open RAN: Again a Hot Topic at MWC

Chip Vendors Showcase Open RAN Merchant Silicon Solutions at MWC

Open RAN Cheerleader Vodafone Plays Safe with Incumbent Vendors

Open RAN Radios – Chinese Vendors Set To Dominate An Emerging Market?

Private Networks Market: Vendors Hold Key to Operators’ Success

Private networks are still an emerging market and many players offering vertical-specific solutions or specialized services are entering the space to grab a piece of the pie. There is a vast selection of vendors offering small-cell, LTE and 5G hardware as well as end-to-end easy-to-deploy solutions.

MNOs also view private networks as a growth opportunity against the backdrop of stagnating revenues from the consumer segment. After all, revenue diversification is need of the hour! Many operators have forged partnerships with vendors either to develop private network solutions or collaborate on network deployment.

Tier-1 operator-vendor partnerships

We studied a selection of Tier-1 operators and their private network go-to-market strategies. These strategies can be broadly categorized as “offer spectrum and private network solutions in partnership with vendors” and “offer only managed services to enterprises with their own spectrum”.

MNO-Equipment Vendor Partnerships

Source: Counterpoint analysis

These partnerships may also differ from one another as some of them may be aimed at co-developing industrial use cases or combining hardware and software with the operator’s assets, while others may be formed to act as global marketing partners. At times, these partnerships evolve as a result of long-term relationships for public networks. Some examples to help understand these dynamics:

BT and Ericsson, which had partnered in the past to build the UK and Ireland’s first private 5G network for ports at Belfast Harbour, signed a multi-million-pound deal in May 2022 to provide commercial private 5G for the UK market. The partnership combines the operator’s expertise in building converged fixed and mobile networks with the vendor’s network technology and enterprise solutions.
AT&T offers private enterprise network solutions with Nokia and Ericsson using CBRS spectrum in the US. On the other hand, Verizon has partnered with Nokia to market private 5G for international customers, mainly in Europe and Asia-Pacific.
Deutsche Telekom and Ericsson have recently partnered for a new 5G standalone (SA) campus network offering. Ericsson provides the required modern 5G SA technology, while the operator looks after planning, deployment, operation, maintenance as well as optimization.

So, what do operators gain?

Many operators and vendors partner to co-develop private network solutions. A pre-packaged or end-to-end solution offering allows operators to reach a wider set of enterprises, especially small and medium businesses. They are better placed to sell a predefined solution as compared to the one with a high degree of complex customization, which at times makes it difficult for the enterprise to understand the business rationale in respect of investments.

Also, partnerships help operators increase their outreach across the ecosystem and gain access to new markets.

Takeaways

Since MNOs lack the specialized knowledge to target a large swathe of vertical markets, they should focus and prioritize their resources on three or four broad verticals. In order to profit from the enterprise sector, Counterpoint Research believes, operators need to invest in and partner with numerous vertical-focused companies. For every single vertical, and even some use cases within those verticals, a distinct set of partners will be required.

The success of operators may well depend on how willing they are to scale down, i.e. extend their reach into smaller organizations, verticals and sub-verticals. For many of these use cases, operators may not offer spectrum but provide network support services. For instance, Vodafone Germany and Lufthansa Technik launched a private 5G network in Hamburg based on standalone technology. The operator does not own the spectrum used to provide the connectivity but takes on the role of technology and service partner to support the deployment and operation of the private network.

It is important to acknowledge that although operators are set to gain by collaborating with various vendors, the same set of vendors may also be viewed as competition, especially in markets with enterprises having direct access to spectrum to set up private networks. We will be looking at this perspective in an upcoming blog. Stay tuned!

Rogers Q2 2022: July network outage and inflation acts as a dark cloud over a successful 2nd quarter

Rogers reported an excellent quarter across all segments (wireless, cable, and media) with increased revenue, upgrades and subscribers and a declining churn rate YoY. Although the metrics are mostly positive, the tone of the call was gloomy as it addressed the nationwide network outage that occurred on July 8^th. They also addressed the Rogers-Shaw merger and why they pushed the rollout date to the end of 2022. There are also the looming inflationary pressures on consumer spending that will impact the national economy in the second half of the year.

Positive results across all segments

Service revenue increased 11% YoY and mobile ARPU had a 6% increase YoY as people are returning to work and travelling. Although equipment revenue was down YoY by 6%, overall revenue was up 7% due to the significant increase to the service revenue.
The boost in service revenue is driven by roaming fee revenue that has now increased as travel and immigration begins to settle back to pre-pandemic levels. Return to work has caused a 40% increase in data usage and this is expected to grow in the second half of the year as students return to school in September and immigration continues to pick up.

Source: Counterpoint Analysis

Rogers has been working to improve their cable sector and they saw the largest quarter for cable that they ever have with 21K net additions to video and 26K additions to retail internet. Rogers has now reached 4.7M homes passed for their cable segment.
The Media segment saw the biggest growth this quarter with media adjusted EBITDA reaching $2M CAD. This is a 103% increase YoY and is a result of the Rogers Centre being able to reach full capacity and the supported teams, like the Blue Jays, being able to have a full season with home games.

The impact and next steps to recover after the network outages

According to statements during the call, Rogers has seen an immediate impact on subscriber base in the early days following the outage, caused by a coding error, but churn has seemed to improve daily. Rogers has promised $150M worth of credits that will be automatically applied to customers monthly bills in Q3 to reconcile the loss of network connection these customers experienced. The CAPEX for 2022 has increased from $2.8B CAD to $3.0B CAD to cover the losses and implement preventative measures. Going forward, Rogers has created a plan to instill safeguard to prevent this level of outage again and the plan is as follows:

Rogers uses a common IP core gateway to capitalize on efficiency, the outage highlighted issues with this method so there will be a physical separation of wireless and cable router gateways. This plan will cost $250M over the course of several years. Rogers believes that the Shaw merger will further help reduce the cost and timeline of this project.
Greater partitioning of the network at a more local basis, so if there is an outage in one area that nowhere else besides that area should be impacted.
The internal process in writing, moderating, and executing code will be re-evaluated and updated to help prevent errors like this from occurring.
Failsafe measure for emergency calls, partnering with other carrier to provide a 100% working method to transfer those emergency calls to another network in case of those issues and that will happen within the 60 days mandated by the minister to telecommunication.

Rogers-Shaw merger updates

The expected date of the merger has now been pushed to the end of 2022 from the optimistic goal of the end of Q2 2022. The outage was not the only factor to impact this date change, the competition bureau had appealed the merger due to the lack of evidence that this acquisition of Shaw will have a positive impact on the state of competition in the Canadian wireless market. Rogers focused on Quebecor being the new 4^th player in Canada market as they are the ones who are set to purchase Freedom mobile from Shaw once the merger has been finalized. The deal is expected to cost Quebecor $2.85B CAD for Freedom mobile, this purchase will be the launching point for Quebecor to launch their network outside of Quebec and into the western provinces.

Expected inflation impacts

Rogers is optimistic about its outlook for the second half of 2022 despite the inflationary pressures that will be impacting the economy and the possibility of a recession. Historically, enterprises usually see the highest impacts from recession and Rogers has claimed that since they are focused on consumers, negativity will be limited. Rogers has managed to grow their revenue and subscriber base to a point that they will be able to withstand hiccups to consumer spending in the second portion of this year and they will maintain the guidance provided at the end of 2021 for 2022. Rogers remains the top carrier in Canada, as Rogers website and stores covered over 23% of the smartphone sell-through in Q2 as per Counterpoints Canada channel share tracker.

Rakuten Mobile – Time To Show Disruptive Networks Can Deliver Disruptive Profits?

With only 310,000 new users added during the 1Q 2022 (slightly more than Q4) Rakuten Mobile’s most pressing challenge is to boost subscriber growth. At its recent earnings call, the company unveiled numerous service initiatives, which interestingly included plans to target the business/enterprise market starting in October.

Leveraging the Rakuten Digital Ecosystem

Several initiatives to boost subscriber growth are planned during the next few months, including a new pricing plan with a focus on increasing the number of paying users. In addition, Rakuten plans to launch a series of points-based marketing campaigns designed to leverage synergies between its mobile business and other Rakuten digital services businesses.

In contrast to its rivals, Rakuten owns its own digital services ecosystem, which includes e-commerce services, banking, payment platforms, streaming video services and insurance, with around 36 million active users per month. In fact, the company claims that the main motivation behind building its own mobile network is to capitalize on the ecosystem synergies between its digital services. Rakuten thus regards mobile connectivity as an enabler to engage users in its wider digital ecosystem and the company hopes that leveraging these synergies will be more fruitful than monetization via connectivity alone. At a previous earnings call, Rakuten shared data showing the proportion of new mobile subscribers who started using Rakuten’s other digital services (e.g. Rakuten Ichiba, Card, etc.) within 12 months of subscribing to Rakuten Mobile (Exhibit 1, upper diagram).

Exhibit 1: Leveraging the Rakuten Digital Ecosystem

Rakuten also claims that this cross-marketing of services is starting to have an impact on revenues. For example, the company reported that the average annual Gross Merchandise Sales (GMS) per user for mobile users using its Ichiba e-commerce platform was 67% higher after 12 months compared to just 20% higher for non-mobile users (Exhibit 1, lower diagram). From July, the company also plans to launch a points-based, cross-business marketing campaign, in which various digital services will be offered for free on a trial basis with the award of loyalty points.

Improving Financials

With most of its 4G network deployed, Counterpoint Research believes that Rakuten Mobile’s financials should start to improve during the second half of 2022 helped by cost reductions due to lower roaming costs, lower capex expenditures and to some extent boosted by increasing revenues at its Symphony telecom platform.

Rakuten also needs to continue deploying its 5G network, which will require a much denser network than 4G. Although 2Q capex may well be less than the $1.1 billion expenditure in 1Q, Counterpoint Research believes that infrastructure spending will remain high throughout 2022 and into 2023 as Rakuten continues deploying 5G radios throughout its network. In contrast to its open-RAN brethren Dish, however, Rakuten has been reporting steadily increasing mobile revenues for several months, which the company claims will be boosted significantly by revenues from its Symphony telco business from the end of 2022 onwards.

Targeting New Markets

Although the retail market remains Rakuten main focus, the company plans to enter the broadband and enterprise markets with a range of services starting in October. Rakuten claims that it will become an MVNO network provider and will offer a range of private networks services.

In addition, Rakuten plans to launch a FWA broadband service on both its sub-6GHz and millimetre wave frequencies starting in December as well as a FTTH service, thus making Rakuten a fixed broadband service provider. With its extensive fibre transport network across Japan, Rakuten certainly has the capacity to offer FTTH services and continues to invest in expanding the network’s capacity. For example, in a recent test with Nokia, it achieved speeds of 1 TB/s per channel over its DWDM fiber network, an increase of 5X compared to existing 200 Mb/s transmissions.

Drive To Profitability Starts Now

In commercial terms, Rakuten’s market debut to date has been disappointing, particularly when compared to new entrants using conventional infrastructure. But with its 4G network now covering 97% of the Japanese population – and presumably offering a comparable user experience to rivals – it looks as if the company is about to embark on its first serious attempt to boost subscriber growth. Rakuten is first and foremost an Internet services company with its own digital ecosystem – an advantage that rival CSPs lack. The key question therefore is: how much of a differentiator could this really turn out to be? Although initial results shown in Exhibit 1 look promising, most of the marketing initiatives will not be launched until July and hence the full impact on subscriber and revenue growth will probably not become apparent until the end of 2022 or later.

Responding to Competitive Threats

During the next few months, Rakuten needs to demonstrate serious traction in boosting subscribers and provide investors with a credible path to profitability in its mobile business. However, Japan is an extremely competitive market and Rakuten’s deep-pocketed rivals will not be slow to respond to any new competitive threat. Already competitors are taking advantage of Rakuten’s decision to terminate its popular zero-yen plan, with KDDI’s Povo – where subscribers pay for data used rather than a flat fee – benefiting the most. Competition in the 5G market is likely to intensify as Rakuten expands its marketing initiatives across Japan. Although its mobile business will benefit from revenues from its Symphony business, the road to profitably is likely be a long haul and may take many years. Meanwhile, in the short- and possibly medium-term, Rakuten will need to raise further funds, particularly if it intends to undertake a sustained marketing campaign.

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Network Automation Congress 2022

Our Research Vice President Neil Shah will be moderating a session at the Network Automation Congress 2022 on 24th June.

Neil’s session details:
Topic: The Key to 5G Success in India – Strategy of Zero Touch Network Automation for Network Operators
Day and Date: Friday, June 24th 2022
Session Time: 9:30 – 11:30 IST
Venue: Salcette Ball Room, Hotel Taj Lands End, Bandra (West), Mumbai

For more information and registration link, click here.

Click here (or send us an email at contact@counterpointresearch.com) to schedule a meeting with him.

To get live updates from the event you can watch this space or follow us on Twitter Follow @CounterPointTR.

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