Philippines’ Globe Telecom has announced it is on course to deploy 5G in the second quarter of 2019.  The network operator is currently focused on upgrading its core, radio and transmission network to support 5G by the end of the year, and plans to start offering a 5G fixed wireless mobile broadband service in 2Q19, Globe said in a statement.

Globe executives recently visited China to meet with Huawei deputy chairman Eric Xu to discuss their 5G partnership. In November 2015, Globe signed a five year contract renewal with Huawei  involving the planning and design of an upgraded mobile broadband network and the creation of a joint mobile innovation center.  Huawei was also the technology partner of Globe when it implemented a $700-million network modernization program that began in 2011.

The operator started deploying massive multiple-input multiple-output (MIMO) technology on its network in July last year, and has spent over 139 billion Philippine pesos since 2014 mainly on expanding and upgrading its network.

“5G will bring innovation and spur economic growth in the Philippines,” Globe chief technology and innovation officer Gil Genio said.  With 5G, Genio said the Philippines can expect more companies entering the country, more employment opportunities, and higher equipment sales, among other economic benefits.

“From the same physical network, we will be able to support different uses with varying performance requirements, in effect looking like different networks to different types of applications, from IoT to faster broadband to mission critical information. This will spur innovation and help various industries digitally transform.”

“5G will not operate as a standalone technology, at least not for the earliest use cases. How 4G/LTE integrates with 5G will determine the overall fixed wireless experience in the next few years,” Genio added.

The Hong Kong Special Administrative Region (HKSAR) government has proposed to allocate 5G spectrum to the market’s operators for no charge, to give them a competitive advantage in the race to 5G adoption.

The government has proposed to assign 4,100MHz of 26-GHz and 28-GHz spectrum to operators if demand is below 75% of supply, the South China Morning Post reported.

Allocating free spectrum would greatly reduce the cost and shorten the time required for operators to roll out 5G networks, according to Hong Kong’s secretary for commerce and economic development Edward Yau Tang-wah.

Announcing the proposal, Yau noted that he has concluded that there is no need for an auction given the abundant supply of high-band spectrum.  “That means it will greatly reduce the cost and also shorten the time involved,” Yau said, referring to the roll-out of 5G networks by service providers.

Ensuring a timely 5G rollout would also facilitate the introduction of more IoT, smart city and other technology applications, supporting the government’s smart city ambitions.  “We all know that 5G is not just for communication. It is also for the Internet of Things, smart city and lots of technology applications,” he said. The Internet of Things refers to a network of devices – anything from phones and computers to home appliances and microchips – that wirelessly connect to the internet and to each other.

Under the proposal, operators assigned high-frequency spectrum would need to install at least 5,000 base stations across the city.  The HKSAR government also plans to hold a consultation on allocating an additional 200 MHz of 3.3-GHz and 4.9-GHz spectrum to support 5G rollouts in the market, the report adds.

Yau cautioned that while the proposal could lead to lower prices for consumers, operators’ spectrum utilization charges typically only make up 3% to 4% of operational costs, and prices are more affected by market competition and data usage than spectrum fees.

Sprint said today in a press release that it’s Next-Gen Network build is well underway as we invest billions to give Sprint customers an even stronger 4G – LTE Advanced network (true 4G) and launch mobile 5G (fake-non standard) in the first half of next year.  CTO John Saw wrote:

The Sprint Next-Gen Network build stems from our largest investment in years, and we’re unleashing our spectrum assets to improve coverage, reliability and speed nationwide as we work to launch mobile 5G in the first half of 2019.

Massive MIMO is our award-winning strategy for 5G. This game-changing technology is capable of delivering up to 10 times the capacity of current LTE systems, significantly increasing data speeds for more customers in high-traffic locations. And because Sprint has so much 2.5 GHz spectrum, we can use Massive MIMO to deliver 4G LTE and 5G on the same radio simultaneously.

In our first quarter of FY18 we continued field testing and optimizing Massive MIMO radios in locations such as Dallas, Los Angeles and New York City. Some sites are now running commercial traffic and the initial performance results are very promising. Today we’re seeing a more than 4X increase in speed on these sites, as well as increased coverage and cell edge performance.

When it comes to 5G, the network is only part of the equation. This is why we’re excited to keep making progress on our first 5G smartphone and Always Connected PC. In the first half of 2019 we plan to launch mobile 5G in nine markets initially – Atlanta, Chicago, Dallas, Houston, Kansas City, Los Angeles, New York City, Phoenix and Washington, D.C. And we expect Sprint customers will be among the first in the world to have access to a beautifully designed 5G phone.

It’s an exciting time to be in wireless with LTE networks rapidly advancing and 5G on the near horizon. You’ll see us accelerate our build activity in the months ahead. More triband upgrades, more innovative small cells, and more game-changing Massive MIMO powering a Network Built for Unlimited.

These technologies and more all play a pivotal role in improving the network experience for our customers under any scenario. If Sprint proceeds as a standalone company, our investment helps us continue improving our 4G LTE Advanced network, and launch mobile 5G in the first half of next year. If the merger with T-Mobile is approved, our investment helps the combined company rapidly create the best nationwide mobile 5G network, fueling a wave of innovation and disruption throughout the marketplace.

In March 2018, Saw told RCR Wireless:  “Massive MIMO is our secret weapon to getting 5G built simultaneously with 4G.  You need two enabling things. One is massive MIMO. I was just in a meeting with [Ericsson] to see if they can do more faster. The second thing is spectrum.” Sprint is tapping its 2.5 GHz spectrum to support the massive MIMO build.  That theme was echoed last week during Sprint’s fiscal first quarter 2018 earnings call.

“We now have a few massive MIMO sites on air,”  Sprint’s new CEO, Michel Combes, said Wednesday, adding that the 2.4GHz massive input, massive output (massive MIMO) arrays are “5G-ready” with a software upgrade for the mobile 3rd Generation Partnership Project (3GPP) New Radio specification.  “We expect to provide mobile services and devices in the first half of 2019,” Combes said. (See Sprint Reveals 3 More 5G Cities, Promises ‘Cool’ 5G Phone & Small Cell and Intel Promises 5G Laptops With Sprint in 2019).  Specifically, Combes said on the earnings call:

We are deploying innovative 5G technologies such as Massive MIMO as we prepare to launch the first 5G mobile network in the first half of 2019. Massive MIMO radios are software upgradable to 5G NR allowing us to fully utilize our spectrum for both LTE and 5G simultaneously while we enhance capacity even further with 5G and begin to support new 5G use cases. We now have a few Massive MIMO sites commercially on air in a few markets and are seeing very promising results, including speed improvements of over 300% while also increasing coverage and cell edge performance.

Sprint’s priority is mobile 5G and we expect to provide commercial services and devices by the first half 2019. Most importantly, as we look ahead, it’s clear that our proposed merger with T-Mobile will deliver an acceleration of an even greater 5G network with the breadth and depth that we could not do on our own.

 

Sprint has previously said that massive MIMO will be deployed in its initial 5G cities first. Sprint has so far named Atlanta; Chicago; Dallas; Houston; Kansas City; Los Angeles; New York City; Phoenix; and Washington, D.C., as its first 5G markets.

Massive MIMO will enable Sprint to run both LTE and 5G on its 2.5GHz band, CTO John Saw noted on the call. It is taking advantage of its higher-band spectrum to deploy 64 transmitters and 64 receivers (64T64R) in an array. It has already shown over 600-Mbit/s downloads on LTE over MIMO in New Orleans. (See Gigabit LTE: Sprint’s MIMO Gras in New Orleans).

Separately, Sprint now seems more open to using millimeter wave if it can buy licenses at auction in November. “It’s an excellent opportunity to supplement our 2.5GHz portfolio for our 5G deployment,” Combes said.

CTO Saw has said that LTE speeds in its initial 5G markets are seeing a four-times increase in download speeds, although CEO Combes noted on the earnings call that Sprint can build a better 5G network if its merger with T-Mobile is approved. (See Getting Real About Mobile 5G Speeds). New Sprint CFO Andrew Davies noted that capital expenditure for the quarter was “relatively flat” year-on-year, at $1.1 billion. Network spending will ramp up with the 5G build this year, to $5 billion or $6 billion.

References:

https://seekingalpha.com/article/4193250-sprint-s-q1-2018-results-earnings-call-transcript

https://www.samsung.com/global/business/networks/insights/news/sprint-to-deploy-samsungs-new-5g-ready-massive-mimo-solutions-to-increase-gigabit-speeds-and-capacity/

http://techblog.comsoc.org/2018/02/03/sprint-to-increase-capex-to-focus-on-mobile-5g-in-2019/

The global passive optical network (PON)  market is on track to grow to over $7 billion by 2022, driven by adoption of next-generation PON technologies such as 10Gbps EPON, Dell’Oro predicts in a new report.  The market is on track to grow at a five-year CAGR of nearly 40% from 2017 to 2022, the research firm said in a press release.

“Where PON technologies are used for residential broadband services, 2.5 Gbps GPON will remain as the dominant technology due to its lower price and sufficient speeds.  However, for a number of growing use cases such as business services and mobile backhaul, next-generation PON technologies  have capacities and capabilities that current generation technologies lack,” Dell’Oro senior analyst Alam Tamboli explained.

He said 10 Gbps EPON is already seeing strong traction across China, noting that current generation PON has previously been widely deployed across the market.

“10 Gbps EPON has already begun shipping strongly in China where current generation PON is widely deployed.  Shipments of XGS-PON and NG-PON2 remain small for now, but we anticipate that XGS-PON will grow more rapidly. XGS-PON and its 10 Gbps symmetric bandwidth should meet operators’ needs for business services and mobile backhaul,” Tamboli added.

Other next-generation PON technologies set to drive the strong growth for the segment include XGS-PON and NG-PON2.

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About the Report

The Dell’Oro Group Broadband Access 5-Year Forecast Report provides a complete overview of the Broadband Access market with tables covering manufacturers’ revenue, average selling prices, and port/unit shipments for Cable, DSL, and PON equipment.  Network infrastructure equipment includes Cable Modem Termination Systems (CMTS), Digital Subscriber Line Access Multiplexers ([DSLAMs] by technology ADSL, ADSL2+, G.SHDSL, VDSL, GFAST), and PON Optical Line Terminals (OLTs).  Customer Premises Equipment (CPE) technology reflects Voice-over-IP (VoIP) or data-only.  To purchase this report, please call Daisy Kwok at +1.650.622.9400 x227 or email Daisy@DellOro.com.

Despite skepticism from industry analysts and some recent prodding by the FCC, Dish Network Corp. is steadfastly confident that it can meet its service and buildout commitments for the wireless spectrum it owns.  On it’s second quarter earings call (see excerpts below), Dish stressed that it’s “on track” to complete the first phase of a 5G-capable network, initially supporting Narrow Band Internet of Things (NB-IoT) services, by March 2020.

Author’s Note: Of course, NB-IoT is a 3GPP spec and is not part of true standardized 5G (ITU-R IMT 2020).

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CEO Charlie Ergen on Dish’s 2Q-2018 earnings call earlier this week:

When we first started talking about it, I think there was a high degree of skepticism that an IoT network — that narrowband IoT network was the business. And of course since that time, you’ve seen Verizon, and AT&T, and T-Mobile now has a national plan all around the world Vodafone, companies in China very far ahead in IoT. So think it’s now recognized that narrowband IoT is in fact a major contributor in the world moving forward.

So we have a track record of being innovative, disruptive and it may be on the — maybe being on the very, very leading edge of where technologies go and we have another opportunity to do that in 5G…. I think that the FCC is maybe just like many people in this call and many investors and that there is some skepticism on DISH’s ability to execute that plan it’s a big project. And I think as the months go by, as people see the progress that we made, you turn that into people coming to the realization that we can in fact — we face same skepticism when we were going to launch satellites and compete against with — compete against incumbents and major corporations. And we never done that before, it was a big project for us. But with a dedicated team of people focused on the right direction we’re confident that we’ll be able to do that.

But the big paradigm shift in 5G, not the market in 5G that you’re going to hear about , but the real paradigm shift in 5G is Release 16 from 3GPP, which for standalone network is December of 2019, that’s when the specification comes out. It allows you to do three things that you can’t do in 5G today; it allows massive broadband; it allows massive IoT connectivity; and it allows the network to have low latency, so very, very low latencies.

Editor’s Note:  That is absolutely correct- it’s 3GPP release 16, along with parts of release 15, that will be submitted to ITU-R WP 5D for consideration as an IMt 2020 RIT.

We also are in a position with clean sheet of paper to do one — two more things really; one is to virtualize the network in a day and virtualize every aspect of our network, not just portions of it; and to slice our network so that it looks like separate networks to potential partners and customers. So it’s a huge, huge paradigm shift in terms of being 100% 5G with Release 19. So that release comes out at December 19, which means that people have to go build product for that. So product becomes available sometime later in 2020.

The second thing that happens is that our uplink spectrum. Let’s take 600 megahertz as an example that is not cleared by the broadcasters fully cleared until July of 2020. So we can’t build a modern network. The state-of-the-art we can’t start building that until 2020. And we’re hampered today just as a sideline, we’re very hampered today in building network because our uplink spectrum — we only have 5 megahertz of uplink spectrum. You can’t build a massive broadband network with 5 megahertz of uplink spectrum. So we have a lot of downlink spectrum, but we don’t have corresponding uplink. So we’ve got to get that cleared. And it’s not — it’s the 600 megahertz, it’s still the DE issues that are outstanding, all those things need to get cleared up for us to be able to do it. But everything comes together in 2020 for us to build a modern network.

The competitors will start building hybrid networks, but they’re not going to get to a full 5G platform without ripping out what they already have. And they have hundreds of millions of customers with phones. So the phone customer is not going to see that much difference in latency. So that some of the things that we’re going to do aren’t going to be that attractive from a cost to benefit ratio to the incumbents. But if we want to lead in 5G, we want to lead in artificial intelligence, virtual reality, autonomous vehicles,, smart cities, you’re going to need a more modern network for that and we’ll play big part in that.

Dish expects NB-IoT deployments to start “in earnest” this fall, Tom Cullen, Dish’s EVP of corporate development said. He pointed out that this part of the buildout is already funded by cash on the company’s balance sheet.

As I mentioned on the last call, we’ve made a lot of good progress and it’s the number one priority here at DISH and we’ve got a dedicated team working on it day-in and day-out. And we’ll start seeing radios in the next in the coming weeks and the deployment will start in earnest later this fall and that as we’ve mentioned before, it can be funded off of cash on the balance sheet.

On the number of NB-IoT cell sites/towers, Ergen said:

We’re not, at this point, disclosing the number of towers. As you know — as you’re doing RF planning and deployment that’s a pretty fluid environment and the number of towers is changing as we make progress going down the road. So I can’t address that specifically other than, as I said earlier, we feel like we’re making good progress and we’ll have pretty meaningful insight I think in the next four to six months.

I think you can assume that we would have materially less towers in phase one than phase two as you get into some of 5G applications that once the Release 19 is that you’ll need a denser network for sure. We have disclosed that we expect to spend between $500 and $1 billion on wireless through 2020. So they give you’re a range where we think it is no matter how many towers it is, we’re probably going to be in that range. And we’re working with a third party for RF design in terms of how many towers. And then obviously once we get it to test, we could verify that the specifications that the RF design and the vendors have said to us, is accurate. And so we’re — the answer is we don’t surely know, but we do know it’s materially less towers than perhaps the incumbents have today on a nationwide basis just because the range is clearly farther to the spec.

Cullen on 3GPP NB-IoT coverage:

 I would only say that the 3GPP standard spec) today is about 35 kilometer coverage. But the 3GPP is currently entertaining, changing the NB-IoT standard (spec) to 120 kilometers of coverage and some of the vendors we’re working with are able to provide 100 km. Now you can’t do that in every area, obviously, because of clutter and urban density and so forth. But that — because of that level of propagation, it reduces the number of towers necessary to provide the required terrestrial signal coverage as dictated by the license.

Ergen refuted persistent suggestions that Dish should just sell its spectrum, holding that Dish is committed to the network buildout because 5G is critical to the company’s future.

I don’t think you’ve heard me talking much about selling spectrum even, question number one. And then analysts have talked about that but I think that we see such an opportunity for 5G in terms of what that does realizes is our network is going to be different as a standalone network, it’s a little bit different. And we think the customer we might go after might be quite a bit different than the incumbents. And we see that as the long-term future of how this company is relevant 30 years from now. And so that’s a tough transition and tough on investors to be patient while it goes through that. But that has been our focus and has always been our focus.

We originally want to be built an LTE 4G network. We just — the rules on H-block got changed where we suddenly lost some of our — from interference perspective and we had to change course and then we had to go downlink this is all things that took place we had to wait for the next paradigm shift. And that’s — the good news is the 5G paradigm shift is much bigger than the LTE paradigm shift.

How much capital will be needed for the 5G build-out?  Here’s what Ergen said:

There is no question that we need to raise capital for the build-out. But realize we’re two-thirds of the way there — more than two-thirds of the way there in terms of capital for total 5G network. So run the math on that and it’s something like dollar megahertz per pop with a totally standalone 5G network, right. The number of people that might be attractive to is very long. What way you might structure partnerships and the ability for capital are many, many, many, many options to how you might do that.

There isn’t an industry in the next decade that doesn’t need what we’re going to build; and tens of billions of dollars is going to autonomous vehicles, but they’re going to need a piece of what we have; tens of billions of dollars goes to healthcare, they need a piece of what we have; tens of billions of dollars goes in utilities, they need a piece of what we have; tens of billions dollars is going into artificial intelligence, they need a piece of what we have; tens of billions of dollars are going in virtual reality, autoimmune reality and need a piece of what we have; tens of billions dollars is going into smart cities, they need a piece of what we have.

How long will NB-IoT build out take and what comes next?

It takes three years to build this first phase (NB-IoT). But the first phase leads to the second phase, which I think everybody is going to be pretty thrilled about, including the FCCs and investors and consumers. The first phase is going to be important but it’s not going to be as massive as we all would like. But for our license that’s not required and there is practical reasons why we can’t make it more massive today.

The global RAN base station equipment market will grow at a compound annual growth rate (CAGR) of 5% to exceed $26 billion in 2023, ABI research forecast in a new report.

“Today the RAN equipment market is undergoing multiple technology transitions as network operators move to densify macro networks with small cells, tackle in-building wireless and evolve to new technologies such as 5G, LAA (Licensed Assisted Access), unlicensed and shared spectrum technologies such as OnGo in the United States, and MulteFire,” said Nick Marshall, Research Director at ABI Research.

“These transitions are occurring against a backdrop of continuous technology evolution as networks upgrade to include MIMO (Multiple Input Multiple Output), Massive MIMO, 256 QAM, and carrier aggregation,” continued Marshall.

Global spending on indoor equipment which represents 27% of this market today will grow at a compound annual growth rate of 15.5% to represent a value of 42% of the total by 2023, the ABI Research report, Indoor, Outdoor, and IoT Network Infrastructure states.

The Asia Pacific region, which includes some of the largest and growing RAN markets in the world, is expected to continue to dominate the market with a share of 58% of global sales. North America and Europe will rank a distant second and third respectively.

Sale of infrastructure equipment in the North American and Asia Pacific regions will continue to be dominated by replacement and upgrades to LTE with the addition of 5G equipment gaining share starting in 2019, the report states.

“While the overall market is healthy, the underlying technology transitions are complex and only those vendors that can leverage them stand to benefit – these vendors include Ericsson, Huawei, Nokia, Samsung, and ZTE,” Marshall concluded.

Not only the traditional vendors will benefit as various “5G” technologies mature.  Many specialist vendors are ready to compete for “5G” market share. These vendors include small cell specialists Acceleran, Airspan, Airvana/CommScope, Comba, Contela, ip. access, Parallel Wireless, Ruckus/Arris, and SpiderCloud Wireless/Corning.

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This report is part of the company’s 5G & Mobile Network Infrastructure research service, which includes research, data, and Executive Foresights.

About ABI Research

ABI Research provides strategic guidance for visionaries needing market foresight on the most compelling transformative technologies, which reshape workforces, identify holes in a market, create new business models and drive new revenue streams. ABI’s own research visionaries take stances early on those technologies, publishing groundbreaking studies often years ahead of other technology advisory firms. ABI analysts deliver their conclusions and recommendations in easily and quickly absorbed formats to ensure proper context. Our analysts strategically guide visionaries to take action now and inspire their business to realize a bigger picture. For more information about ABI Research’s forecasting, consulting and teardown services, visionaries can contact us at +1.516.624.2500 in the Americas, +44.203.326.0140 in Europe, +65.6592.0290 in Asia-Pacific or visitwww.abiresearch.com.

Italy’s Ministry of Economic Development (MISE) announced seven companies will participate in the country’s upcoming 5G spectrum auction, which is projected to raise €2.5 billion. Mobile operators Iliad, Telecom Italia, Vodafone Italy and Wind Tre will be joined by fixed broadband operators Linkem, Fastweb SpA (Milan: FWB) and Open Fiber.

The auction is unusual in attracting so much interest from outside the existing mobile telecom sector.  In sharp contrast, recent 5G auctions in South Korea, Spain and the UK have not produced new mobile challengers.  Italy will be auctioning spectrum across a variety of bands, and not just the mid-range airwaves that were made available in Spain and the UK.

Companies will bid for licences in the 649MHz to 790MHz; 3.6GHz to 3.8GHz; and 26.5GHz to 27.5GHz frequencies, with the auction designed to create new entrants focused on boosting infrastructure in the market as well as making 5G-suitable spectrum available.  MISE said that new low-cost operator Iliad was the only participant to indicate it would bid for spectrum in the 700 MHz band frequencies currently used by broadcasters, and where special conditions apply to new entrants.

The auction is scheduled to be held at the end of September, with half of the €2.5 billion raised this year. Allocation will, however, not be finalized before the end of 2022.  Bidders are expected to submit initial offers by September 10th.

Under the tender’s rules, a new entrant (or remedy taker) can acquire up to three blocks of 2×5 MHz in the 700 MHz band of the six available, while an operator that has 10 MHz  in both the 800 MHz band and in the 900 MHz band, can acquire just two of these blocks.

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About Italy’s Ministry of Economic Development (MISE):

MISE is responsible  for Internet Governance  through participation in various international bodies and supervision of the assignment of domain names.  It operates for IT security,  certifying the security of systems and products and providing prevention and support services to citizens and businesses.  It authorizes network providers  to offer public access to the network and telecommunications services (ISP). It also promotes the dissemination of accessibility and usability of websites and, more generally, digital literacy.  Finally, the Ministry supports the development of the ultra-broadband  and defines the National Strategy together with Agid (Agenzia per l’Italia Digitale) .

 The development of ultra-broadband through the simplification of the regulatory framework, the creation of new development drivers, the use of tax incentives, the reduction of installation costs is a priority for achieving the objectives of the EU 2020 agenda.

The report concludes that as another era of untapped economic potential emerges with the adoption of 5G technology, investment in upgrading the underlying communications infrastructure has become increasingly critical. Unless tangible steps are taken to help rebalance the private investment case for the upgrade, the U.S. may risk losing the macro-economic leadership it gained in the previous wireless investment era.

“Maintaining U.S. leadership in mobile communications requires that carriers, technology vendors, OTT innovators, municipalities and policy makers collaborate to build a strong business case for 5G.  Deployment costs and cycle times for a densified network infrastructure is are critical for the U.S. to gain equal footing with other countries striving to be first to 5G,” Littmann added.

Service Provider Data Center Growth Accelerates,  by Cliff Grossner, Ph.D., IHS Markit

Service providers are investing in their data centers (DCs) to improve scalability, deploy applications rapidly, enable automation, and harden security, according to the Data Center Strategies and Leadership Global Service Provider Survey from IHS Markit. Respondents are considering taking advantage of new options from server vendors such as ARM-based servers and parallel compute co-processors, allowing them to better match servers to their workloads. The workloads most deployed by service provider respondents were IT applications (including financial and on-line transaction processing), followed by ERP and generic VMs on VMware ESXi and Microsoft Hyper-V. Speed and support for network protocol virtualization and SDN are top service provider DC network requirements.

 “Traditional methods for network provisioning to provide users with a quality experience, such as statically assigned priorities (QoS) in the DC network, are no longer effective. The DC network must be able to recognize individual application traffic flows and rapidly adjust priority to match the dynamic nature of application traffic in a resource-constrained world. New requirements for applications delivered on demand, coupled with the introduction of virtualization and DC orchestration technology, has kicked off an unprecedented transformation that began on servers and is now reaching into the DC network and storage,” said Cliff Grossner Ph.D., senior research director and advisor for cloud and data center at IHS Markit , a world leader in critical information, analytics and solutions.

“Physical networks will always be needed in the DC to provide the foundation for the high-performance connectivity demanded of today’s applications. Cisco, Juniper, Huawei, Arista, and H3C were identified as the top five DC Ethernet switch vendors by service provider respondents ranking the top three vendors in each of eight selection criteria. These Ethernet switch providers have a long history as hardware vendors. When selecting a vendor, respondents are heavily weighing factors such as product reliability, service and support, pricing model, and security,” said Grossner.

More Service Provider Data Center Strategies Highlights:

·         Respondents indicate they expect a 1.5x increase in the average number of physical servers in their DCs by 2019.

·         Top DC investment drivers are scalability (a driver for 93% of respondents), rapid application deployment (87%), automation (73%), and security (73%).

·         On average 90% of servers are expected to be running hypervisors or containers by 2019, up from 74% today.

·         Top DC fabric features are high speed and support for network virtualization protocols (80% of respondents each), and SDN (73%).

·         100% of respondents intend to increase investment in SSD, 80% in software defined storage, and 67% in NAS.

·         The workloads most deployed by respondents were generic IT applications (53% of respondents), followed by ERP and generic VMs (20%).

·         Cisco and Juniper are tied for leadership with on average 58% of respondents placing them in the top three across eight categories. Huawei is #3 (38%), Arista is #4 (28%), and H3C is #5 (18%).

Data Center Network Research Synopsis:

The IHS Markit Data Center Networks Intelligence Service provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for (1) data center Ethernet switches by category [purpose-built, bare metal, blade, and general purpose], port speed [1/10/25/40/50/100/200/400GE] and market segment [enterprise, telco and cloud service provider], (2) application delivery controllers by category [hardware-based appliance, virtual appliance], and (3) software-defined WAN (SD-WAN) [appliances and control and management software], (4) FC SAN switches by type [chassis, fixed], and (5) FC SAN HBAs. Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Cisco, Citrix, CloudGenix, CradlePoint, Dell, F5, FatPipe, HPE, Huawei, Hughes, InfoVista, Juniper, KEMP, Nokia (Nuage), Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.

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The following information was collected by Alan J Weissberger from various subscription only websites:

Gartner Group says the data center networking market is primarily driven by three factors:

• Refresh of existing data center networking equipment that is at its technological or support limits
• The expansion of capacity (i.e., physical buildouts) within existing locations
• The desire to increase agility and automation to an existing data center

Data center networking solutions are characterized by the following elements:

• Physical interfaces: Physical interfaces to plug-in devices are a very common component of products in this market. 10G is now the most common interface speed we see in enterprise data center proposals. However, we are also rapidly seeing the introduction of new Ethernet connectivity options at higher speeds (25 GbE, 50 GbE and 100 GbE). Interface performance is rarely an issue for new implementations, and speeds and feeds are less relevant as buying criteria for the majority of enterprise clients, when compared to automation and ease of operations (see “40G Is Dead — Embrace 100G in Your Data Center!” ).
• Physical topology and switches: The spine-and-leaf (folded Clos) topology is the most common physical network design, proposed by most vendors. It has replaced the historical three-tier design (access, aggregation, core). The reduction in physical switching tiers is better-suited to support the massive east-west traffic flows created by new application architectures (see “Building Data Center Networks in the Digital Business Era” and “Simplify Your Data Center Network to Improve Performance and Decrease Costs” ). Vendors deliver a variety of physical form factors for their switches, including fixed-form factor and modular or chassis-based switches. In addition, this includes software-based switches such as virtual switches that reside inside of physical virtualized servers.
• Switching/infrastructure management: Ethernet fabric provides management for a collection of switches as a single construct, and programmable fabrics include an API. Fabrics are commonly adopted as logical control planes for spine-and-leaf designs, replacing legacy protocols like Spanning Tree Protocol (STP) and enabling better utilization of all the available paths. Fabrics automate several tasks affiliated with managing a data center switching infrastructure, including autodiscovery of switches, autoconfiguration of switches, etc. (see “Innovation Insight for Ethernet Switching Fabric” ).
• Automation and orchestration: Automation and orchestration are increasingly important to buyers in this market, because enterprises want to improve speed to deliver data center network infrastructure to business, including on-demand capability. This includes support and integration with popular automation tools (such as Ansible, Chef and Puppet), integration with broader platforms like VMware vRA, inclusion of published/open APIs, as well as support for scripting tools like Python (see “Building Data Center Networks in the Digital Business Era” ).
• Network overlays: Network overlays create a logical topology abstracted from the underlying physical topology. We see overlay tunneling protocols like VXLAN used with virtual switches to provide Layer 2 connectivity on top of scalable Layer 3 spine-and-leaf designs, enabling support of multiple tenants and more granular network partitioning (microsegmentation), to increase security within the data center. Overlay products also typically provide an API to enable programmability and integration with orchestration platforms.
• Public cloud extension/hybrid cloud: An emerging capability of data center products is the ability to provide visibility, troubleshooting, configuration and management for workloads that exist in a public cloud provider’s infrastructure. In this case, vendors are not providing the underlying physical infrastructure within the cloud provider network, but provide capability to manage that infrastructure in a consistent manner with on-premises/collocated workloads.

You can see user reviews for Data Center Networking vendors here.

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In a new report,  HTF Market Intelligence says that the Global  Data Center Colocation Market will Have Huge Growth by 2025.

The key players are highly focusing innovation in production technologies to improve efficiency and shelf life. The best long-term growth opportunities for this sector can be captured by ensuring ongoing process improvements and financial flexibility to invest in the optimal strategies. Company profile section of players such as NTT Communications Corporation, Dupont Fabros Technology, Inc., Digital Realty Trust, Inc., Cyxtera Technologies, Inc., Cyrusone Inc., Level 3 Communications Inc., Equinix, Inc., Global Switch, AT&T, Inc., Coresite Realty Corporation, China Telecom Corporation Limited, Verizon Enterprise Solutions, Inc., Interxion Holding NV, Internap Corporation & KDDI Corporation includes its basic information like legal name, website, headquarters, its market position, historical background and top 5 closest competitors by Market capitalization / revenue along with contact information. Each player/ manufacturer revenue figures, growth rate and gross profit margin is provided in easy to understand tabular format for past 5 years and a separate section on recent development like mergers, acquisition or any new product/service launch etc.

Browse the Full Report at: https://www.htfmarketreport.com/reports/1125877-global-data-center-colocation-market-6

Australia 5G Auction in November

The Australian Communications and Media Authority (ACMA) announced it will award spectrum in the 3.6 GHz band for the provision of 5G services in November.  Australia’s telecom regulator confirmed that it will be auctioning off 125 megahertz of spectrum in the 3.6 GHz band. The spectrum will be divided into 350 lots across 14 regions of Australia.

“As a key enabler of the digital economy, the 3.6 GHz spectrum will ensure Australia is well-placed to realize the benefits of 5G. Timely release of 5G-compatible spectrum will facilitate the early delivery of next generation 5G services to the Australian public and industry,” said ACMA Chair Nerida O’Loughlin.  “The ACMA has designed an auction process—including starting prices—that aims to maximize efficiency, competitive outcomes and the full utility of this spectrum for 5G,” O’Loughlin added

Interested carriers will have to pay a AU$10,000 ($7,400) application fee to participate in the auction. Prices for spectrum in metropolitan areas begins at AU$0.08 per megahertz per population. ACMA said the parties wishing to participate in the auction must put in their applications by August 31.  The regulator also said that the auction will include a spectrum cap, whereby each bidder is limited to 60 megahertz of spectrum in urban areas and 80 megahertz in rural areas.

In October 2017, the government of Australia developed a paper outlining a 5G policy for the country, including the establishment of a working group to drive the deployment of 5G mobile technology in Australia.

The government said this working group will support the timely rollout of 5G technology in the country with the primary goal of fostering the growth of the digital economy.

The government highlighted that it will support 5G deployments by making spectrum available in a timely manner, actively engaging in international standardization processes and streamlining planning arrangements to allow mobile operators to deploy infrastructure more quickly and at lower cost.

In February, Australian telecommunications company Telstra opened a 5G innovation center in the Gold Coast region. Telstra said the main aim of the new 5G center will be to test next-generation technologies to support the early commercial deployment of 5G mobile services in Australia. Telstra said it aims to launch commercial 5G services in Australia in 2019.

The carrier said its 5G center is designed to enable collaboration among technology vendors, developers, start-ups and the operator’s enterprise customers. At the time of the opening, the carrier announced plans to conduct 5G field trials in the coming months in and around the Gold Coast.

Telstra previously said that said that it would work with Ericsson on key 5G technologies including massive multiple-input, multiple-output (Massive MIMO), adaptive beam forming and beam tracking, and OFDM-based wave forms in its Gold Coast center.

References:

https://www.telecomasia.net/content/australia-auction-5g-spectrum-november

https://www.rcrwireless.com/20180809/5g/australia-auction-5g-spectrum-later-november

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New Zealand’s Spark on its 5G Plan:

Meanwhile,  New Zealand telco Spark today published a briefing paper that outlines how it is on track to start providing 5G services to New Zealand consumers and businesses from 2020.  The briefing paper aims to inform investors of Spark’s 5G intentions, help customers and stakeholders understand more about 5G, and address key considerations for policymakers.  Spark Managing Director Simon Moutter said Spark’s technical and network planning for 5G is advancing after successfully conducting outdoor and indoor trials earlier this year.  He has called on the government for clarity on the delivery of 5G spectrum, while outlining the telco’s technical and network planning.

Moutter said Spark is already making decisions that are contingent on securing additional 5G spectrum and is having to make those decisions “in the absence of any clear government policy” on when that spectrum will be available or in what bands.  Furthermore, Moutter said the allocation processes for the two most likely spectrum bands – mid frequency C-band and high frequency mmWave band – should be completed as soon as possible, to ensure 5G services can be delivered in time for the 2020-21 America’s Cup in Auckland.

In addition to these bands, low frequency spectrum (below 1000MHz) will be required to deliver 5G services on a pervasive basis into rural areas.  The government’s current work to define 600MHz spectrum as a band for potential 5G use should continue at pace, he said.

“We are undertaking detailed planning to ‘map’ expected 5G cell site densities in New Zealand and, as a result of this planning, and the learnings we have taken from our 5G testing, we are forming a good understanding of how many new sites we will need for 5G, and where,” said Moutter today, while releasing a briefing paper on Spark’s 5G intentions.

“We have already begun a build programme to increase the number of cell sites in our existing mobile network – which will enable us to meet near-term capacity demand as well as lay the groundwork for network densification required for 5G.”

Moutter said 5G will enable Spark to provide additional capacity at a lower incremental unit cost than under 4G and 4.5G.

“This means that once 5G is available to deploy, we will have a strong commercial incentive to rapidly build 5G network capability as the primary means of keeping ahead of growing customer demand for more data at faster speeds,” he added.

Spark expects to fund 5G network development (excluding spectrum and any move towards widespread rollout of new cell sites using high frequency mmWave band spectrum) within its existing capital expenditure envelope of 11 per cent to 12 per cent of revenues by diverted investment from 4G as soon as the necessary spectrum is available.

By 2020, Spark expects its wireless-network specific capex to be between 25 per cent and 35 per cent of Spark’s overall capital expenditure envelope, up from 25 per cent in the year ended 30 June 2017.

In late 2018, Spark will launch a 5G Innovation Lab in Auckland’s Wynyard Quarter Innovation Precinct that will allow partner companies to test and develop applications over a pre-commercial 5G network.

Moutter said it was important for policy makers to recognise 5G is not a standalone technology or solution – it will operate with previous generations of wireless technology and will be deployed as an overlay of existing network infrastructure.

Therefore, policy settings need to support network operators having control over the evolution of their wireless networks, he said.

Moutter also took another swipe at recent suggestions an organisation such as Chorus should roll out a single 5G network for New Zealand along the lines of the Ultrafast Broadband project.

“The current competitive market model, in which multiple wireless network operators compete against one another to grow their customer bases through product and service innovation and pricing, represents a good blueprint for the way 5G can be rolled out in New Zealand and would provide for more investment predictability and certainty over the coming decade,” Moutter commented.

Reference:

https://www.sparknz.co.nz/news/Spark-outlines-5G-network-intentions/

Is it possible for anyone to throw cold water on the 5G market potential  and diminish ultra hyped expectations?  YES!

5G use cases may not be compelling enough for massive uptake by businesses, according to Kathryn Weldon, technology research director at GlobalData.  Weldon offered her view on upcoming challenges for mobile operators:

“While 5G services are not yet ‘live’ this next generation of wireless technology is already top of mind for service providers, original equipment manufacturers (OEMs) and other telecom market ecosystem players. Aside from gearing up to build out the technology, they will be working together to make sure that 5G use cases are compelling – that is, different enough from 4G to matter to customers. As with any new generation of wireless, the stakes are high, and operators are hoping that they’ll make back their substantial investments in 5G. For most operators, this should come via a ‘massive’ uptake of connectivity, plus revenues from advanced services spanning both consumers and business customers.”

Operators need to move beyond their current barrage of technology build-out narratives and discussions of fixed vs. mobile services, she emphasized. “Rather, it’s the use cases and business outcomes that will make the difference. Operators need to deliver novel and compelling capabilities that change how business customers see and use cellular services.”

Enterprises have different requirements than consumers:

“As 5G communications traffic is expected from Internet of Things (IoT) sensors in industrial robots, roads, and vehicles and can leverage the technology’s reliability and low latency to control critical services and infrastructure for public safety, healthcare, government organizations, and utilities. But the ROI for these applications must be compelling.”

Weldon further acknowledged that questions remain:“Will the enterprise appetite to spend more to use these futuristic use cases exist when 5G networks become a reality? Will devices to support these applications be in place once those networks are ready? Will businesses finally see wireless as a valid replacement for wireline broadband? And lastly, will operators be able to offer all these futuristic services profitably? Only time will tell.

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Last year, Global Data said 5G networks will become mainstream by 2020, but Europe will lag behind Asia and the US, as operators seek to make the most of 4G, according to GlobalData, a recognized leader in providing business information and analytics. The company’s 5G report forecasts that while over half of all mobile subscriptions will be 5G-capable in South Korea by 2022, compared only around 7% in Europe.

5G will, for the first time, go beyond increased bandwidth and capacity, as was the focus in previous wireless generations, adding low latency, high density and high reliability. These capabilities will enable a variety of use cases, opening the door to new, predominantly business-focused services such as self-driving cars and smart cities. 5G also supports the focus that many operators have in looking for new, adjacent revenue streams, including fixed-mobile integration, digital content and the Internet of Things.

Peter Jarich, Chief Analyst for GlobalData Technology, adds: “Hopes are running high for the potential of 5G to truly transform mobile business models, and tap new revenue opportunities moving beyond consumers and into diverse digital industries. The implications go beyond any individual operator to impact national and regional competitiveness.

“Despite this, for all the efforts to fast-track early 5G deployments, it’s important to recognize that 5G rollouts will take years to complete; no region or country has won or lost the race to 5G yet.”

Frisco Station is a 242-acre, mixed-use urban development in Frisco, Texas. Located along Frisco’s North Platinum Corridor, Frisco Station includes office, residential and medical space, along with a retail and restaurant district.

On Friday, the entity  announced plans to deploy integrated network connectivity from AT&T.  Frisco Station said that the development will be one of the first connected communities in the nation built from the ground up with “5G Evolution” wireless technology from AT&T.  The future deployments will include “wireless stealth micro cells,” fiber-based internet service and Wi-Fi throughout all common areas according to Frisco Station and AT&T.

“Frisco Station understands the future belongs to the individual,” said Ed Balcerzak, SVP of AT&T Connected Communities in a statement. “With this development, we’re working together to give you more of your thing and connect you to the people, information and entertainment you care about.”

“Stations are places where people go to make connections. That’s why the Frisco Station Partnership chose AT&T as its partner to implement a platform that can support a connected community at every stage,” said Mike Berry, president of Hillwood, Frisco Station’s master developer. “We believe we are creating a high-tech environment, unlike anywhere else in the country, that has the potential to change the way people think about what’s possible in their day-to-day interactions with people and information.”

AT&T highlighted that this investment in innovative technologies will allow Frisco Station to be ready for new innovations to be launched, like Uber Air’s first Skyport and the recently announced drive.ai autonomous vehicle pilot program.

“By proactively addressing current and future connectivity needs, Frisco Station will be prepared for greater reliance on smart devices and automated platforms for transportation, healthcare, entertainment and lifestyle advancements – connecting an anticipated 15,000-person daytime population, five million square feet of office and 2,400 urban living residents,” AT&T’s statement says.

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Frisco Station’s enhanced wireless technology is providing a platform to encourage connectivity between Frisco’s emerging corporate and entertainment destinations. Building a connected community from the ground up ensures that Frisco Station’s vision can be put into practice today and maximized well into the future.

About Frisco Station

Frisco Station is an unprecedented 242-acre, mixed-use development in Frisco, Texas that is created with a new approach to urban design based on the foundational principles of smart, creative and healthy experiences. It is among the first connected communities in the nation to be constructed from the ground up, which enables the development to offer innovative amenities that increase convenience and productivity. Frisco Station is served by one of the world’s first Skyports to support Uber Air’s unique flying taxis and is one of the first projects in the nation to be served by a network of autonomous vehicles. Located along Frisco’s highly desired North Platinum Corridor, Frisco Station features fully amenitized office, residential and medical uses, along with a robust retail and restaurant district that will be anchored by Alamo Drafthouse. The project is being developed by the Frisco Station Partnership, which is composed of The Rudman Partnership, Hillwood Properties and VanTrust Real Estate.

About AT&T Communications

We help family, friends and neighbors connect in meaningful ways every day. From the first phone call 140+ years ago to mobile video streaming, we innovate to improve lives. We have the nation’s largest and most reliable network and the nation’s best network for video streaming.** We’re building FirstNet just for first responders and creating next-generation mobile 5G. With DIRECTV and DIRECTV NOW, we deliver entertainment people love to talk about. Our smart, highly secure solutions serve over 3 million global businesses – nearly all of the Fortune 1000. And worldwide, our spirit of service drives employees to give back to their communities.  AT&T Communications is part of AT&T Inc.

References:

AT&T to deploy 5G-ready connectivity services for Frisco Station urban development

https://www.businesswire.com/news/home/20180809005098/en/Frisco-Station-ATT-Create-5G-Evolution-Connected

Cignal AI’s (Andrew Schmitt) latest  Optical Customer Markets Report states that spending growth by cable Multiple System Operators (MSOs) led all other North American industry verticals during first quarter 2018. The report also reveals that contrary to continued increase in China’s optical spending, incumbent network operator spending in North America and Europe, Middle East and Africa (EMEA) on optical transport equipment continues to decline.  Spending in North America grew 30 percent and outpaced all other customer verticals, including cloud operators.

Indeed, optical equipment spending by cloud operators has stalled due to rapidly declining prices and the use of IP-over-WDM as a substitute. Despite the downward trend, however, Ciena and Infinera continue to increase market share in the cloud optical network market.

“In North America, cable MSOs were the strongest performing customer market during the first quarter of 2018,” says Andrew Schmitt, lead analyst at Cignal AI. “Cloud operators are not increasing purchases of optical equipment, though common belief right now is just the opposite. The revenue growth from cloud operators experienced by Ciena and Infinera came at the expense of other vendors’ sales.”

Other key findings in the report include China being the largest source of optical hardware market growth, almost single-handedly representing the one-third global spending by Asia. Global spending by cable MSOs grew 5% year-over-year in the first quarter, with North America increasing 30%.

Other findings of the report were outlined in the press release and included:

• Ciena and Infinera sales growth in the cloud and colo market came during a period of overall spending decline among these customers (see above chart).
• Optical equipment spending by cloud operators has stalled, which contradicts the common perception that cloud operators like Amazon, Google and Microsoft are increasing spending on optical transport equipment. Growth in the cloud market has been inhibited by rapidly declining prices and the use of IP over WDM as a substitute.
• One third of global spending on optical hardware is in Asia, with almost all coming from Chinese incumbent operators.
• Cable MSO global spending grew 5 percent year-over-year in the first quarter.

Cignal AI’s Optical Customer Markets Report is issued quarterly and quantifies optical equipment sales to five key customer markets as well as equipment vendor market share for sales to cloud operators.

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From a separate Cignal AI market research report, here’s the latest YoY Revenue % increase/decrease for various segments of the optical networking market by country or region and Grand Total:

Chart courtesy of Cignal AI

Samsung’s digital city in South Korea showcases many of the perceived benefits of 5G.  Samsung has deployed a 5G hot spot (or hot zone) within its campus to demonstrate how quickly a person in a moving vehicle could download and upload large video files to the network.   The company’s pre-5G standard technology already supports some in-vehicle services, as well as smart city initiatives such as traffic, smart lighting and CCTV, and as it gains widespread coverage, even more innovations will occur.

Sporting venues will likely use 5G hot zones to deliver a new in-stadium fan experience that offers personalized video feeds of a customer’s favorite player to their mobile device. One example of this was the time slice feature that was available for the winter Olympics. Moreover, remote healthcare use cases will get a boost with better bandwidth to enhance the video and enable new use cases such as assisted surgery with augmented and virtual reality.

https://news.samsung.com/global/video-5g-city-samsungs-preview-of-the-5g-era

Verizon and Nokia announced they were able to achieve a key milestone on the road to 5G: handing off a signal seamlessly to a vehicle traveling between two radio sectors.  The test took place at Nokia’s Murray Hill, N.J., campus. A data transmission at 28 GHz was sent from two 3GPP New Radio (NR) radios on a Nokia building to a vehicle outfitted with a receiver and equipment to measure transmission statistics. The vehicle traveled between the two radios, achieving seamless NR Layer 3 3GPP-compliant mobility hand off of the signal between the two sectors, intra-gNB and inter-DU, according to the companies.

Verizon said that the call mobility test involved a data transmission at 28 GHz that was sent from two 3GPP compliant NR radios on Nokia’s building, to a vehicle that had a receiver and test equipment to measure transmission information.

“The vehicle traveled between the two radios, achieving seamless 5G NR Layer 3 3GPP-compliant mobility handoff of the signal between the two sectors,” Verizon said, noting that these were intra-gNodeB and inter-distributed unit handovers.

“Unlike some of the incremental 5G technology announcements we’ve seen lately, tests like the one we conducted are significant advancements in the development of 5G technology,” said Bill Stone, vice president, Technology Development and Planning for Verizon, in a press release. “By taking these tests out of the lab and into the field, we’re replicating the experience users will ultimately have in a 5G mobility environment,” he added.

“We are pleased to showcase the acceleration of the mobile capabilities in 5G,” said Marc Rouanne, president, Mobile Networks, Nokia, in the release. “Enhanced mobile broadband is one of the first services being delivered on Nokia’s end-to-end 5G Future X portfolio. As a result, we can help our customers meet their early 5G deployment schedules and initial coverage demands.”

Verizon plans to be the first to launch 5G residential broadband service in four markets this year:  Los Angeles, Houston, Sacramento and Indianapolis.  Verizon CEO Hans Vestberg told CNBC the operator is going to be first in the world with 5G. “We are building everything right now,” he said, with 5G mobile phones due in the hands of consumers next year.

References:

https://www.verizon.com/about/news/5g-move-verizon-and-nokia-complete-first-5g-nr-mobility-call

https://www.rcrwireless.com/20180817/5g/verizon-nokia-test-5g-nr-call-mobility

https://www.fiercewireless.com/wireless/verizon-nokia-complete-5g-nr-mobility-call

Cogent Communications, one of the world’s largest ISPs, is carrying more traffic on its network than most incumbent telcos. During its most recent earnings report, Cogent said its quarterly traffic growth came in at 10%, while year-over-year traffic growth hit 44%.   Let’s break that down into on-net and off-net services/customers:

On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by Cogent facilities. On-net revenue was $93.0 million for the three months ended June 30, 2018; an increase of 0.7% from the three months ended March 31, 2018 and an increase of 8.7% over the three months ended June 30, 2017.  Cogent’s more than 65,000 on-net customer connections and its nearly 2,600 on-net office buildings and carrier-neutral data centers send traffic over its all-IP-over-DWDM network, protected at Layer 3, using Ethernet as its network interface.  On-net customers are obviously the most profitable customers for Cogent.

Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities and services to provide the last mile portion of the link from the customers’ premises to Cogent’s network. Off-net revenue was $36.1 million for the three months ended June 30, 2018; the same amount as the three months ended March 31, 2018 and an increase of 6.3% over the three months ended June 30, 2017.

Total customer connections increased by 13.8% from June 30, 2017 to 76,193 as of June 30, 2018 and increased by 3.1% from March 31, 2018. On-net customer connections increased by 14.1% from June 30, 2017 to 65,407 as of June 30, 2018 and increased by 3.2% from March 31, 2018. Off-net customer connections increased by 12.3% from June 30, 2017 to 10,480 as of June 30, 2018 and increased by 2.3% from March 31, 2018. The number of on-net buildings increased by 161 on-net buildings from June 30, 2017 to 2,599 on-net buildings as of June 30, 2018 and increased by 58 on-net buildings from March 31, 2018.

Cogent classifies all of their customers into two types:  NetCentric customers and Corporate customers.

1. NetCentric customers buy large amounts of bandwidth from us and carrier neutral data centers and our Corporate customers buy bandwidth from us in large multi-tenant office buildings. Revenue in customer connections by customer type.  There were 33,520 NetCentric customer connections on our network at quarter-end, which declined from last quarter due to significant circuit grooming, consolidating multiple 10 gig circuits to fewer 100 gig circuits at the same location from some of our larger NetCentric customers.
2. Corporate customer revenue grew sequentially by 2.7% to $83.3 million and grew year-over-year by 11.9%. We had 42,673 Corporate customer connections on our network at quarter-end. Quarterly revenue from our NetCentric customers declined sequentially by 3.4% and grew year-over-year by 1.4%.

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CEO Dave Schaeffer’s Earnings Call Remarks:

The size and scale of our network continues to grow. We have over 927 million square feet of multi-tenant office space on-net in North America. Our network consists of over 31,900 metro fiber miles and over 57,400 intercity route miles of fiber.

Cogent remains the most interconnected network in world, where we are directly connected with over 6,360 networks. Less than 30 of these networks are settlement-free peers. The remaining over 6,330 networks are paying Cogent transit customers.

We are currently utilizing 27% of the lit capacity in our network. We routinely augment capacity in sections of our network to maintain these low utilization rates. For the quarter, we achieved sequential quarterly traffic growth of 10% in what is traditionally a slow seasonal period for traffic growth and we saw a significant improvement in our year-over-year quarterly traffic growth to over 44%.

We operate 52 Cogent-controlled data centers with 587,000 square feet of space and we are operating those facilities at 32% utilization. Our sales force turnover rate in the quarter was 4.8% per month, again better than our long-term average turnover rate of 5.7% per month. And I think a testament to the training and retention programs that we’ve put in place. We ended the quarter with 438 reps selling our services.

Cogent remains the low cost provider of internet access and transit services. Our value proposition to our customers remains unparalleled in the industry. Our business remains entirely focused on the Internet and IP connectivity and data colocation services. Our services provide a necessary utility to our customers. Beginning at the start of Q2 and April 1st, we began selling our SD-WAN services. We do not expect a material contribution from these services for the next several quarters.

We expect our annualized constant currency long-term revenue growth to be consistent with our annualized guidance of 10% to 20%, and our long-term EBITDA margin expansion rates to remain approximately 200 basis points per year for the next several years.

We expect to grow the sales force at between 7% and 10% per year for the next several years, while we expect operational head count growth to be slower at probably 2% to 3%. So the mix will increasingly become more sales-centric. Because of the efficiencies in running our business and the standardization of our products and the systems that we’ve deployed, we can sustain 44% traffic growth, 20% growth in unit number of connections and do that with a increase in operational and overhead employees of only about 2% to 3% per year. The sales force, however, is the engine that will drive accelerating revenue growth. And investing in that sales force has been and continues to be our major focus.

Analysis:

Cogent is trying to provide the most bandwidth at the lowest possible price, which means it’s in a race to run its network at the lowest possible cost, which means it’s in a race to take every advantage of new optical networking and routing technologies, as soon as they’re available.

“We divide the network into four big technology regions — edge routing, core routing, metro transport and long-haul transport,” Schaeffer told Light Reading. “In all of those functional areas we are on our third generation of equipment — we’ve done two complete forklift upgrades in 19 years — and, you know, I’m sure we’ll go to a fourth generation soon,” he added.

Webcast Replays:

The KeyBanc Capital Markets 20th Annual Global Technology Leadership Forum was held at the Sonnenalp in Vail, CO. Dave Schaeffer will be presenting on Monday, August 13th at 10:00 a.m. MT.  Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.

The Oppenheimer 21st Annual Technology, Internet & Communications Conference was held at the Four Seasons Hotel in Boston, MA. Dave Schaeffer will be presenting on Wednesday, August 8th at 1:05 p.m. ET.  Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.

The Cowen 4th Annual Communications Infrastructure Summit was held at the St. Julien Hotel and Spa in Boulder, CO. Dave Schaeffer will be presenting on Tuesday, August 7th at 3:30 p.m. MT.  Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.

KT Corp, South Korea’s largest telecommunications network operator, will participate in a nationwide project to greatly improve Internet connectivity in the Philippines, gaining a major foothold in the Southeast Asian country and neighboring region.

KT signed a 53 billion won (US$ 47 million) contract last week with the Philippines’s Converge ICT Solutions Inc. to build an optical fiber network along some 1,570 kilometers (975 miles) of main roads in the northern region of Luzon. The company hopes the contract will lead to more business partnerships with the top Philippines Internet provider in the future.

The latest deal is part of Converge’s $1.8 billion endeavor to expand its broadband coverage throughout the Philippines over the next five years. KT is increasing efforts to expand its business presence and partnerships overseas, notably in Asia, Europe and Africa, with the company’s latest Internet solutions, including GiGA Wire, GiGA WiFi and GiGA LTE.

“The partnership with Converge ICT Solutions is a great opportunity to introduce our technological expertise in telecommunications network planning, construction and operation not only in the Philippines but also in neighboring countries,” said Yun Kyoung-Lim, head of KT’s future convergence and global businesses. “KT will continue its efforts in representing the Republic of Korea to the world as the global ICT leader.”

KT is a global leader in next-generation wireless technology. The company is preparing for the commercial launch of the country’s first nationwide 5G network early next year and successfully showcased trial 5G services with the world’s first 5G-ready network. The company is also a pioneer in future technologies such as artificial intelligence (AI), autonomous driving, and virtual and augmented reality (VR and AR).

In recent years, KT has installed more than 5,500 kilometers (3400 miles) of optical fiber networks in Myanmar, Bangladesh and other countries. For the Philippines-based project, the company plans to cooperate with many Korean small- and mid-sized companies, which have proven their high quality through previous overseas projects. KT expects to have more business opportunities in the Philippines, including smart energy, corporate and public innovations, and disaster and safety management.

The Korean telecom leader also signed an agreement last month with Germany-based albis-elcon to provide its GiGA solutions and next-generation technologies to communications service providers in Europe and other parts of the world. KT is also now working on various projects to improve ICT infrastructure in Africa, including broadband networks in Rwanda, Gabon and Botswana and a public security network in Angola.

Luzon is the largest of more than 7,000 islands in the Philippines and is home to the Southeast Asian country’s capital, Manila. More than half of the country’s population, estimated at over 106 million, live on Luzon. Because the country consists of so many islands, the Philippines has experienced difficulties in improving its Internet speed and telecommunications service environment.

When the optical fiber cables project in Luzon is completed in June 2020, a great number of people in the Philippines are expected to benefit from high-speed home Internet connections. Philippines President Rodrigo Duterte has established the Department of Information and Communications Technology, and the administration is promoting e-government services and ICT development.

About KT:

KT Corporation, Korea’s largest telecommunications service provider reestablished in 1981 under the Telecommunications Business Act, is leading the era of innovations in the world’s most connected country. The company leads the 4^th industrial revolution with high speed wire/wireless network and innovative ICT technology. After installing 4.5 million fixed lines for 20 million users in just 12 years, KT was the first telecom provider to introduce 5G broad-scale trial service in 2018. It is another step in KT’s continuous efforts to deliver essential products and services as it seeks to be the No.1 ICT Company and People’s Company.

For more information, please visit our English website at https://corp.kt.com/eng/

The roll out of super fast broadband in the UK has increased revenues for businesses and created jobs, says a report by the UK Department for Culture, Media and Sporttitled: “The Evaluation of the Economic Impact and Public Value of the Super fast Broadband Programme, covering 2012 to 2016.”

“We’ve also recently introduced a raft of lower wholesale prices to help drive higher take-up of faster fiber services which will help to further fuel the boost to the UK economy,” Openreach chief Clive Selley said.

https://www.bbc.com/news/business-45238452

https://www.gov.uk/government/news/need-for-speed-drives-superfast-broadband-boost-for-wales

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From the FT (see reference below):

IHS Markit says that 82% of mobile operators participating in its recent 5G study are busy trialing and testing the technology, mainly in North America and Asia.  “Get ready, 5G is around the corner,” said Stéphane Téral, executive research director, mobile infrastructure and carrier economics, IHS Markit.

–>That’s despite the IGNORED REALITY that the true and only 5G standard- IMT 2020- is over 2 years from completion!

“5G is going live in North America by the end of 2018, and then in South Korea in 2019. Most operators in Europe, however, aren’t planning to deploy 5G until 2021 or later,” Teral added.

Eighty-two percent of operators polled for the study, entitled “Evolution from 4G to 5G: Service Provider Survey,” rated ultra-low latency (ULL) the chief technical driver for 5G, followed by decreased cost per bit (76%) and increased network capacity (71%). The participants were 17 of the world’s largest mobile operators with a combined 43% of the world’s 6 billion subscribers.

“Every technical aspect that’s related to substantial improvement in network performance — lower latency, higher capacity, higher bandwidth, higher throughput — while decreasing the cost per bit continues to receive high ratings in our survey,” Téral said. “This is logical because it’s the foundation of the 5G definition.”

Radio remains the most challenging network development item on the 5G agenda with 53% of operator respondents noting that radio is the area of the network that will require the biggest development effort to make 5G happen, followed by transport (24%) and management (14%).

Extreme mobile broadband (eMBB) was the highest-rated 5G use case driver among survey respondents, followed by real-time gaming. As real-time gaming requires a super-fast network with low latency, it cannot occur in the absence of eMBB; the same applies to high-definition (HD) and ultra-high-definition (UHD) video services and tactile low-latency touch and steer.

Even so, respondents expect fixed-wireless access (FWA) to be ready for commercial deployment first.

“The bottom line is early 5G will be an extension of what we know best: broadband, whether in FWA or eMBB form,” Téral said. “Don’t expect factory automation, tactile low-latency touch and steer, or autonomous driving to be ready on 5G any time soon despite being touted as the chief 5G use cases.”

About the survey

The “Evolution from 4G to 5G: Service Provider Survey” assesses 5G technologies,  market trends and mobile operator plans for deploying 5G networks. For the study, IHS Markit interviewed 17 of the world’s largest service providers, who together have 43 percent of the 6 billion mobile subscribers worldwide. Respondents to the survey have detailed knowledge of the mobile network infrastructure and technologies operated by their companies, and they are influential in planning and making purchase decisions for mobile network equipment.

References:

https://news.ihsmarkit.com/press-release/technology/5g-trials-full-swing-12-percent-operators-moving-commercial-deployment-year

https://ihsmarkit.com/topic/technology-critical-insights-5g.html

https://technology.ihs.com/605082/evolution-from-4g-to-5g-service-provider-survey-2018

On August 21st Nokia announced its patent-licensing rate for 5G smartphones at €3 (~$3.47) per smartphone. That rate appears to be less than what Qualcomm and Ericsson are charging for their own 5G patents.

“Nokia innovation combined with our commitment to open standardization has helped build the networks of today and lay the foundations for 5G/NR,” said Ilkka Rahnasto, head of patent business at Nokia. “This announcement is an important step in helping companies plan for the introduction of 5G/NR capable mobile phones, with the first commercial launches expected in 2019.”

For other categories of devices, Nokia said it will determine its licensing rates separately “and seeks to engage in constructive dialogue with relevant industry participants to define the licensing models best suited for those industries.”

Nokia’s announcement underscores what will be a major element in the growth of the 5G industry.  The companies that have contributed to the 3GPP relase 15 New Radio (NR) spec are all likely looking to cash in on patent-licensing agreements.  That’s even though 3GPP won’t submit it’s IMT 2020 RIT proposal to ITU-R WP 5D till July 2019!

Already some of the global wireless industry’s biggest players have outlined their patent-licensing positions on 5G, even though there won’t be a standard (ITU-R’s IMT 2020) for more than two years.

Qualcomm late last year said that it could charge smartphone manufacturers up to $16.25 in royalties for every 5G phone they sell. However, $16.25 per 5G phone is not necessarily the exact price that 5G handset makers would pay; the company said its rates would vary depending on exactly what kinds of technologies were included in the license, as well as what types of devices manufacturers would sell.  Furthermore, Qualcomm indicated in April the company will adjust its patent-licensing terms, which some analysts said could result in a reduction in licensing fees paid by some of Qualcomm’s bigger customers, like Samsung.  Last November, Qualcomm announced it would charge up to $16.25 in royalties for 5G smart phones.

Similarly, in March of last year, Ericsson said it would charge $5 per 5G phone, though Ericsson said it might reduce that rate to $2.50 per phone under “exceptional circumstances.”  The company states on its website:

5G standardization is supported by the patent and licensing process, and will boost performance between networks, devices and operators, creating new revenue streams with radical new business models and use cases. Progress on the 5G standardization front will also bring enormous opportunities to the way we use our devices to communicate with our surroundings, revolutionizing key industries globally, including: TV and media; manufacturing; healthcare; telecommunications; and transportation and infrastructure.

Monica Magnusson,  VP of IPR Policy at Ericsson recently wrote:  “5G will offer a $619 billion revenue opportunity by 2026 globally. The new possibilities and innovations that 5G will enable seem exciting but harnessing the potential business value and societal benefits from technological breakthroughs will require a commitment to making this technology accessible. That’s why consensus-based standards and fair patent licensing must be prioritised.”

Nokia, Qualcomm and Ericsson are all working to increase the revenues that they derive from patent licensing. During the Nokia’s second-quarter earnings conference call with analysts, Nokia’s CEO Rajeev Suri said that “We expect our current portfolio strength both to continue for many years to come and to give us considerable monetization opportunities. … We’ve always had clear and ambitious targets for new patent creation and we are constantly adding new patents to our portfolio while still maintaining a high-quality threshold.”