Mobile World Congress-2014. Issue 2. World Network Infrastructure Market Trends.

April 2014

Analytical Report (full version)

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Analytical Report (full version)

Mobile World Congress-2014. Issue 2. World Network Infrastructure Market Trends.
Mobile World Congress-2014. Issue 2. World Network Infrastructure Market Trends.
April 2014

Mobile World Congress-2014. Issue 2. World Network Infrastructure Market Trends.

April 2014

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JSON TV crew and analysts from J'son & Partners Consulting participated in Mobile World Congress 2014 - a key event of the world telecommunications market, held on February 24-27, 2014 in Barcelona, Spain. Traditionally, the Mobile World Congress can be divided into three key areas: consumer devices, network infrastructure, and the development of the overall mobile ecosystem. This part of the Congress report is devoted to the world network infrastructure market trends.



Network Functions Virtualization and Small Cells

With regard to technological trends on the infrastructure equipment market, the Mobile World Congress 2014 was all about virtualization. Almost all infrastructure vendors offered these solutions at the show, and the concept has been given the common name Network Functions Virtualization, or NFV. In particular, Glenn Booth Vice President of Alcatel-Lucent, paid special attention to it, noting the prospect of "overflow" of all network functionality, including radio wave access systems, from telecommunications hardware to cloud-based software. "We are focusing on wireless in three different dimensions. Number one is LTE overlay offer, delivering best performing LTE networks in the world. Second aria is new applications for LTE like life real working broadcasting, we’ve done with Verizon Wireless as well as Voice over LTE (VoLTE) demonstration. And the third is highlighting commitment to the cloud, which is big corporate move for us, - it’s virtual Evolved Packet Core, virtual multimedia IMS and from wireless perspectives most importantly is Virtual RAN (virtual radio access network"-said Mr. Booth. More details about Alcatel-Lucent key areas of development, the network bandwidth scalability, as well as company opinion on the world mobile and infrastructure market trends can be learned from interview with Glenn Booth here.


It is worth noting that NFV is already being tested by leading world mobile carriers, especially European ones, who are faced with the urgent need to reduce CAPEX/OPEX due to a sharp drop in revenue caused by competition, European regulators and popularity of OTT-services. In particular, Telefonica group has announced a global initiative named UNICA, mainly tasked to transition from a proprietary telecommunication infrastructure to IT-compatible platforms based on open standards. The traditional approach is to develop equipment for each of the specific network features, whereas NFV uses virtualization and moving to standard IT infrastructure of carrier data centers. Thus, mobile carriers will increasingly transform from classic telecommunication players into major IT companies. In more detail you can learn about it from the interview with Nokia Solutions & Networks (NSN) Director of Technology (Russia) Lidia Varukhina (here). When the voice shall “die”, when LTE-Advanced terminals with 3x20 MHz support shall appear, is there a future for LTE Broadcasting and how carriers can make extra money on the Android OS vulnerability – all these, as well as other, equally interesting questions, are answered in Ms. Varukhina’s interview.


At the same time, Telefonica’s UNICA initiative assumes that 30% of all functions of the carrier’s new network equipment shall be virtualized by 2016. The first phase of virtualization will affect functions directly related to signaling (IMS, DNS, SMSC and OCS), the second phase involves the transformation of the network core. UNICA tests in various countries around the world currently employ appropriate equipment by NEC, Huawei, Alcatel-Lucent, Ericsson, HP and NSN. At the same time, the network infrastructure virtualization projects were also announced by Deutsche Telekom, Austria Telecom and AT&T. Interestingly, this largest American mobile carrier provides the industry's first example of large-scale virtualization using solutions not only from the largest and well-known vendors (Ericsson, Tail-F Systems, Metaswitch Networks) but also from a software startup company (Affirmed Networks, network core virtualization). According to analysts, this is just a first trial step, and in the near future, with the increasing acceptance of the NFV concept by mobile carriers, the balance of power in the infrastructure solutions market will gradually shift from the "Big Four" (suppliers of telecommunications hardware) to small, greenfield telecommunications software providers.


In this regard, the very interesting to watch an interview with Azita Arvani the Director of Global Partnerships and Alliances at Nokia Solutions & Networks, who says that this infrastructure vendor is currently working to establish partnerships not only with large and well known companies such as Juniper or Motorola, but also with new small and innovative players. Tellingly, among the key areas of NSN’s partner policy Ms. Arvani highlights not only the Big Data analytics and "small cells", but also the development of carrier cloud, including virtualization of network functionality. She insists that this area is one of the most disruptive technologies of today’s mobile industry. All this is intended to provide a solution to NSN’s key challenge of 1000x increase of network capacity by 2020 in order to let the operators provide each user with 1 GB of data per day. The exclusive interview with Azita Arvani can be watched in full on JSON TV here.


As for the "small cells", this concept enjoys support of a growing number of infrastructure market players, including the largest ones. Ericsson, for example, announced such project at MWC-2014, with the first mass shipment of small cells (Ericsson Radio Dot System) going to Vodafone’ 3G/LTE networks. In addition, this key player of the infrastructure market also announced in Barcelona a partnership with Philips to build such small cells into urban street lighting LED lamps. In the project, Philips and Ericsson are launching a new model of "lighting-as-a-service, which includes renting of the lighting poles by Ericsson’s partner mobile carriers to accommodate Radio Dot small cells on them. Details about the partnership of two companies you can watch in an interview (here) with Ericsson’s Vice President, Product Line Site Products, Cecilia De Leeuw, and Sr. Director of Philips Lighting, Christoph Herzig. “One thing you don’t probably think about - there are one hundred more city lights then radio sites in the world. So the opportunity for the operator finding the perfect location with this is fantastic. So what you see behind of us is so-called Ericsson Zero Site. On the top you have a radio and antennas and in the base you have a power and transmission. In fact this is a completed radio site housed and at the same time it is a street lamp”, tells Ms. De Leeuw. “We believe that we can roll out hundreds, maybe thousands such sites in large cities and provide a real game changer not only for industry but also for cities looking for more livability, more connectivity and more sustainability” -added Mr. Herzig.


The transformation of business models of European mobile operators in the face of competition from OTT-players, as well as strategies to monetize data services can be found in an interview with Lars Tofft, Vice-President of Ericsson in the Northern Europe and Central Asia region, here. Mr. Tofft also noted the need for a more detailed CAPEX approach based on the development strategy selected by a carrier, vision of its place in the mobile ecosystem of the future, as well as the prospects of mass development of M2M services. When describing the solutions offered for this by Ericsson, Lars also stressed the particular importance of SDN and virtualization of carrier networks. In his interview, Mr. Tofft assessed the development of Russian mobile carriers vs. their European colleagues.


LTE-Advanced and 5G Prospects

The infrastructure vendors are still reluctant to talk about the fifth generation mobile network (5G) , saying that the potential technological capacities and means of the next generation had not yet been determined. However, the initial conceptualizing of 5G is already becoming one of key directions of development for the entire industry. So, the European Union, as part of a larger research program named "Horizon 2020", announced the creation of a new 5G-PPP industry association in partnership with NSN, Ericsson, Alcatel-Lucent and Orange. It is noted that 5G-PPP is created to preserve the EU's technological leadership in the field of mobile technologies in an age of 5G, and that it is expected to attract up to 4.2 billion Euros of R&D investment up to 2020. It is symptomatic that another industry association, Next Generation Mobile Networks (NGMN) Alliance also announced at the Mobile Congress the beginning of its research in 5G. This is much more serious, given that 21 mobile carriers-members of NGMN Alliance today account for up to 60% of the world's subscriber base, and its biggest participants include China Mobile, AT&T, Vodafone, Telefonica etc., as well as VimpelCom and Yota Networks. NGMN’s 5G initiative will involve not only advanced radio interface research, but also business cases, applications, related technologies, development of new segments, such as M2M and IoT, and future changes of cellular operator positions in the mobile ecosystem, taking into account the increasing role of OTT-players, etc. However, it is already clear that the 5G network must be flexible enough to provide a solution for mutually exclusive objectives.


In particular, the Ericsson report notes that 5G network must ensure 1000x capacity growth and ~Gbps access speed for mass-market segment. Thus, creation of billions of new "hardware" subscribers by IoT, or "Internet of Things" may require a very low latency, approaching few milliseconds, and increased network reliability for critical applications (industry, transport, energy supply, security); it may also require immediate transfer of large amounts of data (remote video surveillance) or making do with a few Kbit of data (smart meters), to ensure high energy efficiency of myriads of connected devices, etc. Accordingly, this will require the use of very large bandwidths and creation of super-dense networks. "Before the year 2020, the resources of existing 3G/4G technologies and frequencies up to 6 GHz will suffice to meet the needs of operators and users. However, by then we’ll need to master the new, centimeter and millimeter wave range (10-100 GHz), where wideband is still available and it is possible to aggregate channels up to 100 MHz. Naturally, the radio wave propagation conditions will be different there, it is impossible to provide the cellular networks in the classic sense, so most likely, a priority here will be to use short-range cells to create super-dense networks. Accordingly, we’ll need a new radio interface which NSN is preparing"- stated Lidia Varukina, Nokia Solutions & Networks (NSN) Director of Technology (Russia), in an interview with JSON TV about 5G (here).


While the industry has yet to determine the requirements for 5G and standardize the new generation of technology, LTE-Advanced remains the hottest technological innovation with ability of Carrier Aggregation in different frequency bands. Russian mobile carrier MegaFon deserves a special notice here – the announcement of launch of the world’s first commercial LTE-Advanced (Cat 6) network with peak access speed of 300 Mbps, using Huawei infrastructure equipment, became one of the MWC-2014 key events. During the press conference and video bridge between Moscow and Barcelona, the participants witnessed downlink speeds of 257 Mbps and uplink speed of 35 Mbps. Network that covers the territory of Moscow within the Garden Ring, uses 2600 MHz frequency band (with MegaFon’s own frequency resource and frequency resource of Scartel (Yota) as a MVNO). The service is provided under the brand "4G+" and is priced similar to 3G and 4G services. Wi-Fi router “MegaFon Space” (R300-1), also developed by Huawei, is offered as user's equipment.


“First of all, we expect competition to fixed broadband in cities with lower population density and in the future, of course, in the big cities. If you were paying attention, today we demonstrated that the accessible maximum theoretical speed in MegaFon’s LTE-Advanced network, by expert opinion of NII Radio, may reach 1.2 Gbps, which surpasses the current fixed solutions even with optic channel. I think these numbers speak for themselves. As to LTE-Advanced service pricing, considering the high access speed, and in comparison with unlimited access in fixed broadband, I hope we’ll be able to offer various models” - noted Mihail Dubin, MegaFon’s Director of Business Development on Mass Market. His speech at the launch of LTE-Advanced (300 Mbps) network can be viewed here, and his interview with JSON TV - here.


The significance of this launch was exemplified by the presence of Russian Minister of Communications Nikolaj Nikiforov at the joint press conference of MegaFon and Huawei. In his speech that can be viewed exclusively at JSON TV (here) the minister stated that LTE-Advanced will completely change the network infrastructure ecosystem. Mr. Nikiforov in particular noted: "It's very important for us that the first launch of such high-speed LTE-Advanced network (300 mbps) or 4G+ is happening in Moscow, in the center of our country, in the center of our capital. I believe that it gives us a strategic advantage and also influences on economic growth, education, healthcare, business environment of our country. I believe that Russia is making a new step towards technology future and this created fantastic business environment for every citizen in our country. Let me thank those technological leaders - the company that is launching network – MegaFon and Huawei that devotes a lot of attention to Russian market and believes in this market as the technology breakthrough for them”.


According to J'son & Partners Consulting, by February 25, 2014 5 LTE-Advanced networks were launched into commercial operation worldwide (one each in Russia and Australia, 3 networks in South Korea). More than 10 LTE-Advanced networks are being tested.


In general, the LTE-Advanced ecosystem develops quite actively all over the world, with infrastructure vendors again a little ahead of the market. Subscriber terminals supporting two carriers to 20 MHz will appear only this year, and supporting 3 x 20 MHz (with maximum speed of 450 Mbps) - only in 2015. However, this did not prevent South Korean SK Telecom successfully test its LTE-Advanced with the aggregation of three carriers of 20 MHz each. Sangho Moon, chief engineer of SK Telecom R&D center, told JSON TV about his company’s plans. According to him, SK Telecom in South Korea have already launched the LTE-Advanced network 10+10 MHz version. And at its MWC-2014 booth carrier presented system with 20+20 MHz (300 Mbps) and even with 3 carriers (450 Mbps) as well as so-called “Inter-Site Carrier Aggregation”, the most advanced technology for aggregation of two different frequency bands on two different base stations. The user terminals, commercially available for carrier’ subscribers are delivered by Samsung, LG and Pantec. In general, - all Korean mobile phone vendors start to produce user equipment with LTE-Advanced supporting. However, according to Mr. Moon, SK Telecom plans to launch a network with aggregation of three 20-MHz carriers (450 Mbps) next year, but still this date is mostly dependent on the user equipment site since the modems supporting this technology require fundamentally new chipsets. And Qualcomm will be probably #1 candidate for this task. The interview with Mr. Moon can be seen in full here.


At the same time, after the joint event with MegaFon, JSON TV team was able to interview Wan Biao, a member of the Board of Directors of Huawei Technologies Ltd., General Director of Tehcompanija Huawei LLC (Russia) who also talked about key trends in the infrastructure market and 5G, noting that joint efforts of the industry are required to benefit from a higher frequency spectrum. "Low-frequency bands are quite limited. But if we look into the future for the 5-6 GHz even beyond 10 GHz, there is still broad spectrum for allocation. For entering there we should seat together, to consider and to discuss how to use this kind of spectrum and how to engage all End-to-End vendors in the industry chain to push it forward. For Huawei, the 5th generation is area where we put our best efforts and also invest big money on that. I can share you that to date Huawei have invested $5.4 Billion USD on R&D-part. And surely in the future the 5th generation remains one of the major parts of our investments.” – commented Mr. Biao. You can watch the full interview with Wan Biao at JSON TV site here.


Additionally, you’ll find in our reports the Qualcomm’s concept of Smart Home, interviews with innovative South Korean operator SK Telecom, visits to Ericsson’s key exhibition stands:

Qualcomm view on Smart Home, AllSeen Alliance (here)

Kids Room of Qualcomm’ Smart Home (here)

Qualcomm media platform AllPlay for Smart Home (here)

Ericsson booth_1: Connected Paper (here)

Ericsson booth_2: Connected Car (here)

Ericsson booth_3: Remoted management technology (here)

Ericsson booth_4: M2M for Maersk’ fleet (here)


During the MWC 2014, the JSON TV crew produced about 40 videos that are available on the JSON.TV website. They include an interview with Ralph Simon, the founder of the world mobile entertainment industry, the "father of the ringtone" and General Director of Mobilium Global Group, as well as with major network infrastructure vendors, analysts, the world's leading research agencies, who shared their thoughts on global industry trends and assessed the development of Russian cellular operators.



This Information Note is Prepared by J’son & Partners Consulting, We strive to provide factual and prognostic data that fully reflect the situation and are available to us before issuing the material. J’son & Partners Consulting reserves the right to revise the data after publication of new official information by the market players.


JSON TV crew and analysts from J'son & Partners Consulting participated in Mobile World Congress 2014 - a key event of the world telecommunications market, held on February 24-27, 2014 in Barcelona, Spain. Traditionally, the Mobile World Congress can be divided into three key areas: consumer devices, network infrastructure, and the development of the overall mobile ecosystem. This part of the Congress report is devoted to the world network infrastructure market trends.