AvidThink

Research and Analysis

AvidThink 2022 July Newsletter

Welcome to the July wrap-up! Last month, we kicked off the newsletter by pointing out massive cuts in headcount at Parallel Wireless, but analysts aren’t souring on Open RAN completely. Dell’Oro still expects $20B in spending on Open RAN over the next five years (see below).

Other highlights in this month’s newsletter include continued growth at hyperscale clouds — AWS, Google, and Microsoft all show progress — but mixed private wireless expectations, with BMW embracing private wireless but analysts reducing their growth estimates. We hear rumblings on the grapevine about continued interest from enterprises (and carriers) but understand there are challenges in scaling up post-POCs.

Recent notable content:

Again, we hope to see you at one of the events we’ll attend in the Fall (check out the AvidThink Events page). These are events that we (or partners like Converge! Digest) are headed to in the next few months: VMware Explore (San Francisco), MWC Las Vegas, Topio’s Edge Computing World (Santa Clara), OCP Summit (San Jose), FutureNet Asia (Singapore), Fyuz – O-RAN, TIP, Meta (Madrid), Upperside SD-WAN/SASE (Paris), Linux Foundation ONE Summit (Seattle), AWS re:Invent (Las Vegas), Layer 123 World Congress (London). Yes, we’re going to be busy!

Finally, contact us at [email protected] if you are interested in participating or sponsoring upcoming sites: telco and edge infrastructure (in progress now), the new middle mile (actively researched now), SD-WAN/SASE, private mobile networks, data center networking, and infrastructure security.

On to the news!

5G
Verizon Business CEO Sampath Calls FWA the Company’s “Hero Product”
Verizon Business’s new CEO, Sowmyanarayan Sampath, told FierceWireless that Verizon’s fixed wireless access (FWA) product had been the company’s “hero product” for the last few quarters. In 1Q, Verizon added more than 80,000 business customers to its FWA service and 256,000 FWA subscribers in Q2. Sampath said that 80% of those customers use it as a primary service. The company now has a combined total of more than 700,000 FWA customers, and about 30% of the FWA customers are new to the company. Sampath said that 50% are customers that previously used cable for their broadband service, and the other 50% are customers that cable can’t serve, like food trucks, kiosks, and other types of use cases where some mobility is required. “It’s a very compelling, new market for us,” he said, adding that average revenue per user (ARPU) is almost two and a half times that of smartphone ARPU, and there’s no subsidy on the phones. “It’s good for customers, and it’s good for shareholders.”

Dish’s Dave Mayo talks benefits of C-RAN
Dish’s Dave Mayo told Light Reading that there are many reasons to use a centralized radio access network (C-RAN), which allows operators to pool baseband computing functions in a central location. He said that it could help operators cut expenses and potentially cut down power needs. But the main benefit for Dish is that C-RAN allows it to instantly coordinate users’ data traffic among nearby cell sites using the same baseband functions. That coordination can significantly improve each user’s connection and speed, Mayo said, because of the system’s improved spectral efficiency. However, he added that cell sites running on a C-RAN architecture need to be around 25 kilometers from the baseband processing due to the virtually instantaneous nature of cell site coordination. Anything further away would simply be too slow.

Verizon Business Will Host Events to Demonstrate 5G and MEC
Verizon Business is launching a series of events around the country where it will demonstrate the impact of 5G and Mobile Edge Compute (MEC) on the sports and entertainment industries. The first event will be held on July 27 at State Farm Arena in Atlanta. Verizon Business, Ericsson, and other companies will create different scenarios that use technologies such as facial recognition, near real-time crowd analytics, and more. Besides the Atlanta event, Verizon will also host similar showcases in Houston (August 24), Boston (September 28), Los Angeles (October 19), New York (November 9), and Phoenix (December 7).

SDN
Andre Fuetsch to retire from AT&T
Andre Fuetsch, EVP and CTO of Network Services at AT&T, is retiring in September after 27 years. He will be replaced by Jeremy Legg, who will become CTO, and Igal Elbaz, who will become chief of network technology. Fuetsch was instrumental in helping AT&T become an early leader in software-defined networking and network functions virtualization. Fuetsch worked closely with AT&T Communications CEO John Donovan, who retired in 2019.

AT&T CEO Says Software-based Solutions Make Up Half of Wireline Biz
AT&T’s Business Wireline Unit is experiencing some challenges as customers are replacing traditional voice services with mobile and using collaboration tools like Zoom and Teams. AT&T CEO John Stankey said that while there is still a sizable amount of business revenue coming from legacy voice and data services such as MPLS, it is experiencing a retraction. In addition, Stankey said that on the data side, VPN and legacy transport services are being impacted by the growth of software-based solutions. Stankey said that half of the segment revenue now comes from software solutions.

O-RAN
Open RAN revenues will generate nearly $20B by 2026
Dell’Oro Group increased its Open RAN projections and now believes that the global cumulative open RAN revenues —radio and baseband excluding services —will be close to $20 billion over the next five years and account for around 15% of the RAN market by 2026. The research firm said that Asia-Pacific and North America would dominate Open RAN investments. However, Dell’Oro Group noted that the Open RAN area is still uncertain because while more operators are embracing the technology, operators and vendors are questioning whether open RAN will lead to lower prices and boost competition.

Cloud
Google Cloud revenue rises 36% to $6.3B in Q2
Google Cloud revenue continued to grow at a healthy clip in Q2 2022, rising 36% to $6.3 billion. This is the first time Google Cloud sales have crossed the $6 billion mark. Alphabet CEO Sundar Pichai said that demand has remained strong across all geographies, including North America, Europe, Latin America, and Asia, but added the current macroeconomic environment is playing a role in cloud spending decisions. Despite the revenue gains, Google Cloud’s operating loss jumped to $858 million in the quarter, up from $591 million. Still, Alphabet executives said they “very much believe in the long-term growth [opportunity] and believe this is the right level of investment across the business, go to market, the product teams continuing to build it out globally.”

IBM sees jump in hybrid cloud revenue
IBM’s hybrid cloud revenue topped $9 billion in 2Q 2022, a 23% increase over the same quarter in the previous year. The company said it added 250 hybrid cloud platform customers during the quarter and now has 4,000 customers for its hybrid cloud platform products. “Growth [in the second quarter] was driven by our hybrid cloud and AI capabilities,” said Jim Kavanaugh, CFO and senior vice president of IBM, during the earnings call, according to FierceTelecom. The company also saw its consulting services revenue grow to $8.6 billion, a 32% increase over the previous year.

Microsoft’s cloud business is strong but shows signs of slowing growth
Microsoft reported overall cloud revenue of $25 billion in its fiscal Q4 2022 (ended June 30, 2022), an increase of 28% year on year. In addition, its Intelligent Cloud unit reported revenue of $20.9 billion, an increase of 20% year on year. While Microsoft doesn’t provide a breakout figure for Azure revenue, it noted sales of Azure and other cloud services increased by 40%. However, that figure was down from the 51% growth that the company reported in fiscal 4Q 2021. Microsoft CEO Satya Nadella said that while the company’s cloud business remains strong, there was a reduction in Azure consumption, which meant revenue growth for the quarter was slightly below expectations. Nevertheless, Nadella said that he is confident demand for Microsoft’s cloud services will hold steady despite tough macroeconomic conditions.

Microsoft debuts Sovereignty Cloud
Microsoft is now offering a Microsoft Cloud for Sovereignty built on the Microsoft public cloud but intended to help public sector customers adhere to different government requirements. Microsoft said that government customers will have the power of the public cloud but will be able to scale to meet expectations and keep their costs low. The Sovereignty cloud is designed as a partner-led solution with in-country partners who are key in meeting different government requirements. Microsoft is particularly focused on Europe’s government business and being able to meet European government sovereign needs. Partners include Capgemini, Orange, SAP, and Telefonica.

AWS revenue increased 33% in 2Q
Amazon reported that revenue from its Amazon Web Services (AWS) cloud business increased 33% in the second quarter generating $19.74 billion. That was higher than analyst expectations of $19.56 billion in the quarter. However, the 33% growth rate AWS reported was down from the nearly 37% growth rate AWS reported in the previous quarter. AWS also reported $5.72 billion in operating income, a 36% increase year over year. AWS noted that its costs are increasing as wages are growing due to the high demand for engineers and other tech workers. The company also said that its paying higher electricity rates in its data centers.

Juniper Networks Q2 revenue increased 8% year over year
Juniper Networks reported Q2 revenue of $1.27 billion, an 8% increase year over year. In addition, the company’s net income increased 83% to $113.4 million. However, the company’s margins were down because supply chain issues forced it to find alternative partners and pay more for necessary components. However, Juniper executives said that they believe a massive order backlog will help the company maintain consistent revenue growth as it weathers supply chain issues. CEO Rami Rahim also noted that the company sees promise in its 400G offering and enterprise SD-WAN. Juniper CFO Ken Miller said Juniper’s order backlog reached $2.4 billion in Q2, a figure more than six times normal levels.

Edge
Lumen Expands Edge Offering to Europe
Lumen Technologies is now offering its edge computing solutions to enterprises in Europe. The company is first expanding to the U.K., France, Germany, Belgium, and the Netherlands. More locations will come later in the year, the company said. Lumen added that its edge computing solutions could meet about 70% of enterprise demand in those five European countries within five milliseconds of latency. As part of the European deployment, Lumen enabled an additional 100G MPLS and IP network connectivity, as well as increased power and cooling at key edge data center locations.

Security
T-Mobile must pay $350M to customers impacted by security breach
T-Mobile must pay $350 million to customers that were impacted by a cyber hack of its systems in 2021. And as a result, the company will record a $400 million charge in the second quarter related to the settlement of that class action lawsuit. T-Mobile said it will spend about $150 million on data security and related technology in 2022 and 2023. In addition, T-Mobile said it plans to transform its cyber security program and conduct hundreds of thousands of hours of training for its employees and partners. 

SD-WAN/SASE/ZTNA
Nippon Gases Will Use AT&T’s SD-WAN to Connect Sites in 13 Countries
Nippon Gasses, a Madrid, Spain-based company, will use AT&T’s software-defined wide area networking (SD-WAN) service to connect the company’s sites in 13 European countries. Nippon produces industrial and medical gases for customers across Europe, and the goal of the upgrade to SD-WAN is to create a more resilient network architecture and increase employee productivity. AT&T said that it piloted its SD-WAN technology at selected sites and optimized the solution. It also helped Nippon by hosting workshops with third-party vendors to train them on the technology.  

Enterprises Will Flock to Network-as-a-Service Model, Says ABI Research
Network-as-a-Service (NaaS) is expected to see substantial growth over the next eight years as 90% of enterprises are expected to migrate at least a quarter of their network infrastructure to the NaaS model by 2030, according to a new ABI Research report. ABI added that telcos may benefit from this trend and could capture at least half of the $150 billion NaaS market. Still, to do so, they need to refine their operational and go-to-market models and fend off competition from cloud and interconnection providers. NaaS includes various services, including software-defined wide area networking (SD-WAN), virtual private networking (VPN), transport services, and cloud access.

Global SD-WAN Market is Worth $3B, Report Says
Research firm TeleGeography found that the global SD-WAN market for large multinational enterprises is worth $3 billion. However, the company also found that while SD-WAN adoption is growing globally, MPLS is still the dominant networking technology. TeleGeography said MPLS is a $17 billion market globally and accounts for 29% of the global WAN market. SD-WAN, for comparison, makes up just 5% of the total market. Local loops that connect customer sites to the Internet are worth $3.8 billion and make up 6% of the market, the firm said.  

AWS Makes Cloud WAN Available
Amazon Web Services is making its new managed WAN service, called AWS Cloud WAN, available to customers. AWS Cloud WAN will connect on-prem data centers, colocation facilities, branch offices, and cloud resources, making it easier for enterprises to operate a global network. AWS Cloud WAN comes with a central dashboard that lets customers define their network configuration, view the health of their network, and automate routine configuration and security tasks.

Lumen Awarded $137M Contract to Provide Network Services to CBP
Lumen won an 11-year, $137 million contract with the U.S. Customs and Border Protection (CBP) agency to provide it with mission-critical communications, internet connectivity, and network services at its facilities, including ports of entry, including airports, and border patrol checkpoints, in the U.S. and globally. Lumen will help the CBP modernize its IT equipment by helping it transition to a software-defined wide area networking (SD-WAN) solution. The contract is part of the General Services Administration’s 15-year $50 billion Enterprise Infrastructure Solutions program.  

Private Networks
Verizon Business Will Build Private 5G Network for Virginia Port
Verizon Business will build a private 5G network for one of the Port of Virginia’s main container terminals. Verizon will build the private network using Verizon’s licensed spectrum and equipment from Ericsson. The Virginia Port will use the private 5G network across the facility and will use it to replace the Wi-Fi network. This is Verizon’s second deal to build a private 5G network for a major international port. The company has a similar deal with Associated British Ports in the UK using Nokia’s equipment. 

CommScope Teams with Microsoft Azure on Private MEC
CommScope is joining forces with Microsoft to create a private wireless network solution. Specifically, CommScope will combine its Citizens Broadband Radio Service (CBRS) access points with Microsoft’s Azure private multi-access edge compute (MEC) system to create a cloud-connected private wireless network. The first private network using the combined solution is being deployed in a manufacturing center in Shakopee, Minnesota. CommScope says the cloud-connected private wireless network will improve operational efficiency and manufacturing agility. It will also improve productivity and worker capabilities.  

BMW Group Built a Private 5G Network
BMW Group installed a private 5G network using open radio access network (RAN) technology and is using it to test new technologies and train employees at its European vehicle production site in Dingolfing. The company previously said it wants to bring 5G to all its global production facilities. The Dingolfing factory makes the all-electric BMW iX and several other models. It has been a hub for BMW’s research on autonomous and connected logistics for almost three years. Its 5G network was already in place before work began on the new testbed. NTT Group, Celona, Intel, and Microsoft partnered with BMW to develop the new lab. 

Dell’Oro Reduces Private Wireless Network Forecast
Private wireless LTE/5G small cells hardware will reach between $800 million and $1 billion by the end of 2026, according to research firm Dell’Oro Group. This is lower than an early Dell’Oro Group projection. According to Stefan Pongratz, VP and analyst with Dell’Oro, the company still believes that demand for private wireless is growing but not as fast as initially expected. Looking longer term to the 2030 horizon, Pongratz believed that the total addressable market for private wireless networks will still be a “large market opportunity” but will take some time to realize its full potential.

And that wraps it up! Again, don’t forget to check out the NextGenInfra.io 2022 SmartNICs and Infrastructure Acceleration Showcase! We’ll see you back here at the beginning of September. Stay safe, monkeypox-free, and enjoy the rest of summer (those of you who have summer)!