Thursday, April 20, 2017

Verizon: Revenue Down 4.5%, LTE Traffic up 57%

Verizon reported consolidated Q1 revenue of $29.8 billion, a 7.3 percent decrease compared with first-quarter 2016, but down 4.5 percent on a comparable basis excluding divestitures and acquisitions in the period. Net income was $3.6 billion in first-quarter 2017, and EBITDA (non-GAAP, earnings before interest, taxes, depreciation and amortization) totaled $11.2 billion. Consolidated operating income margin was 24.1 percent.

Earnings per share (EPS) were 84 cents in earnings per share (EPS) and adjusted EPS (non-GAAP) ws 95 cents, excluding non-operational items, compared with EPS of $1.06 in 1Q 2016.and adjusted EPS (non-GAAP) of 95 cents, excluding non-operational items, compared with EPS of $1.06 in 1Q 2016. Capital expenditures totaled $3.1 billion in first-quarter 2017.

Some Wireless highlights                                                              

  • There was a net decline of 307,000 retail postpaid connections in first-quarter 2017 included 289,000 phone losses. Prior to the launch of Unlimited service in mid-February, Verizon had a retail postpaid phone net loss of 398,000; after the launch, Verizon added 109,000 retail postpaid phone connections. For the entire quarter, Verizon added a net of 49,000 smartphones to its retail postpaid phone base.
  • Verizon’s retail postpaid connections base grew 1.2 percent year over year to 108.5 million, and retail prepaid connections grew 0.5 percent to 5.4 million.
  • Retail postpaid churn was 1.15 percent in first-quarter 2017, a year-over-year increase of 19 basis points primarily due to increased churn in tablets. Phone customer loyalty remained high, with retail postpaid phone churn of less than 0.90 percent for the eighth consecutive quarter.
  • Total revenues were $20.9 billion in first-quarter 2017, a decline of 5.1 percent compared with first-quarter 2016, due to decreased overage revenue, lower postpaid customers in the quarter and continued promotional activity.
  • In first-quarter 2017, overall traffic on LTE increased about 57 percent compared with first-quarter 2016, while Verizon extended its lead in the industry’s third-party network performance studies across the country.

Some Wireline highlights

  • Total wireline revenues declined 0.6 percent, to $7.9 billion, comparing first-quarter 2017 with first-quarter 2016. Consistent with recent trends and on a comparable basis (non-GAAP), this decline was 3.2 percent, excluding revenues from XO Communications in first-quarter 2017.
  • Total Fios revenues grew 4.7 percent, to $2.9 billion, comparing first-quarter 2017 with first-quarter 2016. This supported revenue growth of 0.7 percent in consumer markets and 2.3 percent in business markets.
  • In first-quarter 2017, Verizon added a net of 35,000 Fios Internet connections and lost a net of 13,000 Fios Video connections. At the end of first-quarter 2017, Verizon had 5.7 million Fios Internet connections and 4.7 million Fios Video connections, year-over-year increases of 3.3 percent and 0.1 percent, respectively.


http://www.verizon.com

HK-G Submarine Cable to Offer 48Tbps Capacity

Construction has commenced on a new Hong Kong - Guam Cable system (HK-G) that will offer 48 Tbps of design capacity when it comes into service in late 2019.

The 3,900 kilometer undersea cable, which features 100G optical transmission capabilities, is being built by RTI Connectivity Pte. Ltd. (RTI-C) and NEC Corporation with capital from the Fund Corporation for the Overseas Development of Japan's ICT and Postal Services Inc. (Japan ICT Fund), along with syndicated loans from Japanese institutions including NEC Capital Solutions Limited, among others.

In Hong Kong, the cable is slated to land in Tseung Kwan O (TKO) and will land in Piti, Guam at the recently completed Teleguam Holdings LLC (GTA) cable landing station. HK-G will land in the same facility as the Southeast Asia - United States Cable System (SEA-US).

Russ Matulich, RTI-C's President and CEO, acknowledged this important milestone stating, "Hong Kong is already an important interconnection point for undersea cables, and Guam is emerging as a key telecommunications hub. By extending HK-G to our SEA-US cable investment in Guam, RTI-C is facilitating a new diverse 100G transpacific cable to better serve our customers' traffic requirements between Asia, the United States and Australia." Matulich added, "RTI-C's existing investments, and those under current consideration, will enable other cable owners to better utilize their assets by interconnecting with RTI-C in Hong Kong or Guam."

http://www.RTI-Cable.com
http://www.nec.co.jp

NTT and Telkom Indonesia Launch Telecom Innovation Initiative

NTT and PT Telkom Indonesia (Persero) announced the launch of the APAC Telecom Innovation Initiative (ATII), a joint research and development initiative intended to support the development of new network services for the Asia Pacific region leveraging virtual infrastructure technologies.

The new joint initiative will focus on establishing technical studies and proof of concepts (PoCs) targeting the requirements for new network services with the advent of virtualisation technology. NTT and Telkom Indonesia plan to expand the initiative through agreements with additional partners, including other service providers, who share the aims of the initiative.

The companies noted that APAC service providers are faced with a number of common issues such as sustainability due to natural disasters and traffic demands complicated by uneven population distribution and growth, particularly in island nations. To help address these challenges ATII will propose new services and technologies tailored for the APAC region.

The ATII will also seek to accelerate innovation and create new markets leveraging information and communications technology (ICT). The initiative will focus on delivering sustainable development through collaboration and promotion with partners across the region to support the development of APAC service providers and countries.

More specifically, taking into account the APAC market environment joint technical studies and PoCs will be conducted with a focus on the speed and availability characteristics of virtualisation infrastructure designed to enable flexible and efficient network services. Initially, three projects have been established:

1.         High value-added network services.

2.         Server platform virtualisation.
3.         Flexible access network virtualisation.

ATII will immediately start joint technical studies and plans to release whitepapers on the identified requirements, specifications and PoCs results. ATII will also liaise and share its findings with the relevant standards organisations and industrial alliances with the aim of advancing and expanding its activities.

In the future, ATII intends to perform field trials with participating service providers and partners in emerging markets that will lead to the creation of commercial services.

Monthly update on the Indian telecommunications market - Part 1

Full article: Part 1Part 2 , Part 3Part 4

Preamble 

The Indian telecommunications market continues to go through tremendous changes which, though occurring in parallel with have been largely independent of, were already happening well before the more general national level social and economic changes instigated (or accelerated) by the reformist government of Narendra Modi.

According to data assembled by the World Bank, in 2014 India with a monthly ARPU of $2.80 was the sixth cheapest nation in the world for phone charges after Sri Lanka, Bangladesh, Iran, Pakistan and Nepal, and in that year its people spent only 2.14% of their average income on mobile phone costs. However, since the dramatic full commercial entry into the Indian mobile broadband market in September 2016 of the Mukesh Ambani-led RJIO operator, whose level of initial investment in its national 4G network, content and services is reported as being around a staggering $20 billion, mobile rates have fallen even further and the absolute value of the market has declined.

According to the Indian Telecommunication Services Indicators Report published by the Indian regulator TRAI for the October to December quarter of 2016 (published April 7th), despite a steep sequential quarter on quarter rise of 7.22% in fixed and wireless subscriptions, from 1,074.24 million to 1,151.78 million as of December 31, 2016, total services revenue for the quarter fell 6.79% to INR 66,532 crore ($9.688 billion). The major factor in that was an amazing decline in monthly ARPU for GSM service (including LTE) of 14.10% from INR 121 in the quarter ended September 2016 to INR 104 ($1.50) in the quarter ended December 2016. On a year-on-year basis monthly ARPU for GSM service (including LTE) declined by 15.32% in the fourth quarter.

Despite radical restructuring and temporary decline of telecoms market, Indian economy beginning to develop long term momentum Despite these surprising local fluctuations in the telecoms sector the national level changes referred to in the first paragraph are still important because they directly and indirectly support a high economic growth rate in India, currently predicated by the IMF at 7.2% in 2017 and 7.7% in 2018. This is a longer-term sustaining platform for further growth in the telecommunications sectors. Macroscopic economic programs include:

Agreement for the implementation of an uniform Goods and Services Tax across all the states; this will to some extent help to support a single integrated national market, which is a crucial advantage for technological development and catch-up, and is supposed to be implemented across India by July 2017.

The effective introduction, by administrative organisation the Unique Identification Authority of India, of the Aadhaar biometric personal identity card, carrying a unique 12 digit number, for well over 1.133 billion Indian citizens as of March 31, 2017. Although more than 150 million Indian citizens are still excluded from the system these are mostly infants. Although this project was initiated in 2010 well before Modi was elected his government has fully supported the program and claims to have already saved around $8 billion through more accurate distribution of food and fuel support to impoverished families.

The energetic pursuit and rooting out of 'black money', which has included Mod's controversial national removal and replacement of high value currency.

Key infrastructure programs including the National Optical Fibre Network (or BharatNet), designed to link 250,000 small villages to the national network, 100 smart cities and high speed rail programmes including the Diamond Quadrilateral project to connect the cities of Chennai, Delhi, Kolkata and Mumbai. In February India announced record spending of INR 3.96 trillion ($59 billion) to build and modernise its railways, airports and roads in a drive to upgrade the strained infrastructure in Asia’s third-largest economy; already under way is the construction of the 1,500 km Mumbai-Delhi Industrial Corridor which includes 24 industrial regions, eight smart cities, two airports, five power projects, two mass rapid transit systems, and two logistical hubs and has an initial budget of $90 billion.

Numerous other less specific programs including national self-sufficiency, morale and capability strengthening programs such as Make in India, the Clean India initiative, the drive to improve the technical competence of the Indian workforce (Skill India), the People’s Bank Plan the Crop Insurance Program.

7-8% growth rate insufficient to prevent India continuing to fall further behind China 

These programs, not all of which are fully funded and active, are all aimed at increasing India's capacity for economic growth, which as noted earlier is currently in the range 7% to 8%. This is a fast rate, around twice the global rate of 3.5%, however, looking back over the last 30 or more years of Chinese economic expansion, when China was at the same economic level as India is now it was growing well over 10% for a decade or more. Over the 28 years from 1989 until 2017 China has grown an average of 9.74% a year, reaching an all time high of 15.40% in the first quarter of 1993

Part 1
Part 2
Part 3
Part 4

Globecomm Deploys Ciena Packet-optical Networking

Ciena announced that Globecomm, based in Hauppauge, New York, a global connectivity solutions provider, has deployed its converged packet-optical and packet networking solutions to address increasing content distribution requirements for applications including video for the news industry, disaster recovery for armed forces and connectivity for ships worldwide.

The upgraded network is designed to enable Globecomm to cost-effectively increase the capacity and improve the reliability and availability of high-bandwidth services to its more than 250 customers globally.

Globecomm is a global connectivity provider operating in more than 100 countries, providing satellite-centric video, voice and managed data solutions for media sector, maritime, wireless, enterprise and government customers. Ciena noted that due to the need to support mission-critical, time-sensitive applications for its customers, Globecomm's network needs to be both responsive and reliable.

Ciena's Ethernet switching, optical transport and network management solutions are designed to provide Globecomm with the fast, reliable and high-performance connectivity required to meet the demands of customers that may be operating in harsh and/or remote environments.

Under its growth strategy, Globecomm is expanding its terrestrial network capacity and reach utilising Ciena's solutions as the backbone. Ciena noted that as part of this initiative the provider recently deployed a high throughput content distribution network (CDN) to support its growing media customer base, while expanding into multiple developing countries in Africa and Asia.

For the project, Globecomm has deployed Ciena's 10 Gigabit Ethernet 5142 Service Aggregation Switch to enable the cost-effective transmission of quality, bandwidth-demanding content such as videoconferencing, surveillance and video streaming over Layer 2 and 3 networks. In addition, the Ciena 6500 Packet-Optical Platform allows Globecomm to customise service delivery and deliver applications at rates from 2.5 to 200 Gbit/s and beyond.


Additionally, utilising Ciena's network management capabilities Globecomm is able to design, schedule and commission services across its network within minutes.

ADTRAN Reports Q1 Revenue of $170.28m, up 18.7%

ADTRAN reported financial results for the first quarter ended March 31, 2017, as follows:

1. Revenue for the first quarter of 2017 of $170.28 million, up 4.5% compared to $162.99 million in the fourth quarter and up 19.7% from $142.20 million for the first quarter of 2016.

2. Gross profit for the first quarter of $73.71 million, up 4.1% compared to $70.79 million in the fourth quarter and up 12.0% from $65.79 million for the first quarter of 2016.

3. R&D expenditure for the first quarter of $31.92 million, down 0.5% compared to $32.08 million in the fourth quarter and up 8.2% from $29.49 million for the first quarter of 2016.

4. SG&A expenditure for the first quarter of $34.77 million, up 1.0% compared to $34.44 million in the fourth quarter and up 13.0% from $30.78 million for the first quarter of 2016.

5. Total operating expenditure for the first quarter of $66.68 million, up 0.2% compared to $66.51 million in the fourth quarter and up 10.6% from $60.27 million for the first quarter of 2016.

6. Net income for the first quarter of 2016 of $6.65 million, compared to net income of $7.57 million in the fourth quarter and net income of $5.01 million for the first quarter of 2016.

7. Cash, cash equivalents and short-term investments as of March 31, 2017 of $125.02 million, versus $123.08 million as at December 31, 2016.

Additional results and notes

ADTRAN reported Network Solutions revenue in the first quarter of $143.60 million, compared with $123.88 million in the fourth quarter 2016, and Services & Support revenue of $26.68 million, versus $18.32 million in the fourth quarter. Access and Aggregation revenue totalled $120.14 million, compared with $93.85 million in the fourth quarter.

For the first quarter, ADTRAN reported domestic revenue totalled $119.26 million, compared with $123.7 million in the fourth quarter, with international revenue of $51.02 million, compared with $39.3 million in the fourth quarter.

Commenting on the results, ADTRAN chairman and CEO Tom Stanton said, "… first quarter revenue (was) driven by increasing momentum in ultra-broadband product sales and continuing strength in the services area… most notably, ADTRAN had very strong performances in FTTP and vectoring products in both domestic and international markets".

http://phx.corporate-ir.net/phoenix.zhtml?c=67989&p=irol-newsArticle&ID=2262741

Big Switch enhances Big Cloud Fabric

Big Switch Networks, a supplier of next-generation data centre networking solutions, announced it has extended Big Cloud Fabric (BCF) container networking support to VMware vSphere integrated containers, building on the previously introduced multi-container networking support for Mesosphere DC/OS and Kubernetes container orchestration platforms, including Red Hat OpenShift container platform.

Big Switch noted that as demand for container technology grows in enterprise and service provider data centres, a next-generation networking architecture is required to handle the rapid lifecycle of container instantiation, elasticity and retirement. BCF uses SDN to provide a single 'logical switch' managed by a centralised controller, enabling simplified network operations, visibility and telemetry of containers and their hosts, and network automation for application and micro-services deployment.

vSphere integrated containers allow organisations to use existing infrastructure to run containerised apps together with traditional applications on the same infrastructure, as well as implement tools, policies and processes to manage containerised applications in production. With the enhanced BCF, customers gain the same benefits for networking infrastructure hosting a mix of traditional VM and containerised workloads.

In container environments, the Big Switch BCF controller enables physical network automation as well as providing greater visibility of container-to-container traffic across the network through integration with vSphere integrated containers.

Big Cloud Fabric is designed to offer an optimised networking fabric for multiple VMware solutions via a single point of integration. Within VMware environments, BCF connects with the VMware vCenter API to provide physical network automation and end-to-end visibility for vSphere. In addition, the BCF controller directly integrates into vCenter to help simplify and automate application deployments on its physical SDN fabric and physical networks.

This BCF integration allows the following aspects of the network to be automated, eliminating the need for intervention from VM or network administrator: automatic ESXi host connectivity with fabric using LAG/MLAG; automated Layer 2 network configuration; and automatic network policy migration for vMotion.

Integrated VMware visibility via BCF also helps network and virtualisation administrators to resolve cross-domain issues, while vSphere integrated containers provide enterprise container infrastructure to help IT teams run both traditional and containerised applications on a common platform. Combined with BCF, the same physical infrastructure can be logically provisioned and orchestrated in different VMware environments for workloads including vSphere, vSphere + NSX, vSphere + vSAN, VMware integrated OpenStack and vSphere integrated containers.


In addition, the scale-out architecture of BCF can accommodates growth in east-west traffic with the roll-out of micro-services.

Criterion Offers Support for CORD

Criterion Networks, a network transformation and solution integration company with a focus on supporting the adoption of SDN, NFV and the cloud, announced the availability of the Mysterious-Decision release of CORD (Central Office Re-architected as a Datacenter) on the Criterion SDCloud platform.

Criterion Networks stated that as enterprises and service providers move towards SDN/NFV deployment, it can provide an on-demand SDN/NFV solution environment. SDCloud Enterprise, Criterion's SaaS-based solution orchestration platform is designed to enable customers to bring up the SDN/NFV solution environment of their choice for development, evaluation and learning.

The cloud-based development and test environment, CORD-in-the-Cloud (CiTC), is designed to simplify the process of launching the SDCloud solution and allows for one touch provisioning of the components of CORD in an isolated, multi-node virtual environment. CiTC also offers a base platform to build more complex use cases such as Mobile CORD (M-CORD).

The company noted that reliably implementing complex test-beds such as CORD in a stable manner presents a challenge for developers. CiTC facilitates test-bed creation and is designed to help customers realise the potential of CORD. With all components of CORD instantiated by SDCloud, customers are able to validate configurations with different versions of the solution components, change controllers, orchestrators or the Open Stack VIM, which constitute key components of the CORD framework.

Criterion Networks, an early contributor to ON.Lab and ONF, provides CiTC for established use cases such as R-CORD and is used by ON.Lab for development purposes. It also offers complex solutions such as CiTC, OpenStack sandboxes with different SDN controllers and other OpenStack integrated SDN/NFV solutions, together with eLearning programs through the Criterion Networking Academy.

Criterion launched its SDCloud Platform in April 2016, offering a scalable on-demand cloud deployment and provisioning platform for evaluating SDN/NFV and OpenStack solutions. The platform initially provided support for Software Defined Data Center (SDDC) use-case solution.


In July last year, Criterion Network Labs, an independent network interoperability test facility, announced the launch of CNLabs SDN/NFV Alliance Program, intended to bring together SDN/NFV product vendors and end users to help ensure that SDN/NFV products meet the solution and production requirements of customers.

Media Commerce Deploys ECI for Optical Network in Colombia

ECI, the Elastic Network company, announced that in partnership with Media Commerce based in Bogota, the largest operator of optical network infrastructure in Colombia, it has completed the deployment of packet-optical metro and aggregation networks nationwide.

Media Commerce of Colombia, founded around ten years ago, has subsequently expanded through both the acquisition of local operations and building out networks for operators. The company also has a history of investing in the upgrade of its fibre infrastructure to improve coverage for business and private networks regionally.

The new Media Commerce infrastructure features a combination of ECI's Apollo (OPT) and Neptune (NPT) family of products, with management provided by the LightSOFT NMS solution.

ECI's Apollo suite is designed to provide transparent and flexible DWDM transport with integrated packet services. The platform combines low-latency OTN transport and OTN switching with software-configurable optical routing for enhanced efficiency. For the project with Media Commerce, a combination of the Apollo 9603 and 9608 solutions provides the foundation for the optical backbone.

The Neptune family of products, supporting packet transport with integrated optics, will provide transport in the metro rings. Neptune offers a MPLS-based, multi-service packet transport solution for metro networks, and via a range of interfaces is designed to enable cost-optimised, multi-service packet transport of both packet and TDM-based services over a converged packet infrastructure.

http://www.ecitele.com/media/1987/media-commerce-pr-april-19-2017-final.pdf

Huawei's Target of $150bn revenue by 2020 - Part 3

Huawei unique in being a world leader in professional and consumer electronics

Huawei is currently unique, in the world, at least for a company of its size, in being amongst the leaders in both professional electronics equipment and also in consumer devices. Ericsson tried stubbornly for many years to pull off the same trick but failed utterly and still bears the scars and arguably its present woes stem largely from that lengthy, expensive and futile endeavour. Motorola was once a world leader in consumer and also quite strong in professional equipment but now is neither. John Chambers' reckless and amateurish and ultimately disastrous attempts to enter the consumer field damaged his credibility during his last few years as Cisco CEO. Nokia's precipitous collapse as the world's long time dominant mobile phone provider was quite shocking though the company has managed to hang on still in the professional field. Samsung, the market leader in smartphones, has a modest position in the base station market but shows no signs there of higher ambitions.

Despite stalled profits Huawei's commitment to massive growing R&D expenditure unwavering

In 2016, Huawei's spending on R&D rose by just over 28% from RMB 59,607 million in 2015, which was 15.1% of revenue, to RMB 76.4 billion ($11 billion), which was 14.6% of revenue. According to the EU Industrial R&D Investment Scoreboard, an annual ranking of the world's top 2,500 R&D investors, Huawei ranked as the world's eighth-largest company in terms of R&D spending in 2016. By comparison, Apple spent $10.39 billion in 2016, its highest level ever (although its Q4 spending did touch $2.8 billion). Meanwhile, Ericsson cut back its R&D spending in 2016 by over 10% to around $3.7 billion and Cisco's R&D has been flat at just over $6 billion for the last three years.

As shown in Part 1, Huawei's profits stalled in 2016 at RMB 37,052 million, only 0.4% up compared to RMB 36,910 million in 2015, which many analysts ascribed to the company's continued steady growth in R&D. Several overexcited commentators made rather too much fuss about that, but rotating CEO Eric Xu (whose six month tenure expired March 31st) pointed out that 2016 profits were still around 7% of revenue and the company's management had always made it clear it would never adjust its R&D expenditure just to meet a profit target.

In 2016, according to WIPO, Huawei filed 3,962 international patent applications which ranked it second in the world on that parameter behind only ZTE, which filed 4,123 patent applications during the year. These add to the total of 52,550 patent applications in China and 30,613 outside China, filed as of December 31st 2015 (of which s total of 50,377 had been granted at that time). According to Huawei's recent 2016 report it has so far been granted 62,519 patents. Roughly 45% of Huawei's 180,000 employees, or about 80,000, are R&D engineers working in 15 research institutes and centres and 36 joint innovation centres where they collaborate with global innovators. Huawei also is working with over 300 universities in more than 20 countries, and has sponsored over 1,200 innovation research projects by them. According to Huawei, it is currently a member of over 360 standards organisations, industry alliances, and open source communities, and holds over 300 positions of responsibility, and within these organisations its engineers have submitted 49,000 proposals, with around 6,000 submitted in 2016 alone.

What does Huawei consider its key achievements during 2016?

These achievements are scattered over several different sections and the following is a sample of Huawei's activities:

• Carrier operations – its Polar code was selected as a 5G standard.

• Collaboration with major operators - with Vodafone, Telefónica, Deutsche Telekom and China Unicom to roll out new services in smart home, smart meter, and connected vehicle domains; with China Telecom, China Mobile, China Unicom, Deutsche Telekom, Etisalat and others on benchmarking projects to develop video into a basic service; providing Deutsche Telekom, Telefónica, and China Telecom with public cloud services to help expand their B2B business; and strategic partnerships with China Unicom Shanghai and HKT to help evolve their O&M systems.

• Cloud - work with over 500 partners to provide cloud computing solutions across over 130 countries and regions; public cloud and big data solutions provided to over 300 financial institutions including six of the world's top banks; and deployment of over 2 million virtual machines and 420 cloud data centres.

• Enterprise business - installed smart city solutions in 100 cities in 40 countries; smart grid solutions installed for over 170 customers in the electricity sector across 65 countries.

• Consumer business - shipped over 139 million smartphones, up 29% YoY but below a target of 140 million (according to IDC Huawei shipped 45.4 million smartphones in Q4 for a unit market share of 10.6% and in 2026 shipped 139.3 million for a market share of 9.5% in a total market up only 1.1% YoY, and shipped 76.6 million phones in China for a 16.4% market share just behind OPPO); according to one source by end of 2016 Huawei had a market share of over 15%% in 33 countries and over 20% market share in 22 countries, half in Europe; and Huawei said it achieved key technological innovations in the consumer business including chipsets, UI and dual-lens camera technology.

Representative technology achievements in 2016/17

Batteries

In December 2016 Huawei at the 57th annual Battery Symposium in Japan announced  new graphene-assisted heat-resistant technologies that would enable Li-ion batteries to remain functional at 60 degrees C, 10 degrees higher than the existing upper limit and which would also support a lifespan for the graphene-assisted Li-ion batteries twice as long as ordinary Li-ion batteries. Huawei also, based on technology first announced in 2015, confirmed plans to bring to market a mobile phone with 3000 mAh batteries rechargable to 48% of capacity in five minutes.

5G technology 

In September 2016 at a conference in Beijing, Huawei announced that, working with China Academy of Information and Communications Technology (CAICT), China Mobile, China Unicom and China Telecom, it had completed first-stage field test verification of 5G air interface technologies, which: demonstrated three times spectrum efficiency improvement; successfully tested flexible air interface slicing, a technology expected to be a key component of 5G and which supports a particular connection type with a specific way of handling the control and user planes to provide only the traffic treatment that is necessary for the use case and avoid other unnecessary functionality.

On March 1st at MWC Huawei and Deutsche Telekom provided a demo based on work done at Deutsche Telekom's 5G network lab in Bonn, Germany using Huawei all cloud architecture to enable multiple industry services over one physical network, aimed at validating wireless network slicing technology and specifically showing E2E network slicing including RAN, transport, core network and massive MIMO C-band for high throughput, physical isolation and ultra-low latency mobile edge computing technology.

On March 31st Huawei and Telenor announced that during the month they held the first 5G-based, E-band, multi-user MIMO demo in Norway reaching a maximum speed of 70 Gbit/s.

Smartphone development

In its review of the 2016 global market for smartphones, which it said grew only 1.1% YoY to 1470.6 million, IDC observed that in the past year, vendors such as Huawei, Xiaomi and LeEco had developed phones with dual cameras, thin bezels, and digital headphone connectors well before many overseas vendors.

Summary and commentary

It is dangerous to bet against momentum on the sports field, the stock market, in business or in politics, and Huawei is certainly at this time going like a rocket. Almost whatever happens it is hard to see the company's drive for growth slowing significantly in under 2-3 years unless China Inc. itself crashes, which many analysts have been forecasting for years. However, China is a well-educated, hardworking, politically stable, technically ambitious and opportunistic country, centrally planned by a strong technocratic government with a very clear sense of direction and a sense of global mission and also with plenty of momentum, and nominal GDP per capita of $8,100 in 2016 is still 20% below the global average, so that seems rather unlikely.

Similarly, at Huawei there is just so much going on in terms of new technologies, new products, new joint ventures that even if growth slows and the company takes a year to consolidate and maybe lift its product margins the opportunities and desire for growth will still dominate the situation. However, there are a few caveats. Firstly, too much success for too long can result in complacency, overstaffing, reduced work rate and carelessness by staff who take success created by an earlier generation as guaranteed. There are rumours that Huawei's top management is worried that has happened and has been reading the riot act about under performance to many of its senior personnel, and even a suggestion that a whole layer of older management is about to be retired early in a bid to rejuvenate the company. Those kinds of internal strains and necessary restructuring are certainly quite likely in a company which has been regularly doubling in size every 3-4 years. There are at least two much more worrying issues than those necessary organisational adjustments to explosive growth mentioned above.

The first is the underlying threat of what one could term the 'constant curse of the consumer combination',which as noted above has already damaged or destroyed several once-great electronic hardware companies. Despite Huawei's remarkable consumer performance over the last few years there are already hints that the curse may be preparing to strike again. Both OPPO and Vivo arguably did even better at least in unit terms than Huawei in 2016. OPPO is now the leading Chinese smartphone company in terms of units shipped and at global level both OPPO and Vivo, according to IDC, gained more global market share than Huawei. Both companies are also ahead of Huawei in the fast growing, low priced Indian smartphone market. Suddenly Huawei not only has to take on Apple and Samsung in the high priced smartphone market but also watch its back against OPPO and Vivo at the low end. While Huawei may certainly gain share over the next 18 months, what one might call an outright market-dominating win by Huawei now looks very improbable and a five year scenario might suggest a global market which is much more evenly divided between half a dozen top players than has historically been the case.

The second problem for Huawei is the difficulties it has and is likely to continue to have in penetrating the U.S. market, where on the consumer side the company currently only has only a 0.4% market share mainly because the majority of consumer phones are marketed via the two main operators. Problems on the professional side have been frequently covered both in OND and elsewhere and with the present mindset of the ruling Republicans that situation looks unlikely to change in the next few years.

Huawei's semi-legitimate hope is that by forcing the pace in communications technology it can create a situation whereby AT&T and Verizon are forced to ask the U.S. government to drop its informal embargo on the two companies freely trading with Huawei because they are falling behind in technology. On the whole that probability looks quite slight, at least for a few years. After all, the U.S. has trailed several Asia Pacific countries for years in the use of top end fixed broadband in the home and although grumbling is frequent no one other than Google has made any serious effort to fix the problem. Similarly, the mass use of wireless technology in the U.S. lagged Europe and Asia for many years without huge impact. Huawei will certainly eventually achieve success in the U.S. but that may take at least five and up to ten years to achieve.

See also