Thursday, July 5, 2018

Charter launches Spectrum Mobile over Verizon infrastructure

Charter Communications, the second largest cable operator in the U.S. with over 25 million subscribers, launched its Spectrum Mobile service. Charter is operating as a mobile virtual network operator (MVNO) using Verizon's nationwide 4G LTE network in combination with its own nationwide network of Spectrum WiFi hotspots.

Spectrum Mobile is offering two plans: (1) unlimited data for $45 a month (2) By the Gig at a price of $14/GB. Both plans include free nationwide talk and text.

Comcast and Charter form 50/50 partnership for mobile backend

Comcast and Charter announce a 50/50 operating platform partnership focused on the development and design of backend systems that support Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile service. The partnership will be governed by a four-person board of directors, with two directors representing each of Comcast and Charter. The partnership will be based in Philadelphia and will utilize Comcast employees to support the development of the platform on behalf of both companies.

The companies said that while they will continue to develop their respective mobile brands, products, and services, there is an opportunity to work together to develop an efficient and scalable software platform, and related backend systems, which will power each company’s mobile-related customer sales and support platforms, device logistics and warehousing, and billing." The operating platform developed by the partnership will serve as the systems interface for current and any future MVNO (mobile virtual network operator) partners.

Danny Bowman, Chief Mobile Officer for Charter, said, “Our new partnership will enable us to drive faster and more cost-effective mobile product and service enhancements and provide innovative and affordable mobile service to our customers. We are excited about the launch of Spectrum Mobile in the coming months.”

“We have built a best-in-class mobile platform for Xfinity Mobile that is resonating with customers,” said Sam Schwartz, Chief Business Development Officer for Comcast. “By collaborating with Charter, we will help drive operational and cost efficiencies for both companies.”


FCC Approves Charter + Time Warner + Brighthouse Deal

The FCC approved the merger of Charter Communications, Time Warner Cable Inc. and acquisition of Bright House Networks.

Charter said it agreed to a number of conditions as part of the FCC approval.  Many of the conditions either codified or reflected specific commitments Charter offered proactively at the beginning of the transaction review process, including no data caps or usage-based billing, a commitment to build out high-speed broadband service to unserved and underserved customers, the fastest low-income broadband program of any major service provider, and settlement-free peering.

The California Public Utilities Commission vote is scheduled for May 12th, following last month's recommendation for approval from the California Administrative Law Judge.

"I want to thank Chairman Wheeler and Commissioners Clyburn, Rosenworcel, Pai and O'Rielly for their thorough review of these transactions," said Tom Rutledge, President and CEO of Charter Communications.  "The significant benefits of these transactions are clear; greater competition, more consumer and OTT friendly broadband policies, broader access to affordable broadband, and added U.S. jobs.  The conditions are largely extensions of the longstanding consumer friendly values and practices of our company, and based on the commitments we put forward during the review process. Charter will be a stronger competitor in the broadband and video markets, well positioned to deliver these benefits and more to consumers."

U.S. provides a temporary lift on exports to ZTE

The U.S. Department of Commerce's Bureau of Industry and Security (BIS) agreed to temporarily lift export restrictions to ZTE that were imposed on the company on 15-April-2018.

In a statement dated 02-July-2018, the BIS grants temporary authorization to engage in transactions with ZTE until 01-August-2018.

In June, at the urging of President Trump, BIS announced a deal with ZTE to lift the export restrictions in exchange for ZTE agreeing to pay a $1 billion fine and place an additional $400 million in suspended penalty money in escrow. ZTE has also replaced its entire board of directors and senior leadership team.

The ban on exports of U.S. technology to ZTE remains a hot topic in Washington. The U.S. Senate included a continued ban on exports to ZTE in a spending authorization bill for the U.S. Department of Defense. The U.S. House of Representative did not in its version of the legislation. The bills must now be reconciled before being sent to the President.



U.S. Senate's Defense Legislation hits ZTE






The U.S. Senate voted 85 to 10 to approve a $716 billion defense spending authorization bill that includes a provision extending the restriction on the export of U.S. technologies to ZTE. The provision is a rebuke to President Trump's decision to lift the ban against exports to ZTE. The Senate version of the defense spending authorization bill must be reconciled with the House version, which prohibits the federal government from purchasing ZTE products,...

ZTE resumes trading, seeks loan from Chinese banks





For the first time since April 16th, shares of ZTE resumed trading on the Hong Kong Stock Exchange. The shares were valued significantly lower than the previously listed price. ZTE also announced its intention to seek a 30 billion yuan ($4.9 billion) line of credit from Bank of China and a separate $6 billion credit line from China Development Bank. ZTE also informed the market that it has agreed to the settlement with the U.S. Department of Commerce...

U.S. reaches deal to save ZTE





The U.S. Department of Commerce announced a deal to allow the export of U.S. components and technology to ZTE, enabling the company to resume operations. Under the deal,  ZTE must pay $1 billion and place an additional $400 million in escrow. ZTE also agreed to certain provisions allowing monitoring of its compliance with U.S. export control laws. “Today, BIS (Bureau of Industry and Security) is imposing the largest penalty it has ever levied...

FWD: The death of ZTE

Zhongxing Telecommunication Equipment Corporation (ZTE), one of the world's largest suppliers of network infrastructure products, informed the Hong Kong Stock Exchange that "the major operating activities of the Company have ceased". 

If the notice means what we think it means, then ZTE is dead.

It took only 3 weeks from the day that the U.S. Commerce Department' Bureau of Industry and Security (BIS) issued its order prohibiting companies or individuals from participating in any way in an export transaction with ZTE for this multinational giant based in Shenzhen to collapse. I'm not sure there has been any other corporate collapse in the networking sector of this magnitude and in this accelerated time frame. The nearest comparison would be the collapse of Nortel in 2009, but that took years to occur rather than just weeks.

ZTE's website has already started to disappear. Many product, technology and news archive pages are now gone.

The most proximate reason for the death of the company is that without new deliveries of chipsets and optical components from U.S. vendors, the manufacturing lines for ZTE must have already come to a halt, leaving the company unable to ship products. Just-in-time manufacturing probably means that the company has insufficient inventory to sustain operations during a protracted appeal or legal fight with the U.S. Department of Commerce. More importantly, if the market has lost confidence, the sharks smell blood, and normal operations become impossible.

There will be a scramble amongst investors, creditors, employees, competitors, suppliers, and customers to secure whatever value remains in the organisation. There should be plenty.

Salvaging the good bits

First, there is a huge installed base of ZTE equipment worldwide in carrier networks, in data centres, in enterprise IT centres, and in home networks. The value of this equipment could be in the tens of billions if we take a cumulative count of sales over the last four years. These networks, which belong to the customers and their lenders, will need to be supported.  There is ongoing business here for someone.

ZTE holds the No.1 or No. 2 markets share position on many of the core infrastructure projects of the big three carriers in China -- China Mobile, China Telecom, and China Unicom.

All of ZTE's product segments were growing. Here are the 2017 annual growth rates:

  • Carrier networks  8.3%
  • Gov't and corporate  10.4%
  • Consumer 5.2%


Outside of China, ZTE has many current sales contracts and open purchase orders for new equipment, with good prospects of upcoming fibre broadband, 4G, 4G, and core network projects. 

ZTE has a very extensive telecom equipment portfolio, covering every sector of wireless networks, core networks, access & bearer networks, services and terminals. 

ZTE has been listed on the Shenzhen Stock Exchange since 1997 and on the Hong Kong Exchange since 2004. Trading has been suspended since April 16 and so there is no way to know quite yet if the shares are now worthless. The company's balance sheet at the end of 2017 showed RMB 31.647 billion in current assets, and the company's most recent statement said it was conserving cash.

ZTE has abundant in-house and contracted production facilities capable of manufacturing large volume of smartphones, customer premise equipment, and carrier infrastructure products. 

ZTE has many current and next-generation product designs using the latest silicon from U.S., Japanese, Korean, Taiwanese and other international suppliers. The product designs could be sold to other equipment suppliers.

ZTE has a considerable patent portfolio. ZTE claims to amongst the most prolific corporate patent filers in recent years. As of 30-June-2017, ZTE Group 68,000 patents, including 29,000 granted global patents.

As of mid-2017, the company was operating 20 R&D centres in China, the United States, Sweden, France, Japan and Canada, as well as more than 10 joint innovation centres established in association with leading carriers.

There is a talented pool of 74,773 employees (including 58,940 as employees of the parent company), with an average age of 33. Many of these employees have deep subject matter expertise, the vast majority of whom had nothing to do with the business decisions that got ZTE into trouble. 

ZTE was gearing up for a big play in 5G

At this year's  Mobile World Congress in Barcelona, ZTE captured the “Best Technology Innovation for 5G" award for its end-to-end vision encompassing the radio access network, the core network, bearer platforms, custom 5G silicon and CPE terminals. As with other suppliers, many of these are “works in progress” rather than commercially deployable solutions right now.

ZTE's has pushed hard on Massive MIMO, the antenna technology which has been shown to improve spectral efficiency up to 8 times.

It has been pioneering a multi-user shared access (MUSA) technology to effectively increase the number of connections served, and thereby enable support for scenarios involving mass connectivity with low power consumption. This could be extremely useful in very crowded areas, such as subway systems, when everyone is using their smartphone. The MUSA technology works by allowing high overload and eliminating scheduling operations, thereby increasing the number of connections by between 3- and 6-fold. It uses advanced spread spectrum sequence and SIC technology to simplify terminal implementation and help reduce energy consumption.

In the network core, ZTE is ready to commercialize end-to-end 5G network slicing. Its Cloud ServCore platform implements lightweight micro-service components to enable the network slices to operate independently and with easy scalability. This will allow IoT applications, for instance, to scale smoothly and without impacting other network slices.

ZTE is also readying a 5G Flexhaul bearer solution based on next-gen FlexE technology. Part of this vision to achieve a unified bearer network for 3G / 4G / 5G traffic. ZTE says its 5G Flexhaul achieves end-to-end protection switching time of less than 1ms, as well as single node forwarding latency of less than 0.5μs.




ZTE was a $20 billion company on the rise

Prior to receiving the death sentence for sanctions violations and lying to the U.S. government during a probationary period, ZTE was profitable and on a $20 billion per year sales run rate.

For Q1 2018, the company reported revenue of RMB 28.879 billion (US$5.548 billion), up 12% over the same period in 2017. Net profit after extraordinary items attributable to holders of ordinary shares of the listed company amounted to RMB 1.368 billion (US$216 million). For the full year 2017, ZTE reported operating revenue of RMB 108.82 billion, 7.49% higher than a year earlier,  

Net profit for 2017 was reported at RMB 4.55 billion, an increase of 293%. Net cash flow from operating activities for 2017 was approximately RMB 6.78 billion, about 28.88% year-on-year growth. This was a quite a recovery from 2016, when revenues grew just 4% and profits were lower. With booming handset sales in China, India and other developing markets, along with good prospects for 5G, things were looking pretty good for ZTE, until its troubles with the long-running exports violation case came to a head.

Big fine in 2017

ZTE's 2017 results were impacted by troubles with the U.S. government. In March 2017, ZTE made penalty payments of over US$1.19 billion to the U.S. government-- this too for the case involving the shipment of U.S.-origin technology to Iran during the period of economic sanctions. ZTE plead guilty in the case and paid the fine. It also agreed to a number of other conditions, which were not fulfilled, according to the U.S. Commerce Department, or which ZTE subsequently lied about. 

Huawei as the beneficiary? 

ZTE generates about 40% of its revenue abroad. 

We can surmise that many of the large carrier projects that ZTE currently has underway internationally will have been funded by the Bank of China,  the China Development Bank (CDB), or other government-backed, export/import financial institutions. These carrier customers are facing the prospect of suspended or canceled projects. This presents an opportunity for other network vendors to step in and capture the business. 

However, the customer would need to secure another funding source. Huawei is the most likely to be the ZTE replacement, especially if the Bank of China or CDB were to transfer project loans on their behalf. Ericsson, Nokia, Samsung and others also have an opening to entice these ZTE carrier customers with their offerings.

But what if Huawei is next?

However,  it is conceivable that the Trump administration will ratchet up the pressure on Huawei, for instance by extending all of parts of the ZTE export ban to them, or by persuading other governments to block Huawei as has been done in the U.S.. Many analysts expected that the ZTE ban was a bargaining chip in the recent, first round of trade negotiations between the U.S. and China. There was, and perhaps continues to be, hope that the order would be rescinded after the trade talks. This did not happen. Perhaps the trade tensions will get worse, with Huawei coming under pressure next.

With this possibility at hand, some large carriers in countries such as Japan, Germany or Singapore, may rethink their future plans with Chinese equipment vendors in general on critical projects so as not to face supply disruptions like we now see with ZTE. In Germany, Deutsche Telekom recently announced a 5G pilot deployment in Berlin using Huawei equipment. In the U.S., T-Mobile is prohibited from using Huawei as a supplier. With T-Mobile now seeking to merge with Sprint, U.S. regulators conceivably could require the German parent company to remove all Huawei gear from all of its networks as a condition for approving the merger. 

In other countries, there will be other geopolitical considerations. In Russia, ZTE has just clinched a 70% share of the first stage of  Rostelecom's the access network modernization project. ZTE's Multi-Service Access Network (MSAN) product delivers VDSL. Rostelcom is currently testing G.vectoring and G.fast for deployment in a second stage of its upgrade project. Rostelecom, of course, is Russia's leading broadband and pay-TV provider with over 12.7 million fixed-line broadband subscribers and over 9.7 million pay-TV subscribers, over 4.7 million of which are subscribed to its IPTV service. Given the need for Rostelcom to complete this network upgrade successfully, on-time and on budget, they will look for other suppliers.. but probably not from the U.S.

In India, ZTE is now a major supplier of low-cost smartphones and optical transmission gear. In October 2017, ZTE announced a 100G WDM Backbone Network Project and metro area network (MAN) construction contract with Idea Cellular, the third largest mobile operator in India with 189 million subscribers. With this deal, ZTE’s OTN optical transport platform captured a 95% share in the metro optical backbones that carry Idea Cellular’s traffic. ZTE has previously disclosed major contracts with Bharti Airtel as well. This success comes despite some protectionist voices in India warning against Chinese suppliers for critical network infrastructure.

Other recent contract wins include the Ooredoo Group, which serves 164 million customers across the Middle East, and South Africa based MTN. For Ooredoo Group, ZTE was expected to supply end-to-end networks, applications, and terminals in preparation for a 5G launch. MTN was also looking at deploying ZTE’s 5G NR radio access, 5G virtualized network slicing, carrier DevOps and container-based vEPC, and 5G Flexhaul bearer network.

The ZTE effect on suppliers

For those companies who were supplying chipsets, optical components, memories, display technologies, protocol stacks, etc. to ZTE, there will be a waiting game to see who takes up the slack. We can presume that the size and growth of the market will remain the same before and after this incident. If ZTE doesn't supply that core router, someone else will. 

What comes next?

The ZTE statement about ceasing normal activities holds out a glimmer of hope that the U.S. government might hear an appeal and grant a reprieve. Last week, U.S. trade negotiators visited China. Obviously, no deal occurred or ZTE would not have made its statement. 

Whatever comes next, it better happen quickly because sales contracts and talented employees will not stick around to what eventually emerges. The best people and ideas will move on to competitors or new ventures.

The most likely outcome is that ZTE individual business units are sold off, spun out, or otherwise reorganised into new corporate entities. In other words, the same cast of characters with the same products but operating under a new name.

U.S. seeks to block China Mobile from entering U.S. market

Citing national security concerns, the National Telecommunications and Information Administration is requesting that the FCC deny a license request from China Mobile to offer services in the U.S. market.

“After significant engagement with China Mobile, concerns about increased risks to U.S. law enforcement and national security interests were unable to be resolved. Therefore, the Executive Branch of the U.S. government, through the National Telecommunications and Information Administration pursuant to its statutory responsibility to coordinate the presentation of views of the Executive Branch to the FCC, recommends that the FCC deny China Mobile’s Section 214 license request.”

https://www.ntia.doc.gov/press-release/2018/ntia-statement-china-mobile-s-section-214-application-fcc

  • China Mobile initially filed its petition for global facilities-based and global resale international Section 214 authority in September 2011.

Ciena's Packet Design acquisition enhances its Blue Planet automation

Ciena completed its previously announced acquisition of Packet Design, which focuses on network path optimization technologies.

Ciena said the integration of Packet Design’s capabilities enhances its Blue Planet network automation platform, which can now provide multi-domain, multi-vendor, and multi-layer support across Layers 0-3 of the network.

https://www.ciena.com/insights/articles/Ciena-Completes-Acquisition-of-Packet-Design.html

Ciena to acquire Packet Design for network analytics and path computation
Ciena agreed to acquire privately-held Packet Design, a provider of network performance management software focused on Layer 3 network optimization, topology and route analytics. Financial terms were not disclosed.

Packet Design's portfolio includes Route Explorer, an IP/MPLS route analytics software that provides management visibility into routing behavior for all IGP and BGP protocols, Layer 2/3 VPNs, traffic engineering tunnels, segment routing and multicast with real-time monitoring, historical reporting, and what-if modeling capabilities.

Ciena said the acquisition will help accelerate its Blue Planet software strategy by extending its intelligent automation capabilities beyond Layers 0-2 and into IP with critical new capabilities to help customers optimize service delivery and maximize network utilization. Specifically, the combination of the Blue Planet software platform and Packet Design’s performance analytics and service path computation capabilities will form a unique, micro-services-based platform that delivers real-time analytics, optimization and orchestration capabilities to support the broadest range of closed-loop automation use cases across multi-layer, multi-vendor networks.

“Blue Planet is already one of the premier brands in the network automation space. The addition of Packet Design will enhance our position by enabling customers to realize networks that are more adaptive – capable of self-optimizing and self-healing for faster time-to-market for new services, more efficient and lower cost network operations, and the ability to deliver an overall better customer experience,” said Rick Hamilton, senior vice president of Global Software and Services at Ciena.

China Mobile, Tencent, and Huawei test 5G eMBB slicing

China Mobile, Tencent, and Huawei have completed the first round of testing of 5G network slices designed for enhanced mobile broadband (eMBB) services requiring stable network latency. The target application is augmented reality (AR) gaming.

In Phase 1 of the 5G slicing verification project, terminals, networks, and AR game platforms were connected. The test verified the effects of data rate acceleration with slicing at the terminal side, and with slicing at both the terminal and network sides. The slice management function was also examined. The verification on network slicing usability represents a significant step in promoting the application of 5G network slicing.

AR games already allow for real-time positioning data. E2E Quality of Service (QoS) assurance is needed for consistent network latency and data rates.

Huawei said 5G networks will be able to offer "slicing as a service", with E2E QoS to support AR gaming.

China Mobile, Tencent, and Huawei have started Phase 2 of the 5G slicing verification, which should be complete by the end of the year. The project will focus 5G core networks' movement towards users, and the sensing of access network and bearer network slices. Slice management will also be closely examined. This includes research into slice template design, coordinated orchestration across terminal slices, core network slices, bearer network slices, and mobile edge computing (MEC). On-demand, flexible deployment of third-party applications on MEC will also be explored.

https://www.huawei.com/en/press-events/news/2018/6/ChinaMobile-Tencent-5G-eMBB-Slice-AR-Games

New Zealand signs ABB for North/South Island power link upgrade

Transpower New Zealand awarded a contract to ABB to upgrade the high-voltage direct current (HVDC) link which interconnects the transmission grids of the North and South islands.

New Zealand's North Island houses more than three times the population of the South Island, which besides its picturesque landscape, offers vast amounts of hydropower.

ABB noted its historic involvement in the link-- the first New Zealand link was commissioned by ABB, (erstwhile ASEA), in 1965 as one of the first HVDC transmission systems in the world. It was originally a bipolar 600 megawatt (MW) link with mercury arc valves, until the original equipment was paralleled onto a single pole in 1992, and a new thyristor-based pole was commissioned by ABB alongside it, increasing capacity to 1040 MW. The first installation was decommissioned in 2012 after 47 years in operation.


See also