Monday, August 13, 2018

Intel's Future of the Enterprise looks to cloud repatriation

A fundamental question regarding the astonishing rise of public cloud companies is how far will they go in capturing the enterprise networking and IT services businesses? 

Nearly every week, this journal tracks another "all-in" customer migration story to AWS, Azure, Google Cloud, Alicloud, etc. However, in reading the press announcements in detail, we often find caveats. Sometimes it is only one division of a corporation that is fully migrating to the cloud, or maybe it is a next-gen application that is all-in, or maybe the news is only the expression of an intent to go all-in to cloud but no timeline is given.

This topic was the subject of a  presentation given last week at the Intel Data Centric Innovation Summit by Rajeeb Hazra, Corporate Vice Presiden of Intel's Data Center Group. Earlier in the day, Intel had spoken quite enthusiastically about partnerships with the big cloud providers to build custom silicon for their pressing scalability challenges. It is clear that Intel is benefitting from the explosive growth of hyperscale data centers from these guys. The forthcoming Intel Xeon processors with integrated persistent memory is an effort to accelerate this fire even faster.

The afternoon talk by Hazra tackled the "Future of the Enterprise" from the Intel perspective. Plenty of Xeon chips have shipped to enterprise customers of the past two decades and the company is determined that this party won't end for any reason, even to be cannibalized by Xeon sales to the public cloud.

The key takeaway from Hazra's presentation is a data point cited from IDC: that 80% of enterprises are considering re-patriating workloads from public clouds to their on-premise infrastructure.

One argument for this trend is that biggest enterprise applications require many clusters of high-performance systems, which currently are best procured in a public cloud. However, if we think about the mid to long-term future of computing, we should question whether this assumption will always hold true. How big are the largest corporate applications? What would it take to run them in-memory?  Hundreds of cores and thousands of threads? Terabytes of persistent memory? 

The development of persistent memory technologies, such as Intel's Optane, promises to redraw the boundaries between computing and storage. In the microservices and containerization, could very efficient on-premise infrastructure do the job better than an all-in public cloud solution or hybrid cloud solution. Ten years from now or maybe sooner, the amount of compute and storage resources and AI resources that can be packed in one standard rack of equipment, may have caught up to the big data needs of most enterprise applications. In some sense, this is the same old question of whether it is better to rent or own. The answer depends on many factors, which may well shift away from public clouds when resources are cheap and powerful enough.

A video of Rajeeb Hazra's "Future of the Enterprise" is archived here:

IETF completes Transport Layer Security 1.3

The IETF has officially completed and published Transport Layer Security (TLS) Protocol Version 1.3, which is the most important security protocol update for the Internet since SSL was completed twenty years ago.

The preceding TLS 1.2 version was known to have several high profile vulnerabilities. TLS 1.3 brings major improvements in security, performance, and privacy in the way that client/server applications communicate over the Internet.

The IETF says it engaged with the cryptographic research community to analyze, improve, and validate the security of TLS 1.3 so to prevent eavesdropping, tampering, and message forgery.

Some highlights:

  • TLS 1.3 encrypts more of the negotiation handshake to protect it from eavesdroppers.  
  • TLS 1.3 enables forward secrecy by default which means that the compromise of long term secrets used in the protocol does not allow the decryption of data communicated while those long term secrets were in use. This ensures that current communications will remain secure even if future communications are compromised.
  • TLS 1.3 shaves an entire round trip from the connection establishment handshake. In the common case, new TLS 1.3 connections will complete in one round trip between client and server.

TLS v1.3: How Do We Get from Here to There?

Spirent has been leading the way in providing companies with the tools they need to prepare for TLS v1.3. I had a chance to sit down with David DeSanto, Director, Products and Threat Research for Spirent to talk about the transition to TLS v1.3 and some of the hurdles that organizations face as they make the switch to the new de facto standard.

Jim Carroll, OND: Tell me about the evolution of TLS. How did we get to this point?

David DeSanto, Spirent: Transport Layer Security, or TLS, is a cryptographic protocol used by many applications and services such as web browsing, email communications, and multimedia communications.  It made Secure Sockets Layer, or SSL, obsolete as it offered better encryption properties such as perfect forward secrecy (PFS), newer cipher suites, etc.

TLS v1.2 is a considered the current de facto standard for cryptography when paired with a strong cipher suite and large private key (i.e., asymmetric key).  However, this comes at an impact to the user’s experience, as the protocol itself and the cipher suites offering elliptic curve with PFS and large asymmetric keys come at a performance hit.  Even in today’s world of data breach roulette, organizations choose to go with a lower encryption standard or cipher suite such that cryptographic steps do not overburden the user and potentially have them stop using their services altogether.
TLS v1.3 looks to address the concerns commonly seen with TLS v1.2.  This new standard includes performance improvements such that the user does not have as much overhead or burden in initializing the secure connection.  It also makes additional insecure cryptographic practices obsolete, which can lead to attackers improperly gaining access to the encrypted communication.

Jim Carroll, OND: What's the current status of TLS v1.3 and what is the next phase of specification development?

David DeSanto: TLS v1.3 is still in draft—specifically draft-28—and this draft has been submitted as the official standard. This was submitted in March to the IETC and is going through the IETF process to be a ratified standard.  It is expected to be ratified this year, and you can track its progress at

Jim Carroll, ONDWhat is the market reaction so far?  Are customers implementing TLS v1.3 in big numbers?

David DeSanto: The market adoption has varied depending on the specific technology and vertical.
As TLS v1.3 is a cryptographic protocol used by a client and server to provide privacy and data integrity, users can be put into a “forced adoption” model without realizing it.  The best example of this is with one of the bigger champions of TLS v1.3: Google.  Google rolled out TLS v1.3 earlier this year within its services and consumer solutions.  If you have a Gmail account and access it using the Chrome browser, you are using TLS v1.3 and may not even know it.

There is a parallel effort—started by development at Google in 2016—to build a new transport layer protocol named QUIC (short for Quick UDP Internet Connections).  It was first submitted to the IETF in 2016 and is currently still in draft with draft-12 being the current working draft.  QUIC has encryption requirements built right into its standard and these requirements are based on TLS v1.3.  

Just these two examples show strong adoption of TLS v1.3 so far and it is expected to grow at a consistent rate.  TLS v1.3 is expected to be adopted at a much faster rate than previous iterations of the TLS protocol—due in large part to the providers we rely on today who are actively making the switch to support it quickly.  Google is joined by many others who have already implemented and have enabled support by default.

Jim Carroll, ONDWhat technical hurdles are there to implementing TLS v1.3?

David DeSanto: There are three crucial considerations that organizations need to keep in mind as they prepare to migrate to TLS v1.3. Every organization should be thinking about three crucial considerations:

1.      How to handle zero round trip time resumption (0-RTT)
2.      Preparing for downgrades to TLS v1.2
3.      The need for infrastructure and application testing

The 0-RTT option has the potential to significantly increase performance during an encrypted session between endpoints. With TLS v1.2, secure web communications requires two round trips between the client and server prior to the client making an HTTP request and the server generating a response. TLS v1.3 reduces this requirement to one round trip and offers the ability to inherit trust to accomplish zero round trips, or 0-RTT. 0-RTT potentially provides better performance, but it also creates a significant security risk. With 0-RTT, a transaction could be easy prey for a replay attack, in which a threat actor can intercept an encrypted client message and resend it to the server, tricking the server into improperly extending trust to the threat actor and thus potentially granting the threat actor access to sensitive data. Organizations should be wary of allowing or using 0-RTT due to the potential security risks.  Unless your application or service is highly latency sensitive, the new option is simply not worth the security risk.

Another concern is that TLS v1.3 is backward compatible to TLS v1.2 to allow for interoperability with legacy clients and servers during the transition to the new standard. It’s important to configure the security settings to ensure fallback to TLS v1.2 uses higher security standards. Organizations should disable lower cryptographic algorithms to prevent security breaches such as man-in-the-middle attacks. Select strong cipher suites, including ones that leverage elliptic curve key exchange, use large asymmetric keys, and implement PFS.

Testing is also crucial. The change to TLS v1.3 may be disruptive, and it’s important to discover and address issues proactively. Businesses should test for interoperability, security, and performance in a combined, holistic manner. Use a realistic load, generating, inspecting, and processing appropriate levels of encrypted traffic. Validate how internal and external users will interact with your systems and consider what this change in encryption may mean for an employee, customer, partner, or any other relevant stakeholder. You also have to test all clients—including mobile devices and tablets, and the entire network infrastructure, such as identity and access management systems, firewalls, web proxies, etc.

NVIDIA's 8th GPU architecture for real time graphics and AI

NVIDIA CEO Jensen Huang unveiled the company's  NVIDIA’s eighth-generation GPU architecture, which he described as "the greatest leap since the invention of the CUDA GPU in 2006."

The new GPU architecture, which is codenamed "Turing", leverages dedicated ray-tracing processors — called RT Cores — accelerate the computation of how light and sound travel in 3D environments. It also employs Tensor Core processors to accelerate deep learning training and inferencing, providing up to 500 trillion tensor operations a second.

These hardware capabilities, along with a new software stack merging rastering and ray tracing, are expected "to fundamentally change how computer graphics is done."

Initial Turing-based products include the NVIDIA Quadro RTX 8000, Quadro RTX 6000 and Quadro RTX 5000 GPUs.

Samsung supplies 16Gb GDDR6 Memory for NVIDIA Quadro

Samsung Electronics has supplied its latest 16-gigabit (Gb) Graphics Double Data Rate 6 (GDDR6) memory for NVIDIA’s new Turing architecture-based Quadro RTX™ GPUs.

Samsung's 16Gb GDDR6, which doubles the device capacity of the company’s 20-nanometer 8Gb GDDR5 memory. The new solution performs at a 14 Gbps pin speed with data transfers of 56 gigabytes per second (GB/s), which represents a 75 percent increase over 8Gb GDDR5 with its 8Gbps pin speed.

Samsung says its GDDR6 consumes 35 percent less power than that required by the leading GDDR5 graphics solutions.

"It’s a tremendous privilege to have been selected by NVIDIA to launch Samsung’s 16Gb GDDR6, and to have enjoyed the full confidence of their design team in making our key contribution to the NVIDIA Quadro RTX GPUs," said Jim Elliott, Corporate Senior Vice President at Samsung Semiconductor, Inc.

BAE Systems partners with Flexera for government cloud migration

BAE Systems, the British defence, security and aerospace company, has formed a partnership with  Flexera to help government agencies moving to the cloud better manage their software licenses and more accurately plan and budget for their future information technology (IT) needs.

Specifically, BAE Systems will integrate Flexera’s  asset and license management tools into its scalable, hybrid cloud environment for government. The federated secure cloud, developed by BAE Systems and Dell EMC, is designed for any U.S. Intelligence Community, Department of Defense (DoD), or federal/civilian government organization.

Flexera is based in Itasca, Illinois.

“With our federated secure cloud, we’re helping government agencies rethink how they share data, analyze information, and collaborate across their enterprises real-time while remaining consistent with strict governance and security requirements,” said Peder Jungck, vice president and general manager of BAE Systems’ Intelligence Solutions business. “It’s only natural that we’d partner with Flexera – a company reimagining how government IT assets and software licenses are bought, sold, managed, and secured.”

U.S. Defense Authorization Act bans Huawei and ZTE from government purchase

The John S. McCain National Defense Authorization Act for FY 2019, which was signed into law by President Trump, officially prohibits the  U.S. government from purchasing telecommunications equipment produced by Huawei Technologies, ZTE Corporation, or any of their affiliates.  The U.S. government is also prohibited from using telecommunications or video surveillance services from any entities using such equipment.

Earlier versions of the legislation had threatened more severe action against Huawei and ZTE but were later removed from the bill.

Nokia supplies Optical LAN for new Korean resort hotel

Nokia has completed the first phase of an Optical LAN deployment for the Jeju Shinhwa World in Jeju, South Korea. The new hotel is a massive resort project that will incorporate a theme park and other attractions.

The installation brings fiber to each of the 1,326 hotel rooms for supporting in-room IT services such as IPTV, VoIP, room control and Wi-Fi.

Technology used for the deployment:

  • Nokia's 7360 Intelligent Services Access Manager (ISAM) FX serves as a high-capacity access node
  • Nokia's 7368 Intelligent Service Access Manager (ISAM) Optical Network Terminals (ONTs) deliver superior triple-play services with high bandwidth capacity to the end users.
  • Nokia's 5571 PCC controls all LAN systems from one centralized advanced management platform optimized for performance and usability.

256 GB microSD cards are aimed at mobile gamers

Kingston Technology introduced a 256 microSD car under its HyperX brand aimed at gamers.

The new Gaming microSD Card line is designed for mobile gamers who need additional storage to store and play games. The HyperX Gaming microSD cards feature read speeds of 100MB/s and write speeds of 80MB/s, meeting or exceeding Nintendo Switch requirements. The new product line is available in 64G, 128G and 256G capacities.

The HyperX Gaming microSD Card is compatible with Nintendo Switch, mobile phones, tablets and other portable gaming devices that have a microSD slot for extended storage.

Deutsche Telekom activates vectoring upgrade in more areas

Deutscke Telekom announced another milestone for its broadband upgrade program as 226,400 households in 151 municipalities can now surf faster on the Internet with download speeds of up to 100 Mbps and upload speeds of up to 40 Mbps.

The cities benefiting include Haltern am See, with 12,000 households, Werdau, with 11,200, Aachen with 10,900, Illingen with 8,300, and Peißenberg with another 6,400 households.

“We’re not just building information superhighways between major metropolises and population centers; our network also extends to rural areas. We are the only company pursuing comprehensive broadband expansion," says Tim Höttges, CEO of Deutsche Telekom. “Some of our build-out projects are designed to serve tens of thousands of households, while others benefit just a handful. For us, every line counts. It doesn’t matter if it’s in Aachen, Chemnitz or Munich or in Aulendorf, Bisingen or Schwindegg.” No other company is investing as much in broadband expansion in rural areas as Deutsche Telekom. The next wave of commissioning is scheduled for September 17.

Switch posts $102 million in revenue

Switch, the Las Vegas based company that develops and operates the SUPERNAP data centers, reported record quarterly revenue of $102.2 million, compared to $92.1 million for the same quarter in 2017, an increase of 11%. Operating income of $15.8 million, compared to $23.5 million for the same quarter last year, a decrease of 33%. Operating income in the second quarter of 2018 includes the impact of $8.2 million in equity-based compensation expense compared with $1.3 million in the same quarter of 2017. A significant portion of this equity-based compensation expense in the second quarter of 2018 relates to the continued vesting of Common Unit awards granted in connection with Switch's initial public offering.

Adjusted EBITDA was $50.3 million, compared to $46.8 million for the same quarter in 2017. Adjusted EBITDA margin of 49.2%, compared to 50.8% for the same quarter in 2017, a decrease of 160 basis points.
Capital expenditures of $99.4 million, compared to $112.9 million for the same quarter in 2017, a decrease of 12%.

"The logistics and timing required for customer implementation of our holistic cloud solution impacted our expectations for the year," said Thomas Morton, president of Switch. "We firmly believe in the long-term growth prospects of our business, and that the unique and market-defining solutions available only at the Switch PRIME campus ecosystems will establish our organization as the recognized pillar of enterprise hybrid cloud."

BigBear cites rapid growth in government cloud services

BigBear, a privately-held company offering cloud-based big data analytics solutions for government and commercial customers, reports more than 220 percent revenue growth last year and is on track to gain another 50 percent boost to revenue by the end of this year.

The company has office locations in Charlottesville, Virginia, and San Diego, California, and is opening a new office in Reston, Virginia.

“We’re excited about our new office location in the Washington, D.C. area as well as the progress our work has made serving our nation’s most critical defense missions,” said Frank Porcelli, CEO of BigBear. “By having our senior technology experts and engineers located near our customers, it enables the kind of close collaboration that is required to provide the high-level mission-critical support we deliver. We look forward to continuing to bring the incredible cost savings and productivity-enhancing benefits of our platform and expert team to more customers throughout the defense and intelligence communities.”

Sunday, August 12, 2018

China Tower - world's largest mobile infrastructure company goes IPO

China Tower, which had been pitched as the world's largest IPO - and not just for telecoms, drew lacklustre investor enthusiasm this week as its shares began trading on the Hong Kong Exchange. Trading opened on Wednesday at the bottom of the forecasted range at HK$1.26 and closed at exactly the same price. This raised HK$54.3 billion (US$6.9 billion) for China Tower, funds that will be much needed for the very capital intensive undertaking of preparing China's physical infrastructure for 5G.

The $6.9 billion IPO makes China Tower's listing one of the biggest in recent years, but far below the record US$25 billion that Alibaba raised in its IPO in New York four years ago. 

In investor roadshow briefings last month, China Tower executives talked about raising as much as US$8.7 billion in the IPO. The pre-IPO chatter had also mentioned Alibaba as a cornerstone investor in China Tower, presumably bringing along with many other of the country's high-tech powerhouses. Joint bookrunners and lead managers for the IPO included a who's who in international finance: CICC, Goldman Sachs, J.P. Morgan, BNP Paribas, HSBC, UBS, etc. 

With this pedigree, many will be wondering whether China Tower's tepid IPO reception is the result of fundamental questions about the company's business, or unfortunate timing during a period of trade tensions and market uncertainty.

Some background

China Tower is the Beijing-based infrastructure business that consolidated the tower operations of the country's three mobile operators: China Telecom, China Unicom, and the leader, China Mobile. As such, China's mobile communications infrastructure is literally in this company's hands. 

As of March 31, 2018, China Tower operated and managed 1,886,454 sites and served 2,733,500 tenant equipment contracts from its investor/owners. This makes China Tower the number 1 tower company in the world in terms of sites, revenue, and contracts.

In terms of being a key component of the country's critical infrastructure, China Tower cannot fail or be disrupted in any financial or physical sense without harming the nation and its cyber ambitions. For this reason, it seems inconceivable that China Tower could be hindered by competition, legal disputes, or any lack of regulatory support in its mission. The prospectus for China Tower even states this as such:

"We are the world’s largest telecommunications tower infrastructure service provider with a commanding market position in the PRC. As the coordinator of the co-location of telecommunications tower infrastructure in the PRC, our site resources and services are essential and fundamental to the nationwide enhancement of 4G network and the future build-out of 5G network by China Mobile, China Unicom and China Telecom (the “Big Three TSPs”) in the PRC telecommunications market."

China Tower is present in all 31 provinces, municipalities and autonomous regions in the PRC, covering all cities and extensive rural areas. There are a few other, very minor tower companies in business, but it is safe to say that China Tower has the market pretty much wrapped up. Essentially, it is the dedicated utility in a rapidly expanding market.

In July's investor roadshow, China Tower estimated that 60% of the proceeds from the IPO would be dedicated to CAPEX for building new towers and upgrading existing ones. Under this plan, the now completed IPO yields a CAPEX budget of US$4.14 billion for the infrastructure program and US$2.76 billion for debt relief. 

China Tower's balance sheets lists current liabilities of 96.4 billion yuan (US$14.17 billion) and non-current liabilities of 48.2 billion yuan (US$7.08 billion). The budget for 2018 apparently is $34 billion

The CAPEX budget will be tight for 5G

China Tower has disclosed capital expenditures of 229 billion yuan (US$33.7 billion) for 2015, 64.1 billion yuan for 2016 (US$9.42 billion), and 43.8 billion yuan (US$6.43 billion) for 2017. The CAPEX trend clearly has been declining at a rapid pace over the recent years, reflecting the rapid 4G rollouts in China, which have significantly been completed.

The IPO money dedicated to CAPEX (US$4.14 billion) will be a big boost compared to 2018 spending, but nowhere near the banner year of 2015. The big questions will be "is it enough" given China's size and its goal to be a leader in 5G, as well as the ongoing maintenance that is always needed to keep equipment in good order, including moves/adds/changes, dealing with fiber cuts, fixing air conditioners, installing new sensors, testing, security, responding to outages, etc.

China Tower operates macro cell sites, small cells, and DAS installations. As of June 30, 2018, China Tower operated and managed 1,878,739 macro tower sites and 19,400 DAS sites. The overall tenancy ratio was 1.47 and the tenancy ratio of the TSP tenants for ground tower sites in operation was 1.54.

On the positive side, China's 4G rollout specified fibre to the tower in most installations. This implies that the majority of those 1.9 million sites currently in operation should be easily upgradeable for the additional backhaul needed for 5G. If so, a lot of the future CAPEX could go toward network densification, especially small cells.

China Tower is profitable when CAPEX is low

As mobile data usage continues to climb with no end in sight, China Tower will need to keep building. Its existing customers have nowhere else to go, so it is a pretty certain bet that China Tower will keep on expanding. 

As far as delivering a desirable return to investors, the business model comes with one big caveat. The prices that China Tower charges for allowing mobile operators to use its infrastructure is set by the customer/investors themselves. In other words, China Mobile, China Telecom and China Unicom set the common price they are willing to pay to their former infrastructure arms. 

China Mobile is a mixed bag with big subscriber numbers, low ARPU

China Mobile, the world's largest mobile operator in terms of customers, published a mixed report for the first half of 2018, revealing increased profitability amidst an overall drop in revenue, heightened price competition from rivals China Telecom and China Unicom, and a slowing of new customer additions as the market becomes saturated even in rural areas of the country. It is a mixed picture as well because China Mobile is seeing a wave of IoT activations of its network, as well continued triple-digit growth in handset data traffic, yet tighter cost management and better efficiency are touted as the path forward. China's central government has pressured the Big 3 operators to speed up their network upgrade programs, while at the same time imposing tariff reductions, especially the cancellation fo domestic data roaming tariffs between provinces. China Mobile retains a 53% market share, making it the strongest of the Big 3

In terms of revenue growth, voice revenue is eroding at an alarming rate (-6.4%) due to the tariff reductions; SMS and MMS are flat (+0.1%); wireless data revenue is the bright spot (+7.0%) but far outpaced by traffic growth of 153%; and wireline broadband is expanding at rate more typical for developed markets (+2.5%).

Meanwhile, over the past twelve months, China Mobile's stock price has declined by nearly 20%, lagging the 12-month performance of a basket of Chinese tech stocks (NAR: CQQQ).

Operating data published by China Mobile (in English) for the first half of 2018 is extensive, more so than the quarterly data disclosed by major operators in western countries, which is surprising as one might expect the opposite to be true.

Unlike the big three U.S. operators who enjoy ARPU is the US$50+ range, China Mobile must make do with ARPU of RMB 58.10 (US$8.43) -- about 1/6th the billing per subscriber per month -- a. China Mobile is clearly gearing up for what is likely to be one world's fastest and deepest rollouts of 5G. They are already known for running a tight ship in terms of cost management. To complete this 5G upgrade cycle they are promising to cut costs even further. And while China Mobile has a very large number of employees, individual salaries are low compared to western peers and so automation of network administration functions may not have as big a payback, which will mean that efficiency gains will have to come from somewhere else.

The semi-annual report gives us a good idea of where China Mobile intends to cut. Its cost cutting targets include:

-15.4% -- average maintenance expense per base station
-7.5% -- average power and utility expense per base station
-9.0% -- average selling expense per new additional customer
-0.13pp -- operating lease charges to revenue

A lot of these expenses are associated with the physical infrastructure that was handed over to China Tower, which completed its IPO in a Hong Kong listing only last week. China Mobile's new report states that tower leasing fees cannot exceed the budget established at the beginning. And now there are these new expectations for reduced maintenance, as well as expectations for the 5G rollout and network densification.

Top and bottom lines for 1H2018

Profits at China Mobile are growing, even if other aspects of the business are under challenge. EBITDA grew by 3.7% compared to the same period last year, reaching RMB145.9 billion. Profit attributable to equity shareholders grew by 4.7% year-on-year to RMB65.6 billion. While overall review was down, operating revenue of RMB391.8 billion, up by 2.9% compared to the same period last year, and telecommunications services revenue was RMB356.1 billion, up by 5.5% compared to the same period last year.

The Four Growth Engines

With its 906 million mobile customers, it is clear that this is the engine that really matters.

The total number of connections increased to 1.425 billion, comprising 906 million mobile connections, 135 million wireline broadband connections and 384 million IoT connections.

In the first half of 2018, the average handset data traffic per user per month, or DOU, of 4G customers exceeded 3GB while the total handset data traffic increased by 153%, while revenue for data traffic grew 15.3%. Actually, for Q2, data traffic grew 164%, so we are likely to see and even bigger data traffic growth rate for the rest of 2018. So far, China Mobile has managed to move 75% of its users onto the 4G network.

Revenue for the personal mobile market grew by only 1.1% compared to the first half of 2017.

In fixed line residential Internet service, China Mobile is adding customers at a good clip and its market share has now reached 39% with 128.2 million households. This is bad news for China Telecom and China Unicom. Net growth in household broadband customers reached 18.80 million, accounting for 57% of the total number of net additional customers in the industry. Over 42% of households receive over 100 Mbps connection speeds, a strong showing compared to many developed countries. Household ARPU is also rising (+7.2% yoy) although ARPU remains at a very low level RMB 35.0 (US$5.08).

In the first half of 2018, application and information services revenue grew by 23.5%.

China Mobile also said it is rapidly completing a national NB-IoT network, which it expects to launch before the end of the year.

China Mobile's total number of IoT smart connections has reached 384 million and revenue from IoT business recorded a year-on-year growth of 47.6%.

The CAPEX story

For 1H2018, China Mobile spent RMB 79.5 billion (US$11.54 billion), down from RMB 85.3 billion for 1H2017. For the full 2018, China Mobile anticipates total CAPEX will be RMB 166.1 billion, down from RMB 177.5 billion for all of 2017.

For comparison, Verizon's CAPEX for 1H 2018 was $7.8 billion, compared to $7.0 billion for 1H 2017. Deutsche Telekom listed its 1H2018 revenue at EUR 6.1 billion for "both sides of the Atlantic."

The CAPEX budget for 1H2018 was as follows:

  • 36.7% - Mobile communications networks, including the addition of 190,000 4G base stations
  • 37.6% - Transmission networks
  • 10.7% - Business networks
  • 4.4% - Support systems
  • 8.3% - Buildings & infrastructure & power systems
  • 2.3% - Other
For the second half of 2018, China Mobile plans to shift more of the spending from the transmission network to the mobile communications network, with additional spending for buildings and other infrastructure.

The 5G plan

China Mobile has been granted an LTE FDD (Frequency-Division Duplexing) operating permit and says it is working to speed up network convergence.

The operator plans 5G trials for the remainder of 2018. The corporate report states: "The development of 5G bears great significance to the Company for its profound implications on our sustainability... We are keen to generate returns on our investments and will plan our future investments on 5G taking into consideration the level of maturity of the industry and business models that emerge"

China Mobile awards EUR 1 billion deal to Nokia

China Mobile and Nokia signed a frame agreement valued at up to EUR 1 billion for the continued delivery of mobile, fixed, IP routing, optical transport, customer experience management technologies and operational support as well as services expertise throughout 2018. The agreement was signed at the recent Sino-German Economic Forum by Li Huidi, Vice President of China Mobile, and Hans-Jürgen Bill, Executive Vice President and Chief Human Resources.....

VMware picks up Dell EMC Service Assurance suite

VMware agreed to acquire the technology and team of Dell EMC Service Assurance Suite - software spanning network health, performance monitoring and root cause analysis for communications service providers (CSPs) and their customers - from Dell EMC. Financial terms were not disclosed.

The core Dell EMC Service Assurance Suite, which has been deployed by more than 50 CSPs worldwide, including many Tier 1 operators, provides assurance capabilities to deliver service impact and root-cause analysis with visibility across physical and virtual networks, and cloud environments, to identify how resources are being consumed and whether service level agreements are being met. This helps CSPs optimize their environments to enable faster resolution times; proactive identification of issues is proven to provide better return on NFV and IT investments.

VMware says the acquisition demonstrates its growing commitment to the telecommunications industry and reinforces the “better together” synergy between VMware and Dell EMC.

“As carriers are readying for 5G, they are increasingly virtualizing edge and core networks with network functions virtualization, or NFV. Service assurance is a critical need for any network. The Dell EMC Service Assurance Suite’s established software and services capabilities, combined with VMware’s trademark innovation, will empower CSPs to modernize and accelerate the transformation of their networks through NFV upon closing,” said Shekar Ayyar, executive vice president, Strategy and Corporate Development and General Manager Telco NFV Group, VMware. “The Dell EMC Service Assurance Suite team is primed to accelerate our NFV business and help drive it forward with unprecedented service assurance.”

Ericsson -- first 5G radios built in US by end of 2018

Ericsson will boost US-based R&D to meet the growing demand for 5G in the region. Plans call for a new software development center with a baseband focus that is expected to employ 200 software engineers when fully operations. Last year, Ericsson opened a 5G ASIC design center in Austin, Texas. This facility will have 80 employees once fully staffed.

Ericsson will begin manufacturing in the US to support the 5G rollouts of its US customers and for global flexibility. The first 5G radios manufactured in the US are expected by the end of this year thanks to a production partner.

Börje Ekholm, President and CEO of Ericsson, says: “The United States is our largest market, accounting for a quarter of Ericsson’s business over the last seven years. To serve the demand of these fast-moving service providers, we are strengthening our investment in the US to be even closer to our customers and meet their accelerated 5G deployment plans.”

Ericsson predicts that 5G subscriptions will reach the 150 million-mark, accounting for 48 percent of all mobile subscriptions in North America by the end of 2023.

Ericsson also noted that it will soon have about 80 employees in North America focused on AI and automation.

IDC: SD-WAN infrastructure to hit $4.5 Billion in 2022

The SD-WAN infrastructure market will grow at a 40.4% compound annual growth rate from 2017 to 2022 to reach $4.5 billion, according to IDC's latest SD-WAN Infrastructure Forecast.

  • IDC said SD-WAN infrastructure revenues increased 83.3% in 2017 to reach $833 million. 
  • IDC finds that Cisco holds the largest share of the SD-WAN infrastructure market, fueled by its extensive routing portfolio that is used in SD-WAN deployments, as well as its Meraki offering and its August 2017 acquisition of Viptela. 
  • VMware, which in December 2017 purchased VeloCloud, holds the second largest market share in the SD-WAN infrastructure market, followed by Silver Peak, Riverbed, Aryaka, Nokia and Versa.

IDC is also publishing its first market share report for this segment, including 2016 and 2017 revenues by vendor for SD-WAN infrastructure.

"The emergence of SD-WAN technology has been one of the fastest industry transformations we have seen in years. Organizations of all sizes are modernizing their Wide Area Networks to provide improved user experience for a range of cloud-enabled applications," said Rohit Mehra, vice president, Network Infrastructure, IDC. "Incumbent networking vendors have quickly realigned their routing and WAN optimization portfolios to take on the growing cadre of startups in this market. Enabled by a rapid uptake across the service provider domain, SD-WAN infrastructure will continue to grow rapidly in the coming years, providing a beachhead for other software-defined networking and security functions in the enterprise branch."

Windstream cites growth in SD-WAN as overall revenues dip 3%

Windstream reported Q2 revenue of $1.44 billion, a decrease of 3 percent from the same period a year ago, and total service revenues were $1.42 billion, a decrease of 3 percent year-over-year. Operating income was $88 million compared to $103 million in the same period a year ago. The company reported a net loss of $94 million, or $2.30 per share, compared to a net loss of $68 million, or $1.83 per share, a year ago.

Some highlights:

  • ILEC consumer and small business service revenues were $466 million, a decrease of 6 percent from the same period a year ago, and segment income was $274 million compared to $289 million year-over-year.
  • Enterprise service revenues were $730 million, a 1 percent increase from the same period a year ago, and segment income was $161 million compared to $142 million year-over-year.
  • Wholesale service revenues were $182 million, a 7 percent decrease from the same period a year ago, and segment income was $129 million compared to $135 million year-over-year.
  • CLEC consumer services revenues were $46 million, a decrease of 10 percent from the same period a year ago, and segment income was $27 million compared to $26 million year-over-year.

“Our Consumer segment delivered a successful quarter, adding 2,300 broadband subscribers,” said Tony Thomas, president and chief executive officer. “This continued an upward trend that we have experienced for the past several quarters and was driven by both strong sales and lower churn. It demonstrates that our network investments are paying off and enables us to say with confidence that we expect to grow our consumer broadband base in 2018.

“Our Enterprise segment continues to see improved results as our focus on SD-WAN, Unified Communications as a Service and on-net sales have driven improving revenue trends and margins. Windstream is now the largest SD-WAN provider in the country with more than 1,000 customers in over 12,000 locations nationwide. Sales of strategic products accelerated to over 50 percent of Enterprise sales for the quarter.

“Reflecting these strong segment results, Windstream delivered sequential and year-over-year growth in Adjusted OIBDAR that came on the back of both improved revenue trends and lower cash costs,” Thomas said.

Malaysia's Celcom Axiata adopts Huawei's cloud OSS

Celcom Axiata Berhad will deploy Huawei's cloud-based Digitized Operation Platform, Software as a Service (SaaS) solution to manage its network in Malaysia.

Celcom will be the first in Malaysia to adopt a full suite cloud-based Operation Support Service (OSS) system. The platform will enhance Celcom's capabilities in managing increasingly complex networks and services. It also enables Celcom to transform their daily operations from reactive to proactive and predictive, and further solidify their relentless drive to achieve excellence in customer experience.

Portworx expands container data management options for AWS

Portworx, a start-up based in Los Altos, California announced that its PX-Enterprise can now be integrated with Amazon Elastic Container Service (ECS), enabling mission critical stateful workloads to run in Docker containers with dynamic provisioning, cross-Availability Zone high availability, application consistent snapshots, auto-scaling and encryption functionality.

Portworx can also be integrated with Amazon Elastic Container Service for Kubernetes (EKS).

"Enterprise container adoption is skyrocketing as companies recognize the value that container technologies provide on the path to digital transformation," said Murli Thirumale, co-founder and CEO of Portworx. "Amazon Web Services integration with Portworx for both EKS and now ECS is evidence of a sea change happening in the industry: enterprises running on Amazon need flexible cloud native storage solutions that play well containers. By giving enterprises these two options for container data management, we're radically simplifying operations of containerized stateful services running on Amazon."

Key benefits of Amazon ECS with Portworx's cloud native storage include:

  • Multi-AZ EBS for Containers – Docker containers within and across Availability Zones based on business needs. Portworx will not only replicate each container's volume data among ECS nodes and across Availability Zones, but also add additional EBS drives based on reaching capacity thresholds.
  • Daemon Scheduling on ECS:  automatically run a daemon task on every one of a selected set of instances in an ECS cluster. This ensures that as ECS adds new nodes, every server can consume and access Portworx storage volumes.
  • Auto-scaling groups for stateful applications – dynamic creation of EBS volumes for an ASG, so if a pod is rescheduled after a host failure, the pre-existing EBS volume will be reused, reducing failover time by 300%.
  • Hyperconverged compute and storage for ultra-high performance databases – ECS can reschedule the pod to another host in the cluster where Portworx has placed an up-to-date replica. This ensures hyperconvergence is maintained even across reschedules.
  • Application-aware snapshots – ECS administrators can define groups of volumes that constitute their application state and consistently snapshot directly via .docker. These group snapshots can be backed up to S3 or moved directly to another Amazon region in case of a disaster.

Fujitsu develops high power Gallium-Nitride transistors

Fujitsu Labs has developed a crystal structure that both increases current and voltage in gallium-nitride (GaN) high electron mobility transistors (HEMT). The innovation effectively triples the output power of transistors used for transmitters in the microwave band.

Potential applications could include weather radar and 5G systems.

Fujitsu said GaN high electron mobility transistors can extend the outreach of microwaves from the microwave and millimeter-wave bands used for radar and wireless communications.

This research was partially supported by Innovative Science and Technology Initiative for Security, established by the Acquisition, Technology & Logistics Agency (ATLA) of the Japanese Ministry of Defense.