5G Virtual Expo was held recently. There was a panel discussion on unlocking the potential of 5G. The participants were: Håkon Lønsethagen, Telenor, Research, and 5G Infrastructure Association (IA) member of the Board (EU 5G PPP), Edwin Bussem, Developer Next Generation Infrastructure, KPN, and Ms. Friederike Hoffmann, EVP, Head of Connected Business Solutions, Swisscom. Ms. Julie Snell, Chair, The Scotland 5G Centre, was the moderator.
How are we going to integrate the 5G network into the existing network? Edwin Bussem, KPN, said we are on the verge of being able to provide service levels on wireless connectivity, and there can be a wait-and-see situation with customers. There is a waiting game going on to see who goes first.
Ms. Friederike Hoffmann, Swisscom, added that their issues have not been about integrating with the existing infrastructure. However, some of our antennae have been demolished in Switzerland. Can you imagine that? We are installing a mobile 5G network. We are also working on automated vehicles. The private customer mind is very careful and hesitant in Switzerland. We can’t build the entire network as fast as we want to. We can’t make the networks strong, as needed to be, to fully test the use cases that we need, and to onboard more enterprise customers.
Ms. Julie Snell agreed that people are attacking networks that are not necessarily 5G. There seems to be a real concern that it is not safe enough.
Håkon Lønsethagen, Telenor, noted that in Norway, there have not been that many cases, compared to the UK and Switzerland. We are aware of these things and how we communicate carefully to the public. We are doing this is in a very well-thought way. We are installing and providing services in a secure way. It is also a matter for enterprises and verticals to step up and do testing, along with the operators. They also need to understand the pain points they would like to solve. We are trying to create methodologies to interact with the enterprise vertical customers.
Ms. Snell said there is a trial-and-error method on the move towards establishing standards. Ofcom, UK, released a report that calmed down the situation. Bussem, KPN, said we are trying to project what are the societal benefits that we are going to bring. The public are willing to give it a chance.
Satisfying 5G quintet
Next, there was a point raised about how will 5G satisfy the quintet of trusty, reliability, latency, and bandwidth efficiency.
Håkon Lønsethagen, Telenor, said that they have been able to define some new mechanisms with 5G. Eg., radio channel coding and how we use the spectrum. If you want to aim for high capacity, you typically introduce some buffering and channel coding. That may sacrifice some latency performance. So, there will always be this trade-off. You can probably deploy in private networks with industry use cases. It also enhances mobile broadband. You can also combine this with edge computing. There is 5G and network slicing. It allows you to allocate resources to the demand that you have. You can start optimizing across the whole 5G system. You can also build purpose-built logical networks. Eventually, you can think of green ICT.
Edwin Bussem, KPN, added that there are technology-related benefits with 5G coming into play. It is about optimizing per use case, and per field of interest. We need to provide societal benefits. We are being very careful in what we are promising the market. That’s the sort of prudence you need to take when you consider the quintet.
Ms. Friederike Hoffmann, Swisscom, noted that they have the opportunities to manage the quintet way better than before. Companies don’t stop at national borders. You have production facilities all over the world. We also need standards, and to learn from each other. We usually do this in telco networks and classical partnerships. We need to make sure that when trains are self-driven, they also do not stop at borders. We can do this, and are working on it. There are also gaming opportunities. We can manage resources way better than before, and be more energy efficient. We are going to need close-knit partnerships and ecosystems that are just evolving.
Håkon Lønsethagen, Telenor, said they are migrating to inter-border capability. We are seeing advanced use cases. We still need some time. We need to step up as a community. With 5G, there are use cases that are quite demanding. We also need to develop inter-provider-based services and capabilities.
Ms. Julie Snell said that there is more of a shift toward private networks, eg., in campuses. We need to integrate these private networks to be part of a global network. MNOs are also providing new products and pricing.
Ms. Friederike Hoffmann, Swisscom, said that it is creating a challenge. We did a terrible job at monetizing 4G. When networks are full, we do need the capacity. Do we need more products and pricing? Of course, we do! It also depends on the market segment. There are qualities of service levels that are now possible, that were unseen on 4G. Customers understand there is a big value for them in 5G. They are also making efficiency gains. The use cases of 5G need to be very clear. Customers are also weighing their options carefully, before investing.
Håkon Lønsethagen, Telenor, said there is so much to do in 5G. There are solutions today, and more will happen within the next three years. There will also be society- and citizen-critical services. The application level cannot really express their intent to the network today. We have to work on this. We need to reach the optimization challenges ahead of us.
Edwin Bussem, KPN, agreed, adding that we need to look at what are we handling. You have to treat situations differently, and also have to prepare yourself as an organization. You also have to re-organize your own internal operations. You can charge some price. This is all new to us. We are going to build pricing models on a firm-by-firm basis. We have to take the potential use cases.
Peter Gammel, CTO MWI, GlobalFoundries, presented a keynote on day 3 of the ongoing IRPS 2021, on laying the groundwork for 6G communications. He talked about silicon solutions for today’s 5G reality and foundation for 6G.
Three megatrends are driving the industry. These are frictionless networking, virtualization, and hierarchical AI. Frictionless networking arises from the need to be immersed in a sea of data. Your devices are always connected, without worrying about log on/off, network type, etc. The move to frictionless networking is going to be huge. Next, when can we go to a true holographic virtualization. This would require at least 3GB per person at about 10ms latency.
Frictionless networking will be enabled by low latency, bronto bytes of data, proliferation of connected devices, and secure agents and transactions. The number of connected devices will just explode.
5G is critical to the evolution of the network. There will be 10X decrease in latency, rise in 10X connection density, 10X experienced throughput, 3X spectrum efficiency, 100X traffic capacity, and 100X network capacity. There will also be growing data demands, leading to everyday machine communications, and critical machine communications. In terms of the future regulatory and standardization, we should have reached Rel-17 by 2021. We will aim for Rel-18 in 2022, going up to Rel-22 by 2027.
We are also looking at wireless last hop. This will lead to higher frequency, denser network, lower power, and multi-standard. The frequencies continue to increase, cell size continues to decrease, and Wi-Fi growth continues. Higher frequencies favor SiGe, FDX (FD-SOI), etc. Higher density and multi-protocol drives software volume and roadmap. Smaller cells favor SiGe, FDX, and lower power, especially, IoT, drives FDX SoC.
At sub-6GHz and 5G handset RF FEM (front-end module) there are technology challenges. More bands/handset leads to more components within the same form factor. Higher frequency bands leads to higher insertion loss, transmission efficiency, and transmission/reception isolation, etc. A DL 4×4 MIMO device has four antennas for four simultaneous data streams. That means more antenna, more components, and transceiver area/power.
There are key technology metrics for mmWave radio. These include back end parasitics, transistor stacking, and flicker noise. Low-power logic and analog are the key metrics for RF SoC. The mmWave 5G will need phased arrays. Multiple phased array antenna modules within a handset avoid blockage of mmWave signal. Also, mmWave radio will co-exist with sub-6GHz in a handset. GlobalFoundries’ mmWave technology enables next-generation networks. These include 22FDX solutions, 45RFSOI solutions, and SiGe 8HP/XP solutions.
Expanding requirements for 6G
Now, 6G will expand all of our work. 6G will lead to extreme high data rate and capacity, and extreme coverage. Peak data rate will be above 100Gbps and exploiting new spectrum bands. There will also be new coverage areas.
It will also lead to extreme low energy and cost. There will also be extreme low latency, extreme high reliability, etc. There will be extreme massive connectivity, with massive connected devices, sensing capabilities, and high-precision positioning. 6G will also enable new combinations of requirements for new use cases.
Looking at 6G and sub-THz, there are huge amounts of spectrum available at 100-300GHz. It is an enabler for sensing and communications, with large bandwidth and smaller wavelength. W- and D-bands are the leading contenders.
There are next-generation solutions from GlobalFoundries to address the 6G requirements. These include extreme high data rate/capacity, with transmission at higher frequencies (up to THz), extreme low energy and cost leading to alternative front-end modules/power amplifier (FEM/PA) architectures, extreme massive connectivity, with low-power devices, IoT, etc.
There are other technology challenges for beyond 5G, such as PCB routing loss. One way would be to move antenna from PCB to package. We are going on to a much more complicated packaging structure. With the antenna on package, there would be die flip chip under mounted to laminate, and antenna elements are on the package.
Next, satellite-based broadband Internet and mobile communications will boom. It will be connecting the next 4 billion people. There will be thousands of satellites in LEO.
Open RAN will also challenge the traditional network deployment. The shift to 5G networks is creating innovation in RAN component virtualization and interface standardization. Upto 10 percent of all cellular infrastructure deployments could be Open RAN by 2025. Key drivers for this transformation are multi-faceted. There will be flexibility in selecting multiple vendors, fast hardware deployments, and reduction in capex (by 40 percent) and opex (by 35 percent).
Future communication networks will be driven by intelligent edge nodes based on high-speed, always-on devices. Technology innovations are needed to leverage a vast, untapped spectrum (100GHz-1THz). Innovative RF-SOI, FinFET, SOI/SiGe-based photonics are the platforms for the future.
5G MENA Digital Symposium 2021 commenced today. There was a session on secrets to the deployment of nationwide, flexible and robust 5G networks. Masum Mir, VP and GM, Cable and Mobile Business Unit, Cisco, said that 5G brings a world of new opportunities.
There are use cases in connected cars, Industry 4.0, venues, smart cities, smart meters, smart energy, etc. You require redefined security and experience, full-stack automation, and programmable platform.
There are learnings and insights for success. These include coverage planning, distributed architecture, cloud operations, and service transition from 4G to 5G. You need to plan beyond coverage and connectivity, and embrace continuous integration (CI) and continuous development (CD) and skill transformation.
Cisco’s 5G innovation provides simplicity at scale for mobile subscribers, mobile IoT, and nationwide 5G IoT and consumer deployments.
There was a panel discussion on consumer 5G: from devices to FWA and beyond. The participants were Patryk Debicki, Field CTO, Guavus, Amar Padmanabhan, Software Engineer, Facebook Connectivity, and Hani Mohammad Yassin, Senior Director/Technology Strategy, Etisalat Group. Gabriel Mohr, Principal, Arthur D. Little, was the moderator.
Amar Padmanabhan, Facebook, said they are working on network-intensive solutions. They are working with Oculus on the AR side. These are technologies that require fundamental shift from 4G devices. A bulk of social interactions are moving to the digital world. Experiences are going to get richer, as we go forward. They will need new network architectures, powered by 5G.
Hani Mohammad Yassin, Etisalat, added that 5G consumer proposition is a challenge. Operators are experimenting how to present 5G to consumer markets. In GCC, we have had success on 4G networks. 5G devices are still expensive. We are offering higher data bundles for 5G. There is also 5G access fee charge from some operators. 5G-specific content will be main driver for consumers.
Patryk Debicki, Guavus, added that gaming devices are expensive today. In 5G, there will be mobile edge computing. That means, gaming devices can become cheaper. Mobile edge compute will need to handle the gaming compute. 3GPP addressed the network analytics function that predicts the consumer’s mobility. It allows preparing content for the customer.
Yassin noted that the younger generation is getting social interactions online. Everything is on demand. Media can be a key monetization lever for 5G.
Debicki added that media is an interesting entity. With 5G, media can be taken to another level. Customers can be provided with specific QoS. 5G allows you to allocate the QoS. It can also analyze the QoS. You can charge only if the level is above a certain value. 5G addresses the access management in a great way. It will allow operators to differentiate on tariffs, depending on consumer behavior. The network becomes an engine for gaming. 5G will be about B2B models.
Padmanabhan said lot of monetization experiences come from sporting events. Delivering critical experiences means network changes in a fundamental way. We need some sort of data localization that is relevant to some campus.
In South Korea, MNOs have actually achieved growth in ARPUs. Yassin said that is a unique experience. The South Koreans have developed certain apps relevant for the local market. They applied those to the devices and networks. An integrated proposition is more suitable in this case. Apps with immersive experience will come over time.
Debicki noted that the variety of 5G devices will play a key role, and whether they support standalone or non-standalone. You need insights of the device capabilities. Yassin said there are lot of questions regarding 4G and 5G. Collaboration is very important among the different partners. We have still not at achieved the full potential of 5G yet. We are only scratching the tip of the iceberg as far as 5G capabilities are concerned.
Debicki said there are lot of metrics regarding smartphones. By 2025, operators will have more consumer IoT devices than smartphones. This is an area that will grow rapidly and overtake smartphones. Padmanabhan agreed there will be heterogeneity. There will be different devices, different access technologies, etc. The platform will need to be cloud-native, etc. There are lot of data center technologies that we are bringing into the open source world.
Forum Global organized a conference on 470-694 MHz band, and how it is shaping the future use of the UHF band.
Discussions around the future use of the UHF band are expected to be held at WRC-23, with a particular focus on the situation in Region 1. At WRC-19, there was a proposal from some Arab states for a change in the WRC-23 UHF agenda item to propose a harmonised band at 470-694 MHz with a co-primary allocation to the broadcasting and mobile services, and an identification for IMT. Europe and Africa opposed this position and the proposal was rejected. A more neutral review of the use of the UHF band in Region 1 will be considered at WRC-23.
Mark Coville, Principal, Analysys Mason, talked about whether the 600MHz band is the right long-term approach. There is continuing demand for UHF spectrum from digital terrestrial TV (DTT), and program making and special events (PMSE). UHF is valuable for mobile use, but more recent focus is on the larger carriers.
Harmonization is important, but there are other options, such as continuation of DTT across 470-694 MHz, time-division duplexing (TDD) across 470-694 MHz, and hybrid of supplementary downlink-only (SDL) and 5G broadcast. Could TDD or SDL options be more attractive to mobile providers in the long run?
UHF band at WRC-23
Nikolai Vassiliev, Chief, Terrestrial Services Dept., Radiocommunications Bureau, ITU, talked about the UHF band at WRC-23. Following digitalization of broadcasting in beginning of 2000s, emersion of the digital dividend and increasing IMT spectrum requirements, bands 790-862 MHz and 694-790 MHz have been allocated co-primary to the mobile service.
WRC-23 agenda item 1.5 looks to review the spectrum use and spectrum needs of existing services in 470-960 MHz band in Region 1, and consider possible regulatory actions in 470-694 MHz in Region 1 on the basis of the review in accordance with Resolution 235 (WRC-15).
Under AI 1.5 ITU-R should study the spectrum needs of services in 470-960 MHz in R1, especially TV and mobile, sharing and compatibility of broadcasting and mobile in 470-694 MHz, and sharing and compatibility to provide protection to existing services. The task of WRC-23 is to consider possible regulatory actions in frequency band 470-694 MHz in R1.
In the current situation, for requirements of services, there are three areas, namely, broadcasting, mobile and other services. In broadcasting service, 470-862 MHz is harmonized band for terrestrial television worldwide. Many countries have obligation to provide broadcasting services and terrestrial broadcasting is sometimes the only means to deliver them. Over 60 percent of Region 1 countries switched to digital television (DTT). Transition to DTT enables compression of programs leading to released spectrum (digital dividend), that is, less spectrum needed for SDT, but DTT offers new services, (HD, 4K, etc.) Therefore, more spectrum is needed.
In mobile service, IMT needs UHF to increase broadband coverage of rural and remote areas. There will be less base stations, cost-effective, new services, e.g. IoT, road Internet, etc. In other services, number of countries use aeronautical radionavigation in 645-862 MHz, radio microphones in 470-694 MHz, and wind profile radars in 470-494 MHz.
Some regulatory and technical considerations are that 470-862 MHz is governed by GE06 Agreement. Any new TV, IMT, ARNS station shall be co-ordinated via GE06. WRC-23 shall respect this regulatory mechanism.
As for technical considerations, sharing TV and IMT in the same area is impossible due to different topology of networks and ubiquitous coverage. Each country has to choose one service. If neighbouring countries chose different services, there should be exclusion zones at the border.
This led in a harmonized re-arrangement of 700/800 MHz bands in 2011-2018 in Europe, ASMG, African countries, and now, in RCC. The objective is to move TV below 694 MHz. Such re-arrangement could result in 470-694 MHz as the only band available for TV.
The ITU-R studies on AI 1.5 include WRC-23 AI 1.5 studies in Task Group 6/1. The next meeting is on July 5-14, 2021. Correspondence group on background section of the draft CPM. The issues one might to look at include spectrum need and sound frequency requirements, studies regarding possible re-use of some previous UHF sharing studies, efficiency of spectrum use with the current FDD channeling, and protection of existing services.
Innovations in UHF band
Glyn Carter, Senior Spectrum Advisor, GSMA, said 90 percent of the world’s population is covered by mobile broadband. More UHF spectrum is needed to bridge the digital divide. There will be increased capacity and performance in areas where higher frequencies are not effective. Also, rural areas need advanced communications services. Consumers also require consistent user experience with 5G.
Mobile allocation can enable flexibility to use UHF spectrum according to needs. There is need to encourage harmonization between countries that wish to use for IMT. A primary mobile allocation in 470-694 MHz at WRC-23, with the potential to identify for IMT, can support greater wide-area capacity and help the development of affordable broadband.
Ms. Elena Puigrefagut, Senior Project Manager, Technology & Innovation, EBU, noted that DTT plays a key role in the society. DTT’s technical resilience is essential in the role of national sovereignty, and reaching populations during crisis. 5G broadcast can respond to audience trends.
5G broadcast can address smartphones and tablets, and mobile devices in cars. Broadcasters have addressed this in 3GPP with 5G broadcast, which includes a receive-only mode (SIM-free). 5G broadcast trials are currently ongoing in Vienna, Stuttgart, etc.
Mobile and stationary use-cases might require different layer/network structures. Continuous product improvement is now undergoing at the chipset/terminal and transmitter levels. 5G broadcast is a new downlink-only technology that guarantees compatibility with DTT and PMSE. From a regulatory point of view, it can be introduced in the UHF band under the GE06 Agreement. From a technical point of view adjacent channel interference to DTT needs to be addressed (mainly at national level).
As for the future use of UHF band, DTT in the UHF provides public value to the society and will stay in many countries alongside with PMSE use. Regulators, when defining the future of the UHF band need to consider the ‘societal value’ that new uses can generate and not only the ‘economic value’. The real value that 5G can generate is in the verticals. If 5G remains just as more 4G, it will not add much incremental value compared to 4G, which already provides good capacity and reliability.
5G broadcast is a key 5G vertical for the media ecosystem that can generate societal value to the UHF band. 5G broadcast can be introduced in the UHF band under the GE06 Agreement, and therefore, be technically compatible with DTT and PMSE, offering different options to countries, i.e., providing real flexibility. Innovation and flexibility in the UHF band do not require changes in the ITU radio regulations at WRC-23.
Ulrich Rehfuess, Low-band Global Lead, GSA, and Nokia, presented several 5G use cases. There is beed for flexibility below 700 MHz in ITU Region 1. GSA sees a need for additional low band spectrum globally and specifically in ITU Region 1. 600 MHz FDD 3GPP Bands 71 (4G) and n71 (5G) are widely supported in infrastructure and terminals, and can allow for immediate, cost-efficient deployments of wide area 4G/5G. Readiness to release, e.g., 600 MHz FDD across regions and sub-regions, is very different. It is worth noting that administrations may have different targets regarding the balance of broadcast and mobile. Different options need to be studied taking into account the regional specificities.
Recommendations regarding WRC-23, include, broadcast and mobile industries / technology will continue to evolve and are likely to integrate and/or work more closely. A co-primary mobile allocation at WRC23 keeps the options open. A co-primary mobile allocation provides future flexibility for administrations to decide within the 2025-2030 timeframe what to do with the UHF spectrum taking into account the latest market/technology developments in both broadcast and mobile.
A co-primary mobile allocation may also provide additional flexibility for some administrations to enable mobile technology within a country/sub-region subject to co-ordination arrangements with their neighbors. An IMT footnote is also important to help market development and ecosystem scale if administrations subsequently decide to make spectrum available for IMT. A number of duplex arrangements exist (FDD, TDD, SDL/DL etc.) and these should be studied after WRC-23 (building on a co-primary mobile allocation / IMT footnote agreed at WRC-23).
Jean-Pierre Faisan, Vice-Chairman, Broadcast Network Europe, said 470-694 MHz spectrum is vital for terrestrial TV broadcasting. So far, DTT is a worldwide and Region 1 success. 31 new countries (21 in Region 1) have launched DTT since 2016, investing in an affordable, sustainable and high-quality public service. Linear TV remains an essential usage (3h30 daily in Europe, 90 percent live)- and vital in terms of crisis (Covid-19). Required amount of spectrum for DTT in the future is at least 224 MHz for 94 countries in Region 1.
For the foreseeable future, the existing framework makes optimal use of the 470-694 MHz spectrum. There is strong investment to clear the 800 MHz band, and in many countries the 700 MHz band. As a result, IMT coverage needs can be fulfilled with the 900, 800 and 700 MHz bands.
Without the remaining 470-694 MHz band, DTT cannot operate and exist, let alone innovate. This has been recognized in the EU law, which secures this band for the long term (until at least 2030) for terrestrial broadcasting and PMSE. Co-primary is not necessary for introducing new services in some countries provided they respect broadcasting needs of neighboring countries and do not claim protection. Whereas far from increasing flexibility, a change to co-primary would in practice threaten the future needs of the majority of countries.
470-694 MHz is the core remaining spectrum for modern DTT. It is the basis for ongoing and planned investments in Region 1 and further innovation. It is ensuring universal access to free TV, news and entertainment, and bringing business, social, cultural, and sovereignty benefits.
The various national regulators responded separately.
Jonas Wessel, Director, Resource Management Department, PTS Sweden, said spectrum is a core element. We also need to see what the consumers want. We need to be aware of the political will. There are also different demands across different regions, and we are moving at various spaces and speeds. We need to create pre-conditions for different solutions. It is important to enable the co-existence of different scenarios for the future.
Mohd. Aljnoobi, Director, Spectrum Allocation, CITC, added that the mandate of spectrum managers is to see that it is used properly across different areas. The Middle East is a different region than Europe. We are looking to increase digital and mobile connectivity in the region.
Ms Irene Kaggwa Sewankambo, Director, Engineering & Communications Infrastructure, Uganda Communications Commission, noted that people want information. There is the analog-to-digital switchover going on across the various countries. We, in Africa, also wish for this change.
Andrey Lashkevich, Deputy Head of Department, Radio Research & Development Institute (FCUE NIIR), added that a lot of preparation is required. We should provide a clear roadmap ahead.
Here is part two of the SEMI Silicon Valley Chapter and SEMI Northeast Chapter conference on semiconductor outlook for 2021.
Dan Hutcheson, CEO, VLSI Research, presented on how the pandemic has turbocharged digitization. There are macro factors driving the semiconductor industry. Covid-19 closed one door and opened another. We have since gone from rainy situation to a sunny situation. The semiconductor industry had prepared the world for Covid-19. This year has started really strong. IC market growth has been slowing because of Covid-19.
This year, VLSI Research’s forecast for semiconductor equipment industry is about 20 percent. Zooming in on critical IC market segments, semiconductor sales growth should be +13 percent.
Focusing on IC market growth this week, the 13-week MA shows 2021 has kicked off on a strong growth path. Unlike the last 2 years, DRAM, NAND, auto, analog logic, and power are in a tight growth pattern – most recently ranging from +14 percent to +19 percent. In 2019, DRAM and NAND sung the blues after a hot 2018. 2020 was the year for auto ICs to be blue. With all the news of an auto IC shortage, this market is clearly hot. The auto IC sales are forecast to grow 21 percent. Seeds of auto IC shortage in 2020 were sown in poor supply chain management.
DRAM is very data-driven and forecast to grow 21 percent. NAND IC sales is forecast to grow 15 percent, as well. Analog IC and power discrete sales is forecast to grow 12 percent. Logic IC sales is forecast to grow 10 percent.
IC supply/demand trends
Looking at the IC supply/demand trends, IC wafer fab production levels continued to rise last week at ~20 percent above 2020 levels, with production levels above 2M 300mm equivalents per week. Supply/demand status held tight for the week. DRAM jumped, NAND and IDM tightened, while foundry, OSAT, and analog and power loosened. The 1Q nowcast is tight
In semiconductor utilization, all sectors are high. These include wafer fab, test, and packaging. Electronics’ prices are also declining. These include TVs, PCs, notebooks, tablets smartphones, cell phones, digital cameras, appliances, etc.
Looking at semiconductor inventory, the inventory-to-billings ratio is in an expansionary range, and ~0.25 below critical levels. Total IC inventories are in decline, suggesting high fear levels at the start of 2021.
Semiconductor/semiconductor capital equipment 2021 outlook
Harlan Sur, Executive Director, JP Morgan, presented semiconductor/semiconductor capital equipment 2021 outlook and long-term trends. Semiconductors/semicap stocks have outperformed the market over the last 1, 3, 5, 10 years.
Drivers of the strong stock performance include the realization that semiconductors are the foundational building block for all innovation in the technology sector — applications/devices/appliances are getting more intelligent and requiring higher levels of semiconductor $ content. There is lower cyclicality in the industry driven by end-market diversification and disciplined supply growth. Lower cyclicality drives more focus on profitability and free cash flow expansion, leading to strong capital return to shareholders.
Industry consolidation (M&A) is expected to drive diversification, R&D scale, and enhanced profitability and capital returns. Near-term, there is positive Y/Y inflection in semiconductor company revenues in 2H20, and expectations of industry growth through 2021. We expect long-term positive fundamental trends to continue going forward. Semiconductors have been in more stable growth phase. There is focus on market leadership, strong product cycles, margin/free cash flow expansion, and capital allocation.
End-market diversification and lower industry cyclicality drives more focus on profitability and cash flow. As operating margins and free cash flow margins have expanded, companies put in place strong capital return programs, driving higher valuation multiples. Industry consolidation has driven valuation multiples higher over time.
Semiconductors/semicaps growth and cyclical trends remain positive entering 2021 and beyond. We believe the semiconductor industry has entered a more stable and less cyclical growth phase characterized by low- to mid-single-digit annual revenue growth and high-single-digit unit growth. With the industry generally driving high-single-digit Y/Y unit growth, the entire value chain is able to better predict silicon consumption requirements, better respond to perturbations in supply/demand, and more efficiently plan manufacturing output. As a result, volatility in semiconductor supply/demand and semiconductor equipment spending has muted significantly.
Compare this to 15-20 years ago, when unit growth rates were +15 percent Y/Y – small perturbations in supply/demand would drive significant swings in inventory, shipments, capacity planning, and equipment spending. Bottom line: The current environment is likely more stable and less cyclical for semiconductor and semiconductor capital equipment suppliers. In a maturing industry, we believe the market will focus on market leadership/scale, operating margin and free cash flow margin expansion, and increasing payout ratios.
We see the semiconductor industry revenue up 10-12 percent Y/Y (bias upward) in 2021, following a 7 percent Y/Y growth in 2020. If you recall, the 2H20 demand picked up significantly and growth turned positive after 1H20’s weak demand environment and supply chain disruptions (Covid-19). In semiconductor equipment, we see spending up ~16 percent Y/Y in 2021 led by DRAM and foundry strength.
As for supply constraints across all end markets, we see multiple quarters of strength for the semiconductor suppliers. Channel/customer inventories are at/near historic lows, and lead times are continuing to get stretched out. Given the strong demand environment combined with supply tightness, we anticipate strong demand trends through 2021.
We expect continued industry consolidation (M&A). There is focus on scale, diversification, and margin and FCF expansion. There is promising outlook for foundry/memory in 2021, with demand and capex spending driving strong semiconductor equipment fundamentals. Potential investment in US domestic manufacturing capability is a positive, with innovation and assurance of the supply base.
Industry consolidation should also support valuations. We can expect more M&As to happen. Semiconductors are consolidating focus on building scale and driving profitability improvements, End-market diversification, etc. Consolidation should drive more stable revenue growth and improve margins. Less competition leads to less pricing pressure. There will be more market leadership and diversity. In 2015-2018 have seen $100 billion+ per year in M&A deal activity vs. the $20-30 billion run-rate prior to this time period.
M&As are characterized by big getting bigger. Going forward, we expect to start seeing a lot more M&A activity with the smaller/medium-sized companies, as there is pressure to drive scale to compete with much bigger competitors.
Data center fundamentals strong
Strong data center fundamentals, led by cloud service provider (CSP) spending are driving strong demand for compute, networking, and memory/storage semiconductors.
Look for companies levered to data center trends to outperform in 2021 across compute, networking, and storage/memory after digestion cycle in 2H20. CSP spending (top 4) grew by 10 percent in 2020 and was up 6 percent in 2019. We expect cloud spending to reaccelerate in 1H21 and grow 25percent+ in 2021, and at 10-15 percent CAGR over the next few years.
Cloud services revenues continue growing >40 percent + Y/Y. Over the next 5 years, CIOs should grow spending on public cloud by 4x. Early ramp of new processors by Intel, AMD, Nvidia, and ARM will see adopters. Silicon switch ports (>25Gbps) should grow 23 percent CAGR. DRAM memory content in a cloud server is 50 percent higher than traditional enterprise server – OW MU. Data center compute acceleration is growing >25 percent CAGR, driven by higher complexity workloads (AI/Deep Learning, analytics, etc.).
Resurgent custom chips
Custom chip (ASIC) market is experiencing a resurgence in activity as large OEMS, cloud, and hyperscalers look to differentiate at the silicon level — $10-$12 billion silicon market opportunity. Demand is rising for custom ASICs as many large OEMs/CSPs/hyperscalers are looking for more differentiation, better performance, lower power consumption and overall lower cost of ownership versus off-the-shelf chip solutions (or ASSPs).
These same customers do not have the capabilities to do large complex SoC) designs, nor do they have the broad IP portfolio of on-chip design blocks, like high-speed SERDES capabilities or high-speed memory interface technology. They need to engage with semiconductor companies (ASIC companies) that have the IP and chip design expertise (Broadcom, Marvell, Intel, MediaTek as examples).
The digital custom ASIC chip market is a ~$10-$12 billion per year market opportunity. These include cloud/hyperscale ASICS (AI processors, smartNICs, security/video processors, networking/storage acceleration). Telco/service provider equipment OEMs also see growth, for 5G base station modems, 5G digital front ends, 5G MIMO/beamforming DSPs, and coherent DSPs for long haul/metro.
There are 5G opportunities too. These benefit wireless infrastructure and wireless RF smartphone market leaders. 5G base station deployments are growing by more than 22 percent CAGR (2020-2023E). 5G base station estimates are growing from 2020’s ~800k to 2023’s ~1400k. We expect North America activity to pick up in second half of the year followed by Europe in 2022.
Digital semiconductors are growing from ~$3 billion in 2020 to ~$4 billion in 2023. Analog semiconductors will grow from $0.8 billion in 2020 to $1.1-$1.2 billion in 2023. This is a positive for players like Broadcom, Marvell, Intel, Analog Devices, Xilinx, Qorvo, NXP, etc. Massive MIMO/Beamforming are key enablers of 5G sub-6 GHz and mmWave to increase network capacity, data rates with better energy efficiency and TCO. GaN opportunity scales with number of antenna elements. GaN market will grow from ~$350 million in 2020E to ~$550 million in 2023E (15-20 percent CAGR).
5G smartphone complexity benefits the RF market leaders such as Qorvo, Skyworks, Broadcom, etc. The market is growing at 10-12 percent CAGR (2019-2022E). 5G smartphone estimates are growing from 2020’s 225 million to 2022’s 725 million. Ramp of 5G to meaningfully increase RF market opportunity primarily on new sub-6 GHz content, millimeter wave, are also additive over the next few years. There will be ~$5-$7 of incremental 5G sub-6 GHz content. This is positive for Qorvo, Skyworks, Broadcom, etc. Core base component expertise will grow, across PAs, switches, premium filters, etc. It is difficult to insource with lack of foundry model/merchant filter vendors.
Demand growth has been accelerating in memory. Pricing should improve meaningfully in DRAM in early 2021, while price declines in NAND are still moderate. Bit demand in DRAM and NAND should accelerate in 2021. DRAM bit demand should increase to >20 percent with strong demand for server and mobile DRAM. The NAND bit demand should increase to ~40 percent led by SSDs and mobile devices.
There is supply tightness in DRAM, as a result of lower DRAM capex in past two years. It should lead to improved pricing and ASP increases in 2021. NAND market is still in oversupply. ASP declines are set to decelerate later in 2021.
Capital intensity has been increasing across the device types. This is a positive for semiconductor equipment. Increasing capex should drive bit growth for DRAM and NAND. NAND capital intensity for 12X layer should be >50 percent higher than 4X layer NAND. This will require increasing the capex to drive bit growth for DRAM and NAND. Capital intensity is also increasing for foundry/logic, even as EUV has begun ramping. There is 5nm capital intensity that is >50 percent higher than 14nm/16nm. Increasing capital intensity is positive for semiconductor equipment companies, as spending on equipment will likely have a higher floor and be less cyclical over the next several years.
Looking at the wafer fab equipment (WFE) forecast and key programs for semiconductor manufacturers in 2021, we estimate WFE spending is on track to increase by ~16 percent in 2021 to nearly $70 billion.
We expect memory to recover in 2021 led by DRAM on improving supply/demand fundamentals with foundry/logic spending sustainable. Key drivers include following muted memory WFE in 2020 that was held back on supply discipline, we expect memory spending to accelerate to double-digit percent in 2021 led by DRAM. We expect continued foundry/logic spending strength in 2021. This will be broad-based across leading and lagging edge technologies. China spending should remain strong in 2021 as local manufacturers come up the learning curve.
Kris Szaniawski, Practice Leader, Service Provider Transformation, Omdia, presented the 2021 trends for telecom operations and IT, at the ongoing Omdia’s Future Vision conference.
First, there are plenty of telecom IT opportunities despite Covid-19. The crisis has impacted service provider spending plans, but technology never sleeps, and several key areas of telecoms IT will demand attention in 2021. The overall telecom IT vendor revenue is expected to grow by 2.3 percent in 2021—a welcome improvement on this year’s anticipated 0.6 percent decline—although still below the 4 percent CAGR for the period to 2025.
However, despite the overall sluggishness, there will be strong areas of growth, especially around anything to do with AI-driven network automation, data management, and monetization. Automating the increasingly complex network and service management environment has become a major priority for CSPs, along with the AI and data management capabilities required to support this.
Service providers also need to invest in customer engagement solutions to digitize and unify the customer experience, and the 5G monetization tools required to support a wide range of new services and business models. And, underlying it all is the continuing shift to the cloud, and the need to adopt cloud-native technologies and practices.
Telecom IT will see several strong areas of growth. AI and customer engagement will see a strong increase in investment in 2021, as well as areas such as network and data management and monetization. 58 percent of service providers are expected to increase spend on AI tools in 2021. And, 53 percent of service providers are to increase spend on customer engagement systems in 2021.
There is growing service provider appetite for cloud and cloud-native telecom IT. Underpinning everything is the continuing shift to the cloud and the need to adopt cloud-native technologies and practices. Whichever cloud migration approach you choose, it is unlikely to go well without embracing Agile operating principles to support it.
AI investment finally starts to catch up with the hype. Automating the increasingly complex network and service management environment has become a major priority for service providers, along with the AI and data management capabilities required to support this shift.
Customer engagement resurgence is driven by Covid-19. Service providers are already under pressure to automate and digitize customer engagement, but this will not be sufficient if they do not also invest in the IT tools capable of supporting a consistent and unified customer engagement strategy.
5G monetization remains a priority. 5G monetization will continue to be prioritized. Service providers need the tools to support a wide range of new services and business models. This will require not just 5G-ready policy and charging systems, but also a broad mix of customer and partner management capabilities.
Recommendations for SPs and vendors
There were some recommendations for service providers and vendors.
Service providers need to start trialling, testing, and implementing Agile practices across the organization so that they are well prepared for their cloud migration. CSPs also need to take stock of and fill any gaps in in-house capabilities and IT skills.
Service providers need to look beyond performance, monitoring AI use cases. Utilizing AI to perform closed loop automation presents a much bigger opportunity to transform RAN and core operations into something more proactive.
Service providers should seek to convert the short-term shift to digital interaction into a permanent change in customer engagement. However, at the same time, they need to develop a consistent and unified customer engagement strategy and invest in solutions that allow them to deliver a consistent omnichannel experience.
Service providers need to invest in new 5G-ready policy and convergent charging systems if they have not already done so. Most 5G monetization solutions will need to include charging and policy capabilities and service providers need to also consider additional features such as customer management, partner management, product catalog, and analytics.
Vendors will need to provide CSPs with hands-on support to help them embrace Agile and DevOps principles and transform development practices. Vendors will need to provide strong training and support and offer easy-to-use tools to help close gaps in in-house IT expertise.
Vendors cannot focus on AI capabilities in isolation. They need to address the associated areas, including improving data management and embracing open APIs to enable CSPs to access and make effective use of data, as well as support a common analytics platform to help CSPs streamline analytics workflows.
Vendors should ensure that their customer engagement solutions provide a unified view across the customer journey. They should also be able to orchestrate the customer experience across any channel, business function or department.
Vendors will need to assist service providers with 5G monetization use cases. 5G will be characterized by complex B2C, B2B, and B2B2X business models, which will necessitate fast and flexible monetization systems. However, such flexibility will not be sufficient by itself; vendors will need to provide guidance with 5G monetization use cases and be prepared to codevelop such use cases with CSPs.
SP appetite growing
There will be growing service provider appetite for cloud and cloud-native telecom IT.
The shift to the cloud continues apace. We have now reached the point where in any given domain, 78 percent of service providers intend to primarily host their telecoms IT systems in the cloud, although of course systems do not equate to workload. The proportion of the workload in the cloud may still be relatively low, but there is clearly momentum.
By contrast, the adoption of cloud-native technologies has been slower. To get the most out of the cloud, applications should be cloud native. But, over the coming year, CSPs still intend to run a large proportion of telecoms IT systems on legacy monoliths, and on average only 29 percent intend to embrace microservices architectures in any given domain.
Nevertheless, there are encouraging signs of change. Omdia’s ICT Enterprise Insights 2020/21 survey shows that nearly 80 percent of CSPs believe that migrating IT systems to microservices-based architectures will be an “important” or “very important” project in 2021.
This growing interest in microservices and cloud-native IT needs to be accompanied by adoption of Agile, DevOps, and CI/CD practices if CSPs are to obtain the full benefits. Service provider interest in these is also growing, but they face a steep learning curve.
CSPs will also need support to establish Agile, DevOps, and CI/CD practices.
AI investment finally starts to catch up with the hype. AI investment is turning into a service provider priority
Telecom AI has been much hyped, but it is only now that investment is starting to pick up, as service providers realise they need the automation tools, data analytics functions, and intelligence to support 5G network management, slicing, private mobile networks, and new business models. Covid-19 is also making it more of a priority for CSPs to improve operational efficiencies.
Nearly 80 percent of CSPs see the use of AI/analytics to automate network activities as an “important” or “very important” IT project for 2021, with nearly 60 percent of CSPs planning to increase investment in AI tools.
Automating network and service management processes is considered the most important OSS project over the next 18 months, as CSPs start to edge towards
integrated solutions that can support closed-loop automation.
Top AI use cases are expected to include network fault prediction and prevention, automation of end-to-end life-cycle management, and the management of network slicing. The range of use cases is growing fast, and soon the Telefonica CTIO will not be alone in claiming “We are building a new operating model using AI capabilities.”
AI and analytics will also support a variety of non-network use cases, including, using AI to support new business models such as contextual offer management, as well as automating and personalizing customer engagement.
Customer engagement resurgence
Customer engagement resurgence is being driven by Covid-19.
Service providers are already under pressure to automate and digitize customer engagement. The Covid-19 pandemic has brought major changes to the customer engagement environment as a result of retail outlet and contact center closures and a sudden shift to digital and remote working operations.
This has led to a resurgence of CSP investment in customer engagement tools. Over 80 percent of CSPs see end-to-end customer engagement solutions as an “important” or “very important” IT project for 2021, and almost as many plan to upgrade their customer engagement solutions over the coming year.
Furthermore, CSPs plan to incorporate AI and advanced analytics capabilities into their customer engagement strategies. Top AI investments include automating and personalizing customer engagements and deflecting calls from call centers (e.g., with chatbots).
Investment in customer engagement will not be limited to the B2C side of the business, as the top IT projects to improve B2B operations will focus on improving customer engagement for enterprise customers and enterprise end-users. Investments will include improving self-service portal capabilities and evolving self-service channels into new areas.
Customer engagement definitely needs to be more than just digital catchup.
Finally, 5G monetization remains a investment priority. 5G investment has not been derailed despite the impact of Covid-19. Omdia expects 5G RAN investments to surpass LTE by the end of 2021, and although total global market may peak in 2022 as initial China 5G rollouts finish, 5G as whole will continue to grow. This will of course drive the need for 5G monetization solutions. This fits with the longer-term pattern, with BSS revenue forecast to grow at a CAGR of 3.6% over the period to 2025.
CSPs will continue to invest in the BSS domain over the coming year in order to improve their ability to support network slicing, private mobile networks, IoT use cases, and the flexible pricing required to support new business models.
So, it’s no surprise that the two top BSS investment priorities over the coming year are upgrading billing systems to support new business models and investing in 5G-compatible rating and charging systems. Improving self-service capabilities and migrating revenue management systems to the cloud will also be important.
The feedback we have had from CSPs suggests that although billing is a current priority, and we will see increasing interest in 5G policy control (PCF) and 5G convergent charging (CHF), as well as increasing appetite to invest in integrating policy control and charging systems. The top two BSS priorities for 2021 are upgrading billing systems to support new business models, and investing in 5G-compatible rating and charging systems.
5G monetization is a more complex undertaking than many realize.
Omdia’s Future Vision conference kicked off today. Enrique Blanco, Global CTO, Telefonica spoke about the future vision for telecom operators.
Blanco said that we are going through the various interfaces and building a new 5G infrastructure. It is all about how you are managing this network. We are working on how we will manage the data lake. We believe that 2022 will be an extremely amazing year for telecom. We need to fully align the skills.
One of our most valuable assets is the data. We are now powering data for our customers. We are trying to build use cases as fast as possible. We have signed some partnerships with Google. How we can go together, and how we can grow faster? How can we use the capabilities of the interscalers? We are also working with AWS in Germany.
Five things that may surprise you
Evan Kirchheimer, VP, Service Provider Research, Omdia, presented five things that may surprise you in 2021.
We tend to think mobile-first, but fixed growth is delivering in the post-pandemic world. We are in recovery mode, and V is the shape. There are four takeaways. There will be 2.5 billion more connections by 2025, for fixed broadband and mobile connections (excl. M2M) by 2025. 5G is already growing the mobile data opportunity. In 2025, over 30 percent of mobile subscriptions will be for 5G (3.3 billion out of 10.9 billion). Mobile data revenues will rise from 62 percent of mobile revenues to 78 percent, delivering another $170 billion in annual mobile data revenues by 2025.
Mobile ARPU will also stabilize. In many countries (e.g., the UK), data revenues delivered by 5G subscriptions will arrest the decline in mobile ARPU. It will still slip slightly globally, with an ARPC of $74 in 2025 vs. $79 in 2020. But, fixed is a critical growth story: Mobile data revenues will enable all mobile revenues to grow 8.5 percent by 2025. But, fixed broadband will grow 14 percent between 2020 and 2025, to $370 billion. Fixed broadband ARPC will increase from $270 to $285.
Bridging the digital divide is more critical than ever for growing our opportunity. Achieving, or exceeding, this growth requires us to bridge the digital divide. Telcos will increasingly look for a purpose. Omdia’s Environmental, Social and Governance tracker reveals investment in a number of CSR initiatives focused on the environment, including green energy, recycling, conservation and green bonds. But, inclusivity trumps them! Social welfare and digital inclusion are, in combination, the top priorities.
Edge will further erode the distinction between the cloud and the network. Hyperscalers are working more strategically with telcos; how tight will these ties become? The network/cloud interplay becomes deeper. Partnerships with network providers are a large chunk of overall partner activities, and they are more strategic and less about commercial partnerships for specific services than they used to be.
Bypass or going direct is sometimes an option. Hyperscalers are, of course, injecting cash directly into subsea fiber, the edge, backhaul and various parts of the access network.
We are now locked in an edgy embrace. From a service provider point of view, some of these approaches are difficult to refuse: “pipe or nothing”; but hyperscalers need the telcos, because they must physically locate more and more cloud infrastructure in the network. Witness the growing number of hyperscaler-telco
alliances and consortia. Cloud, network, both, will be there. Investment patterns bear witness to the clout of the new kids on the block.
Next, Webscalers take the lead. In Q3 2020, Amazon’s CapEx was higher than China Mobile’s. Google’s was more than Verizon, and Microsoft more than DT. The “edge cloud” drives spend. While AT&T and Verizon are investing aggressively to launch nationwide wireless 5G services, the main aim of Capex across provider types is for building infrastructure for cloud computing.
There will be common things across the ‘splinternet’. China mirrors this trend, as their ICPs saw 3Q20 capex increase 21 percent to $7.9 billion. Tencent’s $5.9 billion rolling 12-month capex makes it comparable in size to China Unicom. Fixed capex dominates. For 7 of the last 8 quarters, fixed capex has exceeded mobile, though 5G network buildouts have caused mobile capital intensity to increase – a trend we expect to continue.
Value add! It’s time to radically rethink your strategies, or prepare to struggle for $0.40/month more. Value add capitalizing on growth of services above the network layer has proven challenging.
On the enterprise side, it has been stagnant. After years of trying, most telcos have failed to forge strategic relationships with large enterprise beyond connectivity. For disruption, aggregators, brokers and SD-WAN/Internet/work from home are disrupting even core managed WAN (though often on multi-year contracts). Re-orgs, with many providers have re-re-re organized their business arms. Witness BTGS, AT&T, TEF and T-Systems.
On the consumer side, household spend grows outside the core. Globally, the average household will spend only $0.4 more in 2024 compared to 2019 on core comms and connectivity. But, households will spend an average of $2.60 more in 2024 on online video, digital music, digital games and smart home services – about a 10 percent increase in spend. There will be struggle beyond Pay TV. With Pay TV flat at best, SPs are competing against behemoths in online video, digital gaming and smart home.
There are still, however, considerable opportunities in new approaches and old standbys. In private networks, our trackers and analysis reveals a complex ecosystem is evolving, and hardening. An alternative, multi-party approach is needed. Alternative service providers and multi-party deals for private network deployment have largely disintermediated the telcos. As for the ecosystem, there is real opportunity if providers view partnerships and ecosystem players as critical to a successful private network strategy.
Meanwhile, Covid-19 has re-ignited the mobile money market, with some long-standing operators realizing growth. Orange’s revenues in Africa and Middle East in 2020 were up 5.2 percent YoY, amounting to a considerable Euro 507 million.
The “emergency aid effect” of government financial support during Covid-19 increased the penetration of banking services in Brazil by 20 percent in a matter of weeks, reaching 90 percent of the adult population. And, 100 percent of this increase is mobile banking.
Digital inside out: The next few years will bring a significant digital skill shift inside the telco. CSPs are starting to embrace cloud-native, but there is a lot of work left to be done. 77 percent of CSPs plan to host a portion of their OSS/BSS workload in the cloud in 2021. Most CSPs (32 percent) will host OSS/BSS in a hybrid cloud environment. CSPs are likely to put the BSS in the cloud.
Now, 78 percent of CSPs plan to embrace microservices architectures for OSS/BSS in 2021. 75 percent of CSPs plan to embrace DevOps and other agile operating principles in 2021. However, 61 percent of CSPs say that lack of in-house experts is hindering their move to the cloud.
Telcos are now digitizing from the inside out. Our industry is beginning to understand digital is about people with skills and outlooks, not just technology. Over 21 percent of the openings at BT mention agile skills. At Colt and Swisscom, there is over 100 percent penetration of digital skills required.
In pre-2020, 5G will deliver the growth shot we have been waiting for. In 2021 and beyond, fixed is doing the heavy lifting, and the growing. 5G will require wholesale re-thinking of fixed architectures as core dissipates to edge. Have you prioritized your fixed architecture?
There was a robust CSR. Now, don’t lose sight of your fundamental business and social purpose – there is no market growth without access. Are you aggressively addressing the divide in your region?
In the emerging cloud/network landscape, it’s the edge that will shape applications for 5G. Digital is also about employee transformation: some telcos are well into their journeys. Do you have a digital people as well as technology strategy?
At the ongoing European 5G Conference 2021, there was a session on Staying sovereign – delivering a diverse, sustainable and European-led ecosystem for 5G and beyond.
Presenting the 6G European perspective, Bernard Barani, EC Deputy Head of Unit – CNECT E1, said there are six key dimensions of 6G. These are:
- New classes of applications — XR, Holographic communications, and Internet
- Vertical use cases beyond 5G — higher capacity, xGbs speed, new spectrum, sub ms latency, location, reliability beyond 5×9, ultra high device density.
- Fully automated infrastructure — Autonomous management, IA, etc.
- Ultra low energy/EMF — Optical technologies, architecture, optimizing computing vs. networking, EMF aware, etc.
- Ultra high security — Quantum, blockchain, from component to application.
- Sustainable development goals — Affordability of technology, Open RAN,
infrastructure access, climate change, etc.
Europe is moving towards a 6G European Initiative. They are accelerating 5G deployment with 5G PPP: ICT-52 implementation of eight 6G exploratory projects, and one flagship, worth 60 M€ (bridging phase). They are accelerating 5G deployment with CEF2, and pan-European corridors for connected cars. There is a 6G vision and technologies across a comprehensive supply chain.
There is strategic autonomy in critical technology areas, European Green Deal,
full digitalisation of the industry, and EU industry global competitiveness. There is also an Industry 6G Partnership Proposal (smart networks and services).
European 6G research
Talking about European 6G research, Dr. Colin Willcock, 5G IA Chairman of the Board, said the 5G research partnerships are in three phases. Phase 1 looks at 5G core research. The main achievements are 5G system design and evaluation aspects, 5G air interface innovations, network management and security innovations, virtualization and service deployment innovations, and contributions to standardization. Phase 2 looks at 5G vertical trials, and phase 3 looks at 5G platforms.
There are 62 R&I projects since the beginning of the program, 800+ contributions to standardization activities (Phase II and Phase III), over 1,300 scientific publications (Phase II and Phase III), and design, evaluated and validated multiple technological breakthroughs.
Beyond 2020, with focus on smart networks and services, they are aiming for communication networks to provide the life blood to realize the digital society. Connectivity has gone from a luxury to a critical human right. Research, development and deployment of communication networks will be a key future economic differentiator. 2020 does not mark the end of network infrastructure development. We need a smart networks partnership instrument in Horizon Europe to continue European technology leadership.
They are looking beyond 5G projects, to 6G structuring and framing, research on 6G technology components, 6G systematisation research projects, and 6G technical standardisation. By 2030, Europe is looking at 6G evolution and commercialization.
Key drivers for 6G
Matti Latva-aho, 6G Flagship Director, University of Oulu. Finland, listed the key drivers for 6G. 5G will be successfull once the value chains related to key verticals are thoroughly understood driving evolution towards new business ecosystems. In the 2020s, applications range will explode and new value chains emerge. 5G and beyond will see trillions of connected objects and intelligence by 2040s.
Critical drivers for 6G will be towards society, business, security, radio technology, AI and standards. These are:
Digital inclusion via global coverage — Connectivity is key to satisfy UN SDGs and needs of digital societies; current terrestrial technologies with evolutionary features need to be complemented by specific remote areas solutions including satellite.
New ecosystems and disruptive business models — Digital societies and emergence of new verticals create new ecosystems and disrupts current business models requiring field specific regulation changes; ownership of customers and networks changes.
Data privacy and security — Expansion of verticals with new stake holders and emergence of large number of new players providing different network elements, critical applications and operating different parts of networks sets new privacy & security requirements.
Super efficient connectivity at high spectrum bands — Extreme speeds, reliability, low latency and localization/sensing accuracy can be achieved only locally in rather short-range networks utilizing the higher frequency bands even above 100GHz.
Smart AI-enabled networks and apps — Networks and applications become intelligent, self-learning and context dependent; edge intelligence is the key technical enabler and challenges/complements centralized cloud solutions.
Global collaboration and standards — 6G coalitions forming in a new geopolitical landscape; a new standard is introduced after every 10-years – business reshaped in 20-year cycles; spectrum regulation principles changing ~25++ year cycles.
6G future for ICT
Dr. Wen Tong, CTO, Huwaei Wireless, said that 6G will unleash the innovation power for 2030-2050. These will include sensing communications, AI cyber world, extreme connectivity, tera-hertz radio, and trustworthiness.
We need to foster an expanded ecosystem to shape 6G. This will help to embrace quantum leap technologies and applications. These will be cross verticals and innovation-driven, on a global scale, on an open platform that is natively intelligent and sustainable.
ICT service continuum
Diego R. Lopez, Telefonica presented the unified ICT theory toward the ICT service continumm. The network environment has to enable a single service space. It has to be consistent for service developers and users. Build once, run anytime, anywhere. It should support different deployment patterns for service
providers — public and non-public infrastructures, and their combinations. There should be multi-dimensional openness for all stakeholders.
The goal should be in-network computing. It should be a service continuum based on programmable network 7devices, languages and abstractions to implement network functions, data-plane abstractions and new network protocols, decentralized security and discovery mechanisms, and end–to-end orchestration of all kind of resources and functionalities.
There should be a matter of balance. These include network heterogeneous and distributed nature with a holistic view of services and infrastructure. The nervous system paradigm, topologies, protocols and models for distributed data-enabled applications at all levels.
There should be user requirements with operational policies. Intent dialectics to match potentially conflicting demands, and compositional mechanisms for many-tenant environments. There should be usability and agility with regulations and security. There should be sovereign identities and reliable crypto, and non-repudiation and accountability. There needs to be closed loop operation with infrastructure criticality.
This will keep humans in the loop, retaining ultimate understanding and control. AI intelligibility and security mechanisms will guarantee proper operation. There should be sensing with acting. We will need converged data models for metering and monitoring, and converged control action representations.
There was a panel discussion on the 5G action plan and revisiting Europe’s key policies at the ongoing European 5G Conference 2021. The participants were Peter Stuckmann, Head of Unit Future Connectivity Systems, European Commission, Michel Van Bellinghen, Chairman, BIPT Council & BEREC, Ms. Maarit Palovirta, Director for Regulatory Affairs, ETNO, Ms. Aarti Holla-Maini, Secretary General, ESOA, and Tobias Martinez Gimeno, Cellnex Telecom. Ms. Janette Stewart, Partner, Analysys Mason, was the moderator.
Peter Struckmann, EC, said people are asking for the new 5G action plan. We adopted the next-gen EU plan. That is now in the delivery and implementation mode. We also had the state of the union address from the president last September. We have the recovery challenge now. We want to make this future proof. We are looking forward to 2030 targets in March 2021. There will be a mini 5G action plan.
We have seen digital is very important, and for keeping business continuity. For SMEs, we need them to recover. We are looking at greening our sectors. The cyber security toolbox was also adopted by the EC. 5G has to be rolled out now. Massive investments are likely in the next few years. We are also digitizing our economic sectors. We are doing so area by area. We need a single-market approach. We also have the connectivity toolbox, to look at spectrum co-ordination, etc. We are also behind in mmWave band, with Asia and USA ahead. We are also looking at small cells. In Korea, there are already 100,000 small cells.
Michel Van Bellinghen, BIPT & BEREC, said they have considered the 5G policy. The objectives are aligned with 2025, regarding digital markets and full connectivity. We are looking at expansion of networks, and transition from legacy infrastructure. More focused digital network is important for the digital market. 5G will be a major driver for economic development.
There are some hurdles for connectivity. The European approach is a middle path. We also have a lively cyber security debate. The Gigabit Society is still underway. 5G networks are expected to be more efficient and be less energy consuming. We are also looking at how to reduce the carbon footprint. BEREC will play a role in these to boost 5G deployments. We are looking at greening the telecom infrastructure.
Ms. Maarit Palovirta, ETNO, said 5G has been launched in 18 countries during 2020. Spectrum auctions, while delayed, there are countries going ahead with them. Industrial use cases are coming up. There is the discussion of the role of 5G in the green transition. There is the cyber security toolbox. We have the standards for EMF. We also seen the pandemic play a role and impact our sector.
By the end of 2020 there will be over 80 networks in operation across the region, bringing next-generation wireless connectivity to millions of people. European telecom markets need to become stronger. Investment is still too low, despite high capital intensity and investment leadership by ETNO companies. Networks are becoming greener, with both carbon intensity and overall emissions decreasing and aggressive climate targets. There is focus on digital services, cloud and AI as telecos are enablers of European trust-based innovation. Regulation and its implementation should support European investment and innovation.
So far, 5G accounted for 1.3 percent in 2020, and is expected to go up to 7 percent this year. 5G is happening and fibre is making the European Internet significantly faster. We have seen significant increases in data traffic. In terms of revenue, the impact has been limited. There are concerns around general spending in the pandemic. 5G remains a huge opportunity for the operators in Europe. There have been delays in spectrum licensing. There has been prompt policy response. There is also the EU Connected Toolbox.
There are policy priorities, such as 5G Action Plan, and Digital Decade. Countries are still slow in rolling out 5G. We need to ensure we have the resources and knowhow. Network sharing, band sharing, etc., could be ways to reduce costs. Cyber security remains key. We would like to call upon more harmonization. 5G is not a one-way track. We also need to see demand from industry verticals, especially. SMEs also play a key role.
Ms. Aarti Holla-Maini, said that new satellite systems are coming up as well. This gives a meaning for the network of networks. The role of satellite in 5G and beyond. Satellites are required for secure 5G services. We are living at a time where Europeans need to see their lives improve.
If we want an inclusive society, we need to raise the connectivity across the board. People should be able to see transformational changes across the society. One size fits all is not going to fit into 5G services. Cloud computing also needs good capacity. The 5G Action Plan should call member states to facilitate meaningful connectivity. Review of the action plan should reset the expectations. The spectrum policy has to respect the long-term policy of each technology. There should be real services that users can be benefitted from. We should be also measuring the impacts.
Tobias Martinez Gimeno, Cellnex Telecom, said the European Wireless Infrastructure Association is about 10 independent tower companies operating across 14 countries, namely, Austria, Denmark, Finland, France, Germany, Ireland, Italy, The Netherlands, Poland, Portugal, Spain, the United Kingdom, Switzerland and Sweden. We are managing the infrastructure. There is capital intensive and long-term investments with industrial commitment.
EWIA is enabling the 5G European Action Plan. Independent wireless infrastructure provides higher efficiency through sharing model. We are also facilitating quick and open access, and looking at long-term investment. Sites and beyond 5G will be fiber connected small cells, DAS, edge computing, backhauling, FTTT, etc.
The 5G challenge is not about towers. It is about delivering infrastructure for factories, distributed data centers, neutral hosts, etc. 5G also demands funding. New spectrum license and coverage obligation are also there. The neutral host model is now being appreciated. Future policy will host wider, faster deployment of 5G. We are here as an industry to build a connected Europe.
European 5G Conference 2021 started today. Pearse O’Donohue, Director General, Director for Future Networks, DG Connect, European Commission, presented the keynote. Europe is becoming the opportunity for 5G investment. We are seeing a huge opportunity. The EU has targeted 20 percent of investments to go into digital technology. A significant proportion could be mobilized to finance connectivity. We have the financial means to meet our needs. Member states have to step up now.
For the plans, we need clear objectives, framework, milestones, etc. We are having multi-country projects. We need a dense 5G network spread out across Europe. We are also looking at reducing energy consumption in transport. We are using the major projects to harness the funding for 5G. This will also be a focus for major industry projects. The plan should be forward looking and integrated with edge computing. AI will harness data. They are also linked to high-performance computing.
All stakeholders need to shape the agenda. The economic security objective will also take on the competition. We want the ambition of 5G to match our plans. We are assessing the plan’s adequacy. Investments are the challenge. Most of the investment needs to come from private investors. We have to look at the wider economic society benefit. We have sought to build up on governance. We have similar activities for the connected trains. This will pave the way for co-operation between the key players.
Supply has to meet demand. We also need to look at venture finance. We are doing large pilots on IoT, 5G, and edge computing across the various sectors. We need to ensure that there is clarity for the investor community. The digital decade will be about 5G. We now need to take on the financial and all other challenges. We hope to have all the tools to make 5G happen. This is also the opportunity for European MNOs to assess the demand. We also see there are various models for edge computing.
The strategic agenda focuses on components crucial for the digital economy, including 5G global policy advancement, research, innovation and deployment of future mobile systems, strategic use of spectrum, implementation of cloud policies, support to software strategy, and the implementation of a common European IoT agenda, while addressing a long-term perspective for the Internet.