Recent indicators from specialist RAN vendors such as Airspan Networks point towards consolidation and modest growth in the private 4G and 5G network sectors, as global economic factors bring mixed impact. On the one hand, global headwinds have been causing some enterprises to pause on potential orders, yet others have been persuaded to push ahead with private network deployments to cut costs or help overcome skills shortages left over from cutbacks during the Covid-19 pandemic, or for other reasons.
The dichotomy showed up in Airspan’s third quarter results, which reported revenues of $41.1m, up 6% year-on-year ,but down 12% over Q2, while orders were well up, as president and COO Glenn Laxdal indicated.
“Global demand across our lead customers remains strong. We had our strongest quarter in terms of bookings in over 2 years and over $35m in bookings from our three largest customers,” said Laxdal. “We are also seeing good progress in the developing private networks market.”
Laxdal noted 87 private network contracts spanning 4G and 5G during the quarter, up 40% on Q2 and bringing the total to over 400 private network wins. Counting just networks can be misleading though, because some initial contracts can be small trials, and so Airspan is right to place great store on winning repeat business from its existing base, taking over $35m in bookings from its three largest customers during Q3.
Airspan’s results also highlight the challenges facing emerging players outside the big four equipment makers, such as Ericsson and Nokia, as well as other big technology or IT players entering the RAN space on the back of virtualization. These issues are primarily concerned with supply chain constraints and inflationary pressures, to which all vendors are subject but smaller companies are more exposed. They need to borrow or attract more funding to atone for continuing losses, as in Airspan’s case.
Indeed, the company anticipates Q4 2022 revenue of between $49m and $57m at a gross margin of 42% to 46%, with component availability, related expenses and challenges from Covid-19 restrictions in Asia continuing to take a toll.
“On the supply chain side, we’re continuing to deal with component shortages, recommitments and price increases, which impacted on our gross margins in Q3,” said Laxdal. “To offset some of this impact, we’ve been able to secure price increases with our key customers, which take effect in Q4. We expect to see continued impacts from the supply chain into the middle of 2023 with long lead times across the board.”
For Airspan and other small or medium sized companies jostling for position in the expanding private mobile network arena, forming the right partnerships is critical while negotiating the current rough terrain. Airspan has partnered with Betacom, which is focusing on industrial private 5G networks, and Druid Software, provider of 5G core software, in the USA’s MxD (Manufacturing x Digital) network. This is an industry center for developing private 5G applications and systems, backed by major manufacturers such as Siemens, as well as the US Department of Defense. As one of the first major indoor 5G deployments in the USA, the network is pitched as the foundation for development of wireless technologies for the country’s manufacturers and engineering firms under the banner of Industry 4.0.
Here, Betacom is the major player with its managed 5G-as-a-Service already deployed by some US enterprises, while Airspan has donated its 5G RAN and Druid the 5G core software.
Betacom has also provided its cloud-based Security and Service Operations Center (SSOC) based on zero-trust security design principles. Zero-trust, as the name suggests, assumes that no element of the network can be assumed to be secure, with another name therefore being ‘perimeter-less’ security. This means there is no effective firewall, no part of the network that can be assumed to be insulated from other parts, or the outside.
Betacom is also one of several vendors engaged with Google in its private 5G initiative, alongside other specialist suppliers including Boingo Wireless, Celona, Crown Castle and Kajeet. Google’s idea, also being pursued by AWS, is to carve up the private network field into vertical or occasionally regional sectors with specific vendors being appointed as partners for each case.
Betacom is dealing with Industry 4.0 and this looks like bringing its partners Airspan and Druid into Google’s frame for the RAN and core respectively. Celona’s role is in real estate, especially smart buildings, while Kajeet is handling educational deployments in schools especially.
For these vendors this provides credibility and access to enterprise prospects they might otherwise not reach. AWS is also working with partners, in this case Mavenir and JMA Wireless for RAN, Athonet for core, and Federated Wireless for frequency coordination in the USA, with others for different markets.