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28 March 2023

Cisco pins hopes of 5G pickings on private network as a service

The agonies experienced by Cisco as the largest US telco/comms equipment and technology vendor over cellular and especially the RAN have been illuminating and sometimes excruciating to behold. They underline the dichotomy in the USA between mobile service deployment, where the country has advanced from being a laggard in the 3G era to a leader today, and over the underlying technology, where it has become heavily dependent on overseas companies.

That partly explains the USA’s onslaught against the Chinese vendors and especially Huawei, where the national security card was played to justify a campaign whose real motivation was fear of these companies becoming too dominant in global 5G on account of their competitiveness. This has led to overdependence on Ericsson, Nokia and Samsung, helping to galvanize interest in Open RAN, which Cisco strongly supports, even if as yet it has no plans to manufacture RAN equipment itself.

Cisco has come under sustained criticism from the federal government for failing to compete with the big mobile infrastructure firms, dating back at least to the beginning of the 4G era over a decade ago. Cisco was more on the cusp of the RAN in the 3G era when WiMAX was a contending option to LTE. At that time Cisco made the occasional RAN-related acquisition, such as Navini in the WiMAX/4G era and Ubiquisys for small cells, but its wireless access success has since become almost entirely confined to WiFi.

It was around 2009 Cisco decided its future in telecoms networks lay not with challenging the RAN giants, but with enabling the move to converged end-to-end IP-based multimedia services, including video- and voice-over-IP, email, gaming and media sharing, as well as basic Internet access. In this view of the world, the RAN would be reduced to profit-squeezed commodity hardware beneath those service layers, placing the packet core and IMS at the center of the value chain. Indeed, some argue now that Open RAN may finally commoditize the RAN, at least outside the most performance-demanding scenarios.

As it happens, Cisco then almost missed the cloud boat, rather surprisingly perhaps, in the wake of its decision to target IP multimedia services (IMS) platforms, which were themselves heading that way (though very slowly – one of the problems for Cisco in the 2010s was the extremely slow development of the IMS market on any platform). The firm’s former worldwide chief strategy officer for channels, Surinder Brar, claimed in 2020 that Cisco had “failed to connect the dots” on cloud, missing the “biggest market transition in IT in a decade”, resulting in a catch-up exercise.

Cisco did move in that direction a few years later through various moves, such as co-founding the OpenFog Consortium, to promote development of fog computing as an intermediate layer between the centralized cloud and network edge (other founders were ARM, Dell, Intel, Microsoft and Princeton University). This was followed in January 2016 by investment in VeloCloud, an SD-WAN start-up; then in February 2017 by the launch of a cloud-based secure Internet gateway called Cisco Umbrella, for safe Internet access to corporate users without VPNs.

Amid other cloud-based developments and acquisitions, Cisco then further developed its strategy extending its presence in mobile infrastructure and services, leading to a partnership reached with Norway’s Telenor from around last year’s Mobile World Congress 2022. Although still steering clear of the RAN business, it had developed various techniques for traffic management at the cell level. Its Ultra Traffic Optimization is designed to make most efficient use of existing spectrum and RAN equipment by optimizing traffic flows in congested cells, for instance.

Cisco was also seeking partnerships to target emerging 5G infrastructure more effectively, although focusing on private rather than public macro networks. It has collaborated with two US Open RAN vendors, Airspan and JMA Wireless, for its private network platform, as announced at MWC 2022. Prior to that, in April 2021, it struck a key deal with Japan’s NEC to cooperate on 5G transport networks, including backhaul, midhaul and fronthaul. Cisco tapped NEC’s expertise in cellular systems integration to market its own IP metro/access transport and edge cloud computing systems.

Cisco was bullish at MWC 2022, striving hard to get a leg up into a private 5G field the company acknowledged was already becoming overpopulated by the hyperscalers, enterprise IT vendors, system integrators and emerging specialist players targeting vertical sectors, especially industrial. Cisco positioned itself to exploit its coverage of key IoT sectors with its portfolio of industrial routers, switches, and gateways, as well as relevant security and management applications, combined with its strong enterprise presence in Wi-Fi and fixed WAN connectivity.

This year at MWC 2023 Cisco seemed more on the defensive, warning that private 5G was in danger of becoming siloed by technology companies promoting their own versions of Open RAN. Yet Cisco is itself building its ecosystem of partners for key areas of the technology, including those Open RAN vendors but also larger players to target particular vertical sectors. On this count Cisco announced a deal with NTT at MWC 2023 to collaborate on private 5G in the automotive, logistics, healthcare, retail, and public sectors. This would combine NTT’s managed private 5G service with hardware from Intel, with no mention as yet of suppliers of the radio and core network components. However NEC might be in the frame for the former, and Cisco for the latter.

Indeed, NEC adds to JMA Wireless and Airspan as partners for the RAN, with Cisco emphasizing at MWC 2023 that its own core system is built to work with any RAN. The software stack can also be deployed in public macro 5G networks, although its prospects on that front depend on significant take up of Open RAN by the major cellcos, which is not happening yet at any rate.

Cisco also has partnerships with General Dynamics Information Technology (GDIT) to target government and especially defense contracts, and with UK-based Logicalis for industrial IoT opportunities.

Cisco’s partnership announcements were overshadowed at MWC 2023 by more assertive developments such as HPE’s acquisition of Athonet to expand its private 5G presence and capabilities. But the scale of such activity does underline Cisco’s determination to become a major force in private 5G on the back of its WiFi presence. As WiFi converges more with cellular it is likely that Cisco will then move to acquire direct RAN capability, but for now will rely on those partners to address the various vertical sectors.

The urgency can be seen from Cisco’s stagnation over the last decade after having enjoyed meteoric growth the previous two. The company won the IP router war in the early 1990s to emerge as the dominant supplier of connectivity both in the public internet and enterprise networks. Although slowing down, growth was sustained more or less continuously until 2013, when Cisco posted $48.6bn annual revenue. Since then the company has flatlined at best, with the 2022 total of $51.6bn actually representing a revenue decline on the 2013 in real terms after taking inflation into account.