One of the interesting questions arising from the US-China trade tensions, with their intense focus on 5G, is how far US vendors will suffer or benefit. We have covered the debit side of the equation several times – the risk that China, on the defensive, will become technologically self-sufficient, reducing the addressable market for US component and systems providers, and even denying them access to key innovations.
On the other side, will the ‘America-first’ mood of the current administration encourage US service providers to buy from home vendors to a greater extent than before?
As far as the national MNOs are concerned, there is unlikely to be a big change. They have been prevented from working with Huawei and ZTE for years, and they already have strong engagements with the USA’s foremost networks supplier, Cisco. Their initial 5G contracts have largely gone to their established (non-US) vendors, Nokia and Ericsson, though with a stronger showing for Samsung (certainly not US).
However, smaller operators, or new entrants, may have greater flexibility to be innovative in their supply chains as they look to establish more favorable economics for their build-outs. Small MNOs and telcos are not forbidden to work with the Chinese suppliers (yet) but may feel pressure to choose a new partner next time, creating at least a modest change in the supplier landscape.
More interestingly, new wireless builders such as Dish Network and the leading cablecos will be looking for virtualized, low cost approaches to make them cost-competitive, and so may be more willing to consider smaller vendors. Like Rakuten, which Dish chairman Charlie Ergen as cited as a role model in this respect, they can harness open interfaces and software architectures to introduce a wide selection of specialists into their networks, rather than playing it safe with an end-to-end supplier.
And that would make it more feasible to choose a homegrown vendor – not just a Cisco or Juniper for core network gear, but a smaller provider like a JMA Wireless, CommScope, Parallel Wireless or Airspan, all of them developing 5G small cells and other equipment for the virtualized, multivendor platform of the future. Airspan is particularly interesting as it is a major supplier to Sprint already, as well as to Reliance Jio, Softbank and other operators which have taken risks in their vendor selections. Then there are core network specialists like Affirmed or Mavenir, and virtualized RAN provider Altiostar.
Dish is the company they are all eyeing at the moment, since the pay-TV provider is set to acquire network, spectrum and customer assets as a condition of the Sprint/T-Mobile USA merger. That will finally drive the company – a substantial spectrum owner, but with only a small NB-IoT network to its name so far – to build out 5G and start offering full commercial services.
“We do think it brings into play American vendors that have been left out of the traditional networks,” Ergen told LightReading in a recent interview. “So we know we’ll have a much more American-centric set of vendors than the traditional incumbents.” He offered some names that would be considered – all of them already part of Rakuten’s cloud-native 4G/5G network plan. They were Cisco, Intel, Red Hat and Altiostar.
Tom Cullen, Dish’s EVP for corporate development, has already been dropping hints to the potential suppliers, having issued a merged RFP and RFI , on the grounds that “some things we’ll be procuring in the immediate term, others we are getting ideas how to optimize”. He said the document covers the whole system Dish envisages for 5G, from core to RAN to mobile edge. The first selection is likely to be for the virtualized core network, though he thinks Dish is likely to choose just one supplier for that, rather than taking the multivendor approach of a few brave MNOs such as NTT Docomo of Japan.
In the first phase, Dish aims to keep the network asset-light. Cullen said that, since it would not have large numbers of customers on day one, small cells will be a second-phase priority. It will look to minimize equipment on macro towers – and therefore costs – by moving a substantial proportion of baseband processing to the cloud and stealing a march on rivals by creating a cloud-centric, highly virtualized platform that can behave in an agile manner.
“We are casting a wide net,” Cullen said. “There are a lot of good ideas out there from players that are not traditional wireless companies.”
Smaller providers will also be offering new opportunities to US vendors. Trends such as shared spectrum and cloud-based hosted core networks will enable more companies to afford to build wireless networks, often for a specific industry, location or application. This more diverse and fragmented service provider base will favor a more varied supplier landscape too, more akin to that in WiFi.
For instance, Gogo Wireless, provider of in-flight cellular and WiFi services, said recently that it was working with an unnamed “leading US 5G solutions provider” as it nears completion of the design phase of its 5G network. CEO Oakleigh Thorne told a second quarter results call that because Gogo’s business is specialized, “we can’t buy things off the shelf. We have to actually design the equipment with our vendors”.
In 4G, that partner was ZTE of China. “We’ve been partnered with ZTE in the past. We now have an American vendor in that role,” said Thorne.
Gogo announced in May that it planned to build a 5G air-to-ground (ATG) network to serve business aviation aircraft, commercial regional jets and smaller mainline jets operating within the USA and Canada. Gogo expects the network to be available for business and commercial aviation in 2021.
It will build its 5G network on existing infrastructure of more than 250 towers and will use unlicensed spectrum in the 2.4 GHz range, with proprietary modem and beamforming technology.