RESEARCH STRATEGY REPORT THREE CRITICAL ENABLERS …

Three critical enablers of 5G: adoption patterns in small cells, cloud-RAN and SONs

© Analysys Mason Limited 2018

RESEARCH STRATEGY REPORT

analysysmason.com

THREE CRITICAL ENABLERS OF 5G: ADOPTION PATTERNS IN

SMALL CELLS, CLOUD-RAN AND SONs

CAROLINE GABRIEL and ROBERTO KOMPANY



KEY QUESTIONS ANSWERED IN THIS REPORT WHO SHOULD READ THIS REPORT

SURVEY DATA VENDOR PROFILES

▪ 5-year forecasts for cloud-RAN,

small-cell and SON deployments

based on a survey of mobile

network operators’ (MNOs’)

build-out plans, split by region

and unit numbers.

▪ SON timelines, drivers and

barriers based on survey of

MNOs.

▪ C-RAN drivers and barriers based

on survey of MNOs.

▪ Ericsson

▪ Huawei

▪ Nokia

▪ Samsung

▪ ZTE

2

This report examines three significant market opportunities for

mobile network vendors as communications service providers

(CSPs) start to move towards 5G. CSPs’ mobile capex will remain

under pressure in the 5G era, but Analysys Mason has identified

three technologies that CSPs will invest in – cloud-RAN, small cells

and self-optimising networks (SONs). They all provide CSPs with

ways to expand LTE, migrate to 5G and reduce total cost of

ownership (TCO), especially when deployed together. Therefore,

vendors should focus on these areas.

The report is based on Analysys Mason’s deployment intention

surveys conducted with over 70 MNOs worldwide in 2017, and on

extensive interviews with vendors in these three areas.

About this report

▪ Which technologies are CSPs most likely to invest in as they prepare for

5G?

▪ How can vendors take advantage of this emerging new demand, by

providing solutions that address CSPs’ key requirements?

▪ How will SONs, cloud-RAN and densification work together to create a

next-generation mobile platform?

▪ What are the drivers or trigger points that will stimulate CSP investment

in these technologies, and how can vendors support them?

▪ How will the competitive landscape for vendors vary in these new

platforms compared to that of the 4G era?

▪ Business and product strategy executives in vendor companies that offer

or develop hardware or software for SON, cloud-RAN and small cells.

▪ Network strategy executives or CTOs within mobile operators that are

looking to understand the drivers and deployment trends of their peers.

▪ Investors in start-ups or listed companies that specialise in these

technologies.

▪ Officials in open-source or standards organisations that focus on these

technologies.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

SMALL CELLS: AN OPPORTUNITY TO IMPROVE COVERAGE

CLOUD-RAN: USING SOFTWARE TO REINVENT THE RAN

SON: REMOVING THE BARRIERS

APPENDIX

ABOUT THE AUTHORS AND ANALYSYS MASON

3



Figure 1: Operator spending worldwide by 5G technology, 2022, and CAGR of spending,

2017–2022¹

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¹ Cloud-RAN capex includes software and services, but not servers and antennas; small-cell capex

includes hardware and services; SON capex includes software and services.

Operators’ mobile capex budgets are falling, and vendors need

to focus on areas where there will still be healthy growth. These

are led by cloud-RAN software and services, small cells and

SONs, which will together be worth USD21.4 billion by 2022.

Cloud-RAN will be the biggest single opportunity for telco software

providers in the 5G era, driven by the technology’s ability to reduce

operators’ TCO and enable new services. After an initial slow start,

we expect this sector to be worth USD15.5 billion in software and

services capex by 2022 – 17% of mobile network equipment and

services spend, and half of total RAN software spend.

Densification using small cells and SON will also deliver significant

growth opportunities for suppliers, and will be critical enablers of

cloud-RAN and future 5G networks.

▪ CSPs must form partnerships with other verticals such as

enterprises in order to accelerate and derisk small-cell

deployments.

▪ Vendors must provide multi-vendor solutions, allowing CSPs to

mix suppliers, and embrace new ecosystems including open

source.

▪ Vendors must address near-term SON requirements in order to

generate revenue, while also contributing to the expansion of

the whole SON platform to support operators’ transition to full

automation.

Executive summary

CAGR

2017–2022

26%

33%

70%

Small cells

SON

Cloud-RAN

2.4bn

3.5bn

15.5bn



Figure 2: Mobile network capex by type, and capacity, worldwide, 2018–20251

5

1 Analysys Mason forecast based on survey of 78 MNOs, 3Q 2017.

CSPs will need to invest to deliver gigabit LTE and 5G services,

but network equipment providers’ (NEPs’) mobile revenue will

continue to show little sign of growth.

The telecoms industry is on the cusp of gigabit LTE and 5G roll-

outs. 5G standards are not yet finalised, but many CSPs have

engaged vendors in pre-commercial trials to showcase high-speed

data downloads among other possible 5G use cases.

However, high bitrate speeds require CSPs to substantially reduce

network TCO and delivered cost per bit. At the same time, CSPs

are burdened with past network investments that have not yet fully

amortised. This reduces their ability to invest in new

infrastructure. Several Tier 1 and Tier 2 CSPs, such as NTT

DoCoMo, have announced intentions to reduce capex and opex

spending for 5G compared with that for 4G.

Such CSPs are looking to virtualisation, network disaggregation

and telecoms software to achieve cost-reduction goals. These

trends are opening the door to new providers delivering networks

based on commodity hardware and open-source software. While

RAN capex figures will recover by 2022, MNOs will be deploying on

average 15 times more capacity per dollar.

NEPs must adapt their solutions to meet CSP needs, otherwise

they may find themselves eclipsed by challengers that do.

Challenge: CSPs need to address 5G data requirements but their

finances are under pressure from previous mobile investments

?



Figure 3: Large RAN vendors by type of technology supplied

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1 For more information, see Analysys Mason’s Network slicing: the future of connectivity in a 5G and

fibre era. Available at www.analysysmason.com/network-slicing-connectivity-rma16-rma18.

There are some bright spots in the investment landscape, which

will provide opportunities for vendors that address them

skilfully.

Despite the financial challenges faced by CSPs, vendors have the

opportunity to address CSPs’ requirements to enhance cost

efficiency and improve the user experience, while protecting their

own revenue streams.

The key technologies in which vendors need to invest will augment

network capacity at lower TCO, improve the user experience, and

support flexible architecture. These solutions are as follows.

▪ Small cells to increase network capacity and spectrum reuse,

particularly in indoor venues or enterprise environments.

▪ Cloud-RAN to separate the base station radio into its

components, and virtualise and centralise the processing,

which will enable resources to be allocated flexibly.

▪ SONs to optimise the radio and avoid interference between

macro and small-cell sites. The use of AI will further automate

the process, which is particularly important because a large

number of IoT devices are set to enter the market.

These technologies will lay the foundation for future 5G networks

and enable use cases such as network slicing.1

Solution: Vendors have developed several solutions that will

increase capacity and drive down TCO for CSPs on the road to 5G

RAN

vendors

SON vendors

▪ Ericsson

▪ Cellwize

▪ Huawei

▪ Nokia

▪ Viavi

Small-cell vendors

▪ Altiostar

▪ CommScope

▪ Parallel Wireless

Cloud-RAN vendors

▪ Ericsson

▪ Huawei

▪ Mavenir

▪ NEC

▪ Nokia

▪ Samsung

▪ ZTE

Source: Analysys Mason


© Analysys Mason Limited 2018 7

Recommendations

1CSPs must form partnerships with other verticals, such as enterprises, venues and shopping centres, in order

to increase the speed of small-cell deployments and de-risk the investment.

Good indoor cellular connectivity and capacity have become key differentiating factors for CSPs, but limited ARPU

growth is making it difficult for CSPs to invest in these areas. Without small cells to improve cellular connectivity

and capacity, CSPs risk losing customers to competitors. CSPs and enterprise owners must establish partnerships

that will improve the take-up of small cells and limit the risk of the investment for CSPs.

2Vendors must provide multi-vendor solutions cloud-RAN solutions that will enable CSPs to mix suppliers.

MNOs understand that 5G cannot be deployed in the same manner as previous generations of mobile technology.

Therefore, they have been working with the telecoms industry for a number of years to create new open and

vendor-agnostic RAN solutions that will enable them to reduce the TCO of RAN.

3Vendors must address near-term SON requirements in order to generate revenue, while also contributing to

the expansion of the whole SON platform to support operators’ transition to full automation.

For the first time, CSPs regard SON as a critical enabler of their future network plans, including the gradual move

to highly automated, zero-touch 5G networks. This greatly enhances the opportunity for SON vendors, provided

they can offer a clear roadmap that delivers immediate cost and efficiency benefits to the operator, but also leads

to a broader platform that will significantly improve on the CSP’s return on 5G investment.



CONTENTSCONTENTS

EXECUTIVE SUMMARY

SMALL CELLS: OPPORTUNITY TO IMPROVE COVERAGE

CLOUD-RAN: USING SOFTWARE TO REINVENT THE RAN

SON: REMOVING THE BARRIERS

APPENDIX

ABOUT THE AUTHORS AND ANALYSYS MASON

34



About the authors

Caroline Gabriel is a senior contributor to Analysys Mason’s Next-Generation Wireless Networks research programme. She contributes to

Analysys Mason’s published and custom research content and works directly with our research clients to advise them on wireless network

trends and market developments. Caroline has been engaged in technology analysis, research and consulting for 30 years, and has focused

entirely on mobile and wireless since 2002. As co-founder and research director of Rethink Technology Research, Caroline has developed a

research base and forecast methodology based around deep contacts with mobile and converged operators worldwide.

Roberto Kompany (Senior Analyst) is a member of Analysys Mason’s Telecoms Software and Networks research team and is the lead analyst

for the Next-Generation Wireless Networks research programme focusing on strategy and market research. Prior to joining Analysys Mason,

Roberto worked for Dixons Carphone, where he analysed the effect on the business of shifts in the telecoms market – for example, in terms of

mergers, operator KPIs and technology – in Europe and the UK. Previous positions included consultancy, where he helped a variety of clients

worldwide with mobile-related projects, such as a capex reduction and developing a 5-year strategy for an incumbent’s wireless infrastructure.



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PUBLISHED BY ANALYSYS MASON LIMITED IN MARCH 2018

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RESEARCH STRATEGY REPORT THREE CRITICAL ENABLERS …

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