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The 5G deadlines just keep getting nearer, regardless of the progress of real standards or spectrum policies. While Verizon says it will start testing '5G' in the field next year, Nokia is promising commercial 5G hotspot equipment the year after that, with an eye to the operators which want to deploy at least limited services as early as 2019.
Verizon talked about its plans at its 5G Technology Forum recently and has now set up dedicated teams, with chief information and technology architect, Roger Gurnani, saying the carrier feels "a tremendous sense of urgency to push forward on 5G".
The carrier's need for a network which offers more capacity and also improved performance for emerging business models in the internet of things (IoT) may indeed feel urgent. Its normal head-to-head with AT&T is only one of its challenges as the large MSOs get more aggressive about wireless with their WiFi-first networks, and as Verizon tries to combat them, and the over-the-top players, by becoming a content provider.
In this rapidly changing market landscape, it is notable that Verizon is relying on its usual suppliers for its 5G field trials. It said it is working with Ericsson and Alcatel-Lucent, its 4G RAN providers, as well as Cisco, Nokia and Samsung, plus the inevitable Qualcomm on the device side. Operators talk a lot about 5G enabling them to move towards a more diverse ecosystem and to introduce new innovators to their supply chain, but there is little sign of that here.
The technologies will be tested initially in sandboxes in the Verizon innovation centers in Waltham, Massachusetts and San Francisco and the operator is the first in the US to announce such activities, though several Japanese and Korean counterparts are likely to be ahead - Softbank and SK Telecom have already conducted field trials.
Rima Qureshi, Ericsson's chief strategy officer, said the move to accelerate 5G innovation had been very much Asia-driven and that it was "exciting to see a US company accelerate the rate of innovation".
The Verizon 5G Technology Forum also includes venture capital groups that are focused on emerging technologies and which Gurnani says account for over $50bn a year in R&D, technology investments and patents.
Meanwhile, Nokia Networks says it will launch 5G-ready cell sites with 10Gbps capacity by 2017 to offer fiber speeds to users. The Finnish firm said the equipment will be targeted at service providers who initially want to use 5G to address areas of congestion, or or homes which lack fiber in the last few meters. The small cells will typically be placed on lamp posts to fill those gaps.
Nokia said the equipment will be software upgradeable to 5G, however the final standards look, because it is built around virtualized baseband software, which will also make the product easily adaptable for other use cases such as M2M.
The company has been talking a lot lately about designing highly flexible platforms throughout the network, which can be readily adapted for future, undefined standards - although those with memories of WiMAX and early WiFi may wonder if it will really be that simple.
Nokia will trial its kit next year as a way to bring fast broadband to locations close to fiber, but lacking superfast connectivity in the final link. The company sees this as a low hanging fruit in terms of a real application for 5G. EVP of mobile broadband, Marc Rouanne, said: "We have all the building blocks in place to make the first concrete 5G use case a reality as early as in 2017. This marks an important foundation for shaping the future of mobile broadband and enabling a personalized gigabit experience for the broadband subscribers in the comfort of their home."
BY CAROLINE GABRIEL
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The rumor that Nokia and Alcatel-Lucent would merge has come around many times in recent years, but the story hasn't got any more attractive with repetition. But now it is real, with Nokia confirming reports that it is in "advanced discussions with respect to a potential full combination" with its French rival.
Nokia said any deal "would take the form of a public exchange offer by Nokia for Alcatel-Lucent". The Finnish company currently has a market capitalisation of €29bn, and ALU's is €11bn. Analysts estimate that ALU could be worth €4.50 a share, or a total of €12.7bn ($13.4bn).
Of course, a deal would give the enlarged Nokia the scale that may be required to stay ahead in the pressurized telecoms equipment market. But it will also create massive integration challenges which could distract the new entity for a couple of years during a time of critical transition among carriers, in particular towards software-defined networking (SDN).
In the early stages of that new phase, Nokia looks well positioned in terms of product offering and philosophy. There seemed to be a real strategic option to move gradually away from the rapidly commoditizing hardware businesses, relying on partners for those (as it has already done in some areas like microwave backhaul and WiFi), and become a leader in carrier software - a smaller company, but a profitable one focused on the key area of investment for service providers in the later years of the decade.
But Nokia seems determined to cast off its long history of radical reinvention and cling to the 'size is all' mantra which has recently driven the network equipment sector. Combining with Alcatel-Lucent would give it combined revenues of €26bn, based on last year's performance, just ahead of Ericsson's €24.4bn.
It would see Nokia abandoning the strategy which has finally brought it to the brink of turnaround - doubling down on mobile broadband alone - since it will take on ALU's significant wireline business.
The mobile-only approach has seen the Finnish firm sell off its devices business (and possibly, according to other reports this week, its Here mapping unit). The refocus has also seen it divest many non-core businesses, as well as invest in smaller firms with technologies that will be important for the two dominant mobile growth drivers - SDN/virtualization and '5G'. Nokia has been prominent in the early development of both, moving early into software-driven network platforms under its Liquid banner, and demonstrating R&D breakthroughs in anticipated 5G approaches such as millimeter wave spectrum and massive MIMO.
The decision to sacrifice size and some revenues for profits and differentiation has brought Nokia close to recovery after years of losses and serial restructurings. Just at the moment when CEO Rajeev Suri might claim tentative victory, he seems set to throw it all away. Yes, ALU would bring Nokia greater scale to withstand the economics of Ericsson and Huawei; and most importantly it would bring the French firm's most impressive product line, its core and edge routers. That would enable Nokia to go after a wider range of service providers, as Ericsson is doing, and - importantly - to target the rising tide of convergence between MNOs and wireline operators, offering a complete portfolio without relying on partners.
But the risks and downsides are daunting. Nowhere will Oscar Wilde's aphorism, that second marriages are the triumph of hope over experience, be more apt. Both the would-be partners have come through exceptionally badly managed marriages which almost killed the bloated companies they created. The merger of Alcatel and Lucent in 2006, and the joint venture created between Nokia and Siemens in the same year (Siemens exited in 2013), have both become bywords for the wrong way to approach mergers, and they gave Ericsson and Huawei significant leeway to step into the breach and consolidate their shares. Both those deals were panic-driven, with traditional companies clinging together for warmth in an increasingly cold competitive climate, but without any clear vision of how they might evolve towards the realities of the future market. Sadly, nothing different could be said of a Nokia-ALU merger.
Amid the inevitable pain of the integration process, there is real risk that the new strategies both firms have put together will be lost. Logically, Nokia's mobile broadband should fit beautifully with ALU's approach. Under CEO Michel Combes, the French firm has, like its suitor, divested many units. It has drilled down on all-IP infrastructure plus SDN for growth, and on access (including mobile) for cash. On the wireless side, it generated €5bn in revenue last year and has a stronger US base than Nokia. These roadmaps seem complementary, but it is very doubtful that such new and therefore fragile strategies will be well combined by two still-traditional firms which are only just emerging from traumatic restructurings.
Nokia shares fell by almost 7% in Helsinki on its statements, but ALU's leapt by 14% in Paris, perhaps reflecting that investor confidence in the Finnish firm, especially since it addressed its cash shortage via the Microsoft deal, is higher than in ALU, and therefore the risk of a reversal of fortunes is higher.
One critical factor is how profitable a combined company could be in the short term. There would be medium term economies of scale, presumably including further large-scale cutbacks, but both have only tentatively returned to the black in the past year so the short term outlook is hard to predict. In 2014, Nokia's operating profit was €170m (its net profit was €1.2bn thanks to tax benefits), while ALU achieved an operating profit of €572m but a net loss of €83m. By contrast, Ericsson had an operating profit of SKr16.8bn (€1.8bn) and net income of SKr11.1bn.
As well as profit considerations, there will be significant regulatory review which could include intervention by the French government, which is very reluctant to see national businesses sold off. The balance of power between the French and US elements of Alcatel and Lucent was a complicating factor back in 2006 (the insistence that CEO Pat Russo should be based in Paris was blamed for weakening ties to key customers like Verizon, for instance). France may have moved on from former president Chirac's comments that Finland has the worst food in the world, but the administration of Francois Hollande will certainly scrutinize any bid for ALU carefully and has a track record of trying to block corporate mergers. Alcatel traces its roots back to 1898 and has been a flagship French firm, though it was privatized in the 1980s.
by Caroline Gabriel, Research Director Maravedis-Rethink
Big wireless suppliers try to influence operators' and regulators' agendas as they dream up visions of the next generation.
While the big network vendors have mainly confined their MWC announcements and previews to relatively short term developments, none of them could resist breathing the '5G' word, seeking to convince their audiences that they had somehow stumbled on the secret ingredients for the next generation of wireless, well ahead of the actual standards bodies.
Ericsson promised to demonstrate "fundamental 5G functionality" in Barcelona, to support both human and machine applications. The Swedish vendor even unveiled results from its 5G testbed, which it says has performed the remarkable feat of already achieving two 5G milestones (even before anyone knows what 5G will be). The testbed includes base stations and concept devices operating in the 15GHz band, indicating the importance most vendors are placing on high frequency spectrum for next generation standards.
Of course, like all the vendors, Ericsson hopes that by calling its R&D efforts '5G' it will improve their chances of being included in the standards, or at least the basic concepts, which do go on to underpin the next generation.
Its two supposed milestones are 5G/LTE dual connectivity and 5G multipoint connectivity, the company said. The first supports a 5G device moving between LTE and the new network, establishing simultaneous connections with both before seamlessly handing over, in order to smooth the user experience. The second allows the 5G device to connect to two 5G base stations simultaneously, improving bit rate performance with multiple downlink streams, as well as signal strength and resilience.
Both of these are 4G concepts, adapted for the supposed characteristics of the new generation network (ultra-small cells, ultra-low power, support for millions of sensors, and so on). As in 4G, multipoint connectivity will be particularly important to enable multilayer HetNets with macrocells, small cells and WiFi interworking seamlessly.
Nokia, too, has been giving a glimpse of what 'future 5G' demonstrations it will make in Barcelona. It will show off radios running in high frequency millimeter and centimeter wave bands (3.5GHz to 70GHz), which will boost capacity, and will be combined with new frame structures to support latency down to single-digit milliseconds. These will be particularly focused on the IoT.
Its good customer Korea Telecom will be partnering with Nokia in the MWC 5G and IoT demonstrations and the operator's head of networks, Seong-Mok Oh, said: "I hope that the strategic partnership with Nokia, including the joint demonstration at MWC 2015, will lay a foundation for the two companies' leadership position along the journey towards an IoT world."
Nokia has also been working on massive MIMO trials with KT's rival, SK Telecom, though these are looking to a shorter timeframe than 5G, initially at least. The two companies said this week they had achieved peak downlink speeds of 600Mbps using 4x4 MIMO. They first got to 300Mbps by implementing the MIMO array in a 20MHz block of spectrum, and then doubled that speed by doing the same in a second 20MHz chunk and aggregating the two. Devices with four antennas and carrier aggregation support have not been developed, so Nokia used a simulated device supplied by test and measurement specialist Aeroflex.
And 4×4 MIMO will be challenging to deploy in a commercial network, because of the need to squeeze four antennas into a small device, and also because it is difficult to maintain the right RF conditions for the 4x4 airlink, so real world user experience may be patchy.
Japan's NEC promises to outline its 5G vision with demonstrations and three white papers outlining what it believes will be the key enabling technologies in 2020 and beyond. These focus on the access network, the backhaul, and massive MIMO, particularly its development of a 'massive-element antenna' for future small cells.
Like Huawei, its post-2020 vision is heavily geared to machine services, from intelligent transport to the use of big data to save energy consumption, as well as next generation consumer multimedia offerings and ultra-accurate logistics systems. The heart of this platform will be SDN, virtualization and Cloud-RAN, all areas where NEC has engaged in advanced R&D and trials.
And Samsung says it will show off three 5G "technology candidates" at MWC. Chang Yeong Kim, head of the DMC R&D Center at the Korean firm, said in a statement: "We consider 5G to be a transformation of how networks are constructed and how radio resources are used. To support 100 times greater throughputs at a fraction of the latency, we need to consider more than just a single network component; we need to look at how everything works together."
The three candidates highlighted by Samsung are a nearly-commercial implementation of wireless backhaul in 60GHz spectrum, combining active and passive radio steering techniques to increase the range of the radio without exceeding unlicensed-band power output limits. An active antenna array enables a beamformed radio signal to be directed at a passive lens antenna, which further concentrates the radio signal toward a fixed point with high precision and multi-gigabit data rates.
The second technology is 'full dimension MIMO' (FD-MIMO). Current MIMO solutions have antennas configured to form beams only horizontally. Users who are at the same horizontal angle from the antenna (even at different vertical angles) still receive the same signal and continue to share radio resources. With the introduction of FD-MIMO and 2D-array antenna technology, wireless signals can be adaptively beamformed to specific users in both horizontal and vertical domains. That delivers a more targeted signal to more than eight users per cell at a time and is good for high rise buildings, stadiums and other crowded locations.
Samsung said it is leading the standardization of FD-MIMO in the upcoming 3GPP Release 13.
It also says it will demonstrate peak stationary data rates of 7.5Gbps - or 1.2Gbps when moving at 100 kilometers per hour - using 28GHz millimeter wave spectrum and Samsung's Hybrid Adaptive Array antenna technology.
However, amid all this cleverness, Peter Merz, head of radio systems technology and innovation at Nokia Networks, injected a note of realism in a recent interview with Telecom.com. He said: "I want to stress that 5G is not around the corner. We're expecting the first commercial roll-outs and deployments starting in 2020. We still have five years to go in order to research technologies, go through standardization, free up spectrum, verify the technologies and then iron out specifications in order to have a ready-made, lean-cut, efficient technology that can be deployed by operators starting in 2020. 5G is like a marathon, it's not a race."
We can only hope that vendors are bearing such words in mind in Barcelona and focusing most of their efforts on real world requirements for 2016 to 2018, even while they seek to influence operators, standards bodies and regulators building their long term plans.
Under CEO Nadella's reorganization, 18,000 jobs will go, 12,500 former Nokia employees, as role of devices is squeezed
Microsoft may be increasingly multiplatform with its cloud applications and mobile enterprise tools - the heart of Nadella's strategy - but it still wants to offer an end-to-end, Windows-based solution for the substantial base of enterprises which trust that approach. Nadella may know that 'Windows everywhere' is no longer a viable strategy, but that doesn't mean Microsoft will not still push its own OS as a superior option, enhancing it and reducing its licensing fees. So the mobile devices strategy, after flirting with Android, will now be refocused entirely on Windows Phone.
Here, Microsoft will pursue a 'bottom-up' approach, seeking to make WP8 a serious competitor to Android on low end devices and attract OEMs in that space, and investing in its hubs in Brazil and Vietnam.
That will involve the axing of the Nokia X Android line, despite recent upgrades to it post-acquisition, and also Nokia's elderly Series 40 platform, which gained its second wind in the past couple of years by powering the Asha range of 'smart featurephones'. The shift to Windows Phone-only does remove confusion for OEMs, and sees Microsoft doing what it should have done all along - optimizing its smartphone OS for the segments where there is still significant growth, in emerging markets where the Nokia brand is still strong.
It is almost certainly too late for Microsoft to gain mass market share for Windows Phone, despite its attractions and differentiated experience, at this stage, and a bolder Nadella might just have killed it - as surely he will one day. After all, if he was serious about being a high volume smartphone maker, he would have stuck with Android and Nokia X. So soon after the acquisition of Nokia, however, it would have angered shareholders to make a complete U-turn, effectively telling them Microsoft had wasted its money. So, like Google with Motorola, Microsoft will hang on for now and seek to extract the jewels from its purchase, such as R&D inputs to Xbox and Surface, its more important hardware activities.
And Android activity will not be dead of course - Microsoft is increasingly releasing business and consumer productivity apps, and web services, for Android and iOS ahead of its own operating systems.
The change of emphasis in devices will cost 12,500 former Nokia employees their jobs, in a total cull of 18,000 staff (14% of the workforce) across Microsoft, designed to meet Nadella's objectives of streamlining and reducing time to market. A memo from Stephen Elop, former Nokia CEO and now head of a much-reduced Microsoft devices kingdom, said that the cellphone unit will now target two markets - "future high end Lumia products" and "more affordable devices". R&D for both lines will be driven out of Finland, from the former Nokia centers in Salo and Tampere.
The high end products - which presumably will, one day, converge with, or replace, Windows RT - will be delivered "in alignment with major milestones ahead from both the Windows team and the Applications and Services Group", which likely means a new version of WP and Office early next year.
At the low end, handset design will focus on "driving Lumia volume in the areas where we are already successful today in order to make the market for Windows Phone", which suggests a concentration of the pared-down resources on Nokia's traditional strongholds such as India, but also on South America via Brazil. Microsoft has new manufacturing hubs in Vietnam and Brazil but will reduce engineering in Beijing and San Diego, though both sites will continue to have "supporting roles", the Chinese team in developing affordable devices in Beijing and the California group in specific US requirements. Two more Nokia centers in Finland, Espoo and Lund, will still operate and will focus on application development, Elop said. Microsoft will shut down the Nokia plant in Hungary, which employs about 1,800 people.
Finnish firm's second infrastructure acquisition with Microsoft cash focuses on indoor small cell and DAS deployments
Nokia expects to close its SAC Wireless deal in the third quarter, though the price was not disclosed. By strengthening its hand in the indoor market it hopes to improve its position in the US, where it has fared poorly in the first wave of major LTE deals, compared to Ericsson and Alcatel-Lucent.
However, as north American operators start to complete their initial, coverage-oriented LTE build-outs, their second investment phase will focus heavily on adding capacity, often via a small cell layer, and on improving indoor coverage. By acquiring SAC, Nokia gains an immediate entry point, since the firm claims all the major US cellcos as customers for its services. These include the design, installation and maintenance of DAS (distributed antenna system) networks for enterprises, venues and government bodies, though it will also extend Nokia's small cells proposition.
Indoor coverage is a critical business issue, as the increase in mobile data usage inside buildings is faster than that outdoors, and mobile-first patterns mean enterprises need fully reliable voice coverage too. Those challenges have led all the big OEMs to expand their indoor offerings, both in terms of products and services - as seen in Ericsson's twin announcements of its Radio Dot distributed radio system, and an 'as a service' proposition for indoor deployments.
In many ways, the services element - particularly site acquisition and backhaul provisioning - is a greater source of competitive advantage than the cells and antennas themselves. SAC, for instance, claims to bring Nokia particular expertise in site development; and in 'self-perform' implementations of indoor and outdoor small cells and DAS.
Some expected Nokia to use its cash windfall, from the sale of its devices division to Microsoft, to make a huge purchase, such as Alcatel-Lucent. So far, it has stuck to buying smaller companies which fill gaps in its core platform, rather than extending its portfolio significantly - in line with last year's restructuring to become a firm entirely focused on mobile broadband. Recently, Nokia also acquired Mesaplexx to strengthen its small cell technology.
Ricky Corker, EVP north America for Nokia, said in a statement: "With SAC Wireless' capabilities complementing our own inhouse expertise, we are well positioned to bring enhanced quality and increased end-to-end delivery efficiency to our customers. No other infrastructure provider is offering this level of proven services."