Ericsson

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Ericsson

According to our research, some of the top 5G mobile network providers in the United States and Europe that may act as competitors to Ericsson are Verizon, AT&T, Sprint, T-Mobile for the former, and Nokia, Deutsche Telekom, Orange, Vodafone, and BT for the latter. These networks were chosen as they are consistently listed as major telecom companies in various articles. The American companies are mentioned in CNet and RCR Wireless articles regarding upcoming 5G carrier plans. The European companies, while more diverse and variable, are mentioned consistently in articles lamenting Europe's lag in 5G services. The aforementioned European companies are listed as major providers, with Nokia and Ericsson being described as "Nordic telecom giants". The list of Ericsson competitors in both the US and Europe can be found in the spreadsheet accessible here.

Our research has also revealed several challenges faced by the 5G mobile network industry in both the EU and in the United States. The European industry's main struggles appear to be in funding and policy-making, which also encompass the sociopolitical and financial landscape of the industry. Conversely, the American industry struggles with security, standards, use cases, transformation and IPv6 and massive IoT. Both the US and European industries face challenges with spectrum and network densification. A separate section towards the end of the report will address Ericsson's specific challenges.

METHODOLOGY
There was no preexisting information regarding the challenges each of the major players in the European and American 5G industries face individually. We began by searching for challenges specific to the industry leaders named in the spreadsheet but found nothing useful. We consulted sources such as Market Realist, Dealerscope, Telecoms Tech News, Forbes, FTC, Medium, Marketing Insider, Deloitte, KPMG, Mckinsey, BCG, and others, but were only able to find general industry challenges, with some cited examples. Furthermore, information on the financial, political, and cultural landscape of the industry in both regions was not found. This may in part be due to the very broad parameters of these terms. Politics and culture, in particular, are broad categories and may have vastly different definitions across regions and context. Furthermore, the meaning of culture in the telecommunications context remains unclear and is not adequately discussed in sources. However, we were able to find general industry challenges and concerns, as well as some financial information that may prove useful. In this report, we will outline these challenges for both the European and US industries, with examples from specific companies. We will also address key players in the industry, some of their general challenges, and insights into who may be "winning" the 5G deployment race.

FINANCIAL ISSUES - EU
According to a 2017 ARCEP report on the challenges faced in implementing 5G networks in Europe, the technology required for 5G networks "will require a great deal of money and a great deal of work". Furthermore, the European Telecommunications Network Operators' Association (ETNO) advocated funding for 5G Research and Development in 2016, to "ensure comprehensive development of the components of 5G infrastructure". 5G R&D is extremely ambitious; 5G technology aims to provide the same "superfast mobile internet" provided by 3G and 4G technologies, but also aims to target vertical markets. Vertical markets entail several segments, such vehicle connectivity, factories, smart cities, medicine and healthcare, and "smart grid flow monitoring and management", which includes utilities like electricity, gas, and water. Due to the massive potential of 5G, funding has remained an ongoing question and hurtle in the European industry.

Lack of funding has also created some level of unevenness. For example, the Nordic carrier Telia is looking to build 5G networks in parts of Stockholm and Tallinn this year; however, because the entire region lags technologically behind international competitors, comparable service and technology shouldn't be expected until 2025. According to a Telecom TV article, a "European Commission study into socio-economic benefits of 5G" concluded that the "total cost of 5G deployment in 28 EU Member States could reach €56bn in 2020". However, this may be offset by a potential €113.1bn revenue by 2025, and the creation of 2.4 million jobs. Thompson Reuters noted that
"the MSCI Europe Telecommunications sector has declined 11.3% over the last year alongside double-digit declines in BT and Telefonica". Nevertheless, companies such as Ericsson remain optimistic that investment in 5G could change this. However, a critical Mobile Europe article argued that vendors have been over-hyping the potential of 5G "due to financial pressures" and due to concerns over decreasing revenues. The article notes two ongoing battles: one to justify funding and investment necessary for successful 5G deployment and a second in "tempering hype" about what 5G might actually end up delivering to consumers.
POLICY-MAKING - EU
The VP of "Ericsson European Affairs Office in Brussels" Peter Olson advocated for 5G development, arguing that 5G would be the "foundation for realizing the full potential of the networked society". He stressed the potential of 5G to pave the way for innovation, expansion into new markets, and the development of new revenue streams with "new business models". Furthermore, 5G is expected to have increased flexibility, "lower energy requirements", better bandwidth, security, data rates, and reliability. Due to the massive networking potential of 5G, Olson advocates for flexible and supportive regulations.

However, there is no uniform approach to regulatory challenges in the EU, and debates continue among industry leaders. A "recently piloted EU action plan", and an inter-institutional agreement for the use of 700MGz mobile services are cited as examples of the "high political and legal importance of this new wave of technologies for the European economy and society". Eva Kaili, the chair of Parliament’s Scientific and Technology Options Assessment (PSTOA), stressed the importance of standardization and policy-making initiatives, as the EU has an opportunity to gain a competitive advantage globally if it is able to define this standardization of 5G technologies. The 5G Infrastructure Association has also asserted the importance of "avoiding over-prescriptive regulation of network traffic management practices", as they may be rigid and compromise the quality of 5G services, their development, and innovation.

According to a Tech Radar article from March 2018, the European Parliament, Council and Commission reached a "provisional agreement on new telecoms and spectrum rules". The Parliament agreed on a legislative resolution that focuses on the role of the EU in "securing enough spectrum" to launch and develop 5G technologies. This agreement and other steps by the EU Parliament are meant to "accelerate 5G legislation" and help introduce 5G networks in Europe "as of 2020". The EU Parliament is also working with US Congress to ensure that "legislation is suitable for the rollout of 5G networks". However, carriers remain tentative in rolling out 5G on the basis that regulations and finances are still too uncertain. An EU Parliament report includes several suggestions moving forward for the implementation of 5G technologies in Europe: more precise definitions of goals; research for a new, compatible infrastructure; "shorter-term 5G applications for small cell networks"; new spectrum policy.

SMART SPECTRUM CHALLENGES - UK SPECIFICALLY
Defining spectrum is a key challenge for the implementation of 5G technologies. It must be determined which bands will be best to enable 5G in Europe, and those are generally thought to be 700 MHz, 3.4-3.8 GHz, and 24.25-27.5 GHz. However, because spectrum is finite and expensive, it needs to be used more effectively to deal with the high demand in urban centers. For this, roadside towers would not suffice, so the "installation of hundreds of thousands of street-level outdoor small cells" may be a solution to provide coverage. This too requires a massive financial investment and the complete re-working of infrastructure.

MIMO AND DARK FIBRE SUPPORT - EU
More in line with the issue of changing infrastructure, the European industry must consider how it will successfully support new technology such as multiple input/multiple output (MIMO), and provide fast, reliable service and connectivity. Furthermore, the industry must think about how MIMO will "work around dark fibre connections", which are vital in 5G network deployment. This will call for "denser networks with greater coordination" in order to support the increase in mobile data, the jump in M2M activity, and the continuous implementation of new services. Dark fibre will become necessary for 5G to thrive.

KEY PLAYERS AND CHALLENGES - EU
According to the previously mentioned European Parliament report, the following are key players in the 5G network industry:
1. Mobile network operators (MNOs)
2. Equipment supply industry
3. Standards development organizations (SDOs)
4. Research funding entities
5. The academic research community
6. Policy makers and regulators
7. Media content providers and distributors
8. W web services and computer industry players

According to the report, MNOs, in particular, are key players in the European market, as well as international operators with sizable marketing and R&D budgets. These include: "Orange, Deutsche Telekom, Telefonica, TeliaSonera, and Vodafone". Key equipment suppliers include global powerhouses such as Ericsson, as well as Nokia, which remains tethered to the EU. However, the report also cites a series of challenges for these players, including: unclear usable ranges; building penetration; unclear business models; uncertainty over the possibility of "killer apps"; funding sources; integration of MNO business models with existing plans and offerings; whether to target the consumer market or business market (for IoT); willingness of consumers and businesses to spend with increasingly tight budgets.

WINNERS/LOSERS - EU
Based on an industry analysis article, Deutsche Telekom AG, which owns T-Mobile in Germany, appears to be leading the industry. This year, they announced a plan at Mobile World Congress to "launch 5G across the entirety of its network but without saying when". However, the company's CEO has mentioned concerns regarding the cost of "rolling out 5G technology", which he estimates to be between €300 and €500 billion for all of Europe. Regardless, it is likely that most operators would not be able to accomplish that level of "cross-border consolidation". Furthermore, Orange, which remains one of the region's most successful companies, claimed that it had no interest in pursuing this kind of consolidation. Nevertheless, Orange is planning to invest in 5G in the coming years.

Conversely, Nokia has been criticized for failing to sell 5G convincingly to the regional telecom companies. The Nokia chief technology officer was reportedly "not optimistic about 5G in Europe". The article noted his claims that Europe's telecom companies are lagging behind Asia and North America, with less investment in 5G technologies. The CTO of Nokia attributes this to "the region's regulatory authorities for their lack of investor-friendly politics". Nevertheless, Orange and Vodaphone have denied that the European industry is falling behind.

US INDUSTRY CHALLENGES
According to one article, there are a number of key challenge areas that are not adequately being dealt with, such as lifecycle management, edge computing, radio access network architecture, and network slicing. These challenges are shared by all major companies in the US industry, however, Verizon has made attempts to address these issues by experimenting with open source technologies to "build a software-defined network". Furthermore, according to a Deloitte industry report, there are 6 main challenges that need to be addressed in order for 5G deployment to go smoothly:
STANDARDS
At the pace things are going, operators are beginning 5G activities before standardization has been achieved. In this instance, use moves faster than standards are established, which creates "risk of divergence in 5G deployments.

USE CASES
Deloitte identifies this issue as one of trajectory; the industry must develop a definitive idea of where the "intersection between economics and long-term infrastructure" lies for 5G deployment in 2020.

TRANSFORMATION
Another challenge faced by operators is to transform their "current OSS and BSS platforms into a convergent MANO solution" across the overall network.

SPECTRUM
Not unlike the European situation, spectrum availability remains uncertain. Brands that are below 6GHz and above 24GHz are not yet defined, and there remain questions regarding spectrum farming. An article by Wireless Week reiterates this issue, citing three major concerns. First is the issue of how to "exploit new frequency bands", particularly at higher frequencies. 5G networks will attempt to exploit those above 6GHz, and up to 25-50GHz; however, there are complications in those high ranges, and operators have "limited experience working with them". Secondly, the article points out that there will be differences in spectrum assignments based on region, which creates a need to "support different frequency bands and band combinations" that will affect "device complexity and cost". Thirdly, the use of "unlicensed spectrum" may be an attractive way to boost capacity to meet 5G data needs. However, this is also challenging, as it requires operators to "integrate and optimize the unlicensed spectrum in their 5G networks".

IPv6 & MASSIVE INTERNET OF THINGS
IPv6 adoption is necessary to support IoT. Operators will have to guarantee this support in their networks in order for the "full spectrum of 5G possibilities" to be maximized.

SECURITY
The 5G architecture will be more susceptible to hack, which creates extra security concerns and greater attention and investment in this issue.

NETWORK DENSIFICATION AND SMALL CELLS
Although this particular issue is not mentioned in the Deloitte report, it is brought up in the Wireless Week article and overlaps with some of the European industry issues. The article explains that higher frequency bands will require more density in the network for more transmission points, base stations, and smaller cells. These will add a plethora of requirements for "transport and backhaul networks" in particular. These are challenges that will impact both technology and business practice. Operators will have to partner with "building owners, municipal governments, utility companies" in order to deploy these dense networks.

KEY PLAYERS AND CHALLENGES - US
We were unable to find any preexisting information regarding key players in the American 5G industry. However, based on our research on the European front, we can reasonably assume that the key players remain generally consisting, and will include the following:
1. Mobile network operators (MNOs)
2. Equipment supply industry
3. Standards development organizations (SDOs)
4. Research funding entities
5. The academic research community
6. Policy makers and regulators
7. Media content providers and distributors
8. W web services and computer industry players
Furthermore, we can assume that the challenges experienced by these players will also remain consistent.

WINNERS/LOSERS - US
Currently, Sprint and AT&T appear to be leading the race with 5G deployment, and potentially "over-extending themselves with both fixed and mobile 5G deployments". Sprint is currently aiming to launch its 5G mobile network towards the end of 2018, putting it at least a year ahead of other networks. Financially, AT&T ranks first with a market cap of $249.3 billion and sales of $163.79 billion as of 2017. Verizon follows with a market cap of $198.4 billion and sales of $125.98 billion. Lastly, Ericsson lags behind with a market cap of $21.4 billion and sales of $26 billion.

CUSTOMERS - US
While we were unable to find customer demographics for each of the major companies, T-Mobile will allegedly target cellphone users before businesses in order to "better align with its customer base". The company hopes to reach a "clearing target of 250 million PoPs by the end of 2019".

ERICSSON
As noted earlier, Ericsson has experienced financial struggles and is remaining optimistic about the potential accompanying the deployment of 5G networks. However, many have remained skeptical, with Rethink Technology Research giving a "gloomy prognosis". Nevertheless, Ericsson announced two new products in February 2019: one that completes its 5G platform and launched in 2017, and a new 5G RAN commercial software "based on the 3GPP 5G New Radio standards", which will launch at the end of 2018.

According to an Ericsson report, respondents to surveys indicated that challenges to adopting 5G in their respective organizations included worries over data security, privacy, lack of standards, and implementation. These are similar to some of the challenges indicated by the Deloitte report. 79% of respondents claimed that data security and privacy were a major concern. Lack of standards constituted the second major concern, at 76%, and "challenges to end-to-end implementation" constituted the third major challenge, at 69%.
CONCLUSION
Our research has revealed several challenges faced by the 5G mobile network industry in both the EU and in the United States. The European industry's main struggles appear to center around funding and policy-making. These challenges also encompass the sociopolitical and financial landscape of the industry. Conversely, the American industry struggles with security, standardization, use cases, transformation and IPv6 and massive IoT. Both the US and European industries face challenges with spectrum and network densification. Ericsson shares many of these challenges, with the majority of surveyed respondents listing security, privacy, implementation, and standardization as major concerns.
Sources
Sources