Nov. 19, 2018

LightCounting analysts share their thoughts after Mobile World Congress Americas in Los Angeles and Broadband World Forum in Berlin, Germany

As the number of fixed broadband subscribers around the world climbs past one billion, service providers are preparing their networks to handle not just millions of homes, but billions of mobile consumers and trillions of connected devices.

The Broadband Forum announced the billion-home milestone during its Executive Workshop at Broadband World Forum 2018 in Berlin in October. In the second half of 2018, according to estimates from Point Topic, the one billionth fixed broadband subscriber was signed up, probably in China. One billion subscribers is around half of all households in the world.

Figure: An unofficial measure of the size of the internet, in 2012 the Carna botnet counted about 1.3 million IP addresses that were reachable and in use.

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Source: Carna botnet IPv4 map 2012, census2012.sourceforge.net

The scale of the challenge in connecting another billion homes as well as entire populations of mobile phone users and other internet-connected “things” cannot be underestimated. The range of topics being presented gave an indication of what keeps telecom executives awake at night. Topics ranged from progress in marrying open software with open standards to accelerate fixed and mobile convergence to managing (and hopefully monetizing) in-home WiFi networks to provide end-to-end service quality for the broadband consumer. Hardware developments took a back seat, though vendors announced software to address concerns about interoperability.

China accounted for the majority of broadband subscriber additions, including 80% of new fiber broadband customers over the 12 months ending in June 2018, we heard. China’s fixed broadband roll-out, mandated by the Ministry of Industry and Information Technology (MIIT), has been completed ahead of schedule. China Mobile, once a pure mobile operator, now has more fixed broadband subscribers than the former fixed-line incumbent China Telecom.

While fixed network deployment in China is slowing, mobile is accelerating. China Tower deployed more towers in three months than the US had done in the past three years, LightCounting heard. China Tower, which was jointly owned by China’s big three telecom operators and has a near monopoly on cell sites in China, owning 96.3% of them, raised $6.9 billion in IPO this summer. Chinese service providers are preparing to commercialize 5G in 2020.

Whereas 4G was led by China, 5G deployment will be led by North America with Verizon launching commercial services in September 2018 when it began taking orders for fixed wireless access (FWA) service in four US cities based on a proprietary 5G network. The U.S. is also leading in smart speaker adoption and these are widely viewed as the control platform of choice for connected homes. Additionally, Verizon last week announced the successful trial of 5G New Radio over its 28 GHz spectrum, with plans to offer a “5G upgradable smartphone” on its network in 2019.

Several speakers highlighted the Tokyo Olympics in 2020, which will be a testing ground for 5G innovation. Japanese mobile operator NTT Docomo has developed technology to live stream 360-degree experiences using 8K VR over 5G networks. A head-mounted viewing system creates highly realistic virtual reality experiences for sporting events that allow viewers to feel as if they are actually at the venue. To reduce bandwidth requirements, a central server slices up the views and one view is transmitted to the user according to their viewing direction. The required throughput to the end user over the radio network is estimated to be around 80Mbps, with up to 200Mbps in the backhaul. Commercial launch of 8K services is probably still years away, however.

Separating the 5G fact from fiction can be a challenge. Hype is not entirely bad; it encourages competition, drives research and development and generates investment. “If it means that companies are going to roll out something innovative, then it [hype] is a good thing for the country at least, though it may not be a good thing for the shareholders,” was one observation at the conference. Now, with technology and commercial trials underway globally, and 5G-capable mobile handsets expected in 2019, the telecom industry is about to find out how reality lives up to the hype.

This is a topic LightCounting will be following closely as it evolves.
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The use of optical transceivers in wired and wireless access networks will be covered in greater detail in the forthcoming LightCounting report “Next Generation Access Optics,” to be published in November 2018. The report includes a five-year forecast of transceivers used in mobile fronthaul, backhaul, and in Fiber-to-the-X networks, broken out by speed, reach, color, and technology. For more information, see https://www.lightcounting.com/Access.cfm.

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3D Sensing for Self-Driving Cars Reaches the Peak of Inflated Expectations

LightCounting releases a new report addressing illumination in smartphones and automotive lidarIn 2019, the market for VCSEL (vertical cavity surface-emitting laser) illumination in smartphones will exceed $1.0 billion – now nearly triple the size of the market for communications VCSELs. That’s quite remarkable for a market that didn’t exist three years ago.3D sensing in smartphones felt like an overnight sensation, but the technology foundations were laid down years ago with Microsoft’s Kinect – a motion-sensing peripheral for gamers released in 2010 but discontinued in 2017 after lackluster sales. Lumentum supplied lasers to the Kinect almost a decade before the iPhone opportunity emerged; the company was ready to profit from the iPhone X opportunity when Apple decided to launch 3D sensing for facial recognition in September 2017.

Figure: 3D depth-sensing meets the Gartner Hype Cycle

3D Sensing

Source: Gartner with edits by LightCounting

If all technologies follow the Gartner Hype Cycle, shown in the Figure above, then 3D sensing in smartphones is now moving up the slope of enlightenment. Android brands raced to add 3D sensing to their flagship phones in 2018 – the Xiaomi Mi8 Explorer and Oppo Find X phones were first – although these only sold in single digit million quantities. Huawei also brought out new phones with 3D sensing, but the ongoing U.S. export ban on the Chinese company must be hurting the company’s traction outside China. Apple continues to dominate the market as all new iPhones released by Apple since 2017 have included 3D sensing on the front of the phone. Apple is expected to introduce 3D sensing for ‘world-facing’ applications in 2020, which adds another laser chip to every phone.

Last year illumination for lidars were not included in our market forecast since LightCounting considered it unlikely that lidar would penetrate the consumer market to any great extent over the forecast period. All indicators now point to a market for lidar illumination ramping up in 2022 and beyond. Optical components firms are now shipping prototypes and samples of VCSELs, edge emitters and coherent lasers to customers developing next-generation lidar systems – many of them building on their expertise in illumination for optical communications and smartphones.

As was the case with smartphones, the foundations for lidar technology were laid down much earlier – in this case with the DARPA Challenge 2007, where the winning vehicle used a 64-laser lidar system from Velodyne Acoustics (now Velodyne Lidar). Lidar is considered by the majority of the industry to be an essential part of the sensor suite required for autonomous driving, helping the vehicle to navigate through the environment and detect obstacles in its path. The first commercial deployments have begun. In Germany, lidar on the Audi A8 enables the car to drive itself for limited periods under specific conditions. In Phoenix, Arizona, you can hail a ride in a Waymo robotaxi.

Investor enthusiasm for lidar is undeniable with nearly half a billion dollars invested in lidar start-ups in 2019 according to our analysis of publicly available investment data. Notable deals include $60 million for U.S. company Ouster in March, Israel’s Innoviz Technologies Series C round of $132 million in the same month, and $100 million for U.S.-based Luminar Technologies in July. Interestingly, these examples illustrate the variety of lidar approaches: each company is building a different type of lidar based on a different wavelength: 850nm for Ouster, 905nm for Innoviz and 1550nm in the case of Luminar. There’s an open technology battle and they can’t all be winners.

The automotive lidar market seems to be close to the peak of ‘inflated expectations’. It’s easy to understand why. The automotive industry is enormous, with nearly 100 million vehicles (including trucks) produced annually. Players like Baidu, GM Cruise and Waymo are backed by deep corporate pockets, and new entrants like Aurora and Pony.ai are attracting hundreds of millions in investment. Intel’s $15.3 billion purchase of Mobileye in 2017 was also directed at autonomous driving. Sensor company AMS is in a $4.8 billion battle to acquire German semiconductor lighting firm Osram with its eye firmly on lidar.

However, signs indicate that the descent into the trough of disillusionment could have already begun. Waymo has yet to roll out its robotaxi services more widely – and this summer admitted that its vehicles needed more testing in the rain. GM Cruise has delayed launch of commercial services for self-driving cars beyond 2019 and is reluctant to commit to a new timescale, with its CEO Dan Ammann observing that safety is paramount; automotive is not an industry where you can “move fast and break things” he said. A casualty of the slow pace was optical phased array lidar developer Oryx Vision, which closed its doors in August and started to hand money back to investors.

While lidar is being deployed commercially today, prices are not conducive to mass production, and there are open questions around regulation, safety, ethics and consumer acceptance. Do local laws prohibit self-driving cars? Will they really be safer than humans? Who is responsible for a crash? LightCounting remains skeptical about the pace of adoption of autonomous vehicles, but will be watching the market closely and with optimism.

More information on the report is available at: https://www.lightcounting.com/Sensing.cfm.


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