Learnings and musings from Japan: 5G but also “Beyond 5G”

Welcome to edition #17 of the Beyond the Next Billion newsletter. We are back after a few weeks away so this will be a longer edition.

In this issue, we dive into key takeaways from a recent visit to Japan about the emerging landscape for “Beyond 5G”, as 5G adoption leader markets complete the first waves of deployment and plan for the future. These past few weeks have also seen first quarter earnings results from incumbent operators in India, earnings calls with contrasting messaging from the likes of Intel and Qualcomm, and a number of industry announcements that are worth highlighting.

As always, this edition also includes relevant news and announcements that we have been covering. However, some of the announcements do merit a longer discussion, and we will pick those up in a future issue.

Japan: 5G but also “Beyond 5G”

Recently, we had the opportunity, along with a handful of industry analysts, to attend Amplify Japan “Nokia Connected Future 2023” in Tokyo, Japan. A two-day visit to Tokyo is always welcome (jet lag, what jet lag!), but it also serves to merely whet the appetite, as this magnificent city has far too much to offer to satiate the palette in such a short time.

Japan is also rewarding to experience in the sense that the country has, in recent history, alternated between large periods of isolation and internationalism. We will not bore readers with sidebars about the Meiji Restoration in 1868 and the subsequent underpinnings of Japan as a modern, industrial state, as tempting as that would be. In a tech and telecom sense, a more recent, if inverted, example would be the rise of Japan as a mobile powerhouse, with incumbent operators like DoCoMo unleashing a tidal wave of innovation in the 90s and early 2000s, with cutting edge mobile devices, services and applications. Indeed, Japan was a beacon and bellwether for the telecommunications industry. Cut to the launch of the iPhone in 2007, and this watershed moment arguably saw the beginnings of a long retreat by Japanese industry from the telecoms industry. Japanese vendors are no longer household names for mobile phones and/or networking equipment, though they were hardly alone in getting waylaid by the paradigm shift that Apple unleashed on the industry. For every Panasonic and Sony, there is also a Motorola and Nokia, with the latter ultimate decline from its halcyon days.

But in 2023, Japan is on the cusp of another virtuous cycle of innovation and adoption of cutting-edge technology. There are several enabling factors and drivers for this shift in our view, some of which we highlight below.

• The first of these is enabling Government policies and frameworks for digital transformation. At the risk of being accused of regurgitating the same buzzwords and tropes, digital agendas are critically important to modern societies and an enabling policy framework is vital to achieving those objectives. The Japanese Government, through the Ministry of Internal Affairs and Communications (MIC), has made digital a priority and is seeing success on several fronts. While the Japanese economy has recovered from its “lost decade” in recent years to register growth (even if low by global standards), it is increasingly challenged by a looming demographic crisis, with Japan’s baby boomer population aging rapidly resulting in persistent shortages of labour, both skilled and unskilled, to keep economic momentum going. Digital transformation is critical to transform the economy and retool it to address these challenges.?
• One of these policy planks related to 5G. Yes, that 5G! The MIC has allocated a range of spectrum frequencies for 5G deployments, cutting across sub-6 (100-200 MHz each in the 3.6-4.5 GHz bands) as well as mmWave (400 MHz each at 28 GHz). Enterprises have been allocated “local” spectrum in the 4.6-4.9 GHz n79 bands, as well as in the 28.2-29.1 GHz bands. Unlike Korea and other markets, Japanese regulators have focused on extending 5G coverage across Japan over headline speeds. A big reason is their belief that 5G networks can play a key role in the larger Japanese policy goals of enabling a digital industry and society. Japan’s mobile operators have, with the exception of newcomer Rakuten Mobile, invested massively in deploying 5G networks with up to 90% of POPS covered today, with “full” coverage expected by 2024. Subscriber adoption of 5G has been healthy, with over a third of subscribers already on 5G. ??
• There is also plenty of innovation driven by the unique requirements of a market like Japan that make it stand out from other markets. For example, Japan is prone to earthquakes and very high wind speeds which whip around the islands. This means that any cellular communications products that are installed have to be light and “secured” so as to avoid injuries and/or casualties. There are other requirements that have nudged vendors like Nokia to come up with innovative designs for the Japan market. These include labour regulations on the maximum weights that can be carried by workers, which in Japan is capped around 25 kgs. The implication of this for network and antenna design is that the total package can’t exceed 25 kgs in weight, requiring significant investments in design and packaging. Another example relates to massive MIMO, which has currently not been deployed in Japan. In Japan, there is quite stringent requirement on acoustic noise from the installed equipment. Nokia believes new light, compact, and natural cooling massive MIMO antennas are good to satisfy all these requirements to boost massive MIMO deployment in Japan.
• Sustainability is an imperative in Japan, as the market continues to be buffeted by economic headwinds, much like the rest of the World. One area where these headwinds are manifesting is in energy pricing. Telecommunications networks are vital for a nation’s digital agenda but in their current form, they will not be able meet new connectivity and capacity requirements without massive increases in energy consumption. Based on current trends, this would require massive investments in energy production and distribution. Moreover, current inflationary trends have already had a significant impact on input costs which are driving up energy prices. In Japan, one of the leading utilities, TEPCO, has announced price increases for energy by an average of 25%. Given that energy costs can run up to 30% of a CSPs OPEX, price increases of this magnitude can have a depressing impact on network expansion plans, unless new and innovative designs can offset the current inflationary trend.
• To our surprise, we found significant evidence of the Metaverse in Japan. Yes, the very same Metaverse that has receded from popular consciousness in markets like the US as the hype cycle shifted to GenAI, might be sinking roots in Japan. There are likely to be many reasons for this contrarian trend, including highly subjective claims of cultural affinity, but the reality is that a significant ecosystem seems to be building around the Metaverse in Japan. Much of the Metaverse in Japan seems focused on the intersection of the physical and digital worlds, from an industrial and enterprise point of view. For those wondering where these applications would manifest, one should look no further than Japan’s massive base of industrial enterprises. Digital twins are the most popular and relevant example of this new world, and these have applications across a wide cross-section of industry and enterprise settings. A great example of this trend was showcased during a visit to the 5G Lab of NS Solutions on the sidelines of Amplify Japan 2023. NS Solutions , a subsidiary of Nippon Steel, has worked to enable a 360 degree remote inspection use case in tunnel shafts. The application was created in conjunction with partners that include a Japanese virtual workspace products vendor, a civil engineering and a surveying company. Feeds from the 360 degree and PTZ 4K cameras are sent through a 5G private network to field or remote offices where workers equipped with VR headsets can conduct remote inspections to assess the effectiveness of equipment and surroundings. If the metaverse does sink deep roots through the industrial sector, this will have a massive impact on data traffic generated from endpoints. This will require new architectural solutions, an increasing decentralization of networking, compute and storage, with edge computing becoming increasingly important in conjunction with the on-premises private 5G network.
• Speaking of private 5G, as an advanced G7 nation with a massive industrial and high technology base oriented towards exports, Japan is in many ways the ideal market for private 5G. A recent report by the MIC highlighted that only 56% of Japanese enterprises have embarked on their respective digital transformation journeys. Productivity gain remains the biggest objective in Japan, reflecting the manufacturing and industrial focus. Currently, Japan has a majority of brownfield campuses across their industrial base, which means dealing with a heterogenous connectivity environment. In the access network, this means a mix legacy WiFi networks, a range of lower power sensors deployed on machinery and assets, legacy voice services like TETRA, a mix of L2 industrial protocols and all too many unconnected assets. In Japan, private 5G is known as “Local 5G” and many enterprises have access to 100 MHz in the 4.8 GHz spectrum through direct allocation of spectrum.
• Japan is at the forefront of 6G research and development. Once the leading market for mobile communications in the world, Japan missed out on both the 4G LTE and 5G development cycles and this had a negative effect on their domestic industry. Today, only NEC and Fujitsu still have viable network equipment businesses and despite substantial investments, have made limited headway outside the Japanese market. Perhaps in recognition of this loss of technological prowess and prestige, Japanese policy makers have put significant resources towards the enablement of research and development for the still nascent efforts at creating a 6G standard. The biggest of these has been the creation of the “Beyond 5G Promotion Consortium”, an industry body aimed at promoting collaboration between industry, academia and Government. There are also industry associations and bodies like the NextG Alliance and Hexa-X which are working on 6G research and development.

Telco Industry announcements

The latest monetization lever for telcos around the world is the release of open, network APIs that would support telco ambitions to engage with developers and become more than pure play, dumb pipe providers. There have been numerous initiatives, the most recent being CAMARA and now the GSMA Open Gateway Initiative. The latter has seen significant progress since its announcement at MWC Barcelona in February, and we have previously written about this here and here . The latest operator to announce its intent to join the GSMA project is True Corporation in Thailand, which also includes DTAC post-merger. Link

Australia and New Zealand

Aussie telecom firms Telstra, TPG will not appeal block of asset transfer deal . The original deal would have seen Telstra acquire spectrum and transmission towers from TPG, while TPG would have procured access to Telstra’s 4G/5G network for wider coverage. In June, the Australian Competition Tribunal (ACT) upheld the regulator’s decision. Link

Optus completes first over-the-air data call using RedCap. Optus, Ericsson and Mediatek have collaborated to complete this data call using Ericsson’s RedCap software on the 5G network. This successful demonstration will enable a range of use cases for smart city, industrial and other segments in Australia. Link

India and South Asia

Reliance Jio announced that it has deployed 5G using its mmWave frequencies across all of its coverage areas in India. Jio owns spectrum in the 28 GHz frequencies that it acquired in last year’s auction. In its release, Jio touted its True5G technology that has been “indigenously” developed. Link ?

Airtel pulls a trick on rivals and announces the availability of its FWA service, called Xstream AirFiber. The service will initially be available in Delhi and Mumbai, with a “pan-India rollout planned soon.” Airtel Xstream AirFiber service is available at an affordable 799 plan, which translates to $9.6 montly, which offers up to 100Mbps speed. While rival Jio has announced an FWA service with targets of 100 million subscribers, it has yet to make the service available commercially. India has significant potential for FWA as a result of a very small, though rapidly growing, base of FTTH connections and challenging Rights of Way (RoW) conditions. However, the device ecosystem has yet to catch up, pushing the TCO beyond affordable levels for most. Link

The Telecoms Regulatory Authority of India (TRAI), is exploring different models for the auction of spectrum for satellite services. This has been the latest controversial topic to embroil the Indian telecoms sector, with rival camps arrayed against each other over the issue of whether spectrum in the high mmWave frequencies that are typically used for satellite services, should be auctioned or administratively allocated. The global experience has been to allocate administratively, which would suggest that spectrum is awarded for an administrative “fee”, as opposed to an auction mechanism. In India, however, a Supreme Court ruling has mandated that all natural resources be auctioned so as to avoid misappropriation. Link

INDUS Towers, the largest digital infrastructure company in India, and a legacy of TowerCo partnerships between incumbent GSM operators, hit a major landmark with 200,000 macro towers deployed across India. Link

VodafoneIDEA continues to struggle with its financial commitments to the Indian Government. The latest news revolves around its intent to utilize the full 30-day grace period to clear its second installment for 5G spectrum purchases. Link

Southeast Asia

Singtel drops 23.1% in the first fiscal quarter of 2024 on exceptional currency related losses at its affiliates. Reported net profit of $483 million was significantly lower than the $628 million in 1Q2023. Nonetheless, Singtel reported a 15% increase in “underlying net profit” in the first quarter, with NCS and Digital InfraCo executing well and strength in roaming and enterprise business segments. Link ?

Singtel, StarHub, M1 to retire 3G services to free up spectrum for 4G/5G. Link

Celona and Filipino operator NOW announced a partnership to offer private 5G solutions in the Philippines.

Globe Telecom has partnered with HPE to offer a private 5G solution in the Philippines market. HPE will offer the technology through its Athonet acquisition. Enterprise customers will receive a complete solution with a 5G mobile core as well as edge servers from HPE. Link

CloudFlare, a BSS/OSS vendor, has partnered with Globe Telecom to launch GFiber Prepaid, an innovative new solution offering fiber to the home (FTTH) to prepaid subscriptions in an effort to expand subscriptions while also accommodating spending patterns and ability to pay. Link

PLDT, announces a partnership with Radisys, to develop innovative digital experiences for the Philippines market. Link

Maxis, the leading mobile operator in Malaysia, has launched 5G services in Malaysia. Maxis has recently been in the news for holding out against signing a wholesale agreement with DNB, which it has since resolved. Link

Malaysia on track to achieve 80 per cent 5G network coverage in populated areas by year-end. Link

#Japan #5G #Beyond5G #6G #massiveMIMO #mmWave #Nokia