Opportunities in the Wireless Communications Industry in the Post-COVID-19 World: 5G, V2X, and 6G are the Way Forward
The COVID-19 pandemic has wreaked havoc on the global economy, with lockdowns forcing many enterprises to have their employees work from home. Telecommunications became their lifeline. Although this would seem to be an opportunity for network operators to capitalize upon, some have been unable to scale their infrastructure to accommodate the surge of digital data from the newly remote workforce.
What is going on with the wireless communications industry?
The Rollout of Long-Awaited 5G
5G will continue to be a key area of focus in the wireless communications ecosystem, but the pandemic caused a few hiccups that extended the timeline of Releases 17. Now that a lot of people are working from the home environment, there is significant congestion on the fixed and mobile broadband network. According to Akamai, global Internet traffic increased by 30% more than annualized 2020 traffic in April 2020 alone; there has not been any other time in history that present day LTE networks have experienced levels of congestion which are as significant as what they are today.
With fewer office workers in urban centers today, the urgency to install 5G-specific infrastructure has diminished; network operators instead have more time to plan their networks, which will alleviate congestion and help network operators deploy successful 5G networks.
Autonomous Vehicles No Longer Science Fiction
The development of a vehicle that is fully autonomous is an important trend in the automotive industry which has significant implications for the communications testing market. While global automobile sales have certainly taken a hit due to a drop in global spending because of economic uncertainty and job losses, automakers are continuing to develop and perfect connected vehicle technology. As the number of electronic control units (ECU) in a vehicle continues to grow, so will the need for an open access, high bandwidth, Ethernet-type technology.
Between 1990 and 2017, communication bus technologies were predominantly CAN, LIN, and FlexRay, but between 2017 and 2020, Ethernet technologies that catered to 2.5Gbps, 5Gbps, and 10Gbps were introduced into vehicles. By 2035, Frost & Sullivan expects it to be as high as 50GbE. The proliferation of the Ethernet into automobiles is driven by a surge in data from the incorporation of ECUs, which will rise at a geometric rate.
The Road to 6G
Even though 5G will continue to take center stage for the foreseeable future, with many IoT-specific use cases still under development, the groundwork for 6G is already being laid. Network equipment manufacturers including Huawei and Samsung have begun developing the standards for a 6G world. Samsung, for instance, envisions 6G to have speeds of up to 1Tbps with latencies of less than 10 microseconds. A network deployment with these specifications can connect at least 10 million devices per square kilometer and offer services that include hyper-connectivity, immersive XR, and digital twinning.
Currently, work on 6G is confined to standardization and research, with its commercial debut expected in the next decade.
What are the implications of COVID-19 for the communications test and measurement industry and the key growth opportunities?
Definition and Overview of the Market
Communications test and measurement solutions test physical and network layers. Frost & Sullivan segments the market into RF testing equipment, Ethernet testing solutions, fiber optic testing equipment, and solutions that monitor and optimize wireless network performance after its deployment. Market participants generated $8.2 billion in market revenue in 2019.
The COVID-19 pandemic is affecting the entire industry, but at different degrees: Frost & Sullivan expects the RF and fiber optic testing equipment markets to experience some contraction in 2020, but demand for Ethernet testing and wireless network performance solutions to grow.
Growth Opportunities for Ethernet Testing
During government-mandated lockdowns, enterprises had to make proprietary tools and solutions accessible to employees who worked from home. They collaborated with web-scale companies that offered a virtualized office tool that could be accessed from home. Both the telco community and web-scale companies have adopted high-speed Ethernet solutions to accommodate this surge in data.
Each new high-speed Ethernet solution is expensive at first, but en masse adoption by hyper-scale cloud service providers commoditizes the technology and makes it attractive for the price-sensitive telcos. Frost & Sullivan predicts that the recent standardization and release of 200GbE and 400GbE by the Ethernet Alliance will follow a similar trajectory and create a demand for dedicated test and measurement solutions.
Growth Opportunities for Network Performance Optimizing and Monitoring Solutions
Telcos have been overwhelmed with the massive amount of data on their networks in a relatively short period of time, but their need for high service quality and customer experience has helped sustain demand for solutions with enhanced geo-location and network optimization capabilities. In the realm of 5G deployments, network operators still have an unwavering commitment to offer customers an unparalleled 5G experience. However, because of the COVID-19 pandemic, network operators have more time to plan their 5G deployments before actually deploying 5G infrastructure. Software solutions which help with RF planning of 5G networks, as well as actively testing the 5G network in the lab environment, would therefore gain prominence during this period we see ourselves in.
6G Growth Opportunities for RF Testing Equipment
Frost & Sullivan attributes RF testing equipment market contraction to the fact that end users have forgone the purchase of specialized equipment with more functionality, instead prolonging the use of test equipment they already had, leasing equipment, or procuring new equipment with lesser features. To enhance the level of testing, they use specialized RF extension modules.
The coupling of extension modules with RF testing equipment will certainly help in the testing of frequency spectrums that are above those covered by top-of-the-line equipment available today. This will enable terahertz testing, which is important for 6G network deployments. Keysight Technologies, a leading manufacturer of testing equipment, partners with companies such as Virginia Diodes to do this.
6G will be so radically advanced that it will force vendors to rethink their testing equipment capabilities—and probably also the supply chain. For example, while the deployment for 5G would call for the massive deployment of multiple-in and multiple-out (MIMO) antennae technology, chipsets that are 6G-specific would have the antennae technology fabricated into them. This could mean a crossover between semiconductor and RF testing equipment, which today are distinct categories.
While the COVID-19 pandemic has devastated many industries and disrupted well-established global supply chains, Frost & Sullivan determined that the effect on the communications testing equipment market was not as severe.
With the traffic generated from virtualized enterprise applications on consumer devices, communications service providers are challenged with accommodating the sheer amount of digital information without compromises on security like never before. At the same time, they still have their eye on being first to market with a complete 5G network solution and having a head start on 6G deployment in the next decade.
Given the immense challenges that service providers and equipment manufacturers are experiencing, the communication testing equipment market remains poised for limited growth in 2020 and a stronger recovery in 2021.