What does the arrival of 5G mean for Access optics?
LightCounting releases a research note summarizing discussions on wireless xhaul and FTTH optics at OFC and at the FTTH Conference held in March 2019
The 5G revolution has started, although most consumers won’t have noticed. Verizon activated its 5G fixed wireless mobile broadband network in Chicago and Minneapolis ahead of schedule, on April 3rd. Also shooting for a ‘world first’, last week saw the coordinated commercial launch of 5G mobile services by South Korean operators SK Telecom, KT and LG Uplus, when sales of Samsung’s 5G-enabled Galaxy S10 smartphone began.
The need for high capacity fiber links to connect an increasing number of 5G cell sites will augment the global roll-out of fiber-to-the-home (FTTH) networks over the coming years - with the unification of fixed and mobile networks high on many service provider wish lists. With publication of our Next Generation Access Optics report still six months away, we thought it would be useful to clients if we provided an update now on this area, based on a wealth of new information obtained at the recent OFC and the FTTH conferences, which both took place in March 2019.
Historically, the top five consumers of optical fiber have been China, South Korea, Japan, India, and the United States, accounting for 80% of overall worldwide demand. These same five countries are expected to spend more than $700 billion collectively building their 5G mobile networks, over the next 10-15 years. Since 10-15% of the overall network cost is in the equipment, this means 5G represents a $70-$100 billion opportunity for the equipment suppliers including Huawei, ZTE, Ericsson, Nokia, and others.
Scenarios for 5G deployment
When it comes to the speed of 5G deployment, the world is split into two camps. In China, the operators will follow the same script that they used for 4G LTE, rapidly deploying a nationwide network. In the rest of the world (where investment is driven by market forces), 5G is going to be a slow-motion evolution rather than an abrupt market dislocation, as LTE-Advanced (4G) is already serving the mobile broadband market well. In fact, one OFC panelist remarked that “Not only isn’t 5G here, but there is very little consensus among operators on what they’re going to use it for.” What there is consensus about is that 5G will be deployed for several distinctly different use cases.
The ITU has described several deployment scenarios for 5G, as outlined by Huawei during a talk at OFC. In Huawei’s view, some early 5G deployments, including Verizon’s, will be for fixed wireless broadband service over millimeter wave spectrum, which will allow mobile operators to compete with the incumbent cable MSO or carrier service provider. Next will be 5G enhanced mobile broadband (eMBB), which will provide higher speeds and/or greater capacity and will be focused on high-end consumers such as gamers, as well as enterprise/office services. Ultra-Reliable Low-Latency Communication (URLLC) will be deployed strategically, in areas where a need for URLLC service exists. And finally the last 5G deployment wave will be to provide very broad coverage of 100 Mbps service in support of rural areas and ubiquitous IoT applications.
LightCounting subscribers can access full text of the research note at: https://www.lightcounting.com/login.cfm
LightCounting’s next Market Forecast Report, to be published by the end of April, 2019, will include an updated Access Optics forecast (covering fronthaul and xhaul). Our annual Next Generation Access Optics report will be published in November 2019.
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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
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.