According to a recently published report from Dell’Oro Group, despite a year on year revenue decline of 5%, the Evolved Packet Core (EPC) market revenue still grew 4% quarter-over-quarter in 2Q 2018 with the combined Ericsson and Huawei business garnering over 60% of the market.
The growth was not hampered by the U.S. ban on ZTE and the vendor’s declining revenue and share. Nokia also increased its share during the same quarter.
David Bolan, senior analyst at Dell’Oro Group, confirmed that Ericsson, Huawei, and Nokia each increased their share in the quarter with quarter-over-quarter growth rates exceeding the average four percent.
“Growth in EPC is being fuelled by the usual growth in LTE subscriber growth, data traffic growth driven by video, and the beginning stages of the migration to 5G. Most of the service providers launching their 5G networks at the end of 2018 and into 2019 will upgrade their EPC rather than invest in a new 5G core,” continued Bolan.
He also confirmed that Huawei gained the most in Asia Pacific garnering twice the share of Nokia or Ericsson who ranked second and third, respectively.
In 2Q 2018 the Asia-Pacific region had the largest share of EPC session shipments followed by Europe, Middle East, and Africa, North America, and Latin America. “However, the North America market is where most of the activity has been in preparing the EPC for 5G launches for as early as the end of 2018,” said Bolan.
NFV is continuing to grow as service providers upgrade their packet core in preparation for 5G. Initially, deployments of 5G will use the EPC. The Y/Y revenue growth was over 70%. Huawei was up sharply Q/Q, just barely taking the vendor lead over Ericsson. The NFV market is still a very small market and large EPC upgrades by Tier 1 service providers can swing the vendor shares from quarter-to-quarter.
The EPC core specifications have continued to evolve to enable control plane and user plane separation (CUPS) and dual-connectivity (simultaneously connecting to two base stations). CUPS, as the name implies, enables the separation of the control and user planes facilitating the ability to distribute the user plane functions to as far as the edge of the network to meet the needs of low latency requirements for data-intensive real-time communications.
The predominant 5G NSA architecture being selected by the SPs is what is commonly known as Option 3x, formally known as E-UTRA-NR Dual Connectivity (EN-DC). The 4G RAN (eNB) acts as the master node while the 5G RAN (gNB) is the secondary node.
This architecture allows the RAN to connect to a variety of user equipment (UE) devices. The UE can be a 4G only device, a 5G only device, or a dual-mode device cable of 4G and 5G. This architecture provides the SP with the most flexibility is serving a variety of user devices with the maximum speed while getting to market faster with 5G without investing in a 5G core.