In this episode of The 5G Factor, our series that focuses on all things across the 5G ecosystem, we review the recent key 5G-related moves made by players advancing 5G readiness consisting Arrcus landing $30 million in new investment including NVIDIA, T-Mobile launching the Partner Plus channel program at reducing 5G laptop and FWA price barriers, and Ericsson providing perspective on how mobile operators can make progress in offering differentiated connectivity.
Our analytical review drilled down on:
Arrcus Lands New Investors Spotlighting NVIDIA Relation. In July, Arrcus announced a significant new investment of $30 million from Prosperity7 Ventures, NVIDIA, Lightspeed, Hitachi Ventures, Liberty Global, Clear Ventures, and General Catalyst. Arrcus’ routing and switching platform, Arrcus Connected Edge (or ACE), features a distributed microservices architecture that is flexible, high-performance, fully programmable, and hybrid cloud ready. We assess why Arrcus’ ACE networking platform, using the NVIDIA BlueField DPU, can enable customers to efficiently offload, accelerate, and isolate compute-intensive networking applications such as security and traffic engineering.
T-Mobile Focuses on Lowering 5G Laptop and FWA Barriers. T-Mobile announcing the launch of Partner Plus, a new channel subsidy program designed to reduce the initial cost of 5G laptops and enterprise-grade 5G Fixed Wireless Access (FWA) equipment from Cradlepoint, part of Ericsson. We examine how T-Mobile’s new program can help businesses overcome cost barriers, as it has teamed up with major global distributors Ingram Micro and TD SYNNEX alongside the Cradlepoint partnership. This collaboration can enable the immediate and convenient procurement of 5G capabilities, through 5G laptops and 5G FWA solutions, at attractive price points while fulfilling the topmost security concerns of businesses through key offerings such as T-Mobile Secure Access Service Edge, the SIM-based SASE solution that uses International Mobile Subscriber Identity and International Mobile Equipment Identity for clientless authentication.
Ericsson Advocates Differentiated Connectivity. Ericsson shares its perspective on how communication service providers (CSPs) currently offer a buffet of dishes at a fixed price, but some dishes are eaten by most consumers while others are barely touched. Buffets usually mean a significant amount of food wastage. As a result, some customers experience disappointment due to the quality of food, while others consume, either more or less than what they have paid for. All in all, this is a ‘best effort’ type of restaurant, offering too much at a satisfactory quality. We explore how things are changing as 5G networks enable CSPs to offer the possibility to launch bistro versions of the restaurant, providing a menu to consumers instead. The Ericsson Mobility Report (June 2024) indicates that 5G uptake has increased and that mobile data traffic has increased by 25 percent between 2023 and 2024 providing broader opportunity for CSPs to enable businesses and developers to offer guaranteed and secure mobile connectivity, centered around the value of service differentiation, to fulfill the unique needs of customers.
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Disclosure: The Futurum Group is a research and advisory firm that engages or has engaged in research, analysis, and advisory services with many technology companies, including those mentioned in this article. The author does not hold any equity positions with any company mentioned in this article.
Analysis and opinions expressed herein are specific to the analyst individually and data and other information that might have been provided for validation, not those of The Futurum Group as a whole.
Transcript:
Ron Westfall: Hello and welcome, everyone, to The 5G Factor. I’m Ron Westfall, Research Director here at The Futurum Group. I’m joined here today by my distinguished colleague, Tom Hollingsworth, the networking nerd and Event Lead at Tech Field Day here at The Futurum Group. In fact, I believe we’re coming off a very successful string of Tech Field Days including Networking Field Day and SHARE Mainframe Field Day that were conducted in July and August respectively. Now today, we’re focusing on the major 5G ecosystem developments that have caught our eye, and this includes evolving collaboration between Arrcus and NVIDIA. T-Mobile is lowering cost barriers for 5G laptop adoption by businesses, and Ericsson is providing perspective on the state of the 5G market, including, for example, 5G standalone implementations. And so with that, Tom, thank you so much for joining The 5G Factor again. Can you also share any insights on upcoming Tech Field Days?
Tom Hollingsworth: We actually have quite a few coming up. August is a little bit of a slow period for a lot of people. They’re trying to get those last vacations in before school starts, but don’t worry, we’ve got some great stuff coming up in September. We have a AI Field Day, which will be happening the week of September the 11th. We have Edge Field Day happening the week of September the 18th, and I actually have a special event happening with Nokia the week of September the 23rd. If you want to learn more information, techfieldday.com is the place to go to learn that. But I’ll tell you, basically starting mid-September all the way through Thanksgiving, we’re going to be super busy with a lot of events.
Ron Westfall: Oh, yes. Running good, and I’m certainly looking forward to all of them and joining a few of them. So this is definitely exciting and to kind of encourage interest in terms of what’s going on with the 5G ecosystem, how it interrelates with the Tech Field Days. Shortly after joining Networking Field Day 35, Arrcus announced a significant new investment of $30 million from a variety of investors. Now, they include folks like Prosperity7 Ventures, Lightspeed, Hitachi Ventures, Liberty Global, Clear Ventures, General Catalyst, and NVIDIA. Now, Arrcus’s routing and switching platform, which is known as Arrcus Connected Edge, or quite simply, ACE is something that I think is going to be making more of a difference in terms of the evolving networking operating system market out there.
Basically, ACE features a distributed microservices architecture that is flexible, fully programmable, and certainly hybrid cloud-ready. Now, with that in mind, you’re asking, “Well, how’s it deployed?” Well, it’s deployed on various form factors that includes data processing units or DPUs, merchant silicon, and compute, as well as enabling a wide range of use cases including low latency data center networking, telco access and transport, there is the 5G tie-in and also hybrid multi-cloud connectivity. So it’s all really related to 5G in terms of its capabilities.
Now, I see that Arrcus’s ACE platform, which is using the NVIDIA BlueField DPU, can allow customers to really become more effective at what they’re doing. That includes efficiently offloading and accelerating as well as isolating compute-intensive networking applications like security and traffic engineering. Now, as we’ve seen with the avid of Gen AI, this can give customers the ability to quite simply gain high-performance secure connectivity within the data center, while also being able to deliver those better business outcomes as well as gaining, for example, better power efficiency for compute-intensive workloads, in other words, the best of both worlds.
Now, what I think is important here also is that the BlueField DPUs offload the compute-intensive encrypted data path from CPUs. As we know, they’re widely distributed in terms of supporting things like vRAN capabilities and other 5G capabilities. And so what this is allowing is the dedicated hardware can quite simply perform a lot better. That is allowing for newer capabilities such as network slicing to support, for example, IPsec encryption without compromise. Now, what I think is also interesting is that Arrcus has already demonstrated how this can be done by showing that secure 5G slicing by using SRv6 Mobile User Plane or MUP, and SR stands for segment routing naturally, and that was a demo that was led by SoftBank. And what it showed is that by using SRv6 MUP technology on the NVIDIA BlueField-3 DPU, it shows that data delivery through a secure 5G network slice is something that can be done today.
Plus the demos also showed that the Arrcus ArcOS network operating system is something that is ready to work directly with quite simply those BlueField DPUs. So that’s good news really for operators like SoftBank, but certainly for other players out there. And so that’s basically also something that I think was very exciting after they had their conversations with us at Network Field Day 35. And with that, Tom, what are your insights? What is Arrcus up to and why is the NVIDIA relationship such a big deal?
Tom Hollingsworth: I’ve gotten a chance to see Arrcus basically from the time that they’ve gone public with what they’re doing to today. And it’s interesting to see the way that the company has evolved. Originally, they were very focused on running on Broadcom silicon, which is merchant silicon, and now when you see the shift the industry has taken towards DPUs where we’re running more and more specialized compute for networking on the edge, to be able to develop a version of ArcOS, ACE, as you mentioned, that can run on NVIDIA BlueField DPUs, a huge advantage because one of the things that they showed off in their demo during Networking Field Day 35 was the fact that they can have huge performance gains by running directly on the DPUs.
And these are not necessarily super complicated things, but they’re super important things. Like for example, IPsec tunnels, you want your traffic to be encrypted, right? You better be nodding your head when you hear that because everybody should want to have IPsec-encrypted traffic going both directions. That is a huge hit to the CPU though. I mean, when you look back at some of the things that Intel was doing with a lot of their multi-core CPUs, they were trying to dedicate cores on those big machines to basically do cryptography. But why? Why wouldn’t you just offload that to something like a DPU? And that’s what NVIDIA is doing based on their heritage of being able to do these offload tasks.
By custom building ArcOS through ACE to run directly on these edge cases, these DPUs, what they’re saying is there’s value in doing this in that market. And when you think about running things like SRv6 in a mobile user plane, this allows you to do all kinds of interesting stuff. The demo that they showed off during Networking Field Day was network slicing. And if you want to go back to the heady days of SDN when it was first coming out, network slicing was one of those big things that Nick McEwen talked about at Stanford was being able to dedicate segments of the network for certain kinds of traffic. This provides Zero Trust because now I can guarantee, the software has segmented these things into separate areas, and I know that certain critical traffic can go over here, certain critical traffic can go over here, but the best thing is that it’s never touching the CPU of the networking device.
And this is a huge advantage for companies that are looking to do upgrades on things like base stations or they’re still trying to roll out their 5G. If I don’t have the budget to do a full upgrade to a base station, what if I could put a DPU in and have a lot of these functionalities running over that DPU? That means that I get more performance gains for less investment today. Plus, when I do decide to go do some of the upgrades on that base station, it allows me to figure out the best way to do that to take full advantage of it. So in general, I love what Arrcus is doing with this, and they have a great demo on techfieldday.com that you absolutely should check out.
Ron Westfall: Yeah, those are excellent insights, Tom, and I agree. It actually brings up a couple more thoughts, which is the question, why network slicing? Well, first of all, it’s about the mobile operators finding ways to monetize 5G. And as we know, 5G is going through a bit of an adjustment in terms of what the operators can support and deliver to the customers out there, certainly on the business side, but also consumers. And so network slicing is something that I believe the operators are going to be able to leverage for things like advanced collaboration applications and services. And so this is something that could be quite simply a service differentiator for operators like SoftBank.
Also, what else I liked about the Arrcus proposition ArcOS ACE at all is that it’s taking advantage of the trend of sonic becoming more prevalent throughout the networking operating system ecosystem that is coming up with a way that is more standard space that’s open-sourced, and so forth. At least, on the open side, that’s true. And it’s backed by the Linux Foundation. And we’re seeing the same thing with Linux being able to make inroads with Compute OS as well. This is, I think, good news for the overall ecosystem in terms of open source capabilities enabling more flexibility, more agility, and how these things are being implemented, certainly across the 5G networks.
And with that, now let’s turn to, speaking of mobile operators, what T-Mobile is up to right now. And recently they announced Partner Plus, which is a new channel subsidy program designed to reduce the initial cost of 5G laptops and enterprise-grade 5G fixed wireless equipment or FWA from Cradlepoint, which is part of Ericsson as we know. Now, to help businesses overcome cost barriers, and that’s been a real issue in terms of adopting say 5G laptops, T-Mobile has teamed up with major distributors like Ingram Micro and TD SYNNEX in addition to the Cradlepoint Alliance. Now, what this collaboration can enable is more convenient procurement of 5G capabilities. Certainly, it can streamline it. And also quite simply, take advantage of what 5G laptops and 5G FWA can deliver. Now, for 5G laptops, what we’re seeing is that T-Mobile is providing a subsidy credit of up to $400 and subsequent business savings per laptop for quite simply certified 5G laptop brands.
Also, businesses can get enhanced security with the option to add T-Mobile SASE capability that is secure access service edge technology. And what I think is a differentiator here is that is the SIM-based SASE capabilities that uses international mobile subscriber identity and also international mobile equipment identity for clientless authentication. That’s going to be important certainly for any SASE implementation. And I think it’s really a differentiator for T-Mobile today. Also, I think it’s important to note that 5G laptops can play a critical role in reducing security breakdowns that have captured the headlines recently. And also, not to deny that for T-Mobile business internet, what they’re doing specifically there for the FWA capabilities is having a support credit of up to $700 on a naturally certified 5G Cradlepoint adapters and routers and also supporting the NetCloud Manager platform at no cost when you actually adopt the solution. That’s an extra $900 value right there. So clearly, this is encouraging. That’s incentivizing. And Tom, do you think that this is going to make a difference in terms of businesses out there at least adopting T-Mobile 5G offerings?
Tom Hollingsworth: I think it will. And part of the reason why is because a lot of companies are hesitant to adopt the T-Mobile private 5G internet because none of their devices take advantage of it. At home, it makes a ton of sense because I have a phone. I have a tablet. A lot of my devices use SIM cards, and so that’s just like a no-brainer. Like drop a T-Mobile service in there and just run it. But in an enterprise, I mean realistically speaking, how many of those devices have that? And so by doing this, T-Mobile is basically saying, “We’re going to plant our flag here, and we are going to offer this service for any laptop that takes advantage of it.” What they’re also signaling to laptop manufacturers is, “You better get on board and start offering 5G capabilities on top of having regular Wi-Fi,” because that’s not something that’s common at all.
I can tell you that a lot of people really wish that manufacturers like Apple would offer a 5G uplink offering in their laptops. Because when I go to a coffee shop, should I use public Wi-Fi as secure as it is with its caveats, or should I just boot up that 5G SIM, connect to a local cell tower, and if I’m running T-Mobile, I have a SASE client that runs on top of that, that’s SIM locked, and now I’m secured, I’m isolated onto my own network, and I can control where the traffic is going and I don’t have to worry about people sniffing it. That to me says, for certain kinds of applications is a much better offering than a shared medium.
Because the other thing you have to remember is that for a lot of people that are working at home that are using broadband options like cable modems, that is a shared medium. If I’m creative enough, I can sniff that traffic. So I think this would be a big driver for businesses that are kind of in a secure footing or highly regulated industry, healthcare, financial to be able to say, “Well, if you want to work from home, you are going to have to buy this device. You’re going to have to have this set up at home in order to be able to use it.” And I think T-Mobile is trying to offer a solution for that to kind of defray those costs. But it’s also a way for them to be able to get a lot more Cradlepoint devices out there to be able to offer that as a kind of mesh network if you will. If you’re a consumer of Xfinity or Cox or any of that other stuff where basically you get to walk around and you can hit hotspots and not have to use your data, this is the same kind of thing, but in reverse. By having all of these devices that are out there running 5G, you can basically have islands of security in the public area.
Ron Westfall: Yes. And I think this brings out a couple of key points to what you’re observing, Tom. First of all, I think you and I do this, many people. When you’re using your smartphone, you want to use your SIM connection to have a secure transaction occur and not use your Wi-Fi. So already the principle is embedded. It’s at least something I do. And I think others are certainly aware of this difference. It’s just a matter of peace of mind and covering your bases. Also, I think what it’s bringing out is the fact that it’s becoming inevitable that more laptop manufacturers are to come on.
Because for example, we’re seeing government agencies in the US requiring that if you have a contractor, they have to have a connected laptop. This is something that’s percolating. This is something that I think will become more a matter of course. And the other thing that I think is eye-opening is what if I had adopted a 5G-connected laptop and it had prevented a massive cybersecurity breach? Because a lot of them can occur quite simply through that Wi-Fi scenario you talked about. It’s just like, “Come on. You don’t want somebody, whether a partner or a contractor or an employee using public Wi-Fi and spilling the beans.”
And why I’m putting that out is, and this is just one example when it has come to ransomware attacks, and this is a survey that was conducted by Cybereason, all of those victims, 37% said they were forced to lay off employees because of that attack. 35% revealed that executives had to leave the company or resign because of the attack, and 33% basically said they had to close shop just because of that ransomware attack. And that’s just one example. As we know, there is a plethora of cybersecurity threats out there. And my goodness, a 5G-connected laptop is a common sense value in terms of avoiding that type of, well, nightmare scenario. And so who doesn’t want that?
And if I’m an IT decision-maker, I’ll be pointing to do this. I’m making the case for why 5G-connected laptops to the CFO, to the CTO, or whomever, whoever needs to basically back it and really make this happen. And I think this is increasingly going to happen because of just the security issues that we touched on. And with that, let’s look at 5G ecosystem on a slightly more broad basis. And that is, recently, Ericsson provided perspective on what they see as some key trends in terms of what the CSPs need to do, to quite simply monetize 5G, and make their services more attractive and well quite simply differentiated.
Now, basically, the concept is that when you look at 5G services, it’s basically a buffet approach that is unfortunately with a buffet approach, yes, there are dishes that are at a fixed price, but some dishes are eaten by most consumers while others are barely touched. And this is I think a problem that all the operators are struggling with while we’re getting toward more 5G-enhanced capabilities. That is, I’ll make it this threshold, having more 5G standalone out there. And so as a result, what we know from buffet experience is that some people aren’t satisfied at all. There’s a quality of food issue. There’s plenty that’s still left out there on the buffet that’s never consumed. And so that quite simply is inefficient. It’s wasteful. And so I think one thing that’s going to need to happen is that we have to keep a close eye on the operators making progress with 5G standalone.
And according to the Ericsson Mobility Report, we’re seeing that 5G SA is making more progress. I believe up to 40 operators now are offering it commercially out of about 238 operators that have some type of 5G commercial offering out there. And so what this is impacting is that while 5G uptake has increased, according to the Ericsson Mobility Report, mobile network traffic has grown by 25% just in the last year. And so you can criticize that data point, but I think it’s important to know that that trend is still on the ascent, and it links back to what we’re just talking about. What are ways to increase the attractiveness of 5G? And something like network slicing can boost that overall network traffic demand.
And so with that, I think it’s like, “Okay, we have to think outside of the box a little.” But also understand we haven’t really seen 5G at its best yet. It really requires a standalone implementation for what can be characterized as pure 5G. And with that, Tom, what are you seeing out there in terms of what Ericsson’s observations are? Do you think the network operators are going to turn the corner more in offering quite simply differentiated services and more attractive services?
Tom Hollingsworth: I kind of think they have to. Because right now, when I want to go do a 5G deployment, what am I getting? Am I getting some kind of weird, cool, magical thing? No, I’m getting slightly faster 4G LTE. And a lot of customers are like, “What am I actually paying for? A slightly better throughput. Okay, that’s going to go up over the years. I mean as long as I can download my Netflix, I don’t need a 4K Netflix subscription over mobile because my phone can’t display 4K. Maybe my tablet can, but I don’t really care.” And that’s one of the things that’s made it so hard for the companies is because when they implemented their original 5G deployments, they were slightly faster LTE, and they still had to carry a lot of those services, like you said, that are loss leaders.
I mean, think about something as simple as Apple One, which is their bundle subscription. You look at the lower tier stuff and it’s the standard. You get music. You get TV. But if you want news included, you have to buy the biggest bundle that they’ve got. Is it because a lot of people use News? I’d say it’s the opposite. Hardly anybody uses the News+ subscription, but the only way that it makes sense for them to be able to bundle it is if they bundle it with the things that people really do want like Fitness+. So the operators find themselves in a really weird situation where they kind of have to offer the entire smorgasbord, the buffets, as you said, in order to make that whole thing make sense.
But customers are starting to push back on that. They don’t want the whole buffet. Like we’ve seen with streaming services and a lot of other applications, I want to just clearly define the things that I want. And at first, you might think to yourself, “Well, that’s dumb. I don’t want to just offer the company or offer my customers just a few of those things.” But what if you could do that and just charge for those things? And that’s where the real value of this comes in. If I can bust that bundle apart and I can sell the individual services to my consumers, I actually gain a lot of value out of that. Security is a good example of that. If I want you to pay an extra couple of dollars a month to secure your communications over 5G, you’ll gladly do that. But you maybe don’t want the streaming service add-in because this is like a business line or something like that. So I think Ericsson is right on the money when it comes to the amount of traffic that we’re starting to push over mobile devices is only going to increase from here.
I do not expect this number to drop below 20% over the next few years because you’ve got more and more devices that are coming online. You’ve got AI services that are starting to become more prevalent in operating systems, which is just going to increase the amount of traffic that’s being sent up to the cloud and sent to other places. So you’re going to see a big increase in the amount of traffic, but you’re also going to see a big increase in the amount of services that can now be added onto that piecemeal, as it were. And that is where to me, the real value of 5G comes in is the ability to offer these new services and these differentiated offerings without needing to throw them in with everything because that’s the only way that the base equipment works, it’s all or nothing. And I think that that is going to help people recognize a huge additional value in what 5G offers and it’s going to make the carriers much more likely to start including these services and rollouts.
Ron Westfall: Yeah, I agree. I think what we need to see is first of all more maturation of the 5G ecosystem. And again, that’s going to require progress with 5G standalone. And yes, we can require new investments and some challenging transition, but I think those operators that have 5G standalone in place are just going to be at a competitive advantage. And we’re seeing that with T-Mobile quite simply. They can offer SASE today. They have I think a proactive 5G-connected laptop program in place. And fixed wireless access has actually been a success story for 5G, but we’re still in the early stages. We still have, for example, 5G advanced on the horizon that can enable a lot more of these capabilities with AI actually being integral to that standard itself. So yeah, there’s definitely a stay-tuned element.
But in the meantime, I think you’re right, Tom, even with the regulatory restrictions that many operators have to operate in, they still have to be smarter about bundling. And I think this is going to actually make a difference in what we touched on with the business side. Yes, consumers might be able to benefit from, say, more innovative network API developer inputs, but I think it’s on the business side where the operators can show, okay, 5G is definitely part of an overall digital transformation strategy. This is something that will be integral, and it can involve certainly private wireless implementations. It can involve more dense FWA deployments. But also, quite simply, smarter capabilities like network slicing.
And so with that, we’re saying, “Okay, there are some positive aspects out there, but their execution is always is going to be key.” And with that, I’d like to thank everyone for joining our broadcast, and certainly Tom. Tom, thanks again for your valuable inputs, always most welcomed.
Tom Hollingsworth: Well, thank you, Ron. I always appreciate being here.
Ron Westfall: All right. Right on. And with that, everybody, don’t forget to basically bookmark naturally 5G Factor. It’s on The Futurum Group website. And as always, we appreciate your time in terms of joining us and looking forward to our next conversation. Good 5G Day, everyone.
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Author Information
Ron is an experienced, customer-focused research expert and analyst, with over 20 years of experience in the digital and IT transformation markets, working with businesses to drive consistent revenue and sales growth.
He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including a wide range of topics across software and services, infrastructure, 5G communications, Internet of Things (IoT), Artificial Intelligence (AI), analytics, security, cloud computing, revenue management, and regulatory issues.
Prior to his work with The Futurum Group, Ron worked with GlobalData Technology creating syndicated and custom research across a wide variety of technical fields. His work with Current Analysis focused on the broadband and service provider infrastructure markets.
Ron holds a Master of Arts in Public Policy from University of Nevada — Las Vegas and a Bachelor of Arts in political science/government from William and Mary.
