14 December 2021

Open RAN is the current hot topic in the world of radio access networks (RANs), rapidly gaining support across the world. But when will it become a mainstream technology for mobile networks? Some think it can be delivered alongside 5G and provide the platform for many small new suppliers to enter the market. However, technological challenges and the inertia of mature networks will likely lead to Open RAN only being widely used for major rollouts in time for 6G, and potentially not providing the diverse supply chain that was hoped of it.

Background – what is Open RAN?

A fully open, virtualised RAN is desired by many for two main reasons: to increase efficiency and versatility of the network and to address concern about the lack of diversity in the vendor supply chain.

Virtualisation will increase network efficiency and versatility through control of the physical network from a virtualised core. This is a major part of the process of transforming mobile networks to provide higher capacity, lower latency and greater reliability for the next generation of mobile apps. Making greater use of the cloud and using more commoditised base stations should also result in capex savings, meaning a virtualised network is also more cost efficient to operate.

Before Open RAN, the use of proprietary interfaces between components meant that the entire RAN in a given area was supplied by one vendor. Three large international vendors obtain the vast majority of contracts from mobile operators for delivering the entire network solution, and with the current security concerns over Huawei leading to many countries banning the use of Huawei technology for 5G networks, for many there is only Ericsson and Nokia to choose from. The concern of governments is that a non-diverse market will not provide the competitive element that encourages innovation and lower costs. For example, see the 5G supply chain diversification strategy paper published by the UK government in December 2020. (Department for Digital, Culture, Media & Sport, 5G Supply Chain Diversification Strategy, 7 December 2020)

Open RAN aims to provide a solution whereby the interfaces between network components within the RAN are open (non-proprietary), meaning networks can be built using technology from multiple vendors. This provides the opportunity for operators to work with smaller suppliers who do not have the capability to develop the entire RAN, but may be able to develop one component, hence increasing competition.

Development of Open RAN

There are some significant challenges ahead for Open RAN:

• The rate of innovation in radio – only a few large vendors can fund the R&D required to keep pace with rapid pace of development of radio technologies such as massive MIMO which has gone from the lab to being the mainstay of 5G capacity in less than 10 years.
• Legacy networks – most operators have little use for a 5G only or 4G/5G radio in the macro site as they still have to support all previous technology generations.
• Vendor lock in – it will take time for the current vendors to genuinely facilitate the use of Open RAN into their networks. Furthermore, existing contracts between mobile operators and vendors will be in place and will take time to reach expiry.
• Ongoing security concerns – although reduced reliance on Huawei may help with security concerns, there is still significant Chinese vendor involvement in the Open RAN ecosystem which may continue the concerns of some governments.

We see three main phases of development of the Open RAN market:

Phase 1: Exploration 2019-25

For some new start-up operators, Open RAN is being viewed as their ticket into the highly competitive mobile market. They have no legacy RAN or core infrastructure to worry about being compatible with and so can go full steam ahead with an Open RAN network, with the hope of getting a head start on the big players in the market. The main examples are Dish (United States), Rakuten (Japan) and 1&1 (Germany).

The interest though in Open RAN has been huge and has led to the large vendors getting involved, whether they wanted to or not. Ericsson had been reluctant to engage in the Open RAN discussion, although in June 2021 it expanded its Cloud RAN portfolio to include support for 5G mid-band and massive-MIMO deployments, positioning it as “Open RAN-ready”. Of the major vendors, Nokia has been the most enthusiastic and active supporter of Open RAN as it has seen an opportunity to embrace the new technology and position itself as a principal partner to carriers seeking to further diversify their RAN vendors. Huawei has the most to lose from the success of Open RAN so has continually downplayed the technology’s potential and has refused to be part of the Open RAN Alliance – a coalition formed to develop the path for Open RAN

So, is this early momentum providing the results hoped for given the optimism surrounding Open RAN? It seems we must wait until 2022 to answer this, with Dish expecting to launch its 5G Open RAN network in Las Vegas in early 2022 (although this has already been delayed multiple times and there is no guarantee it won’t be pushed back again). Rakuten is also due to deploy a 5G network and 1&1 recently signed a commercial agreement. Currently, no existing MNOs are beyond the trial and development stage. Therefore it would appear that as of this moment, Open RAN needs more time for development and it won’t be until the second half of this exploration phase that we see a number of 5G Open RAN networks up and running.

Many large vendors (including Ericsson and Nokia) and operators are involved in the Open RAN Alliance in a bid to influence the direction of Open RAN and neutralise the threat it could have on their current market share. Another approach to control this new market is vendor consolidation – for example, Mavenir’s acquisition of ip.access Ltd in September 2020. Mavenir, a leading provider of end-to-end cloud-native Network Software Provider for Communications Service Providers (CSPs), acquired ip.access Ltd, a leading 2G, 3G, 4G and 5G-ready small cell provider, in order to add 2G and 3G capabilities to its Open RAN portfolio. Another high-profile example is the recent acquisition of Altiostar by Rakuten in August 2021, having been working together to roll-out a virtualised RAN network in Japan.

Areas which have seen significant positive movement are those of private 5G networks and small cells:

• Private 5G networks have the advantage of not having any legacy equipment to be compatible with and so can build a brand new 5G only network. AWS Private 5G – a new initiative to supply 5G to enterprises based on virtualisation in the AWS Cloud and Open RAN radios, should create a critical mass of Open RAN in the enterprise – other solutions, cloud-based and non-cloud-based will emerge.
• Small cells are much easier to focus on initially for Open RAN because they don’t require the complexity of massive MIMO on active antenna arrays that is required for macro-sites and it is not essential for small cells to deliver 2G/3G/4G – ‘5G only’ small cells have a role.

Phase 2: Competitive tension 2026-30

Phase 2 will see the continuation of virtualisation of RAN by mobile operators and an increase in tender requirements for Open RAN compatible equipment. Although this will lead to further Open RAN adoption, we predict that Open RAN will only take a revenue share of 10-20% over this period – well below the expectations of much of the Open RAN community. This is because although Open RAN is successful at bringing competition to the market, many MNOs will primarily invite Open RAN vendors to tenders to keep the pricing of the main vendors down and still continue to use these operators’ technology. The limited take-up results in an increase of vendor consolidation – possibly including some of the bigger vendors buying Open RAN players.

Phase 3: Maturity 2031+

Now into the 2030s, Open RAN has become a major contender for large MNO vendor contracts and the equipment of the main vendors is also now completely Open RAN compatible. All legacy equipment has been phased out and mobile networks are now fully virtualised and cloud compatible, while in the meantime, Open RAN has been continually evolving and major issues have been ironed out.

However, we are now in the 6G era – Open RAN is actually a 6G technology with the 5G period mainly being used for trial and development purposes.

Summary

Open RAN, alongside virtualisation, will eventually play a key role in transforming mobile networks – but there is a long journey ahead, with plenty of vendor consolidation along the way, together with a shift of the major network vendors into Open RAN. In the nearer future however, whilst the more sophisticated mobile networks are grappling with the new technology, we will likely see Open RAN make its mark on private networks and small cells.