Paving the way to Open RAN adoption

27 September 2024

By opening up the traditional telecoms equipment supply market, Open RAN aims to reduce reliance on a handful of dominant providers and inject innovation through supplier diversification. This would trigger more competition between RAN equipment vendors, lower costs for mobile operators, and improve innovation and industry collaboration. However, despite the initial optimism, Open RAN’s progress has been slower than expected, leaving the industry grappling with significant challenges and uncertainties.

Why is Open RAN important?

Mobile network operators (MNOs) typically buy RAN equipment for their networks from one or two major vendors and have not been able to mix the main components from different vendors. Over time the RAN equipment market has consolidated with three major suppliers – Ericsson, Nokia and Huawei – having a combined market share of 75% of global RAN equipment market revenue in 2023.

Open RAN is an approach to deploying mobile network technologies that allows operators to mix and match hardware and software components from different vendors. The allure of Open RAN lies in its potential to drive down costs and foster innovation. By allowing MNOs to source equipment from a wider range of vendors, it could reduce dependence on any one supplier and enable quicker advancements in network performance and features.

MNOs are reluctant to fully diversify the supply chain

MNOs have been reluctant to fully diversify the supply chain in line with the Open RAN vision. This is driven by concerns over the readiness of Open RAN technology, as well as where operators find themselves within their investment cycles.

Examples of the concerns held by MNOs over the readiness of Open RAN technology include:

  • Concerns about who they can hold responsible for the performance of their network. Traditionally, operators will have one vendor in each geographic area who they can contractually hold accountable if the performance of the network is not meeting standards. However, in an Open RAN where an operator is using equipment from multiple vendors, it is less clear who the operator can contractually hold accountable for failures in the network.
  • Lack of certainty that using equipment from different suppliers will work reliably with good performance. Thus far, performance of Open RAN is not matching that of integrated RAN from Tier 1 vendors in High Density Demand (HDD) areas, which carry a large volume of traffic in a small area.
  • Concerns about how new Open RAN equipment will integrate with their existing legacy systems. Most early large-scale Open RAN deployments have come from new entrant (‘greenfield’) operators. For example, in Japan (Rakuten), the USA (Dish) and Germany (1&1). One reason for this is because brownfield operators need to deploy Open RAN alongside their existing integrated RANs.

As well as the technical challenges discussed above, MNOs are also reluctant to invest in Open RAN technology due to where they find themselves within their investment cycles. MNOs typically invest in and replace equipment in cycles of around 7-10 years. Throughout these cycles, operators usually acquire equipment from one or two main vendors. This means that, having made a vendor choice, MNOs can be tied into contracts with those vendors until their next procurement round. Most MNOs began their 5G deployment cycle at the beginning of the 2020s. Also, MNOs are currently investing less in new deployments – Omdia reported that the total RAN equipment market decreased by 11% in 20232 and we expect that it will be in the late 2020s at the earliest that we see MNOs begin their next investment cycles.

So far, early Open RAN deployments have either been greenfield deployments (as mentioned above) or single-vendor deployments. Single-vendor Open RAN refers to a network setup where a single vendor provides the vast majority of hardware and software components for an Open RAN system, limiting the supply-chain diversification that Open RAN is designed to promote. A recently published forecast from Dell’Oro Group3 anticipates that whilst Open RAN will account for more than 25% of the RAN equipment market in 2028, multi-vendor RAN will only account for under 10% of this. Examples of largely single-vendor Open RAN deployments include:

Governments are investing to try to accelerate Open RAN

Governments recognise there are many challenges with establishing open networks and several countries have allocated funds to help the industry overcome these challenges. For example, in the USA, in 2022, the National Telecommunications and Information Administration announced the Public Wireless Supply Chain Innovation Fund of USD1.5 billion to support the promotion and deployment of open, interoperable, and standards-based RAN. Meanwhile, in the UK, the government established a GBP295.5m fund – the Open Networks Programme (ONP) – to help enable supply chain diversification. The fund included:

  • Funding R&D projects at varying levels of technology maturity, which involved mobile operators, equipment vendors and academic institutes
  • Establishing SONIC Labs – an interoperability testing centre
  • Setting up UKTIN to enable networking and knowledge sharing within the Open RAN innovation ecosystem.

However, the level of interest from the UK’s MNOs in deploying Open RAN on their main network varies. To date, Vodafone has demonstrated the greatest interest, having started to deploy Open RAN technology on 2500 sites in the South-West of England and Wales, to be completed by 2027. Virgin Media O2 (VMO2) announced in April 2023 that it would deploy Open RAN technology using Mavenir as its main vendor, but information on the exact timescale and extent (e.g., number of sites) associated with VMO2’s planned deployment is not publicly available. The other two MNOs are currently showing more limited interest in large-scale deployment, instead focussing on smaller-scale trials (e.g., BT’s Open RAN trial in Hull) and participation in the ONP.

Government funding should be focused on achieving commercial readiness

In an interim impact analysis report of the ONP that Aetha prepared, alongside ICF, for the Department of Science, Innovation and Technology (DSIT) (available here7), we recommended that future government-funded R&D projects should be focused on moving products towards commercial readiness, including deployments on live MNO networks. This will help increase MNO confidence in Open RAN. In the report, we noted that the most recent intervention announced by DSIT, the Open Networks Ecosystem (ONE) competition, is focused on products that are closer to commercial deployment, including some projects that include live deployments on MNO networks.

In conclusion, while Open RAN holds promise for transforming the telecoms infrastructure, significant challenges remain in achieving the main ambitions of Open RAN. The technology’s lack of maturity and concerns over performance continue to limit adoption, particularly among established mobile operators who seek reliability and clear accountability. To overcome these hurdles, government funded R&D efforts should prioritise advancing the development of Open RAN products, building MNO confidence, and ensuring they are ready for large-scale deployment.

[1]  Omdia, ‘Market Landscape: RAN Vendors 2024’, May 2024

[2]  Telecoms.com, ‘Global RAN market declined by 11% in 2023’, 20 February 2024

[3]  Mobile World Live, ‘Dell’Oro warns of stalling open RAN momentum’, 9 August 2024

[4]  Ericsson, ‘AT&T to Accelerate Open and Interoperable Radio Access Networks (RAN) in the United States through new collaboration with Ericsson’, 4 December 2023

[5]  Nokia, ‘Nokia and Deutsche Telekom begin deployment of multi-vendor Open RAN network in Germany’, 12 December 2023

[6]  Nokia, ‘Nokia deploys energy-efficient multi-supplier O-RAN 5G network with NTT DOCOMO’, 20 November 2023

[7]  Department for Science, Innovation and Technology, ‘Open Networks Programme: initial evaluation’, 12 September 2024

Authors

Amit Nagpal
Amit NagpalPartner
Harry Madden
Harry MaddenBusiness Analyst