Deloitte predicts that in 2021 most major telcos in Europe will be trialling Open RAN within their networks. We further predict that half of all major telcos in the region will have deployed Open RAN at a live site – albeit typically at a small scale. As of 2021, revenue generated from sales of open RAN products and services in Europe will be between a quarter and half a billion pounds. But over the course of the next five years, Open RAN’s share of RAN revenues will steadily increase, and may exceed those for traditional RAN by the end of the decade.
The Radio Access Network (RAN) is a key component of the mobile network, and provides the interface between mobile devices, and the network. The RAN comprises the antenna and also the computing equipment that links to the wider network. Historically, that is since the start of mobile networks in the 1980s, the hardware (cabinets and antenna) and software (on-site and remote) in the RAN have always been sold as a package, by a single vendor. This offers advantages, in that one vendor manages the entirety of the RAN and it can be easier to manage quality. But the drawback to this approach is a lack of competition in this space - over the last three generations of mobile technology the number of vendors has steadily fallen, following multiple waves of consolidation and market exits.
Opening up the RAN provides opportunities for new vendors, including specialist companies focused on an area of the overall radio network. It encourages the entry of companies that specialise just in the radio software, be able to be deployed on lower-priced hardware.
For new network builds, this open approach should deliver multiple benefits. It could reduce CAPEX, for example through enabling the use of off-the-shelf hardware. It could reduce OPEX, with one potential benefit being a greater ability to upgrade remotely. Some network elements could, in the medium term, be virtualised and performed by cloud-based software instead.
The pace at which operators migrate away from traditional solutions will be critical for the growth in the Open RAN market. This will determine the rate at which more players are encouraged to enter the market. And in many regards, because of 5G, operators need Open RAN offerings to be able to grow their networks, while controlling costs. If revenue per customer changes are small, but delivering 5G experience requires far more sites, then cost per site has to fall. Also, in markets where government policy requires the removal of a vendor’s equipment, Open RAN offers an alternative set of suppliers to the traditional network vendors.
Operators will need to evolve their approach to vendor selection from choosing a vendor accountable for their entire RAN to assembling an array of vendors, with varying specialisations. The pace of migration to Open RAN depends on operators’ willingness to commit to a new approach to vendor management i.e. from benchmarking vendors, selecting the right vendor and managing accountability. This may require a new skill set to be developed, slowing down adoption, or prompting prevarication.
The deployment of Open RAN is likely to be initially in areas with lower traffic levels, which tend to be rural areas. The rationale for this is that it is less risky to test out new network vendors in areas with relatively low traffic levels. Vodafone UK has made one of the largest commitments to deploy Open RAN in Europe, with the technology being rolled out at 2,600 sites across Wales and South West England.
As of 2021, there may just be one operator that has an entirely open RAN network, with thousands of cell sites – Rakuten, in Japan. As of November 2020, Rakuten had over a million users. 4G customers were using an average 0.5 GB of data daily and 5G users were consuming 21 times more, at 11.5 GB per day. Service availability has been high, at 99.7 per cent - equivalent to that for traditional networks in Japan. Rakuten launched its 5G network in September 2020. Initial 5G speeds were up to 870 Mbit/s down and 110 Mbit/s up. An upgrade, to be deployed by end 2020, would raise that to 2.8 Gbit/s down and 275 Mbit/s up. Rakuten is a relative rarity among major mobile operators in that it has a greenfield site. Existing operators would typically find it harder to deploy Open RAN at existing sites. But if the capital and operational costs, as well as performance benefits of Open RAN are significantly higher, this could encourage much faster adoption.
While the major customers for Open RAN will be mobile operators, private companies looking to deploy cellular mobile as a complement or replacement to Wi-Fi or Ethernet, may source from Open RAN vendors. Independent towers companies may consider providing multi-tenant cloud platform for deploying Open RAN as a way of diversifying their business.
The bottom line
Open RAN is a revolutionary concept in mobile networks – but not unprecedented in data centres or fixed networks. Change implies risk, and mobile operators are rightly wary of any innovations that may dent the reliability of their networks.
Operators should consider the following approach:
- Construct a team of a minimum number of vendors required for working Open RAN solution. This is happening already in 2020, with lab trials and field trials across most of the operators.
- Take simple radio, non-real time functions and centralise them. The next step would be to virtualise them. This is happening now live, with Vodafone going live in Wales with this approach.
- The next step would be to centralise complex radio functions. Once this is done, they can be virtualised. The timescale for this step may be the medium term for widespread maturity.
Operators should however consider that openness is a familiar concept in many other areas of technology. There are multiple examples of successful evolutions, over time, from bespoke, closed solutions to open ones. Traditional mobile phones that ran on 2G networks were closed solutions. Most current smartphones offer a high degree of customisation via apps, accessories and operating systems customised by vendor.
Telcos and also other potential purchasers of Open RAN should monitor the performance of Open RAN networks continuously. There will be multiple trials and test beds to learn from, as well as a growing number of live deployments, including a few located in busy areas.
Open RAN may be able to offer lower CAPEX and OPEX: if that is the case, then an operator that has invested heavily in Open RAN will be at a sizeable advantage, able to offer lower tariffs, or enjoy higher profitability, or both.
A view from our experts
“Beyond the scope for innovation and cost savings, OpenRAN is also key to unlocking greater diversity in the telecoms equipment supply chain.”
“Radio access network is on the cusp of disruption. Existing network cost structures are approaching an inflection point, fuelling the emergence of open, disaggregated and virtualised technologies. Telecom Operators are confronted with conflicting objectives – from the need to manage and drive value from the increasing complexity of 5G New Radio to harnessing and deploying off the shelf hardware. What’s clear is the rules of the game have changed; to win in the future, Telecom Operators will need to future proof their network, build a powerful ecosystem of solution partners and invest in the right skills and capabilities today.”
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