Mobile Experts has recently applied its well-known cost models to the question of ORAN networks. And we can confirm that the conventional wisdom is accurate for rural networks: ORAN can save 34% in Total Cost of Ownership for a network that is deployed for coverage.
That’s why Rakuten, Dish, Telefonica, Vodafone, and MTN are all focused on ORAN. All of these networks need coverage, not capacity for the next few years.
But the situation will change when Rakuten or Dish get up to 20 million subscribers and they develop high demand density in urban areas. ORAN does not provide the performance of a "vendor optimized" network in a high-density environment. When we apply our cost models again in the capacity-limited case, we find that ORAN networks are actually more expensive than a single-vendor scenario. This is why Verizon uses a different approach, using radios and baseband processing from a single vendor in each city and dictating a level of proprietary interoperability for the multi-vendor handovers between cities.
If you’re paying attention, you will notice that we changed our cost metric in the second chart. In the rural scenario, we calculate Total Cost of Ownership as the costs per square kilometer of coverage area. But in the urban case, we calculate TCO per GB of data served. This is not a bait-and-switch. This is exactly the kind of transition that lies ahead for Rakuten, Dish, or any other greenfield operator that builds a network, as their primary concern will shift from coverage to capacity over time.
In the performance of today’s ORAN networks, we see a significant loss of spectral efficiency compared with optimized networks. But I believe that the ORAN Alliance and ONF will be driving standardization ever-deeper into the radio algorithms, to address key features that impact capacity performance in the big cities. My recent report provides the details on eight specific features that may eventually be addressed by ORAN and ONF to close the gap.
The problem will be that many of these features require significant compute power in the radio unit, not in the DU or the CU. Because ORAN networks are generally virtualized only at the higher levels, the radio units that will be deployed over the next two years will not have the horsepower to handle some advanced interference coordination, scheduling, and beamforming features that will provide significant capacity gains. I predict that Rakuten’s field techs will be climbing up the tower again in four years to replace their RUs with new hardware.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.