Open RAN technology — which refers to the separation of the hardware and software components of the radio access network (RAN) — has gained a lot of attention over the past year. And with good reason. Open RAN opens the door to more potential RAN vendors and makes hardware and software from different vendors interoperable, which in turn leads to cost savings for operators and more flexibility in the mobile network.
But open RAN critics say the technology is over-hyped. And some analysts, such as Joe Madden, chief analyst with Mobile Experts, have predicted that open RAN will, at least initially, be used primarily for coverage and not capacity due to performance issues in certain environments.
Nevertheless, open RAN’s potential has led to substantial growth in the RAN vendor market that was previously dominated by just a handful of big companies like Ericsson, Huawei, Nokia and Samsung. Today, analysts say there are 20 to 30 mobile RAN vendors and more are expected to enter the market in 2021.
Stefan Pongratz, analyst with Dell’Oro Group, believes the vendor momentum around open RAN is high because operators are signaling their intent to use the technology. “There is strong interest from non-traditional players to enter the market and get a piece of the action,” Pongratz said. “But there won’t be enough business for everyone,” he warns.
Dell’Oro Group projects that open RAN investments — including hardware, software and firmware — will surpass $5 billion over the next five years. But for 2020, Pongratz said he thinks open RAN will garner about $200 million in investment, mostly driven by greenfield operators Rakuten in Japan and Dish Network in the U.S.
Dish Network has already announced several RAN-related deals with Fujitsu, Altiostar, Mavenir and Intel. The company is building a standalone 5G network from scratch using open RAN and plans to launch its first major market by third quarter 2021. Dish intends to cover 70% of the U.S. population with its network by June 2023.
But aside from Dish, it’s unclear when we will see widespread use of the technology by the big three nationwide U.S. operators. At the FCC’s Forum on 5G Open Radio Access Networks that was held virtually, representatives from AT&T and Verizon, which are both members of the O-RAN Alliance, acknowledged their support for the technology but also said that they anticipated deploying it gradually. T-Mobile, meanwhile, is not a member of the O-RAN Alliance, and Neville Ray, president of technology at T-Mobile, has maintained the company is evaluating the technology but has not committed to deploying it.
Not a magic bullet
Pongratz said that with incumbent suppliers like Nokia and Samsung starting to embrace open RAN, he believes the competitive dynamic among vendors will increase. However, he also said that open RAN is not magic and will take some time to mature.
That sentiment was echoed by Ed Gubbins, principal analyst with GlobalData. “There are still questions about how widely open RAN will be adopted,” he said. “Some operators may prefer the relative simplicity and familiarity of traditional RANs.”
One possible sign that the market is already experiencing a bit of a shakeup is the recent move by Mavenir, one of the first open RAN vendors on the scene, which in October filed paperwork with the SEC to raise up to $100 million in a public offering and then pulled the plug on that plan a few weeks later citing market volatility.
Gubbins declined to comment on Mavenir’s IPO back-peddling but did say he believes that some RAN vendors will consolidate as the market matures.
But some startups think the RAN market is more than big enough for multiple players. Verana Networks is focusing solely on making 5G base stations for mmWave spectrum and the company plans to use open RAN to do it. “We just look at open RAN as the direction the industry is going,” said Amit Jain, co-founder and chief commercial officer at Verana Networks. “If anyone is going to build a new 5G base station right now, you are going to want to do it based upon 3GPP and O-RAN Alliance standards.”
And Jain believes that there will be plenty of operators deploying 5G over mmWave spectrum to make Verana’s business thrive. “We think it will be feasible to compete with the big guys,” he said. “They might not have the focus that a startup can bring to the space.”
The open RAN premise of decoupling the hardware from the software and making different vendor gear interoperable is an exciting concept for the wireless space. But wireless operators have always been reluctant to make changes to the RAN — even if those changes promise cost savings. I do think open RAN will eventually become more widespread, but it won’t happen quickly.