Large operators around the globe are beginning to embrace virtual RAN (vRAN) as a way to gain network efficiencies, save money, and avoid vendor lock-in. But making the switch to a more software-driven network that uses general purpose hardware isn’t something operators take lightly. One bad sector or one software glitch can lead to network outages, and problems can be difficult to pinpoint and fix. That’s why last week’s announcement by Verizon was interesting. The operator said that it was able to fully virtualize the baseband functions of the RAN using general purpose hardware. And Verizon said it accomplished this with help from vendors Nokia and Intel. Verizon used Nokia’s AirScale cloud base station architecture and Intel’s processors and reference architecture.
Verizon’s revelation put the spotlight on Nokia, and some see the company as an early leader in vRAN. The vendor was the first legacy RAN company to join the ORAN Alliance, an operator-led group that is defining the specifications for an open RAN architecture.
Global Data senior analyst Ed Gubbins said that he believes Nokia is a thought leader, at least among the other traditional RAN vendors like Ericsson and Huawei, because it has been promoting its AirScale Cloud RAN trials and because of its work with operators. Gubbins noted that Nokia’s approach is very different from that of Huawei, which has not joined the O-RAN Alliance.
Cutting costs vs. more integration
Of course, the traditional radio market has long been dominated by a handful of large vendors including Nokia, Ericsson, Huawei, Samsung and ZTE. With vRAN’s growing threat to the traditional radio business, it makes sense for these companies to embrace virtualization. Mike Murphy, CTO of North America for Nokia, said that he believes traditional RAN and vRAN will co-exist in networks for a very long time, perhaps forever. And he said that while some of the large operators like Verizon and AT&T are very bullish about vRAN, not all operators are onboard with this transition.
“Cloud RAN is new and challenging so it’s easier for the big guys [operators] to do it,” he said, adding that if an operator isn’t interested in having a distributed network architecture with a lot of network edges, then moving to vRAN doesn’t make sense.
And Murphy also downplayed the cost advantage of moving to a vRAN architecture. Even though operators such as Verizon and AT&T have lauded virtualization as a way to drive cost efficiencies, Murphy said that the technology only saves money if it’s a large-scale effort – meaning that only if an operator adopts it across a large part of the network. If an operator only deploys it on a limited basis then vRAN may cost more because it will require more integration work.
Do small vRAN vendors stand a chance?
Verizon’s announcement about its work with Nokia on vRAN wasn’t surprising because Verizon has historically used Nokia and Ericsson for its network gear. But does this mean that smaller vRAN players like Altiostar Networks (which just scored $114 million in Series C funding), Mavenir (an early vRAN advocate), or JMA Wireless will struggle to score vRAN deals with major operators?
Analyst Iain Gillott, founder of iGR Research, believes there is enough opportunity for both the small and large vendors. In fact, he believes there will be scenarios where multiple vRAN vendors work together with the smaller vendor providing the software solutions and the larger vendors like Nokia and Ericsson providing the network integration and management.
Gillott also noted that the vRAN market encapsulates more than just mobile operators. Enterprises that want to build their own private networks could be potential customers too.
I suspect that we will see a combination of deals and acquisitions among the vRAN vendors. I think some upstarts will break through and have success getting deals with large operators. But I also think that any significant deal with an operator will make them a prime target for being acquired.
As Nokia’s Murphy noted: If there’s a problem in the network, the operator will likely look to the bigger firms that are well versed in wireless networks to solve any issues.