The NTIA Innovation Fund: Observations From Round 2

The second round of the Innovation Fund—a program designed to accelerate the adoption of Open RAN to benefit the U.S. economy and the security of our wireless networks—is closed after the one-week extension granted by the NTIA. Many people felt relieved that this part was over, but there's still another round coming up. Here are my observations and some implications to keep in mind for round 3.

This Is How It All Started

The NTIA is responsible for dispersing approximately $1.5 billion in grants for innovation in "open and interoperable wireless networks" a la "Open RAN." Essentially, Open RAN is a network paradigm that moves from closed, proprietary systems led by mostly Nordic vendors to a multi-vendor model, where a different firm can supply each component part of the network. You could have radios from multiple different vendors, servers running multiple different processing software, and so on. This outcome, in turn, should, therefore, open up innovation and drive down costs so operators can lower the capital intensity of deploying new technologies.?

As COVID demonstrated, our supply chains are global in nature. For something as critical as the nation's communications infrastructure, it is essential to have multiple vendors, including U.S.-based ones, providing equipment and services. This is another reason why the government created the Innovation Fund.

However, the dig against Open RAN is that the performance is not as good as that of a traditional closed system. Some argue against that point, but the reality is that whenever you can custom-develop hardware and software, it will likely perform better at targeted, customized operator use cases than something designed for the majority of operators.?

The theory of “build once, solve many” sounds great, but it doesn't address the practicalities of technology and commercial breakthroughs, both of which need to be present. Hence, the Innovation Fund was created to accelerate the formation and creation of Open RAN as a force.

Round 1 of the Innovation Fund distributed approximately $140 million to several firms to establish new ORAN testing capabilities in the U.S. and fund innovative research. Round 2, in contrast, was mammoth in potential impact!

In this round, the NTIA intends to distribute approximately $420 million in the area of the Open RAN radio (or O-RU, as everyone in this round learned to abbreviate). The radio of a wireless network is the most voluminous network element to buy and deploy. Thus, it is also one of the biggest drivers of costs and capital. The NTIA’s funding round focused on two areas of the “O-RU”:

• Commercialization: Awards up to $45 million for partnerships of equipment suppliers and operators to build, test, and ideally integrate new Open RAN radios in the operator's network
• Innovation: Awards up to $10 million for innovative research that improves the radios' capabilities, cost, or performance to drive adoption.

Observations

I had a ringside seat for this round, so here are some general observations:

Observation #1: The documentation requirements were intense

Last year's round required a 20-page technical proposal and a budget narrative. Even with those documents, many firms were stretched to build a concept, document it, and comply with the very tight timelines.

This time, there was a 20-page technical proposal, in addition to a 20-page work plan, a 10-page product security and cybersecurity management plan, a 10-page intellectual property plan, and a templated Excel sheet with the budget narrative. This entire package needed to be complete and compelling in around two to three weeks more than last year. Suffice it to say, many firms struggled with this much documentation under such a timeline, especially in terms of making all the disparate parts consistent.

Observation #2: Lots of "subject to interpretation"

One of the most challenging elements of this Notice is that while it was a somewhat lengthy document, many areas needed clarification and interpretation. Unfortunately, the NTIA was quite slow or non-responsive to many applicants' questions. This created a challenging environment where many firms had to guess how to submit and comply in a “hope for the best” strategy.

Observation #3: The partnering requirements were difficult

Probably the most consistent theme I've heard is the difficulty in finding an operator partner for the commercialization awards. The NTIA expected a "Letter of Partnership Intent" between radio suppliers and mobile operators. The intended focus of this Partnership Intent was to lead to contracts, procurements, and volume commitments.

What many outside of the industry probably don't understand well is that if any network procurement specialist or finance lead were to make contractual commitments to volumes of products that haven't yet been delivered or tested would likely be fired in most major companies. To say operators were reluctant is a vast understatement.

Regardless, the operators were inundated with requests for partnership. With these kinds of requests, the would-be radio suitors hoped there would be a chair left when the music ended. What’s more, they were hoping that music ended with enough time to build a voluminous technical proposal and work plan that met the needs of their operator partner.

What about Round 3?

Word on the street is that another round is possibly coming this Fall, as soon as before the Presidential election. Should that happen, here are a few things that interested firms can be doing now to prepare:

Develop some potential concepts

• I can't overstate the importance of having some ideas before the NOFO comes out.
• Even if your scope is wildly off, you will exercise your creative process, accelerating your timelines. You will also understand what you do NOT want to pursue.
• We know the Innovation Fund is all about driving the adoption of Open RAN. Smart firms can develop their own lists of barriers and ideas on how to resolve those issues based on their own capabilities and products.

Build partnerships NOW!

• Even though you don't know what partnership requirements are going to be necessary, you will need potential partners for any concept, and now is the time to find them.
• Building partnerships, memorandum of understanding, NDAs, etc., can streamline your ability to "phone a friend" when the NOFO comes out.
• Importantly, you don’t have to commit to anything until the NOFO comes out, but building out your Rolodex of potentially willing partners could save you boatloads of time.

Build conviction

• One of the biggest issues I’ve seen is having internal conviction and commitment to go after the grant.
• You cannot have a tepid level of effort or interest. This has to be one of the top priorities for your company, and it needs to show.
• Successful efforts require an " all-company" approach; you can't outsource them to only the marketing or technical team—everyone has to be involved.
• Building that ownership internally takes time, and people need to recognize they need to invest time and resources to succeed.

If you did the grant on your own, you probably experienced significant frustration, uncertainty, and doubt. Even if you were able to submit it, you may be questioning the likelihood of winning. For all these reasons, if you plan to submit a grant in the future and have ideas, partners, and internal convictions, the last thing to remember is to get professional help who can guide you through the process.

It won't necessarily remove the level of effort (or pain) involved in developing an application. Still, it will speed up the process, help you resolve uncertainties, and give you the best chance of building a competitive application.

Are you in for Round 3?

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