Where next for O-RAN
Some history
Open Radio Access Network, known as Open RAN or O-RAN allows the hardware and software components of a mobile (cellular) base station to be sourced from different vendors. It creates a standard interface between the hardware and software components ‘opening’ the base station. This gives network operators more flexibility in choosing vendors for each part and makes it easier for new vendors to enter the market by developing just the hardware or just the software. ?
The idea has a long history, with much discussion about open interfaces dating back to the 2G era. Today’s O-RAN emerged in 2018 when competitive pressures led to a considerable reduction in the number of RAN vendors across the globe. Two operator-led organisations emerged: the C-RAN Alliance, driven by China Mobile, and the XRAN Forum, based around AT&T. After a while, it became apparent that the two organisations had a lot in common, so they agreed to merge in 2018 to form the O-RAN Alliance.?
The desire for more vendors in the market became a political concern around 2020 when countries such as the UK and the US decided to ban Huawei equipment from telecoms networks, reducing the number of large suppliers in the market to two – Nokia and Ericsson. Some governments – notably the US and UK - were keen to redress the reduction in competition that they had brought about by facilitating the emergence of new suppliers, ideally locally based, and saw O-RAN as the most promising vehicle for doing so. Since then, these governments have provided incentives for O-RAN companies and have tied some subsidies for enhanced coverage to a requirement to use O-RAN equipment.
However, despite this market support and encouragement, O-RAN remains a fledgling approach, taking some 5-10% of the RAN market in 2023[1] (depending on how O-RAN is defined) and with some O-RAN manufacturers struggling or even declaring bankruptcy.
Why it is proving hard for O-RAN
Operators have mixed views on O-RAN; while network operators like having supply chain competition, they don’t want too many different vendors within their networks. Each vendor requires equipment testing, integration with existing systems, additional spares holdings and increases the difficulty when there are issues of determining who is at fault. Most operators have one or two RAN vendors and see that as optimal. New entrants (O-RAN or otherwise) need to persuade them to add further vendors to their network, and ones with limited track record.
The timing of O-RAN’s emergence was unfortunate. By 2020 most MNOs had placed substantial contracts for 5G equipment with the incumbent suppliers. When O-RAN became ready for significant deployment in 2021 it was too late for the first wave of 5G RAN supply and hard to persuade MNOs that they needed a second supplier of 5G equipment. A second wave of 5G procurement has not happened as 5G has somewhat disappointed, and this second wave now looks unlikely.
Indeed, the lack of new 5G applications and the slowing in data growth is leading to a significant reduction in the demand for RAN equipment – the market declined by around 11% last year[2]. This has resulted in both Ericsson and Nokia seeing reduced revenues and cutting back on employees. Further cutbacks in coming years seem likely. A falling market is making it even harder for O-RAN new entrants.
Finally, much of the O-RAN equipment now being sold is “single vendor” with both the hardware and software coming from the same supplier, often Ericsson and Nokia. This suits MNOs who only have to deal with a single supplier and is O-RAN compliant so that deployments can qualify for government incentive payments. But it does make the availability of an O-RAN interface rather irrelevant and does not facilitate the entry of new suppliers.
The combination of these factors has made life very difficult for the new entrant O-RAN suppliers. For example, Parallel Wireless, one of the leading new entrants reportedly[3] laid off 80% of its staff in 2022 and Airspan, one of the longest established, filed for bankruptcy in 2024[4]. A few others remain such as Mavenir, but the likelihood of genuine new entrant providers is reducing.
Technical issues
There have been other challenges for O-RAN. The complexities of 5G, with its MIMO antennas, makes it hard to cleanly split apart the hardware (including the antenna) and the software (which then has to drive each of the antenna elements). O-RAN tends to result in lower capability MIMO antennas which can significantly reduce the capacity of the cell. The 5G RAN equipment also needs large amounts of processing. The big providers tend to use customised silicon optimised to the tasks needed, whereas O-RAN suppliers tend to use general-purpose silicon which can be significantly more power hungry.
Large-scale base stations, deployed in urban areas, tend to be complex, delivering 2G, 4G and 5G across multiple frequency bands with many antennas, multiple sectors and high levels of capacity. Many O-RAN suppliers do not have the capabilities to develop at this scale or may lack access to the software or IPR needed for all of the technologies and bands.
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Second tier providers re-emerge
As the RAN market has shrunk, concerns have shifted somewhat from ensuring there are 3-4 significant suppliers to providing protection should a major vendor fail, or partially withdraw. MNOs are now turning towards the smaller established suppliers such as Samsung and NEC, who have historically only had a small market share, but are large and well-established companies and they are strategically introducing them into parts of their network.
O-RAN at the crossroads
The world is now a very different place from 2018 when O-RAN standardisation started. 5G has not resulted in massive deployment of new cells nor facilitated new applications, and the RAN market is in decline. New entrants have emerged, but most are now in a precarious position. Supplier diversification is less of a worry for operators than improving their returns on capital.
Equally, governments remain concerned about supply chains and open interfaces are, in general, good things. Some analysts are predicting that O-RAN’s share of the RAN market may grow to around 30% by the end of the decade, although Ericson and Nokia might take much of that share with their O-RAN compliant single-vendor equipment.
The Research Firm, Dell’Oro summarised the changes well when they said[5]:
“Current growth deceleration combined with the increased acceptance that Open RAN is not some kind of magic solution that will significantly alter barriers to entry or overall market concentration, is prompting more questions about the rationale behind Open RAN. The fundamental assumptions shaping the role Open RAN will play in this RAN journey have not changed. Over time, operators will incorporate more virtualization, intelligence, automation, and O-RAN into their RAN roadmaps. However, the business case for multi-vendor RAN is less compelling.”
The future path of O-RAN likely lies with the MNOs. To date, their support has been somewhat weak. If this were to strengthen with clear signals that they will buy from alternative suppliers, this could stimulate the market and perhaps result in Samsung and NEC coming to rival Ericsson and Nokia.
More fundamentally, the world may need different types of suppliers as the RAN market declines and perhaps, as the need for 6G and other major advances diminishes. Navigating this change, without resulting in a failure of current suppliers, or burdening MNOs with the need for further change in their network will require care on behalf of governments, operators, standards bodies and alliances.
It is time for a re-think about the RAN market and the role that O-RAN should play in it.
thank you for mentioning Dell'Oro Group
Open RAN will change the macro RAN market that exists today but that will be a slow and hard struggle, with feature parity, solved supply chain and economies of scale, and reality of optimized inter-company processes causing barriers to entry. This is why AT&T's deal makes long term sense. They need to work with an incumbent like Ericsson and they need to hold them accountable to true openness. We see how that goes. RAN openness to Ericsson is a bit like mistletoe to a tree, they know it takes away without providing anything other than its own green... What we lack in telecom is imagination on how to solve for the future. This is where Open RAN will start to transform first, will transform the fastest, and will start to scale replacement of macro. The ugly truth is that most user requirements now are indoor and nomadic. We do not need replacement macro solutions but new creative solutions to indoor, neutral host, and private. That all stitch together to form one network. This is where open interfaces are very powerful since there is no one size fits all by 3 companies. And openness to alternative wireless standards...
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4 个月This might be accurate for macro networks, but indoor scenarios present a different case where O-RAN makes more sense. Indoor environments are typically managed by typically medium sized system integrators, and the ability to easily switch vendors in settings like hospitals and other indoor locations is not just beneficial but essential. Additionally, there are more organizations skilled in working with COTS hardware than proprietary systems. COTS hardware can also be repurposed and can run additional MCx Servers for integration with LMR, safety solutions, etc. While O-RAN might not be the most efficient for MNOs, it offers significant advantages in indoor scenarios where system operators manage the load. As we move towards private networks, MOCN and multi-operator indoor deployments, there is still hope for O-RAN.
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4 个月Dr. Who had a similar problem when he left the TARDIS in one place for too long...