What is happening to Open RAN?

By opening up the traditional telecoms equipment supply market, Open RAN aims to reduce reliance on a handful of dominant providers and inject innovation through supplier diversification. However, adoption of Open RAN is progressing more slowly than expected, despite government interest and, in some cases, funding. In this paper, we discuss the reasons why – concerns over technology maturity and performance, particularly among established mobile operators who seek reliability and demand clear accountability.

Mobile network operators (MNOs) typically buy Radio Access Network (RAN) equipment for their networks from one or two major vendors. The radio equipment deployed on a site is fully integrated (Integrated RAN) and makes use of software and hardware platforms provided by that equipment vendor – there is no or little scope for a third party to provide part of the solution as many of the interfaces are proprietary.

Open networks aim to make use of non-proprietary specifications so network operators can ‘mix and match’ components from different suppliers. The Open RAN standard, developed by the Open RAN Alliance, includes open interfaces between the radio unit (RU) and baseband units (Distributed Unit (DU) and Centralised Unit (CU)) – see figure below. This allows mobile operators to mix and match hardware and software components from different vendors. Greater competition between vendors should help drive down costs and foster innovation.

Figure 1: Comparison of Integrated RAN and Open RAN architectures

Western governments have been keen to promote Open RAN, particularly since several governments have mandated the removal of equipment supplied by so-called high-risk vendors (such as Huawei and ZTE) from mobile operators’ networks, which the governments recognise could result in significantly less competition in the RAN equipment supply market. Governments further recognise there are many challenges with establishing open networks and consequently several countries have allocated funds to help industry overcome these challenges. For example:

• In the USA, in 2022 the National Telecommunications and Information Administration announced the Public Wireless Supply Chain Innovation Fund of USD1.5 billion to support promotion and deployment of open, interoperable, and standards-based RAN.
• In the UK, in July 2022 the government established a GBP 295m (USD 367m) fund – the Open Networks Programme (ONP) – to help enable supply chain diversification. One key objective of the fund is to support the UK Government goal of having 35% of the UK’s mobile network traffic carried over open networks by 2030.
• In South Korea, in August 2023 the Ministry of Science and ICT of South Koreainaugurated the country’s Open RAN Industry Alliance (ORIA), which is a body of around 30 members, including operators, vendors, and academic institutes. ORIA will be funded as part of the KRW1.31bn (USD1bn) fund of grants available to companies and organisations in the digital sector.
• In Germany, in November 2021, the Federal Ministry of Transport and Digital Infrastructure pledged EUR 300m (USD 312.7m) to fund projects to develop and test Open RAN technologies.

Many mobile operators have, however, been reluctant to fully diversify the supply chain in line with the Open RAN vision, with levels of interest and commitment varying significantly. For example, in the UK, Vodafone has demonstrated the greatest interest, having started to deploy Open RAN technology on 2,500 sites in the Southwest of England and Wales, to be completed by 2027. However, this amounts to less than 15% of its total sites across the UK. Virgin Media O2 (VMO2) announced in April 2023 that it would deploy Open RAN technology using Mavenir as its main vendor, but information on the exact timescale and extent (e.g. number of sites) associated with VMO2’s planned deployment is not publicly available. The other two UK mobile operators are currently showing more limited interest in large-scale deployment, instead focussing on smaller-scale trials (e.g. BT’s Open RAN trial in Hull) and participation in the UK Government’s Open Networks Programme projects.

Mobile operator reluctance to embrace Open RAN is driven by concerns over the readiness of Open RAN technology, as well as over where operators are in their investment cycles. Such issues include:

• Concerns about who the operators can hold responsible for performance of their network. Traditionally, operators will have one vendor in each geographic area who they can contractually hold accountable if network performance is not meeting standards. However, in an Open RAN where an operator is using equipment from multiple vendors, it is less clear who the operator can contractually hold accountable for failures in the network.
• Lack of certainty that equipment from different suppliers will work reliably and perform  well. Thus far, the performance of Open RAN is not matching that of Integrated RAN from the major (Tier 1) vendors in high traffic areas. Sites in these areas carry a large volume of the mobile operators’ traffic.
• Concerns about how new Open RAN equipment will integrate with existing legacy systems. Most early large-scale Open RAN deployments have come from new entrant (greenfield) operators. For example, in Japan (Rakuten), the USA (Dish) and Germany (1&1). One reason is that existing (brownfield) operators need to deploy Open RAN alongside their existing integrated RANs.

As well as the technical challenges discussed above, mobile operators are reluctant to invest in Open RAN technology as most recently rolled out 5G across their networks. Mobile operators typically replace equipment in cycles of around 7-10 years. In each cycle, operators usually sign contracts for acquiring equipment from one or two main vendors. This means that, having made a vendor choice, mobile operators can be tied into contracts with those vendors until the next procurement cycle. Most mobile operators in Western markets began their 5G deployment cycle at the beginning of the 2020s. Also, mobile operators are currently investing less in new deployments – Omdia reported that the total RAN equipment market decreased by 11% in 2023 1  and we expect that it will be in the late 2020s at the earliest that we see Western mobile operators begin their next major investment cycle.

So far, early Open RAN deployments have either been greenfield deployments (as mentioned above) or single-vendor deployments. Single-vendor Open RAN refers to a network set-up where a single vendor provides the vast majority of hardware and software components for an Open RAN system, limiting the supply-chain diversification that Open RAN is designed to promote. Examples of largely single-vendor Open RAN deployments include:

• AT&T’s contract with Ericsson in the USA, which effectively displaces Nokia from AT&T’s network. However, it also includes Fujitsu radios deployed on an unspecified number of sites 2
• Deutsche Telekom’s announcement of a contract with Nokia includes deployment of Fujitsu radios initially in the Neubrandenburg area of northern Germany 3
• NTT DOCOMO in Japan announced that it will be deploying Open RAN using Nokia as its vendor 4 .

A recently published forecast from Dell’Oro Group 5  anticipates that while Open RAN will account for more than 25% of the RAN equipment market in 2028, multi-vendor RAN will only account for under 10% of this.

In an interim impact analysis assessment of the UK Open Networks Programme prepared by Aetha  alongside ICF for the UK Department of Science, Innovation and Technology (DSIT) (available here 6 ), we recommended that any future government-funded R&D projects should be focused on moving products towards commercial readiness, including deployments on live networks. We believe this will be key to increasing mobile operator confidence in Open RAN technology and we noted that the most recent initiative announced by DSIT ( the Open Networks Ecosystem (ONE) competition)  is focused on products that are closer to commercial deployment status, including some projects that include live deployments on live mobile operator networks.

We believe that the big take-up of Open RAN will occur in the late 2020s/early 2030s coinciding with the beginning of the 6G procurement cycle. However, it is unclear whether the open networks vision of a network comprised of mix and match components from many different suppliers will be realised – the current trend is for brownfield mobile operators to place contracts for Open RAN-compliant equipment, but the vast majority of equipment and software is supplied by the lead vendor.

Perhaps we may end up with 100% Open RAN in the mid-2030s, but that Open RAN may be largely in name only rather than the truly in line with the initial open networks vision of Open RAN.

Aetha Consulting (www.aethaconsulting.com) helps players in the TMT industry to develop creative and sustainable solutions to challenges facing them in a constantly changing environment. We specialise in helping businesses, regulators and policy-makers make major strategic and regulatory decisions, based on rigorous data-driven and quantitative analysis. We work collaboratively with our clients to develop the tools and methodologies appropriate to solve each new business problem as it arises.

Our staff advise on key industry issues including the forecasting of demand for telecoms services and infrastructure, business and technology strategy (including network sharing), cost modelling, regulatory policy development (including cost-benefit analysis), spectrum valuation & auction support, transaction support (including commercial and technical due diligence and M&A synergy analysis) and expert witness provision (supporting arbitration and litigation proceedings).

Many thanks to Amit Nagpal for the dedication and expertise that went into this article. We are honored to have this valuable contribution to our project.