Nokia plight shows need for Samsung

Twenty years ago, seating the different vendors of radio access network (RAN) products around a table would have made for a decent-size dinner party. Companies including Alcatel, Lucent, Motorola and Nortel had places next to Asian and Nordic rivals. Today, none of the four names on that list survives. After years of consolidation, the party offers a barely adequate meal to just three diners, leaving mere scraps for everyone else.

This global market dominated by Ericsson, Huawei and Nokia looks increasingly dysfunctional, too. Deemed a security threat by western governments, China's Huawei can no longer sell 5G products in the UK and other European countries, and it has long been seen as a public enemy by US authorities. In a tit for tat, China has squeezed Ericsson and Nokia to the fringes. And outside China, Nokia looks in desperate shape.

Big US contracts have instead gone to Ericsson and South Korea's Samsung, a RAN challenger, and other customers have not picked up the slack. What was a lightning-fast rollout of 5G in India last year has now shifted down several gears. While sales at Ericsson have also dwindled, Nokia's fell dramatically for the recent first quarter. Having recorded an operating profit for 12 consecutive quarters, its mobile networks business group this year slumped to its first-ever loss.

It's unsettling for telcos such as Vodafone UK, which have had few other choices. "What is the state of Nokia? Not great, from what I read. It's worrying," said Andrea Dona, the operator's chief network officer. "So we need to inject diversity in the network. We need another option. Samsung could be it."

A match made in Devon

The South Korean vendor has come to figure prominently in Vodafone UK's network strategy. Under government orders, Vodafone is stripping out Huawei equipment and software installed at 2,500 RAN sites, a job it must finish by the end of 2027. Using a system called open RAN, it has been replacing those with a mix of vendors. But Samsung is the key. It is not only down to supply many of the radio units (RUs) but also the sole provider of RAN software.

After spending about two years on technology trials at a "golden cluster" of around 20 sites in Devon, a county in southwest England, Vodafone kicked off its commercial deployment last August. Vodafone is not sharing current site numbers, but Dona insists it has now gone significantly beyond that original golden cluster. It has also ticked off some important milestones.

The most recent was the critical pairing of Samsung's software with RUs supplied by Japan's NEC. The original goal of open RAN was to find an alternative to CPRI, a fronthaul interface that has required operators to buy software and RUs from the same vendor's system. With an open fronthaul interface, they would supposedly be able to combine software from one vendor with RUs from another. Yet this remains tricky.

The big problem is an advanced 5G technology called massive MIMO, which crams dozens of transmitters and receivers into antenna units. "Open interfaces does not equal multivendor," said Ericsson in a guide to massive MIMO published in February. It notes four "fundamental challenges."

First, new interfaces do not minimize the cost and effort of systems integration, the work a vendor would normally do before bringing a fully integrated product to market. Different vendors also need to coordinate on software releases to maintain interoperability, said Ericsson. Support for technology features is dictated by a "minimum common denominator," it added, "resulting in performance limitations." Finally, in the event of problems, identifying the vendor at fault, and therefore responsible for providing a fix, can be difficult.

Much of this seems to echo comments made by Tommi Uitto, the head of Nokia's mobile business, at Mobile World Congress (MWC). Massive MIMO relies on complex algorithms in both the RU and distributed unit (DU), a server box hosting RAN software, and these need to match, he told Light Reading.

"If I have to connect my DU to someone else's massive MIMO RU, he will have to make changes to his software, I will have to make changes to my software, or both will," he said. Falling back on simpler algorithms could make integration easier, but these could also reduce throughput by up to 80%, according to Uitto.

In February, nevertheless, Vodafone showed off its first open RAN site where a massive MIMO NEC radio, featuring 64 transmitters and receivers, was linked to a Samsung DU. "You need to choose your partners and be very specific to your partners about the role they have and the rules of engagement," said Dona, when asked how it was accomplished.

He insists, too, that performance is not worse than Vodafone would get from a single-vendor product. "There are difficulties to overcome, obviously, but I am not going to compromise, and we've worked very hard to ensure parity on the KPIs [key performance indicators]," he said. "I am not going to introduce something that doesn't perform to at least the same level, if not better."

Captaining Marvell

Unlike several years ago, when Nokia was hurt by 5G product problems, its current malaise largely reflects the market downturn. Outside China and the US, Nokia's RAN market share has recently grown, according to independent analysts. It has won plaudits from other commentators on open RAN. AT&T's decision to replace Nokia across one third of sites with Ericsson, already the supplier to the other two thirds, seems mainly about having a single technology platform and the efficiencies this could bring.

Nevertheless, Nokia's technology approach does not align with Vodafone UK's. The open RAN the telco is building will also be entirely virtualized, using technologies that derive from the IT world. This means running the Samsung software on Intel chips in Dell servers and relying on Wind River as the cloud platform. Nokia is unopposed to much of this, but it prefers to keep its Layer 1 software – a resource-hungry part of the RAN – on custom silicon from Marvell Technology. Smart network interface cards (SmartNICs) hosting these Marvell chips can slot directly into servers.

Nokia does not, accordingly, have Layer 1 code that works with Intel's chips. It has recently taken issue with the marketing of these as "general purpose" central processing units (CPUs), arguing that new Intel generations like Granite Rapids-D feature plenty of customization and embed that in a server. "It's not a general-purpose processor," said Uitto at MWC. "And if you build servers with only those CPUs, it would be ridiculous because you'd have all this overhead of hardware acceleration in the product cost and power consumption."

The Finnish vendor's earlier criticisms focused on the shortcomings of using general-purpose silicon for Layer 1 functions. Even Ericsson, which uses Intel chips in its virtual RAN products, says custom silicon will remain ahead for some key performance measures. In comments emailed to Light Reading earlier this year, Michael Begley, the head of Ericsson's RAN compute product line, said that "purpose-built hardware will continue to be the most energy-efficient and compact hardware for radio site deployments going forward."

But Dona says Vodafone has not seen any drawbacks. "We wouldn't have gone to mass deployment if we hadn't met the minimum criteria, but it took a while," he said, noting that it has been nearly three years since Vodafone UK first announced its open RAN partners.

A smaller pie

Vodafone has now taken what Dona calls the same "blueprint" into parts of Romania, where it also needs to replace Huawei under government orders (there is a huge amount of Huawei across Vodafone's European footprint). And there is a strong hint from Dona that this Samsung-based template will play an even bigger role in future. Margherita Della Valle, Vodafone's CEO, confirmed on a recent earnings call that suppliers have been invited to pitch for future work across Vodafone's entire European and African footprint of about 170,000 sites.

The danger for Nokia could be the perception it is in financial trouble and that the market needs alternatives. This gave impetus to the open RAN movement several years ago, when operators were unimpressed by Nokia's initial 5G products. If decision makers at other telcos share Dona's view about the "state" of Nokia, and are convinced they must introduce new suppliers, Nokia's condition may only worsen.

But if it were perilously weakened, operators would simply be substituting one vendor for another, not boosting choice. The consolidation that happened years ago showed that a global RAN market supporting low-cost mobile usage at scale was not big enough for more than a handful of vendors. Last year, it shrank 11%, according to Omdia (a Light Reading sister company).

Omdia forecasts another decline this year of between 4% and 6%. Nokia's mobile business, meanwhile, has just suffered a first-quarter operating loss of €42 million (US$45 million), after sales dropped 39% year-over-year, to less than €1.6 billion ($1.7 billion). It worryingly suggests there is not enough pie to keep even a few vendors well nourished.

UPDATE: Vodafone has responded to the publication of this story with the following clarification: "Vodafone would like to clarify the comments in this article were related to increasing vendor diversity in the telecoms supply chain, not on the viability of any individual company. This has been a priority for all telecoms operators in recent years, especially in the UK, where the number of available suppliers has been significantly reduced over the last two decades through consolidation and legislation.

"Vodafone has prioritised the OpenRAN ecosystem as a way of injecting much needed diversity in the wider ecosystem, as well as to enable innovation as a key output of the UK diversification taskforce. Nokia remains a key supplier in several markets and is a long-term respected partner in the evolution of Vodafone's business."