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2021 Heavy Reading Open RAN Operator Survey - Sponsored by Analog Devices, Cisco, Ericsson & Qulacomm

Investigating open RU costs for open RAN

A large part of RAN investment relates to the cost of the radio unit (RU) and its deployment on the tower, rooftop or a similar location. It is often claimed that open RAN RUs (O-RUs) will be less expensive than RUs deployed as part of an integrated RAN because the open fronthaul interface will enable a more competitive market and reduce margin stacking on radio hardware equipment by big incumbent vendors. A common counterclaim is that the bill of materials is similar for integrated and open RUs and, because cost is related to volume and R&D investment, fragmenting the market will not greatly reduce prices.

The latest Heavy Reading Open RAN Operator Survey investigates this issue by asking operators about their expectations for RU pricing, features and performance.

On the cost question, the figure below shows that only 16% of operator respondents expect open RUs to be "significantly less expensive" than vendor-integrated radio products, which signals that the market is not anticipating a large overall RU cost reduction from open RAN. A sizable 35% expect pricing to be "about the same." The key section of the response, therefore, is the 46% expecting that "O-RU equipment will be a bit less expensive."

This shows operators want and expect lower cost RUs as a result of open RAN. However, the balance of the response indicates operators have a realistic view of what is achievable on the cost side of the open RAN equipment equation. On this evidence, a revolution in RAN hardware pricing does not look imminent. Moreover, it is normal in online surveys for operators to express a view that network technology products should be less expensive. Taking that bias into account strengthens the assessment that O-RU hardware pricing will likely be close to that of vendor-integrated RUs.

How does your company expect the cost of O-RU equipment to compare with vendor-integrated RAN radios?
n=82
(Source: Heavy Reading)
n=82
(Source: Heavy Reading)

Cost/performance trade-offs for O-Rus

How do operators think the O-RU price relates to features and performance? The table below shows about a third (33%) of respondents expect lower pricing, 28% are prepared to accept slightly lower performance and 20% expect fewer features. But the majority expect the price (60%), performance (60%) and features (68%) of O-RUs to be about the "same as integrated RUs." These results reinforce the analysis that operators in this survey are realistic about the trade-offs in radio hardware pricing.

Thinking about "white box" O-RUs, what are your company's expectations for performance, features and price compared to integrated RU options?
(n=81-82)
(Source: Heavy Reading)
(n=81–82)
(Source: Heavy Reading)

It is worth noting, though, that this response is not uniform across the survey base. A full 62% of respondents in R&D and technical strategy roles expect lower pricing for O-RUs without an equivalent decrease in performance or features, versus just 23% in network operations, network planning and engineering roles. It is tempting to conclude that this reflects the difference between the R&D and strategy ivory tower and the real-world experience of network operations. However, it may be that price declines are not yet apparent to daily operations people because open RAN is not yet in production at scale outside a few lead operators. On this view, there remains an opportunity for the open RAN ecosystem to drive lower RU hardware costs for operators.

To download a copy of the 2021 Heavy Reading Open RAN Operator Survey, click here.

— Gabriel Brown, Principal Analyst, Heavy Reading

This blog is sponsored by Analog Devices.

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