Startup Could Replace Ericsson, Says Orange
A tiny startup that says its software can turn PCs into mobile basestations could be a viable alternative to 110,000-employee-strong Ericsson in telcos' national networks, according to a senior technology executive at France's Orange.
Lilliputian Amarisoft this week became one of four network startups to secure backing from Orange (NYSE: FTE) and social networking giant Facebook as part of a new initiative to support young telecom infrastructure players. (See Orange, VCs Commit $113M to Network Startups as 'Black Box' Frustration Mounts.)
Bertrand Rojat, the deputy vice president of Orange's Technocentre R&D unit, tells Light Reading that Orange's main objective is to "get into a commercial relationship" with the startups after ensuring their technologies can work in large networks.
Rojat says it is entirely conceivable that Amarisoft -- along with another startup it is supporting called Athonet -- could displace Ericsson AB (Nasdaq: ERIC) in the future on a national scale.
"These two startups are developing full software core networks and I believe for us it is a very interesting alternative to our regular way of working," he said. "The challenge is scaling the solution -- we are talking about millions of subscribers -- and that is the kind of thing we will have to test."
His remarks point to the upheaval taking place in the telecom sector as operators take advantage of new software and virtualization technologies and look to sever ties with the large equipment incumbents.
That a startup with just a handful of employees could represent a serious alternative to a giant such as Ericsson would have been unthinkable only a few years ago and illustrates the dramatic impact that software and "cloud" technologies are having on the market.
It is also a sign of telcos' growing frustration with existing suppliers and the slow pace of network innovation.
The likes of AT&T Inc. (NYSE: T) and Orange have previously complained that vendors have become too powerful, tying their customers into long contracts based on proprietary technology. Germany's Deutsche Telekom AG (NYSE: DT) has suggested some vendors could be forced out of business as operators look for more innovative, software-based technologies in the 5G era.
Amarisoft claims that its software covers the basestation and network backbone and can operate on standard-PC type equipment. This virtualization of the radio access network is perhaps one of the biggest challenges facing companies like Ericsson, Huawei Technologies Co. Ltd. and Nokia Corp. (NYSE: NOK) that have thrived in a more hardware-based mobile infrastructure market.
It is also one of the biggest priorities for mobile operators, according to Facebook, which has become a hugely disruptive force in the network market over the past year.
With its Telecom Infra Project (TIP), launched in early 2016, the Internet company is trying to speed up the pace of network innovation, and reduce equipment costs, through "open" collaboration with players from all parts of the ecosystem. (See Facebook: TIP Will Open Telecom Hardware.)
"One of the reasons we did this was to hear from mobile operators what their needs are and we hear that V-RAN [virtual radio access network] is very high on the list," said Steve Jarrett, Facebook's head of infrastructure partnerships for Europe and the Middle East, during an investor event at Orange's offices in Paris earlier this week.
The V-RAN market is poised to grow at a compound annual growth rate of 125% over the next three years, with V-RAN deployments accounting for a market worth $2.6 billion in 2020, according to SNS Research.
But Amarisoft CEO Franck Spinelli says that convincing investors and operators to back his company against the big guns is not easy.
"Ericsson and Nokia are service companies that can bring 11 people to a meeting with Orange, whereas we don't have 11 people in the company," he said at Orange's investor event. "I need to prove to people like Orange that what we do is of the same quality as a Nokia basestation."
The support from Orange and Facebook should put Amarisoft in direct contact with a large community of mobile operators through TIP, as well as the French operator's Go Ignite initiative with Deutsche Telekom, Telefónica and Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY).
"If we have a startup that is good for one of us, then it might be good for all of us," says Rojat.
Spinelli's other big concern is about the growing telco emphasis on open source technology, which he describes as "incompatible" with Amarisoft's business model. (See Open Sores: Are Telcos on a Collision Course With Vendors?)
He said that Amarisoft had encountered "strong resistance" within TIP, which is widely perceived to be an open source project, and expressed disappointment with the Facebook initiative so far.
Responding to those criticisms, Facebook's Jarrett this week announced plans to set up a new group that would support technology licensing on so-called "reasonable and non-discriminatory" (or RAND) terms. (See Facebook Takes TIP in New Direction as Investors Doubt Open Source Payback.)
However, Deutsche Telekom's Axel Clauberg, who has been heavily involved with TIP, insists that RAND has always been an option for TIP's working groups and that most of the existing ones have been set up with this approach in mind.
On the vendor side, TIP members Nokia and Adtran Inc. (Nasdaq: ADTN) declined to comment on the group's latest move away from open source. Executives at ADVA Optical Networking (Frankfurt: ADV) and Infinera Corp. (Nasdaq: INFN), which are also involved with the project, did not respond to requests for comment.
— Iain Morris, , News Editor, Light Reading