Why Resistance to the Open RAN May Crumble
But skeptics doubt any such transition will be straightforward. The RAN rebellion is bound to hit resistance from the prison guards, they argue. After all, Ericsson, Huawei and Nokia Corp. (NYSE: NOK), the third member of the global equipment triumvirate, have profited handsomely from RAN lock-in, giving them little incentive to change. As it tries to grow its share of the baseband market, Ericsson knows customers will have to buy its compatible radio gear when they start to roll out 5G services.
Yet Nokia, perhaps counter-intuitively, is already a member of the xRAN Forum. While the open RAN would seem a challenge to its own business model, the Finnish company possibly sees greater risk in trying to hold back the tide. "The voice from the big operators is pretty strong on this now," says Brown. "There is a lot of pressure from the buyers to do this, and with the ORAN Alliance there is one group for the industry to get behind."
Interestingly, Nokia is already participating in more open arrangements with its customers. Several months ago it announced a deal with Japan's NTT DoCoMo Inc. (NYSE: DCM), an ORAN Alliance member, to provide baseband units that are compatible with radios from a different vendor. "DoCoMo could be using Fujitsu or NEC," says Brown. "It is already happening in the sense that the big vendors use OEM [original equipment manufacturer] partners, or work in collaboration with an operator."
Could Ericsson similarly relinquish its keys? When Light Reading last contacted Ericsson on this topic in April, it sounded wary. "We welcome all discussions around openness. However, we have currently no public statement on the ORAN Alliance," said a company spokesperson. "We are in continuous contact with our operator customers and other shareholders in the industry, also the ones currently associated with ORAN, to ensure we continue to develop the right products that make operators successful in their markets and satisfy their end users' needs in the best way possible." (See Nokia Seizes Open RAN Initiative as Ericsson Holds Back.)
Joining the ORAN Alliance would clearly be a trickier step for Ericsson than it has been for Nokia. For starters, the Swedish company is obviously more dependent on the mobile market than its Finnish rival. Under its current strategy, its chief focus seems to be 5G market leadership on existing market principles. Current CEO Börje Ekholm does not seem like one for daring gambits. Ericsson has also steered clear of other associations set up to promote openness. That includes Facebook's Telecom Infra Project, which is also developing open RAN technologies and counts Nokia as one of its biggest members. (See Facebook's TIP Seizes vRAN Initiative From 3GPP.)
Yet Heavy Reading's Brown expects Ericsson to participate in the ORAN Alliance in the not-too-distant future. In his view, the growing pressure from service providers is a natural response to waves of industry consolidation that have reduced RAN supplier numbers from eight to just three or four globally. The operator pressure will be hard to resist, says Brown, and the historical narrative undermines the argument that Ericsson has some kind of "Machiavellian plan" to block the open RAN.
"The reality is market forces have driven consolidation in RAN and to ignore that is narrow-minded," says Brown. "Operators will push Ericsson to do it and I don't think Ericsson is philosophically against it. I expect them to participate."
Moreover, an open RAN could throw up new opportunities for Ericsson and its kin. Given the challenge of integrating technologies from multiple suppliers, systems integrators could figure prominently in operators' plans. If traditional equipment makers do not try to fill this role, technology companies like India's Tech Mahindra Ltd. could step into the vacuum. "They have expressed interest and could potentially do it," says Brown. Tech Mahindra, intriguingly, took a 17.5% stake in Altiostar, a company developing virtualized RAN products, at the start of the year.
Innovation on the radio side could also drive both operators and vendors toward the open RAN. Instead of waiting for Ericsson or Nokia to handle a particular request, an operator could turn to a smaller, faster-moving radio specialist. And through partnerships with specialists, Ericsson and Nokia could themselves better satisfy customer needs in a timely fashion.
"At the moment, for example, if an operator needs a certain type of product to meet a rural coverage requirement for regulatory reasons, it might not be that high on the priority list for an equipment maker with hundreds of customers," says Brown. "There is a lot of innovation in radio products, but the process of OEM integration slows down the rate at which this innovation can be deployed."
The development of a "white box" market for radio gear is unlikely to happen fast. One of the challenges will be stimulating independent radio vendors to develop products. As with the virtualization of core networks, concern about the operational complexity of managing different suppliers remains paramount. And what sounds good on paper might not turn out exactly as planned. But Nokia's involvement in the ORAN Alliance is already a sign the jailers are switching sides. With Ericsson's participation, even as a relatively silent partner, the RAN prison would be on even shakier ground. (See vRAN Tech Hits Resistance at SK Telecom and Orange: Still No Clear Business Case for vRAN.)
— Iain Morris, International Editor, Light Reading