2023 in review: Open RAN not working out as planned

Barely a day has passed this year without some mention of open radio access network (RAN) technology in the telecom press. Why all the attention? The concept would certainly not strike any layperson as very exciting. In essence, it allows a telco to build a mobile site using parts and products from multiple suppliers. The lack of open interfaces between those various components has made this difficult – and so most mobile network operators buy the whole system from a single vendor.

But critics say these closed interfaces have cosseted an oligopoly of Ericsson, Huawei and Nokia and made it hard for anyone else to compete. The logic is compelling. A small company focused on developing a specific kind of radio cannot sell directly to a telco, which also needs compatible baseband equipment and software. With new interfaces, the telco could slot those radios into a network otherwise provided by Ericsson, and shazam – the whole thing should work.

The hijacking of the open RAN concept by politicians explains much of the interest. In countries such as the US and UK, where Huawei is now banned, authorities see open RAN as a way to nurture homegrown vendors or at least cultivate alternatives to Ericsson and Nokia. Amid geopolitical strife and protectionism, there is growing concern about national dependency on just two foreign providers for something deemed as important as mobile connectivity.

Related:What's the Story? The reverberating revenue ramifications of the AT&T and Ericsson open RAN deal

RAN spending declines

But open RAN is not working out as originally planned. Struggling to make an impact, smaller companies like Mavenir and Parallel Wireless have stopped specializing (both were originally focused on RAN software) and expanded into other product areas. Sustaining this, given the R&D demands, will be tough.

Moreover, this year has been marked by a decline in RAN spending. Omdia, a sister company to Light Reading, expects the global market to generate just $40.2 billion in revenues, about 11% less than it made last year. The outlook, as far as some challengers are concerned, looks bleak. Japan's NEC had previously expected to make 85.4 billion Japanese yen (US$600 million) in 5G revenues outside Japan for the 2026 fiscal year. This month, that forecast was cut to as little as JPY31 billion ($220 million).

Operators, meanwhile, have continued to wrestle with the difficulty of combining vendors. New interfaces do not appear to have made the job of systems integration much easier. But appointing a third-party systems integrator means paying someone else to do it and relying on their expertise. And the do-it-yourself alternative involves hiring or training staff at some expense.

The year has ended with a bang – the announcement of a big contract between AT&T and Ericsson. But this most talked about open RAN deal does not look very open. It will see AT&T remove Nokia from about a third of its network and switch largely to Ericsson, which was already AT&T's other RAN vendor. AT&T has indicated it will use Ericsson for both baseband and radio at many sites. Fujitsu, the only other radio vendor named in the announcement, was already integrated with Ericsson's 5G system. If this is a sign of what's to come, open RAN will make very little difference.

With all that in mind, here's a roundup of some of the top open RAN stories from Light Reading this year: