Open RAN surgery is a bit like human organ transplant. The operator takes its network patient, introduces components donated by a third party and prays they are not rejected by the underlying system. The problem of incompatibility between parts and software that come from different suppliers is the very thing open RAN was supposed to fix. Yet more than four years after the formation of the O-RAN Alliance, the group tasked with that challenge, combining vendors remains tricky.

There is still no such thing as "plug and play," the ideal of quickly transplanting Samsung radio units (RUs) into a system built by Nokia and then immediately hitting go. Instead, operators and vendors spend weeks, months or even years doing integration trials and checks away from or on a tiny part of the main commercial network. Deutsche Telekom has an "O-RAN Town" in Neubrandenburg. France's Orange is doing the same in Lannion with its Pikeo project. More than two years after saying it would replace 2,500 Huawei sites in the UK with open RAN technology, Vodafone has activated one of them.

"You cannot go and take one supplier's RU and connect it randomly to another supplier's DU [distributed unit, responsible for baseband processing]," said Tommi Uitto, the head of Nokia's mobile business, during an interview with Light Reading before the summer. "The standard is still too open and so you need this type of systems integration work between the RU and the DU. Practically, it means that if you disaggregate the basestation then someone has to reaggregate it. And there is a cost with reaggregation because it is not plug and play."

Two related alternatives to using a costly external or internal reaggregator have emerged. The first is to choose suppliers that have already proven their compatibility on a commercial deployment or even formalized a partnership. An outstanding example would be NEC and Altiostar (owned by Rakuten). In Japan, the former's radios are used in conjunction with the latter's baseband software to support Rakuten's 5G services. NEC and Rakuten are also building a greenfield network for Germany's 1&1 and participating in trials with Spain's Telefónica.

Single-vendor rollouts on the rise

The question is what makes this arrangement any better than buying a pre-integrated system from someone like Ericsson. The guarantee of compatibility comes not from any open RAN specifications – even if they are being used – but from the hard work behind the scenes before operators catch any glimpse of the technology. The only real difference is that a customer gains two commercial partners instead of one.

But some operators are evidently going further, relying heavily on one vendor for open RAN. There were signs of this when Vodafone revealed that South Korea's Samsung would provide not only RUs but also DU software for its Huawei swap-out in the west of the UK (although Vodafone does have numerous other suppliers in the mix). More recently, there has been the suggestion that major US operators have this year embarked on single-vendor open RAN deployments.

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It comes from the latest update by Dell'Oro, a market research company that tracks telco spending on network equipment. Among Dell'Oro's various observations is that activity by brownfield networks in North America gave a spur to open RAN in the first six months of this year. Dell'Oro now expects open RAN to account for 5% of total RAN spending this year, a higher percentage than it had previously forecast.

Dell'Oro counts single- and multivendor deployments in its open RAN database, and the mix is shifting, says Stefan Pongratz, the vice president in charge of Dell'Oro's RAN research. "The lion's share of the deployments to date have been multivendor, though this ratio started changing in the first half as the brownfield share outside of Japan is growing," he told Light Reading via email.

Both AT&T and Verizon have talked up their interest in open RAN, and both are deploying 5G partly with Samsung, a company Dell'Oro identifies as the top vendor of open RAN products for the first half of 2022. The implication is that Samsung has started to supply open RAN-compatible products to one or both of its big US customers.

NEC expands

What's interesting is that NEC also ranks among Dell'Oro's top three open RAN vendors for the first six months of the year (the other one is Japan's Fujitsu, meaning all three of them are Asian firms). Rather like Samsung, NEC does not fit the definition of a specialist that is focused on one bit of the RAN and would by nature have to form part of a multivendor rollout. Although it is usually associated with RUs, it has been expanding fast into other areas.

This was illustrated by NEC during an analyst presentation last week, when the company listed its various offerings and strategic priorities. Besides O-RUs (open radio units), NEC can also currently provide DUs and central units (CUs), its slides show. Effectively, an operator could have an open RAN deployment where all the main components come from NEC. Service management and orchestration (SMO) is being added to the portfolio.

Figure 1: NEC growth objectives (Source: NEC)

While NEC also boasts systems integration expertise for multivendor jobs, its growth ambitions will be tough to achieve without success across the portfolio, said James Crawshaw, a principal analyst with Omdia, in a recent LinkedIn post. "It seems like profit margins on O-RU hardware are thin," he wrote. "NEC needs to succeed in CU/DU, 5GC [5G core], SMO, systems integration and value-added solutions to make good money."

The company goal is to generate about 700 billion Japanese yen (US$4.9 billion) at the network services business in 2025, along with an operating margin of 10%. This would include about JPY190 billion ($1.3 billion) from global 5G revenues, but it would require NEC to outperform rivals and improve profitability. Last year, it made JPY511.5 billion ($3.6 billion) in sales, including just JPY57 billion ($400 million) from 5G, and had an operating margin of only 7%. The comparable figure at Ericsson's networks division was 22.2%.

At a press event in June, Vodafone representatives scoffed when told of Nokia's griping. It would obviously suit the Finnish company – as one of the big kit vendors that open RAN could challenge – to knock the technology. Yet if Uitto were wrong, multivendor rollouts would surely be happening faster.

For all his criticism, he believes plug-and-play technology will eventually arrive. But if that takes years, open RAN in the 5G era could necessitate some awkward trade-offs. Networks are either multivendor and expensively reaggregated or they rely heavily on single suppliers and partnerships with pre-integrated products. And that remains a long way from what open RAN first promised.

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— Iain Morris, International Editor, Light Reading