Open RAN, according to research firm Dell'Oro, is gaining a fair bit of traction. So much so that it has taken Dell'Oro analyst Stefan Pongratz a little by surprise.
"We did not expect open RAN to already comprise a low-single digit share of the overall RAN market," he told Light Reading via email.
Dell'Oro has released its latest open RAN report, which, according to preliminary findings, forecasts that the nascent tech will account for around 15% of the overall 2G-5G RAN market by 2026.
The upbeat projection, said Dell'Oro, reflected “healthy traction in multiple regions”, both for basic and advanced radios. Open RAN is here to stay, it concludes, and the architecture will play an important role before 6G.
"We've talked about C-RAN, cloud RAN, virtual RAN, and open interfaces for a long time, so some skepticism about the open RAN movement was clearly warranted and might have impacted the expectations for open RAN," explained Pongratz as a way of background.
"So, given where we are today, we can safely conclude that the movement has come much further than expected both from a commitment perspective and from a commercialization perspective."
According to Dell'Oro, most of the initial open RAN action can be found in the Asia-Pacific region. This geographical tilt looks set to continue. The research firm reckons the region will account for more than 40% of total open RAN revenues through the 2021 to 2026 forecast period
The shift towards virtualized RAN (vRAN) is apparently not progressing as fast as open RAN, however. With projections mostly unchanged, Dell'Oro thinks vRAN will account for between 5% and 10% of the overall RAN market by 2026.
Question marks over TCO and trad suppliers
The Dell'Oro press release stated that risks around its open RAN projections remained "broadly balanced," although it caveated that the downside risks "have increased slightly since the last forecast update."
Pongratz elaborated via email. "There are risks in both directions," he said, “but when it comes to risks that have increased, the main risk we see is that more operators are more skeptical now about the TCO [total cost of ownership] upside when comparing open and proprietary RAN."
Another potential downside, said Pongratz, was an emerging "technology gap" between "new" and traditional RAN suppliers.
"The [gap] continues to trend in the wrong direction, [which] forms the basis for some of the increased downward risks," he continued.
"While this is not enough to derail the positive momentum behind open RAN, it is of course something we are monitoring."
5G boost to RAN market, but China growth slowing
Open RAN projections came quickly on the heels of another Dell'Oro forecast covering the overall 2G‑5G RAN market. Helped by 5G adoption, Dell'Oro estimates cumulative worldwide RAN revenues for the 2021 to 2026 period will be nearly $250 billion.
5G accounted for more than half the RAN market in 2021, said Pongratz, and is set to comprise around 75% of cumulative capex during 2021 to 2026.
"Even with the elevated baseline and risks surrounding the pandemic and the supply chain increasing, we believe that the RAN market will not only continue to trend upward over the near term, but we are also more optimistic about the long-term 5G prospects," he said.
In China, however, the RAN market is expected to peak in 2021/2022 and account for 25% to 30% of the overall market over the five-year period.
"China has been a major growth driver since the RAN upswing began in 2H 2018 but following years of robust growth to support on-going 5G rollouts, the elevated baseline is expected to impact growth prospects going forward," explained Pongratz.
"RAN revenues in China are expected to decline at a faster pace than the global RAN market over the forecast period."
- Vodafone's first 5G open RAN site goes live – minus antennas
- Telefónica sees the smaller open RAN picture in Germany
- European telco VC arms have shown minimal interest in open RAN
- 2021 Heavy Reading Open RAN Operator Survey
— Ken Wieland, contributing editor, special to Light Reading