Open RAN players are in retreat, losing market share last yearOpen RAN players are in retreat, losing market share last year

A recent report from Omdia, seized on by Ericsson, is further proof that open RAN is failing to hit its original targets.

Iain Morris, International Editor

July 8, 2024

6 Min Read
Nokia's stand at Mobile World Congress
Nokia grew its share of the radio access network market last year, according to Omdia.(Source: Nokia)

This year, the open radio access network (RAN), as a specifications initiative, turned six, the age when many youngsters seem to have a switch that toggles between hyperactivity and deep-sleep mode. But there is barely a flicker of life within the class of open RAN. Wannabe Davids aiming their slingshots at the RAN Goliaths of Ericsson, Huawei and Nokia have stumbled, according to new data from Omdia, a Light Reading sister company. The mood within the camp is undoubtedly somber.

Published in May, and reproduced in full on Ericsson's website, the Omdia data calculates the market shares held by RAN vendors worldwide. When Omdia released its 2022 report, the big three had a combined market share of 74.9%, with China's ZTE and South Korea's Samsung claiming another 19.7%. This left everyone else with 5.4% of a shrinking market. Last year, the share of these challengers fell to just 4.9%, the latest figures show. Far from diversifying their base of suppliers, telcos have leaned even more heavily on the incumbents.

To recap, open RAN's original purpose was to cultivate competition by unlocking the interfaces that link one part of the RAN to another. In the old world, these interfaces included proprietary technologies that made it hard or even impossible to combine different vendors at the same mobile site. An operator buying Ericsson's radios also had to use Ericsson's baseband, connected through a maligned fronthaul interface known as CPRI. 

With the open fronthaul interface conceived by the O-RAN Alliance, the specs body founded in 2018, that operator would theoretically be able to pair those Ericsson radios with another baseband vendor. Fronthaul has remained the priority for big operators, simply because radio and baseband technologies account for most of their spending. But open interfaces for other RAN components are also now an objective.

Mission failure

Why would this boost competition, and to whose benefit? The logic was that creating an Ericsson or Nokia from scratch would be too onerous. Radio and software specialists already existed, but they had been excluded from tenders because CPRI and other proprietary interfaces forced operators to buy a fully integrated RAN featuring all the necessary parts. Open interfaces would give these companies the opportunity of a role.

The concept received a boost from the US and European backlash against the Chinese vendors. Judged a security threat by western policymakers, Huawei and ZTE have faced restrictions or outright bans in numerous countries. Such moves, however, have not been popular with their telco customers. Operators have insisted that Huawei's 5G technology was superior to anything available from Ericsson or Nokia, and a Nordic duopoly looked unwelcome. Open RAN promised geopolitically acceptable alternatives.

But Omdia's data shows the initiative has largely failed to have any impact on the composition of the RAN market. Far from giving work to specialists, most operators forced to replace Huawei have turned to Ericsson and Nokia instead. Outside China, Ericsson's RAN market share rose from 33% in 2017 to 39% in 2022, the Swedish company has claimed. Nokia, despite setbacks in the US, grew its 5G market share outside China from 23% in 2021 to about 29% in 2023, CEO Pekka Lundmark told Light Reading in December last year. This week, it boasted a 5G contract with Portugal's MEO, previously reliant on Huawei.

Omdia's numbers show that Huawei, Ericsson and Nokia collectively grew their RAN market share from 74.9% in 2022 to 75.1% last year, giving them about $30 billion in total revenues. While Huawei's market share was unchanged at 31.3%, Ericsson's dipped by 1.4 percentage points, to 24.3%, with Nokia's up 1.7 percentage points, to 19.5%.

None of this means Ericsson and Nokia are in good health. Telco spending on the RAN fell by nearly $5 billion last year, to about $40 billion, according to Omdia, which predicts it will drop another $3.2 billion (at the midpoint of its forecast range) in 2024. North American telcos have been whittling down stockpiles they amassed after the pandemic rather than buying fresh supplies. Elsewhere, service providers unable to increase their own revenues have slashed spending on equipment. Ericsson and Nokia are cutting thousands of jobs.

Weak challenge

Yet the situation for smaller challengers looks even worse. Omdia's data implies the revenues generated by companies outside the big five (of Huawei, Ericsson, Nokia, ZTE and Samsung) fell from about $2.43 billion in 2022 to $1.96 billion last year. Even if the challengers manage to defend their turf, their sales will fall to $1.8 billion in 2024, according to the midpoint of Omdia's forecast. 

The data also shows that Japan's NEC and Fujitsu account for a big chunk of the challenger revenues, leaving everybody else with sales of about $1.08 billion last year. This would have been divided among companies including Airspan, CICT Mobile, Comba and Mavenir – all of which are analyzed separately in Omdia's latest report on market shares – as well as other well-known open RAN names such as Parallel Wireless and Rakuten Symphony.

Financial disclosures by some of those companies reveal the difficulties they face. In April, Airspan filed for Chapter 11 bankruptcy protection months after its last quarterly filing with the Securities and Exchange Commission showed that revenues fell from $41 million for the September-ending quarter of 2022 to $14 million for the same period a year later. Rakuten Symphony's revenues – which cover more than RAN sales – were down from $476 million in 2022 to $393 million last year. In a strategic shift, it is now licensing its RAN software to other suppliers instead of targeting telcos.

Samsung is arguably open RAN's only big winner, picking up a few deals with Tier 1 telcos and demonstrating compatibility with other suppliers. But it has also reported falling network revenues and been cutting jobs at its RAN unit. And it was already active in 4G, providing all the kit for Reliance Jio, now India's biggest telco, before the O-RAN Alliance even existed. According to Omdia's data, moreover, its RAN market share fell from 7.6% in 2022 to 6.1% last year.

Judging by the size of contracts and compliance with O-RAN Alliance specs, the real big winner – ironically enough – is Ericsson. Its $14 billion deal with AT&T, announced in December, is not only the largest in its history but also cited as proof that both the vendor and its US telco customer are now industrializing open RAN technology.

Full compliance with specs, however, has not brought much opportunity for others, with Ericsson identified as the only baseband software supplier, the only provider of service management and orchestration technology, the only RAN Intelligent Controller, the only containers-as-a-service platform used for the RAN and the main vendor of radios. The convenience and economic attractions of dealing with a single big vendor, it seems, are more important than diversity.

Read more about:

AsiaEuropeOmdia

About the Author

Iain Morris

International Editor, Light Reading

Iain Morris joined Light Reading as News Editor at the start of 2015 -- and we mean, right at the start. His friends and family were still singing Auld Lang Syne as Iain started sourcing New Year's Eve UK mobile network congestion statistics. Prior to boosting Light Reading's UK-based editorial team numbers (he is based in London, south of the river), Iain was a successful freelance writer and editor who had been covering the telecoms sector for the past 15 years. His work has appeared in publications including The Economist (classy!) and The Observer, besides a variety of trade and business journals. He was previously the lead telecoms analyst for the Economist Intelligence Unit, and before that worked as a features editor at Telecommunications magazine. Iain started out in telecoms as an editor at consulting and market-research company Analysys (now Analysys Mason).

Subscribe and receive the latest news from the industry.
Join 62,000+ members. Yes it's completely free.

You May Also Like