Open RAN sharing is the next possible blow to kit vendorsOpen RAN sharing is the next possible blow to kit vendors

Much has been said about open radio access network (RAN) technology as a matchmaker between formerly incompatible vendors. This, after all, is supposedly its big selling point. But it might turn out to be more important for uniting telcos, rather than vendors, at the same mobile site.

A Romanian deployment by Orange and Vodafone seems to flip the whole open RAN concept on its head. Samsung is the sole RAN vendor at multiple sites shared by the two operators. While RAN sharing is possible in traditional networks, it is made easier by open RAN, says Orange. If the approach takes off, it could have nasty consequences for RAN suppliers.

The industry is already in bad shape this year after spending cuts by telcos in large and profitable markets. RAN product sales dropped 11% in 2023, according to Omdia, a Light Reading sister company, whose latest research forecasts another revenue decline of between 7% and 9% this year. The sharing of RAN kit, allowing telcos to save even more, can be only a negative for the companies that sell it.

What could seem counterintuitive, then, is the enthusiasm kit majors like Ericsson and Nokia have for telco mergers that may appear to have similar effects. Without remedies, a proposed tie-up between Vodafone and Three in the UK, for instance, would reduce the number of mobile networks there from four to three. Effectively, it would eliminate a prospective customer for RAN suppliers.

The telco logic, however, is that a combined Vodafone and Three with a single network would have more customers, lower costs and better returns. It would be in a stronger position and more inclined to invest in network products (Three cut expenditure last year, it likes to point out). Under pressure from a newly invigorated competitor, other telcos would have to spend more, too. Ericsson, Nokia and others have bought into this narrative.

Yet the situation in Romania is very different. Four mobile network operators (MNOs) are currently active there, and network sharing has no impact on the subscriber numbers per company. Each telco's primary motivation is probably to slash expenditure as a percentage of sales. "The main objectives of such a RAN sharing model are indeed to share costs but also to reduce the energy consumption by sharing hardware and the technical environment," said Orange, answering questions by email.

Of course, equipment vendors will applaud RAN sharing if the alternative is even lower RAN expenditure. Samsung, moreover, has no substantial Romanian business to defend. Instead, it is replacing the out-of-favor Huawei, which previously supplied all the 4G kit for Orange and Vodafone.

Anxious days for kit vendors

There is already nervousness about open RAN among towercos, the companies that lease space on masts where operators can install their RAN equipment (some towercos now lease the RAN equipment as well). Their concern is partly that centralization of RAN compute products in data centers would mean telcos need less tower space, said Dean Bubley, an analyst with Disruptive Wireless, in a recent LinkedIn post. In open RAN architecture, central units (CUs) and distributed units (DUs) responsible for RAN compute can be separated and distanced from radio units (RUs) atop masts.

The next worry for those towercos is the sort of arrangement that Orange and Vodafone are pursuing. "In the longer run, they're also concerned MNOs might start sharing RUs, breaking out to separate DUs, rather than each having its own end-to-end infrastructure," wrote Bubley. "If you depend on multi-tenancy business models for tower assets, that's not a pleasant prospect – but it does align with often claimed potential cost savings from open RAN." By implication, this is just as much of a concern for RU vendors as it is for towercos.

But why would open RAN make sharing easier? After all, Orange already claims to be sharing the whole of its traditional rural network in Romania. It also says nearly 50% of the sites within its entire European footprint are shared. Meanwhile, today's open RAN pilot in Romania covers only a "cluster" of sites, Orange admits.

The company's rationale, as described in a previous online update, is that operators sharing a traditional RAN must align their software decisions. The disaggregation that comes with open RAN means they can pursue different choices and have more technology independence from each other.

"Indeed, thanks to the containerization of network functions on cloud infrastructure, it will be possible for operators to run different vRAN [virtual RAN] software versions on the same shared hardware, and ultimately even from different RAN vendors, which is not possible with traditional RAN on purpose-built hardware," Orange told Light Reading.

Its assessment seems broadly to align with Bubley's observations about separate DUs (or DU software stacks) and shared RUs. But if this proved much more popular than building entirely separate networks, it could shrink the market for RUs. According to Vodafone, these account for as much as 50% of total RAN spending. And given open RAN's advantages, Orange plans to extend sharing beyond 50% of the European footprint in the future, it told Light Reading.

Sharing limitations

RU sharing might have its limits. Orange and Vodafone appear to be doing it only in rural parts of Romania, preferring to build separate networks for more densely populated areas. In the busiest towns and cities, one RU might have insufficient instantaneous bandwidth (IBW), a measure of the maximum bandwidth range, to support the traffic load generated by two sets of customers.

Orange, however, says this concern is now fading. "The RU supported bandwidth, in particular the IBW, may have been indeed an issue in certain cases of RAN sharing in 3.5 GHz with large gaps between spectrum allocations of operators in the early days," it told Light Reading. With massive MIMO, a more advanced 5G technology, "antennas are not constrained anymore, allowing the full bandwidths of both operators to be transmitted without restrictions," it said.

In their latest open RAN update, Orange and Vodafone note that chips and servers come from Intel and Dell respectively, with the virtualization platform supplied by Wind River. For both operators, though, Samsung is providing not just RUs – covering the 2G, 4G and 5G standards – but also the RAN software. Multivendor may seem like a nice option in the future, but single-vendor open RAN is the dominant strain right now.