Picking winners and channeling taxpayer funds into preferred technologies or companies is not usually associated with democratically elected, right-of-center governments. But it seems routine under Boris Johnson and his Conservative Party in the UK. Not since the lost Labour years of the 1970s has the state interfered so much in industry. And perhaps nowhere is it more evident than in telecom.
It began last year when authorities slapped a future ban on Huawei, a Chinese equipment vendor responsible for much of the country's mobile infrastructure. Bowing to pressure from the Trump administration, which saw Huawei as a conduit for Chinese spies, the Brits immediately began to panic about the consequences of losing access to the world's biggest equipment maker.
The UK, along with just about everyone else, had raised no objections for years as the supplier market consolidated into a handful of titans. After those epic contortions, ridding the UK of Chinese vendors would leave it at the mercy of Ericsson and Nokia, the only other scale vendors. Building a rival from scratch would be almost impossible.
The answer, decided the Johnson government, was something called open RAN. With it, an operator would – thanks to more interoperable technologies – be able to mix products from different suppliers at the same mobile site, instead of buying from one vendor's system. In theory, this would unlock the gates for technology specialists and fuel competition. Ministers spotted an opportunity to cultivate a local ecosystem of suppliers – something the UK had not enjoyed since the days of Marconi. Taxpayer funds were promised.
Late to the 5G party
The sad reality is that open RAN – for all its attractions – remains woefully inadequate today and largely unproven outside a few markets where its disciples are mainly greenfield operators. Brownfield players expect to overcome technical niggles by the mid-2020s. But the commercial case for open RAN looks questionable, and it has probably arrived too late for 5G.
The contracts Huawei has lost due to government restrictions have already gone mainly to Ericsson and Nokia. Only Vodafone has carved out space for new open RAN players, and they are limited for now to about 2,500 rural sites (Vodafone has 19,000 sites altogether). By the time open RAN measures up, 5G will have been widely deployed. To use it at scale, operators would have to rip out that 5G equipment and write off the cost – or run an open RAN network in parallel.
Realization has dawned on Johnson's government, which now seems to have backed away from issuing mandates. Its latest statement will come as a huge disappointment to open RAN's zealots. It includes a rather limp ambition for 35% of UK mobile traffic to be carried over "open and interoperable" RAN technology by 2030. Nowhere does it insist these 2030 networks must come from alternatives to Ericsson and Nokia.
In other words, the government has decided the advice of its own telecom taskforce is unrealistic. "We recommend the government sets a challenging ambition to work toward a significant portion of equipment within mobile operators' networks being supplied by new suppliers and/or through open architectures," that group said in April. "The taskforce believes 25% by the mid-2020s should be the initial aspiration for mobile operators."
Arguably the main problem for brownfield operators determined to build open RAN networks is the lack of support for 2G and 3G, still widely used in the UK. The O-RAN Alliance, the group developing open RAN specifications, has not considered them, and few open RAN specialists have 2G or 3G products. Vodafone has indicated it will have to wait for 3G phaseout before switching on open RAN or run two networks in parallel.
UK authorities have weighed into this area, too, setting 2033 as the date when both 2G and 3G will be turned off. The hope, clearly, is that an effective deadline gives the industry something to aim for. But 2033 is a long way off. By then, operators may be three years into their rollout of 6G, judging by industry time cycles. The expectation that at least 2G may survive this long is probably realistic – it is still the only option for global voice roaming. But the implication is that operators will be heavily reliant on Ericsson and Nokia until then.
Nokia, unsurprisingly, had an upbeat take on today's statement. "Nokia welcomes the UK government's announcement relating to the deployment of open and interoperable networks," it said in its response. "Nokia has long been a champion of open networks and we are the leading contributor to the O-RAN Alliance's technical work."
What remains entirely unclear is whether the government and operator goal of diversification is achievable or even desirable. Some of the logic is dubious at best and flawed at worst. Breaking up today's RAN systems market into various sub-markets (baseband software, baseband hardware, radio chips, cloud platforms and so on) does not mean each sub-market will field plenty of competitors. Oligopolies are already apparent throughout the value chain – in semiconductor manufacturing, for instance. Operators might be trading an uncomfortably close relationship with Ericsson for numerous awkward dependencies.
Nor is every operator keen to use additional suppliers. "I don't think we'd increase dramatically the number of suppliers we work with purely because it is hard to manage that integration and manage them all together," said Neil McRae, the chief architect of UK incumbent BT, at a recent press event. Open RAN, for BT, could mean buying compatible products from the same suppliers – or swapping one big vendor for another.
Such factors have not stopped Johnson's government from flinging £250 million (US$330 million) at telecom diversification, a figure too low to make a serious impact but high enough to raise hackles. The main groups behind the UK's mobile networks (BT, Liberty Global, Telefónica, CK Hutchison and Vodafone) generate several billion dollars each year in net profit from telecom activities. If the market has decided open RAN makes sense, the market should be able to fund it.
BT, at least, seems happy there are no mandates attached to the latest government announcement. Forcing operators down a strange avenue would not sound wise, but for a while it seemed possible. And in a world where cloud king AWS suffers outages and chips giant TSMC's home is threatened by Chinese invasion, dependency on two Nordic firms is probably the last thing to fear.
- Europe's $200B telcos are still pleading for open RAN handouts
- BT takes aim at open RAN myths
- Open RAN has a 2G Achilles' heel
- Vodafone UK says 3G 'holding back' open RAN plan
- Britain's got open RAN talent, hopes clueless govt.
— Iain Morris, International Editor, Light Reading