Edge Computing is So Fun Part 6: Why You Need to Embrace The Open RAN Ecosystem

The Cost of Building 5G Infrastructure

Have you ever wondered how much it will cost to build the 5G infrastructure? According to GSMA Intelligence’s CAPEX forecast, 5G will cost almost US $1 trillion to deploy over the next half-decade. With 5G, it will require more network densification, which means a lot of the capex investment will go into the RAN* (Radio Access Network.)

In fact, the share of RAN in total capex will grow from 62 per cent in 2018 to 86 per cent in 2025 (please see figure 1).

*In simple terms, a Radio Access Network (RAN) is part of a telecommunications system that connects individual devices such as our cell phones to other parts of a network through radio connections.

Figure 1. Capex investment for 5G. Source: GSMA Intelligence

The network operators are paying for the cost of building the 5G infrastructure to provide service to their customers and it has a huge impact to their revenue and market capitalization. The network operators have no choice but to find ways to lower their capex.

Why Open RAN (O-RAN)?

Since the share of RAN in capex is over 60% and rising, the most natural question to ask is how to make it cheaper and cost less to operate. And at the same time, there is increased pressure for the operators to complete their 5G rollouts.

To deal with the challenge associated with upgrading and rolling out networks, several operators (AT&T, China Mobile, Deutsche Telekom, NTT DOCOMO and Orange) created the O-RAN Alliance in February 2018 to drive the development of standards and technologies that would lead to Open RAN implementation. What they need is faster innovation, easier deployment, simplified operations, and a more competitive vendor ecosystem.

Open RAN will meet these needs by providing greater choice, flexibility and agility for network operators racing to deploy 5G. Open RAN also helps operators to speed service introduction and innovation, improve supply chain security, and reduce Opex and Capex.

Figure 2. O-RAN Alliance operator members

Figure 3. O-RAN Alliance NEMs and other contributors

The O-RAN Alliance now has over 300 mobile operators, vendors, and research & academic institutions operating in the Radio Access Network (RAN) industry worldwide. Please see figures 2 & 3 above.

You’re Crazy If You Don’t Embrace the Open RAN Ecosystem

Recently, Dell’Oro Group raised its Open RAN revenue forecast by 50% as the strong momentum behind the technology has continued to grow. It now believes the cumulative open RAN revenue from 2020 to 2025 could soar to as high as $15 billion, with open RAN revenues accounting for more than 10% of the overall RAN market by 2025. The market is moving at a faster pace than expected, especially in the APAC region.

With the US government providing more than $1.5 billion funding to support Open RAN and the Japanese government offering financial incentives and tax benefits for companies that develop, supply, and deploy Open RAN equipment, there is a growing concern of the future viability of a European ecosystem able to compete with other regions in the world.

Feeling that Europe as a whole is lagging behind other regions such as the U.S. and Japan in developing Open RAN, Deutsche Telekom, Orange, Telecom Italia, Telefónica, and Vodafone are calling upon European Union member states, policymakers, and industry to embrace the Open RAN ecosystem with the new report — “Building an Open RAN Ecosystem For Europe.”

To understand why embracing Open RAN should be an easy decision, we need to have a better understanding of what is Open RAN and what are the benefits of Open RAN?

What is Open RAN (O-RAN)?

Open RAN is a set of open specifications defining interfaces between radio and base station RAN. The disaggregation of different RAN elements would provide new ways to mix and match network components by “opening up” the interfaces between them. It will drive down the costs of network deployments and allow new players to enter the RAN market. Please see figure 4 below.

Figure 4. Disaggregation and open interfaces in Open RAN vs Traditional RAN. Source: Building an open Ran ECOSYSTEM FOR EUROPE

Future Radio Access Networks will be based on a wide range of solutions deployments, one size will no longer fit all**.** Continued 4G & 5G traffic growth also requires a significant increase in RAN capacity and network operators to maximize existing investments.

Open RAN enables all types of RAN deployment models: distributed, centralized, virtualized, macro & small cell. And it is built on general-purpose computing hardware with carrier-grade reliability. Along with resource pooling, load balancing, and spectral efficiency, Open RAN enables network operators to maximize resource utilization and deliver new network edge services at a lower cost.

Many Paths to Success

According to Dell’Oro Group, the mix between incumbent RAN players and new challengers with smaller shares is “relatively healthy at this juncture, with smaller RAN suppliers including Airspan, Altiostar, Fujitsu, Mavenir, NEC, and Parallel Wireless accounting for the majority of the Open RAN revenues in 1H21.”

Figure 5. Supermicro’s DU reference designs based on Intel Xeon Processors for O-RAN

The beauty of Open RAN is that network operators can mix and match hardware with different suppliers. For example, the O-RAN DU reference designs from Supermicro can support RAN software from either Mavenir or Parallel Wireless. Please see Figure 5 above. And thanks to Moore’s Law, each generation of processors is getting increasingly powerful, and the ever-falling cost of processing power is making Open RAN even more appealing economically.

Conclusion

Open RAN marks a profound change in how the network operators is building the wireless infrastructure. This change is driven by an incredibly powerful value proposition, driving efficiencies both in operations and economics.

The Open RAN specifications also help cultivate innovation as resources are freed up to allow the network operators to focus on new products and growth. While it’s still ramping, Open RAN will help the network operators to cut billions of dollars in capital spending and speed up the rollout of the 5G network. Wouldn’t it be crazy if we don’t embrace the Open RAN ecosystem?

References

1. Intelligence Brief: How much will 5G cost?
2. The year is 2019 and 5G is finally here. Or is it? At MWC19 Barcelona, there were so many 5G announcements that it…www.mobileworldlive.com
3. Dell'Oro bumps revenue forecast 50% as open RAN gains steam
4. Dell'Oro Group raised its open RAN revenue forecast by 50%, citing strong momentum behind the technology in the first…www.fiercewireless.com
5. European Telcos Sound Alarm Over Flagging Open RAN Progress
6. European telecom companies recently sounded an alarm that they may be falling behind the rest of the world in their…spectrum.ieee.org
7. 5G Testing: What Is O-RAN? - Part 1
8. Open radio access network (O-RAN) is an operator-led alliance that defines the next-generation radio access network…blogs.keysight.com