Open RAN uptake faster than vRAN; Asia-Pacific dominates the nascent market
Dell’Oro Group reports that Open RAN revenues since the beginning of 2020 outpaced expectations. The market research firm said this bolsters Open RAN’s credibility as a continuing presence in telecom.
“While challenging comparisons will weigh a bit on the market over the short-term, it is unlikely that these divergences between the greenfields and the brownfields will leave lasting imprints on the long-term prospects,” said Stefan Pongratz, vice president and analyst at Dell’Oro Group.
Dell’Oro expects that Open RAN revenues will account for about 15% of the total 2G-5G RAN market by 2026. The report shows that the Asia Pacific region is dominating the market in this nascent phrase. It predicts the region to account for more than 40% of all Open RAN revenue from 2021-2026.
“One of the key drivers with the shift from proprietary RAN toward Open RAN is that it should ideally address the competitive landscape and increase the likelihood of a market concentration trend reversal. Per Dell’Oro Group estimates, the worldwide Herfindahl-Hirschman Index (HHI) has advanced nearly 50% over the past 19 years. Preliminary estimates suggest the HHI index for the 2019 RAN market topped 4000 in both North America and China, reflecting the state of the competitive dynamics in these highly concentrated markets,” wrote Pongratz.
vRAN vs O-RAN
Virtualized RAN (vRAN) efforts separate from Open RAN and O-RAN Alliance are expected to progress at a slightly slower pace than Open RAN, according to the report. vRAN projections remain mostly unchanged, hovering around 5-10% of the RAN market by 2026.
“As the telecom industry as a whole is moving away from hardware-driven models toward more virtualization and software, Open RAN and virtualized RAN (vRAN) are increasingly viewed as architectures that could potentially help address some of the underlying supply-and-demand-related challenges that characterize this market,” wrote Pongratz last November.
“Risks surrounding the growth projections remain significant and broadly balanced. The improved momentum combined with positive performance and TCO Open RAN developments could foster stronger market adoption than had originally been expected. Similarly, government funding focused on improving RU/DU/CU (silicon and software) technologies, accelerating interoperability testing, and incentivizing operators that embrace the Open RAN architecture could result in a more favorable outcome,” he wrote.
Global efforts are picking up speed. Vodafone last week claimed to operate the first 5G Open RAN site in the UK. This news comes a little more than a month after the U.K. government announced a new initiative to accelerate such deployments.
