Although 2020 has brought numerous challenges to the telecom industry, including geopolitical stresses, the COVID-19 pandemic, and 5G deployment challenges, these events have also highlighted the critical role of fixed and mobile telecom networks in providing economic resilience and national vitality during a period of unprecedented disruption. Existing 4G and 5G networks have reliably transitioned millions of workers to home-based offices and students to online classrooms, while also enabling widespread adoption of high bandwidth video communication, collaboration, and entertainment services. It is safe to say that the events of 2020 have forever changed how we work, learn, and live and that our national telecom infrastructure will have to change as well.
Several market developments are proving that the telco domain is ripe for change and for innovation and, in fact, needs it. Geopolitical concerns are restricting the number of vendors able to deploy 4G and 5G networks in certain regions, while several mobile operators now state that the established vendor lock-in is restricting innovation and does not allow more favorable horizontal market conditions. Reliance on a few select and very large vendors creates not just market and financial risk for mobile operators, but systemic risk for the overall telco landscape in the United States and other countries.
Open RAN is an answer to these challenges, aiming to open interfaces within the mobile network and allow a transition from a limited number of verticalized vendors promoting proprietary “end-to-end” solutions to an open market of “best-of-breed” system designs offered by numerous vendors. This has already allowed the entry of new vendors in the relatively closed mobile infrastructure supply chain with companies like Altiostar, Mavenir, and Parallel Wireless creating new types of equipment. Open RAN commercialization and adoption will facilitate 5G network deployments at massive scale. The need for operators to deploy new equipment facilitates the introduction of Open RAN at this moment in time. Several operators have been issuing for Proposals (RFPs) for Open RAN with Dish and Rakuten leading these deployments with their new 4G and 5G networks solely in this new domain.
Open RAN is not a new concept and is deployed by dozens of mobile operators globally. In fact, vendors that have been developing Open RAN equipment have been doing so for nearly 10 years, but the current market conditions favorably accelerate these developments. Moreover, from a business point of view, Open RAN is currently “crossing the chasm,” aiming to reach a critical mass of deployments that will, in turn, create economies of scale and make it the preferred choice for any mobile network deployment going forward.
There are several misconceptions surrounding Open RAN currently, the most important of which suggests that Open RAN must focus on cost savings. Although cost savings may be a key element, it is also important to consider that this new technology accelerates innovation in the static mobile network infrastructure market and ensures that there is more vendor choice. Also, current large-scale deployments by Rakuten and Dish are illustrating that Open RAN is not only applicable in niche use cases, but also in mass-market mobile networks targeting the consumer market. Finally, many skeptics will argue that Open RAN needs new standards, but this is not the case; Open RAN is, in fact, a collaborative multi-vendor approach to building a network that complies to The 3rd Generation Partnership Project (3GPP) standards. Future Open RAN standards will further facilitate this approach and ease the entry of more vendors into the ecosystem, but operators can and should start deploying Open RAN today.
In summary, Open RAN can become a disruptive trend that will move the telco infrastructure market from a static, vertical market with few players using proprietary solutions to a dynamic, horizontal market with a multitude of players, similar to the innovative, dynamic, and well-established Personal Computer (PC) and cloud computing markets. The current financial, geopolitical, and pandemic global environment has illustrated the importance of Open RAN telco networks as vital infrastructure. The upgrade of networks to 5G creates a window of opportunity for Open RAN. Governments and policy makers must now foster and stimulate the growth of Open RAN telco networks, while mobile operators urgently take bolder steps to introduce the new technology into their existing networks to ensure that future crises do not affect their network deployments, and to facilitate new innovative 5G network deployments at scale. This can be achieved in small, low-risk initial deployments and scenarios, both of which will create the expertise that will be vital in large-scale deployments in the following years.
ABI Research expects the Open RAN ecosystem to reach a total market of US$30 billion in 2030, climbing higher than the traditional RAN market, which will be a total of US$20 billion. The transition will not happen overnight for public cellular networks that connect consumers to the network, but will be vital, where ABI Research expects Open RAN to drive a US$10 billion greenfield market.
Figure 1: Selection of key companies developing core Open RAN functionality
(Source: ABI Research)
For more information on this subject, check out the whitepaper “Open RAN: Market Reality and Misconceptions.”
