Initially open RAN value prop hinged on lower TCO
The dominant open RAN talking points focus on leveraging open interfaces and general purpose hardware to lower total cost of ownership while providing operators the ability to mix-and-match at radio sites while fostering competition in a vendor market dominated by three major players. If you’ve attended a telecom trade show lately–5G Asia, Huawei’s Global Mobile Broadband Forum and Mobile World Congress Los Angeles all come to mind, chances are you’ve listened to or had a conversation about open RAN.
The operator-led O-RAN Alliance, a mash-up of the former xRAN Forum and C-RAN Alliance, has been steadily gaining contributing vendor members including big names like Ericsson, and major multi-national carriers like Telefonica have made clear the role open RAN will play as it works to build cloud-native networks.
Prior to announcing an investment in open RAN vendor Altiostar via its venture-focused subsidiary, Telefonica Global CTIO Enrique Blanco said, “We are designing and building cloud-based networks,” calling the shift in network design “extraordinarily ambitious.” Blanco said 5G networks have to be programmable; “This is a must because we need to monitor huge growth in the data capabilities for our customers. This network needs to be open and we need to get all these capabilities.”
In addition to the network economics piece, this idea of flexible architecture, itself part and parcel of TCO, is another central point of the virtualized, open RAN story, as well as the larger end-to-end cloud-native network story, which hopefully ends with the ability to automatically deliver customized network slices.
But, according to a research note from Dell’Oro Group Senior Director Stefan Pongratz, the open RAN “value narrative is morphing. Initially the value proposition of these next generation architectures was heavily weghted towards the TCO benefits of using open interfaces, sharing resources, mixing and matching baseband and radio, and utilizing more general purpose processors.”
However, he observed based on recent conversations, including at two of the aforementioned trade shows, “that the performance per watt per dollar delta between x86 and ASICs is perhaps not converging as much as initially expected, resulting in an increased weight towards the demand side value upside as a result of easier access to the framework for 3rd party application developers.”
In a world where RAN equipment is flexible and multi-purpose, essentially a reflection of the software its running, x86 is king. However, application specific integrated circuits (ASICs), as the name implies, are designed to do one thing and do it well. So putting the cost element aside, the question becomes can general-purpose hardware match or exceed the performance provided by a purpose-built box.
“One of the fundamental key questions we are admittedly struggling a bit with is the fact that on the one hand the operators would like to see more RAN/5G competitors,” Pongratz wrote. “But on the other hand, there are so many changes happening from a supply and demand perspective and the R&D required to provide a competitive 5G portfolio with the increased complexity in the RAN and core, the increased use of machine learning and automation in services, and the proliferation of new use cases spanning across a wide range of industries, will possibly move the needle in the opposite direction and complicate the entry for new entrants that want to catch up in the 5G race.”
Let’s ask Verizon’s Chief Network Officer Nicki Palmer if open RAN will make her life easier or more difficult. “It’s both,” she said during an interview at MWC Los Angeles. “Our ideal, like our North Star, is that we’re able to pick best-of-breed componentry and stitch it together. Best-of-breed gives us the performance characteristic we want [and] the cost we want.” On the other hand, open RAN “does require a level of interop a level of integration. But I think, you know, we’re a while away from fully realizing the vision that I just laid out but we’ve been chipping away at it and working towards it.”
