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Cisco sees a virtuous cycle: Innovation lowers cost, lower cost means more connectivity

Open RAN as one of many vectors for closing the digital divide

In my conversations at the recent Cisco Live event in Las Vegas, there were several recurring themes but for the purposes of this piece I’ll focus in on two: the relationship between innovation and cost as a function of driving (or not driving) scale, and the need to bridge the digital divide. Those two thematic threads are related. Innovation lowers cost which drives scale, and innovation is needed to connect the unconnected with meaningful scale. 

And all of this applies to specific areas of connectivity such as Open RAN, which itself feeds into the totality of what’s necessary to connect the more than 3 billion people on earth without reliable access to broadband. Discussing Open RAN, Cisco EVP and GM of the Mass-Scale [emphasis added] Infrastructure Group Jonathan Davidson laid it out this way: “Open interfaces drive innovation and innovation drives lower cost, and lower cost means we can connect more people. That’s my fundamental belief structure.” 

It’s a consistent belief structure too. Back in September 2018 at Mobile World Congress Los Angeles, around the time the X-RAN Forum and C-RAN Alliance united into the O-RAN Alliance to drive relevant standardization activity, Davidson told me the same thing regarding how to solve for the difficulties of multi-vendor radio integration. “Well-defined open interfaces are critical,” he said then. “It’s important that we all work toward a standardized environment with open interfaces. Then the decoupling of these systems becomes feasible.” 

Become feasible it did; in fact, Open RAN is quite the buzzy topic in the telecoms world at the moment. In part because some operators are facing un- or under-funded mandates to rip-and-replace Chinese networking gear, in part because Open RAN promises lower capex and opex, in part because RAN vendor consolidation creates an inherent supply risk that can be addressed through vendor diversification, and in part because leveraging principles or openness and virtualization sets the stage to put RAN workloads in the cloud and reap the rewards that come from dynamic optimization, software-centric programmability and automation. Back to part of the premise, tick the innovation and cost boxes. But how does that relate to more connectivity? 

Ask Vodafone U.K. They’ve leaned into Open RAN and lit up a a number of 2,500 planned sites, including their first at the Royal Welsh Showground in Polys, Wales. I know where Wales is–not sure specifically on Polys–but I’m pretty sure that this hasn’t historically been a five-bars kinda place. When this happened in 2020, Vodafone U.K. CTO Scott Petty called it an “important milestone” and said Open RAN can “make us less dependent on current larger technology suppliers, and find ways to reduce the cost of rolling out mobile coverage. Open RAN can also help close the digital divide between urban and rural Britain.” So there’s the more connectivity and the cost pieces again. 

You might be saying, well, that’s just one example of Open RAN being leveraged to close the digital divide. Here’s another: Orange engaged in 2020 with Parallel Wireless to expand its coverage in the Central African Republic with Open RAN. In addition to coverage expansion, Orange wanted to leverage more connectivity to deliver its mobile banking service, Orange Money, which may not sound like innovation to everyone but for the unbanked among us it certainly is innovative, not to mention safer, to have secure, reliable access to non-cash transactions.

You might be saying, well, that’s just two examples. Here’s more: Inland Cellular in the United States, MTN in Liberia, Nigeria and South Africa, Vodafone in Democratic Republic of Congo

More to the scale piece, Vodafone and Orange, and Telefonica and Deutsche Telekom, have all committed to scaled deployment of Open RAN. Those commitments give relevant vendors room to run and, you figure at least, with scaled deployments comes lower costs, comes more connectivity, comes more innovation, rinse, repeat. 

“I think O-RAN is now inevitable,” Davison said. “I think there are a lot of motivations. I think the long-term motivation is always going to be the innovation and the fact that you can operate the network in a fundamentally different way…I think long-term innovation is what actually drives the agenda.” 

His colleague Masum Mir, vice president and general manager of Cable, Mobile and IoT, zoomed back from just Open RAN to the larger picture of taking costs out of network deployment. “Cisco strongly believes in the economic equation that if we don’t take structural costs out, it’s going to create more disconnects between the haves and have nots. I think we should not forget our obligation to make [connectivity] more affordable.” 

There’s a great book, Good Economics for Hard Times by Abhijit V. Banerjee and Esther Duflo, that contains what’s maybe my favorite example of how even simple connectivity can lead to simple innovation and improve economic outcomes. From that book: “A vivid instance of misallocation comes from the impact of the introduction of cell phones on fishing in the state of Kerala in India. Fisherman in Kerala would go out to fish early in the morning and return to shore midmorning to sell their catch. Before the cell phone, they would land at the nearest beach, where their customers would meet them. The market would run until there were no customers left or the fish ran out. Since the catch varied quite a bit from day to day, there were a lot of wasted fish at some beaches, while at the same time there were often disappointed customers at others. This is a stark example of misallocation. When cell phone connectivity became available, fishermen started to call ahead to decide where to land; they would go where there were lots of customers waiting and not a lot of boats. As a result, waste essentially vanished, prices stabilized, and both customers and sellers were better off.” 

It didn’t end there. As the fishermen visited new beaches, they came into contact with new boat builders. From there, those capable of building better boats got more business and the quality of the fleet, as it were, improved. As the better boat builders scaled (there’s that word again), the cost of boats went down. 

“What is common to these two stories,” Banerjee and Duflo wrote, “is that a communication barrier led to misallocation. When communication improved, the same resources were better used, resulting in higher [total factor productivity], since more done with the same inputs.” 

There’s a tortured “teach a man to fish”-type line in there somewhere but I won’t tease it out by deadline. The point is that the fishing and boat building examples both illustrate the innovation/cost/scale aspects of our discussion, and highlight how bridging the digital divide can set the virtuous cycle into motion. But that’s just one example in one place, just as those Open RAN deployments listed earlier are similarly non-comprehensive. But think of the flywheel effect; do this enough times and start to tally up a lot of small wins and watch as the bigger, better picture comes into focus. 

ABOUT AUTHOR

Sean Kinney, Editor in Chief
Sean Kinney, Editor in Chief
Sean focuses on multiple subject areas including 5G, Open RAN, hybrid cloud, edge computing, and Industry 4.0. He also hosts Arden Media's podcast Will 5G Change the World? Prior to his work at RCR, Sean studied journalism and literature at the University of Mississippi then spent six years based in Key West, Florida, working as a reporter for the Miami Herald Media Company. He currently lives in Fayetteville, Arkansas.

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