Strand Consult: Open RAN hype vs reality leaves many questions unanswered

by John Strand, CEO of Strand Consult with Alan J Weissberger

A recent Dell’Oro Group report suggests that “total Open RAN revenues, including O-RAN and OpenRAN radio and baseband, surprised on the upside both in 2020 and during 2021, bolstering the thesis that Open RAN is here to stay and the architecture will play an important role before 6G.”

The Dell’Oro Group report author Stefan Pongratz added, “So, given where we are today, we can safely conclude that the movement has come much further than expected both from a commitment perspective and from a commercialization perspective.”

I respectfully disagree.  The OpenRAN story is not driven by commercial demand for equipment. Instead, it is driven by people who make a living from hype.  There is probably more money being made in generating hype about OpenRAN than in the actual purchase of OpenRAN equipment.

While there’s a lot of talk about OpenRAN, it’s still a technology that operators are testing – not deploying.

The hype cycle likely explains the Dell’Oro Group’s recent report that the OpenRAN market will increase. However, for all their unique expertise, Dell’Oro has not committed to publishing how many sites will use OpenRAN in the future (% of installed base) and other vital specifics like what proportion of the mobile companies’ traffic and revenue will go through OpenRAN sites and how much shareholders may gain by operators switching to OpenRAN.

Over 200 5G networks have gone live globally. All of these use 3GPP release 15 and 16 compliant  network equipment. None use OpenRAN gear.

Note that neither 3GPP release 15 or 16 5G RAN specs or ITU-R 5G standard (ITU-R M.2150) include any reference to OpenRAN specifications (from either the O-RAN Alliance or TIP OpenRAN project).  In fact, the 3GPP website calls out the conundrum of multiple OpenRAN-like specifications:

Open RAN is made possible through standardized (???)open network interfaces, defined in 3GPP, O-RAN Alliance, IEEE (???), and other SDOs (???) and industry fora (e.g. TIP Open RAN project). To cater to all the diverse 5G use cases and operator’s deployment constraints, the standards define multiple NG-RAN architecture options and the associated open network interfaces. While these options are crucial in making 5G suitable to address all the requirements and challenges of the next generation mobile network, figuring out which option fits a particular practical use case is sometimes challenging. This is further exacerbated by the fact that relevant standards are scattered across multiple SDOs.

Rakuten is the only deployed, purpose-built OpenRAN network (4G now, 5G later), and it uses proprietary network equipment, which is not interoperable with any other 4G/5G network.  The much advertised 4G/5G OpenRAN Dish Network continues to be delayed with a launch date of sometime in 2022.

There are hundreds, if not thousands, of stories about OpenRAN, but they don’t focus on these key questions: 

  1. How much do telecom stakeholders gain by you switching from classic 3GPP RAN to OpenRAN? At what point does it make sense to shift? In other words, how much do operators save and how does that translate to the bottom line? Strand Consult’s research shows that the operators’ RAN costs make up about 3% of ARPU. In practice, even the most optimistic savings from OpenRAN will not meaningfully affect the mobile operator’s earnings.
  1. If OpenRAN products win market share of 15% in 2026, what share of that installed base will be OpenRAN in 2025 and 2030? Strand Consult believes that OpenRAN will struggle with market share, barely reach 3% of the installed 5G sites by 2030. 
  1. How will mobile subscribers experience the shift towards OpenRAN? Will they gain access to more features on their smartphones as a result? If OpenRAN achieves 3% market share of mobile sites, what incentives are there for application developers to build for OpenRAN? Imagine that voice and SMS were services that were available on only 3% of an operators’ mobile sites.

There is a need for greater transparency in the OpenRAN market, including testing, operator trials, units sold etc. While it is one thing for an operator to conduct  OpenRAN trials and tests, it is quite another for the operator to purchase the equipment. To fuel the hype, some stories have suggested that a trial of OpenRAN equipment was a purchase.

OpenRAN benefits, however good they sound now, remain to be seen. We have yet to see any actual benefits created from the mix and match of OpenRAN modules/components.  Moreover, we have yet to see how easy it will be to replace one OpenRAN vendor with another in a large scale commercial 4G/5G network.

For 25 years, Strand Consult has been the opposite of hype. We make our living being critical of pie in the sky scenarios. Our clients are executives and boards members of mobile operators who want credible and critical knowledge.

Strand Consult’s report Debunking 25 Myths of OpenRAN, analyzes the 25 myths that OpenRAN hype machine loves to cultivate.  Close to one thousand people have requested that new report. Outside of three emails noting minor typos in our report, Strand Consult has yet to receive feedback to dispute the report’s analyses and conclusions.

John Strand founded Strand Consult in 1995. Since then, hundreds of companies in the telecom, media and technology industries have attended Strand Consult’s workshops, purchased reports, consulted with the company to develop strategy, launch new products, and conduct a dialogue with policymakers.

John Strand sits on the advisory board of a number of Scandinavian and International companies and is a member of the Arctic Economic Council Telecommunications Working Group. He served on the Advisory Board for the 3GSM World Congress, the event known as the Mobile World Congress in Barcelona.

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References:

Dell’Oro Group, Kenneth Research and Heavy Reading’s optimistic forecasts for Open RAN

Debunking 25 Myths of OpenRAN

https://www.lightreading.com/open-ran/open-ran-moving-faster-than-expected—-delloro/d/d-id/774780?

https://www.3gpp.org/news-events/2150-open_ran

O-RAN Alliance tries to allay concerns; Strand Consult disagrees!

Strand Consult: What NTIA won’t tell the FCC about Open RAN

44 Chinese companies have joined the O-RAN Alliance

Strand Consult: 5G in 2019 and 2020 telecom predictions

https://www.forbes.com/sites/roslynlayton/2021/12/03/openran-americas-trade-policy-masquerading-as-security/?sh=592f70a7177c

 

 

One thought on “Strand Consult: Open RAN hype vs reality leaves many questions unanswered

  1. IEEE ComSoc and SCU will host a virtual panel session on Private 4G/5G and OpenRAN. We have confirmed participants from Nokia, Mavenir, Intel, and EdgeQ + analyst firm StrandConsult. If you’re interested in attending this FREE event (to be scheduled in late Feb) please email me: [email protected] & I will put you on the email invitation list.

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