Assessment of Open Ran

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Introduction

Most telecommunications executives interviewed by Senza Fili believe that Open RAN is the greatest disruptions in the industry. Patrick Lopez, Global VP of Product Management for 5G at NEC said, “If we look at how fast Open RAN has emerged and reached a level of maturity that allows deployments at scale, we may conclude that it is one of the fastest-moving technologies in the telecom market ever.” His views were echoed by others who believe that Open RAN would help them solve vendor-lock ins and other issues that were common in the traditional RAN. However, they also noted that Open RAN comes with its own challenges, which need the cooperation of the whole industry to overcome them. The greatest challenge being integration. Santiago Tenorio, Head of Network Strategy & Architecture at Vodafone once said in a webinar, “We haven’t even scratched the surface of system integration challenges.” The good news is that integration is easier in greenfield deployments when compared to brownfield deployments. That is why most deployments have been in rural areas where the operators have to start from scratch. Deloitte estimates that as of December 2020, there were 35 Open RAN deployments in the world. Around 85% of the deployments were in developing markets, with the majority being done in rural areas. But what exactly is Open RAN? Can it replace the traditional RAN? Does it reduce costs as argued by most experts? Let’s have a look!

What’s Open RAN?

https://www.ifri.org/sites/default/files/atoms/files/velliet_open_RAN_2022_us.pdfpage.8

Radio Access Network (RAN) is a telecommunications network component that links your mobile phone or laptop to the core network. It comprises radio units (RUs), antenna and baseband units (BBUs) in the case of a 4G network. The BBU consists of centralized units (CUs) and distributed units (DUs). The RUs are responsible for sending and receiving data, whereas the BBUs process that data. In a traditional RAN architecture, the interface between the BBU and the RU is closed while all other interfaces are open. The Open RAN architecture aims to solve this, as shown by figures on the right hand side.

https://www.ifri.org/sites/default/files/atoms/files/velliet_open_RAN_2022_us.pdfpage.10

As shown in figure 2, the Open RAN architecture disaggregates the BBU into DU and CU using the 3rd Generation Partnership Project (3GPP) standards and creates open interfaces between them. The open interfaces enable the operator to incorporate many vendors into its network, as we will discuss further in this report. However, it should be noted that this is not the only work of the Open RAN architecture. With Open RAN deployment, the operator benefits from its many other features.

Overview

Bullish	Bear
Eliminates vendor lock-ins	Integration is challenging
Provides flexibility	Interoperability issues
Makes the ecosystem diverse]	COTs hardware consume more power than proprietary solutions
Reduces maintenance costs	Performance has not been fully proven
Fixing of errors will be fast	More cyber attack surface
Reduces reliance on one vendor	It is yet to be known whether Open RAN will support clients in high-density areas
Encourages ecosystem's collaboration	Multiple vendors are hard to manage
Integration is easier in greenfield deployments
Soon operators will be able to use COTs hardware alternatives
Industry is working on more testing solutions that will fix interoperability challenges
More eyes monitoring cyber security issues
Trade-off between benefits and costs is positve(40% reduction in costs)
Almost all the telecommunications operators are bullish on it
Governments are in support of Open RAN
There is a growing number of Open RAN labs aimed at solving integration and interoperability challenges

Benefits of Open RAN

Open RAN has received a lot of interest from telcos due to its many expected benefits. Its ability to expand into other areas, such as automation and virtualization, makes industry players want to deploy it as soon as possible. Below are its main benefits.

1. It eliminates vendor lock-in

https://www.parallelwireless.com/wp-content/uploads/Parallel-Wireless-e-Book-Everything-You-Need-to-Know-about-Open-RAN.pdf

Vendor lock-in is when the network operator is restricted to only one vendor. For instance, in vendor lock-in, the player supplying the hardware should be the same one supplying the software. As illustrated by the Parallel Wireless chart below, Open RAN removes such vendor lock-ins. With Open RAN, an operator can add software from vendor B to hardware from vendor A and vice versa being true.

2. It provides flexibility

Open RAN provides flexibility in many ways. First, it enables the vendor to choose its hardware and software supplier. This improves the quality of the network. Secondly, it enables the vendor to choose the timeline of various deployments within the Open RAN architecture. For example, the operator can start with a single vendor and then initiate multi-vendor deployments later. Similarly, the operator can choose whether to deploy visualization and automation immediately or wait until the first phase pays off first. Thirdly, Open RAN enables the operator to optimize the network to meet their needs, unlike when the vendor provided a single optimized solution.

3. Increases diversity

Open RAN removes the monopolistic behavior that has dominated the industry for a long-time. Traditionally, the supply of hardware and software products was shared among three players, namely Ericsson, Nokia, and Huawei. This made the closed network solution supplied by these vendors expensive. However, Open RAN will create diversity as Dr. Femi Adeyemi, Head of Wireless at Fujitsu Network Communications, said, “The entrance barriers are low, and many new players can enter the environment. But the exit barriers are also low. A wide ecosystem forces vendors to be competitive.” Competition among the different vendors will necessitate innovation in an effort to stay relevant in the market. His words were echoed by Peter Claydon, President of Picocom, who said, “Open RAN can democratize the ecosystem by lowering the barriers to entry and allowing more players to enter the market.” With more players, supply of hardware and software solutions will increase, resulting in lower prices.

4. Enables automation

Open RAN introduces complexity that did not exist in traditional RAN. This will encourage the operator to deploy various automation features such as RAN Intelligent Controller (RIC), which manages the APIs deployed in the network. RIC leverages analytics and AI/ML, hence resolving issues within the shortest time possible.

5. Enables the operator to add virtualization and cloud to its architecture

Although Open RAN can do without Virtual RAN (vRAN) and Cloud RAN(cRAN), their addition to the network will enable the operator to reap its full benefits. Virtualization is the separation of hardware and software features. On the other hand, Cloud RAN refers to the realization of RAN functions over a generic computing platform instead of visiting a network site. Any RAN performance issues can cause havoc to the customer; hence its operations need to be handled via a data center approach. This is accomplished via virtualization and cloud-native architecture. It should also be noted that the RAN’s flexibility will not be fully achieved without virtualization.

6. Reduces reliance on one vendor

Open RAN eliminates reliance on one vendor. This was common in single vendor deployments; hence fixing issues were prone to take a long time. With multi-vendor deployments, an issue affecting the network falls on all parties involved. This protects the operator's investment and reduces adverse impact on the end-user.

7. Encourages collaboration in the network

An issue within the network affects all parties involved. Since each vendor would want to protect their reputation, teamwork is created. This allows for automation such as continuous integrations(CI) and continuous deployments(CD), making deployment and fixing errors fast and reliable. Also, CI/CD will foster innovations in that many individuals will work on Open RAN.

Challenges of Open RAN

1. Integration

As already mentioned, integration is the main issue facing Open RAN. The challenge is even bigger in bluefield deployments since the operator has to integrate the legacy RAN with Open RAN. That is why bluefield operators are transitioning into Open RAN gradually instead of going into it at full speed. Indeed, it's not surprising that greenfield operators such as Rakuten and Dish are among the first to deploy Open RAN.

2. Interoperability issues

Multiple vendors can only be used in the network if their hardware and software solutions are compatible. Although O-RAN Alliance provides a platform for interoperability testing, such testing is not enough to ensure compatibility between different vendor solutions. Also, interoperability is a continuous process which is time consuming and expensive. For instance, interoperability testing should be done everytime there is a software update.

3. Commercial off-the-shelf(COTs) hardware increases OPEX cost

Although COTs hardware is cheap to acquire and enables faster deployments, it can result in higher OPEX costs. This is because, unlike proprietary solutions, COTs hardware is not optimized. As such, they end up consuming a lot of power. But the industry is now moving towards alternative solutions which use optimized silicon.

4. Open RAN performance has not been fully proven

Open RAN players such as Rakuten and Dish have yet to prove whether Open RAN is better than the traditional RAN. It's one way to forecast and another way to achieve.

5. Security issues

Deployment of multi-vendor solutions increases cyber attacks. This is acknowledged by a US Government Agency, which wrote, “the attack surface of the network expands considerably.” Although with more vendors come more eyes monitoring security vulnerabilities, the operator ends up incurring more security costs.

6. Scalability

As indicated above, most Open RAN deployments have been carried out in rural and low-density areas, which is troubling because it has yet to be known whether it will support clients' needs in high-density areas. For instance, although NTT Docomo claims its Open RAN deployment in Japan was successful, its deployment was mainly in rural areas, except for some deployments in metropolitan areas of Tokyo.

Open Ran Can Reduce Costs By How Much?

The RAN segment consumes around 80% of the total CAPEX needed to build a network. This calls for ways to reduce it, especially due to the rising challenges of flat revenues and increasing maintenance costs. Cost savings in Open RAN depend on many factors. For instance, an operator can save on the total cost of ownership(TCO) by choosing cheap vendors and proprietary solutions instead of COTs hardware. Adding visualization and cloud-native architecture will also help the vendor reduce maintenance costs. In general, cost savings can only be achieved if the operator chooses the most efficient options offered by Open RAN. But there have been testimonies confirming that Open RAN indeed reduces costs. For example, Rakuten said it reduced CAPEX by 40% when it deployed Open RAN instead of traditional RAN. A report by Deloitte indicates that Open RAN can reduce CAPEX and by up to 50% and 35%, respectively.

When Will Open Ran Attain Maturity?

https://www2.deloitte.com/content/dam/Deloitte/pt/Documents/technology-media-telecommunications/TEE/The-Open-Future-of-Radio-Access-Networks.pdf

Open Ran is swiftly advancing towards Multiple-Input Multiple-Output (MIMO) model. The highest level it has attained so far is the macro model. Deloitte estimates that Open Ran will reach maturity in 3-5 years, with the revenue of public networks that deploy it coming at par with the revenue of traditional networks in 2028. According to the forecast, Open RAN revenue will be around 12% of the total RAN revenue in 2022. Besides the desire by operators to reap the benefits of Open RAN, the current political environment favours it as it will help them to stay away from Chinese network vendors such as Huawei. For instance, the US government has passed a bill to inject funding amounting to $750 million in the next ten years to support Open RAN deployments. Other governments, such as Japan, the UK, Germany, and India, have come up with similar support.

Greenfield versus Brownfield Deployments

Greenfield Open RAN deployment refers to installing and configuring an entirely new network. That is, the operator is starting from scratch. On the other hand, a brownfield deployment is a scenario where the operator integrates Open RAN with existing networks. Unlike the greenfield operator, which has only 4G and 5G networks, brownfield operators would have legacy 2G, 3G, and sometimes 4G networks. These legacy networks need to be integrated with the Open RAN architecture to achieve the long-term gains of the new network. Therefore, in contrast to the greenfield operator, the brownfield network provider is not immune to Open RAN integration challenges. The most prominent greenfield operators in the world are Rakuten and Dish. Below are the major differences between greenfield and bluefield deployments.

Greenfield Deployment	Brownfield Deployment
Starts from scratch	Based on existing newtwork
Integration is not needed	Integration is a must
TCO cost is high	TCO cost is low
Allows the operator to future-proof its investment	Prone to compatibility issues
Higher risk	Lower risk
Slow deployment	Fast deployment

Open Ran Deployments at Scale

The following companies have started deploying Open RAN for commercial purposes.

1. Rakuten

Rakuten was the first greenfield operator to launch Open RAN at scale in its commercial network in Japan. It began building its network in 2018. However, it was in 2020 that it started constructing its 4G network. Six months later, it launched 5G in its network. It is currently creating massive MIMOs for its Open RAN architecture. The interesting thing about Rakuten's network is that it's visualized, automated, and based on cloud-native architecture. This means it can reap all the benefits associated with Open RAN. For instance, Rakuten said that by integrating antenna and radio heads, it was able to reduce the length of cables, hence achieving 30% more coverage per site compared to traditional RAN. As of June 2022, Rakuten's 4G network had 97.6% coverage, with the number of base stations reaching 47,556. It aims to attain 99% 4G coverage in 2023 with more than 60,000 base stations.

2. NTT Docomo

NTT Docomo is one of the cheerleaders supporting the deployment of Open RAN architecture. In fact, it has a lab in its research and development(R&D) center dedicated to testing and verification of Open RAN systems. The lab is shared with thirteen other global vendors, which include Vmware, Red Hat, Intel, NEC, Fujitsu, etc. Docomo started deploying multi-vendor Open RAN in its 4G and 5G networks in September 2019. Its goal was to have 10,000 base stations by June 2021, 20,000 base stations by March 2022, and 90% coverage by March 2024. According to its vice president Sadayuki Abeta, Docomo's multi-vendor network is currently at the commercial stage.   

3. Dish

Dish is the only operator in the US that has deployed Open RAN in its network. It is a greenfield operator with no 4G or legacy network. As such, its network is purely 5G. Dish's network also leverages cloud-native architecture. It was launched in May 2022 in Las Vegas, and by June 2022, Dish had expanded it to more than 120 cities in the US, hence offering more than 20% coverage to the US population. The company plans to meet its 70% coverage for the US population by 2023. Its Vice President of Technology Development, Sidd Chenumolu, acknowledged in an interview that Open RAN is a gateway to many untapped opportunities. He said, "Open RAN is our gateway in terms of programmability, flexibility, openness and disaggregation to try out new things, and to offer and deliver the services envisioned by 5G." However, he also confirmed that integration is the biggest challenge impacting Open RAN.

4. 1&1

In August 2021, 1&1 signed a contract with Rakuten to build a 5G network using Open RAN. This made 1&1 the first greenfield operator in Europe to tap the benefits of Open Ran. Its architecture is based on Rakuten's playbook; hence it has been tried and tested. 1&1 has an obligation to provide 25% and 50% coverage to German citizens by 2025 and 2030, respectively. That means its Open RAN network should be operational by then.

Given that it is a greenfield operator, we don't expect it to encounter many integration challenges. Already, the tests on the network paint a hopeful picture for the company, as pointed out by Azita Arvani, Rakuten's CEO of North America, who said, "We have a deployment with 1&1 AG in Germany, with one Gbps in the downlink throughput and three milliseconds latency. The results are impressive and show that Open RAN is not just about reducing costs but also about high performance." According to him, 1&1 will be better than Rakuten Mobile since they are deploying Rakuten 2.0, which has more advanced features. This was supported by the 1&1 CEO, who said during the Q2 2022 earnings call that they were impressed with the test results.

Other Expected Open RAN Deployments

Many other bluefield operators are working on a roadmap to see that they deploy Open RAN as soon as possible. As a matter of fact, some of them have already deployed Open RAN in rural areas. Since they must integrate Open RAN with their traditional network, their Open RAN deployment is expected to happen gradually. Examples of these operators are Vodafone, AT&T, Orange, etisalat, MTN, Airtel, Inland Cellular, and Telefonica. Below is a brief description of how far each network has gone.

1.Vodafone

Although Vodafone is one of the pioneers of Open RAN, it only recently started deploying it in commercial areas. Vodafone has been testing Open RAN for over five years. In 2019, it became the first operator to move Open RAN from the lab to the rural areas of South Africa and Turkey. That, too, became a success, and at the end of 2019, its CEO Nick Read said, “We are pleased with trials of OpenRAN and are ready to fast track it into Europe as we seek to actively expand our vendor ecosystem. OpenRAN improves the network economics enabling us to reach more people in rural communities and that supports our goal to build digital societies in which no-one is left behind.” In the same year also, Vodafone initiated Open RAN trials in the UK. In January 2022, the company was able to switch to live deployment in Bath, Somerset, one of the 2,500 sites where Vodafone plans to deploy Open RAN at scale. It now plans to have 30% of its European base stations running on Open RAN by 2030.

2. Telefonica

Telefonica is another operator that has been championing Open RAN deployments for over five years. In fact, in 2018, it launched Internet para Todos(IpT), a project aimed at connecting over 100 million unconnected individuals in Latin America(LATAM) region with the internet. The IpT is considered one of the largest Open RAN deployments in the world. But despite its active role in Open RAN movements, Telefonica only recently started deploying it in a commercial setting. Last year, Telefonica said that beginning in 2022, it will deploy Open RAN in 800 commercial sites across its four main operating countries. Telefonica plans to have 50% of the new sites constructed between 2022 and 2025 based on Open RAN.

3. AT&T

Like Vodafone, AT&T is one of the proponents of Open RAN. It is one of the founders of the O-RAN Alliance, a movement founded in 2018 to promote an intelligent and open RAN. However, unlike Vodafone, AT&T has been shy to showcase its Open RAN efforts. But a report released by Signals Research Group in 2020 indicated that AT&T had deployed Open RAN commercially in Dallas, United States. Its CTO, Andre Fuetsch, said in May 2022 that they are currently conducting proof of concept (POC) tests for Open RAN architecture and will only deploy it in small cells and private wireless networks before taking it to a macro level.

4. Inland Cellular

Inland Cellular is a small US telecommunications operator that has started deploying Open RAN in its 4G network. It provides wireless services to more than 35,000 subscribers in the US. According to its EVP Chip Damato, deploying Open RAN will help them reduce costs by 40% and provide a mechanism to expand to 5G in future. Inland Cellular is already deploying a live commercial Open RAN network in the US.

5. Etisalat

In 2020, Etisalat announced that it would deploy Open vRAN across the UAE to reap the new architecture's benefits. Its senior vice president, Saeed Al Zarouni, had said, "Deploying the open vRAN is vital in enabling digital transformation aimed at increasing efficiencies and the utilization of AI [artificial intelligence]." This was followed by several Open RAN tests in the Middle East, Africa, and Asia. By March 2021, Etisalat had contracted Parallel Wireless, Intel, and Supermicro to replace its existing 2G, 3G, and 4G network in Afghanistan with Open RAN systems. In March 2022, Etisalat and other middle eastern operators such as Zain Group, Mobily, and Emirates Integrated Telecommunications Company (EITC) launched the Middle East Lab to help them deploy Open RAN in the Middle East.

6. MTN

MTN is one of the earliest adopters of Open RAN. As of November 2019, it had deployed Open RAN in more than 200 commercial rural sites in the geographical regions where it operates. It plans to deploy 2G, 3G, and 4G networks based on Open RAN in more than 5000 rural areas that were previously unconnected. MTN favors Open RAN compared to traditional RAN because it can easily be upgraded. For instance, with Open RAN, MTN can deploy 2G in areas that do not support wireless networks while pushing its 3G and 4G efforts with the same investment.

7. Bharti Airtel

Bharti Airtel is one of the pioneers of the O-RAN Alliance. In fact, it holds a board seat in the movement. Bharti Airtel was the first operator to deploy virtual 4G Open RAN trials across multiple cities in India. The deployment covered both small cells and macro sites. In April 2022, Bharti Airtel announced that it had achieved a trial speed of 1Gbps in its cloud-based open RAN architecture. It has deployed 5G services in 8 cities and plans to cover 50 to 60 cities in India by March 2023. Its CTO, RANdeep Sekhon, said, “Open RAN’s readiness to serve a larger scale will happen towards the end of 2023 because we want the total cost of ownership to come down.”

8. Orange

ORANge was one of the founders of the O-RAN Alliance. However, its planned Open-RAN is still in the trial phase. It began trials in 2020 in the Central Africa Republic. In June 2021, it launched a two-year trial of what it considers Europe's first 5G standalone network. The network will incorporate Open RAN, cloud, and multi-vendor deployments. Five months later, it launched its own Open RAN integration center, which is intended to help operators accelerate the deployment of Open RAN.

Final Assessment

Even though most Open RAN deployments are those done by greenfield operators, the industry is genuinely shifting towards this new technology. As such, companies that don't make plans to have it in their network architecture may not be able to compete favorably in the future. Most bluefield operators, such as Vodafone, Telefonica, AT&T, Orange, etc., have already devised plans to deploy it in the future. If the current trends continue, we expect more bluefield Open RAN deployments to occur in 2023. CEO of Ericsson, Börje Ekholm, acknowledged in 2020 that Open RAN will happen and will affect its business. He said, "I don't really see Open RAN to have a major impact in 2021-22 timeframe, but after that I think it will start to impact revenues for us – it will start to impact the way business models evolve going forward. So one should think of this as an opportunity where we will position ourselves as well. It's no different than other technology shifts that have happened in the industry – it's all about leading on that development and leading on that front, and then we have a very good opportunity."

Open RAN offers many benefits, such as multi-vendor deployments, the use of RIC, visualization, etc. However, it also has challenges, such as integration and interoperability issues. Some industry players believe there is a trade-off between the benefits and costs. But when the two are analyzed critically, it can be concluded that Open RAN results in TCO reduction by up to 50%. Even if we assume the worst-case scenario, "Open RAN does not result in cost reduction," flexibility alone will still be enough to outperform the traditional RAN. With flexibility, operators can protect their investment by deploying a 2G network in areas that don't have wireless networks while deploying 4G or 5G networks in other regions without breaking down the network. Flexibility will also allow the operator to choose when to deploy cloud-native architecture and RIC since they won't have to reap out the network. In general, a lot can be achieved with a flexible RAN.

Because there is a growing number of Open RAN labs targeted at solving integration and interoperability issues, we can expect those operators concerned with such problems to change their minds. That said, greenfield deployments will continue rising as Open RAN maturity approaches. The current projection indicates that Open RAN will achieve maturity by 2026. This is achievable considering that operators like 1&1, Rakuten, Dish, and DTT Docomo would have deployed it at scale in macro and MIMO settings. However, we don't expect Open RAN to replace traditional RAN completely since some operators would prefer a single vendor in some instances. As Patrick Lopez, Global VP of Product Management for 5G at NEC, notes, "I don't think Open RAN will replace all traditional RAN deployments. There will be a space for every type of RAN. In some cases, deploying a specialized, proprietary RAN system from one vendor will make sense. In most other cases, it will make more sense to have a multi-vendor implementation where you can use resource pooling."

Open-RAN Greenfield operators facing problems?

March 30, 2023. Rakuten Symphony chief business officer Rabih Dabboussi said that tower issue is the only thing holding up 1&1 Open RAN rollout. “All of the central, regional and edge datacentres are all progressing to plan – the only area that is behind schedule is the [tower] site development and acquisition,” He said. He noted that 1&1 FWA service recently registered around 1.2 Gbit/s downlink from a receiver on the roof of a Holiday Inn hotel.

March 22, 2o23:

• Rakuten has reported about $5 billion losses in its four years of entry into the telecom industry and has managed to capture only 5 million subscribers in a country with a popuation of 126 million.
• At the beginning of 2023, 1&1 said it had managed to put up only three antenna sites for commercial use yet it has an obligation to launch 1,000 sites before the end of 2022. Its rivals are now using this failure to bully 1&1 with Deutsche Telecom's CEO arguing that 1&1 should not be allowed to participate in the upcoming sub-1GHz frequencies. Without these frequencies, 1&1 will require more sites to cover Germany.
• Dish network had less than 30% population coverage as at October 2022. It has an obligation to reach 70% coverage by June 2023. The company said that it would achieve this with 15,000 sites. However, this would likely be insufficient as it will mean one site for every 22,000 people unlike Rakuten's network whose footprint ratio is one site for every 2,500 people. Its customer base dropped to 8 million at the end of December from 8.5 million and is forecasted to drop further following recent cypher attack.