The Open Radio Access Network (Open RAN) subsector, once heralded as a revolutionary approach to telecommunications, is currently experiencing significant turbulence. According to the analyst firm Dell’Oro, Open RAN sales have plummeted by 30% for the first nine months of 2024 compared to the same period last year. This alarming decline starkly contrasts with the broader RAN market, which saw a more moderate decrease of 10%-20%. These challenges facing Open RAN are multifaceted, involving technical complexities, vendor disagreements, and a persistent preference for traditional, integrated systems among telecommunication companies.
The Vision and Reality of Open RAN
Open RAN was conceived as an innovative model aimed at diversifying the supplier base and fostering competition by enabling operators to mix and match baseband technology from different suppliers. This approach aimed to reduce dependency on a few large vendors, giving the telecommunication industry more freedom and flexibility. However, the practical implementation of Open RAN has proven to be more challenging than anticipated. Telecommunications companies often find it more economical and practical to procure integrated systems from established vendors rather than investing in developing and integrating new, diverse technologies.
For instance, AT&T’s $14 billion “Open RAN” contract with Ericsson highlights a preference for single-vendor arrangements, which contradicts the open, mixed-supplier aspirations that underpin the Open RAN model. Despite the inherent promise of reducing reliance on a small number of large suppliers, the real-world application suggests that large-scale contracts continue to favor traditional, integrated systems over the more modular and flexible approach envisaged by Open RAN proponents.
Technical and Operational Challenges
The complexity of integrating new interfaces has led to significant disunity and technical disagreements within the Open RAN community, revealing the difficulties of achieving seamless interoperability. Ericsson, a leader in mobile network technology, exemplifies this conflict by opposing the 7.2x Category B interface, developed for massive MIMO technology. While this interface aimed to simplify radio units (RUs), it risked causing increased fronthaul traffic and subsequent performance issues. To address these concerns, the O-RAN Alliance proposed two new "uplink performance improvement" (ULPI) alternatives.
The first ULPI alternative, favored by Ericsson, transfers all uplink functions back to the RU, while the second option places some functions in the RU and keeps the equalizer in the distributed unit (DU). Despite these proposed solutions, potential commercial readiness problems have contributed to declining sales of Open RAN products. The ongoing technical challenges and lack of cohesive strategy within the community indicate that the envisioned efficiencies and benefits of Open RAN are not easily realized, thereby stalling broader adoption and implementation.
Vendor Commitments and Limitations
Ericsson’s partial commitment to Open RAN has further complicated the ongoing struggle, creating additional barriers and limitations. The company has indicated it will not manufacture radio units without equalizers, complicating efforts to establish a diverse and open supply chain. Furthermore, Ericsson’s support for Open RAN in the context of massive MIMO technology is contingent upon operating on Intel’s processors rather than its proprietary ones. This restriction significantly affects companies like AT&T, binding them to use Ericsson’s radio units for massive MIMO and limiting the choice of third-party suppliers.
Given Intel’s current challenges and lack of viable alternatives, this approach creates less flexibility for deploying Open RAN as initially envisioned. The dependency on specific components and configurations undermines the core objective of Open RAN, which is to enable a more flexible and adaptive telecom infrastructure. These limitations highlight the complexities and misalignments between Open RAN’s theoretical framework and its practical execution, compounding the difficulties faced in achieving widespread adoption.
Diverse Perspectives and Strategic Stances
Adding to the complexity, Nokia has expressed skepticism about Ericsson’s selective adoption and configurations. Tommi Uitto from Nokia pointed out that a baseband lacking an equalizer cannot connect to a radio unit without an equalizer, creating a dilemma that forces either the replacement of existing basebands or a shift to cloud RAN infrastructure. This fundamental technical incompatibility reflects broader doubts about the feasibility and practicality of the Open RAN vision.
On the other hand, Samsung claims its products are "O-RAN-capable across the board," challenging Ericsson’s selective compliance and emphasizing its commitment to the principles of openness and flexibility. Despite these assertions, Nokia acknowledges the inherent complexity of pairing different vendors in the context of massive MIMO technology. To navigate these challenges, Nokia collaborates both internally and with external vendors, like Fujitsu, for its Open RAN projects with companies such as Deutsche Telekom. This diverse array of perspectives underscores the nuanced and multifaceted challenges that Open RAN faces in achieving interoperability and widespread adoption within the industry.
The Path Forward for Open RAN
The Open Radio Access Network (Open RAN) subsector, once seen as a groundbreaking innovation in telecommunications, is now facing substantial difficulties. Analyst firm Dell’Oro reports that Open RAN sales have plunged by 30% in the first nine months of 2024 compared to the same timeframe in the previous year. This sharp decline is in stark contrast to the broader RAN market, which has only seen a moderate drop of 10%-20%. The core issues troubling Open RAN are diverse and complex. These challenges include intricate technical difficulties, disagreements among vendors, and a persistent preference for conventional, integrated systems within the telecommunications industry. Additionally, the initial excitement and promise of Open RAN appear to be waning as companies encounter practical deployment issues, leading them to revert to more reliable, traditional systems. As a result, the subsector must address these multifaceted complications to regain its footing and potentially revive its growth trajectory in the competitive telecom market.