Telecom players need to match the speed in network deployment/expansion as that of data consumption to satiate the ever growing digital appetite of Indian smartphone users.
5G is around the corner but how will telecom players ensure a cost effective and an early deployment of services in its network with new source of revenues? This is where Open RAN (radio access network) architecture fits in allowing them to reduce capex/opex costs on one side and offer innovative digital solutions to its users quickly, simultaneously.
The Open RAN architecture has also opened the global doors for Indian software, equipment makers and system integrators to capture a piece of the growing global 5G market.
While 5G, expected to be launched in 2022, will account for 26 percent of mobile subscriptions in India at the end of 2026 at about 330 million subscriptions, according to data from Ericsson.
What is Open RAN?
RAN is the basic building block of a telecom network. Traditionally, RAN have been based on proprietary technologies of global players such as Ericsson, Nokia, Huawei and ZTE etc. Telecom players had to buy an entire block – software and hardware from one vendor.
O RAN Alliance was founded in February 2018 by AT&T, China Mobile, Deutsche Telekom, NTT Docomo and Orange. From India, Airtel and Reliance Jio have been elected members of the Alliance while Vodafone Global is part of it.
The Open RAN standards are transforming the RAN industry towards open, intelligent, virtualized and fully interoperable RAN. It will enable a more competitive and vibrant RAN supplier ecosystem with faster innovation. Open RAN based mobile networks will improve the efficiency of RAN deployments and operations, according to the information on Open RAN alliance site. Many alliances have come up on Open RAN now – Telecom Infrastructure Project by Facebook and Open Ran Policy Coalition.
Open RAN advantages
Estimates by US based firm Mavenir show a 40 per cent capex and 37 per cent opex saving for an overall 37 per cent total cost of ownership (TCO) saving. These are TCO estimates done over a 6 years period by Mavenir, in consultation with Senza Fili, an external advisory support. These individual numbers are being proven in various markets such as Japan by Rakuten. However, the numbers are market dependent.A global report by Deloitte says one of the most compelling value propositions of virtual RAN architectures, open or closed, is in their potential to lower the total cost of ownership of RAN networks which would come from lower upfront capital deployment costs and lower operating expenses through automation.
Besides, Open RAN encourages innovation as instead of replacing network gear to introduce new features and functions, through Open RAN one can use software updates to affect change shortening upgrade and innovation cycles.
Some reports also suggest an increase in average revenue per user for telecom players with new digital offerings in play.
“Operators won’t improve the economics of their network unless fundamental changes are made in the procurement process to take advantage of these newer technologies with supply chain diversification,” says Sanjay Bakaya, Country Head-India & Regional Vice President, India & South Asia.
Open RAN will foster competition by bringing multiple players for hardware and software, ultimately enhancing the ecosystem of telecom gear space, he said,
Where is the Indian market headed?
Indian telcos are eyeing Open RAN as a viable method to cut network-related costs and bring in more customisations as they upgrade their networks to 5G technology. And this comes at a time when Chinese vendors are unlikely to be a part of future networks leaving two vendors – Ericsson and Nokia. Telcos are looking beyond traditional vendors to bring in innovation through Open RAN and cut dependence on traditional vendors.
Reliance Jio is testing its own 5G Open RAN solutions in several Indian cities. Jio Platforms has partnered with chipmakers Qualcomm and NXP to make virtualized RAN and small cell to support its 5G network enabling various use cases including fixed wireless access (FWA).
Reliance Jio CTO Shyam Mardikar had earlier told ETTelecom that 5G will be the socket for the new age digital world and will connect all cross-industry collaborative forces like education, medicine, industry 4.0 to build their use cases. “…the whole realization of 5G is crucial. Telecom will become a use case or application or vertical driven industry.”
Airtel has just announced a strategic alliance with Tata Group and TCS to build 5G networks based on Open RAN technology to roll out products and solutions initially for India and take it globally later. Airtel will also leverage Qualcomm’s 5G RAN platforms – which runs on the cloud – to rollout virtualized and Open-RAN 5G networks in India. ET previously reported that the telco is working with various US and Japanese companies to develop 5G gear using Open RAN technology.
At the global level, Vodafone Group is making strides in the Open RAN space having recently announced its partnerships with strategic vendors – Dell, NEC, Samsung Electronics, Wind River, Capgemini Engineering and Keysight Technologies – to jointly deliver the first commercial deployment of Open RAN in Europe. The initial focus will be on the 2,500 sites in the UK.
In India, Vodafone Idea also has Open RAN as a focus area for its future 5G networks having conducted 4G trials under the leadership of its previous CTO Vishant Vora. The telco’s current CTO Jagbir Singh in an earlier interview told ET that Open RAN will offer flexibility of deployment, thereby reduction in cost. “This is the right direction for the industry to move on. The initial deployment will be a mix of openRAN and integrated RAN for initial years but everything’s going to be virtualized in the longer run.”
Apart from telecom players, companies such as Tech Mahindra, Saankhya Labs, Cyient and Indian equipment-makers Sterlite and HFCL and US based Mavenir are also seeing a huge potential in this market.
“We are designing and developing solutions via Open RAN for Indian as well as global customers. STL is positioned quite well to offer a full suite of integrated solutions to telecom operators for 5G – from fibre to small cells to 5G micro cells ,” says Ankit Agarwal, CEO – Connectivity Solutions, STL.
The Open RAN is a big opportunity. STL has already developed an end to end multi band radio solution for 5G networks. The solution provides a comprehensive Open RAN solution spanning across Radio Unit (RU), Centralised Unit (CU), and Distributed Unit (DU), with STL forming a key ecosystem alliance for 5G New Radio (NR) products that are aligned with the O-RAN standards.
The company recently appointed former AT&T executive Chris Rice as the CEO of the new business unit for Open RAN and 5G. The new unit will see hiring of about 250-300 people this year, Agarwal said.
Mavenir is also working with Indian operators and system integrators to build and operate Open RAN based networks.
“We are engaging with various suppliers to put together a cost-effective solution to address the Open RAN market. Also, working towards manufacturing Open RAN products under the “Make in India” program. We are expecting large scale deployments in India for Open RAN within the next 6 to 12 months,” Bakaya said.
Globally, telecom operators will follow a stepwise approach by initially targeting the deployments around 4G/5G greenfield or brownfield sites to ensure a healthy return on investment, he said.
According to Ericsson’s ConsumerLab study – Five Ways to a Better 5G, at least 40 million smartphone users in India could take up 5G in the first year of launch. Consumers are even willing to pay 50 percent more for 5G plans with bundled digital services, compared to just 10 percent premium for 5G connectivity.
Way ahead
The market for Open RAN-enabled radio units is estimated to be worth over $47 billion by 2026, according to the analyst team at ABI Research. Network operator investments in Open RAN gear will exceed those spent on traditional cellular network equipment in 2027-2028.
Indian players are bullish on Open RAN and have started forging alliances for the same. 5G trials have started in India. Interestingly, Vodafone Idea and Airtel’s 5G trial applications for Open RAN technology with Mavenir are yet to be approved by the telecom department.
Though, 5G spectrum auction is expected to happen early 2020 and deployments later next year. Till then, operators will be able to test new solutions via Open RAN and develop new use cases specific to the Indian market.
Open RAN seems to be the best bet for the Indian industry – for telecom players, because of lower capex/opex costs, more efficiency and new innovative solutions with quicker deployment of 5G, for system integrators – a way of expanding their reach globally and for software makers – an opportunity to build ‘Make in India’ solutions for the global market.
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