New solutions accelerate move toward open architectures
At the end of October 2020, Ericsson announced Cloud RAN, a portfolio of cloud-native software solutions for the radio access network (RAN). It’s an important move for the Swedish company as it marks a step away from its traditional strategy to sell tightly integrated and purpose-built hardware and software systems.
In a briefing with CCS Insight, Ericsson told us that the new products enable functions over a generic computing platform, thereby offering greater automation, flexibility and openness to its network operator customers. This can hasten time to market for developers and help enterprises launch innovative services in various areas such as indoor connectivity, enterprise and stadiums, the company said.
Ericsson commented that the products are complementary and compatible with its existing 5G solutions, and support standalone and non-standalone flavours. Ericsson will release the products in phases, starting in the fourth quarter of 2021. The initial focus will be on low-band 5G spectrum, with support for higher bands added over time.
Less clear is the extent to which Ericsson’s Cloud RAN offering may eventually replace its traditional networking products. The company is also keeping mum on any contracts or early operator wins.
The announcement aligns with an industry trend toward more open and cloud-orientated network architectures, designed to give operators greater flexibility as to how they select their hardware and software suppliers.
But it’s far from a plunge into the burgeoning world of Open RAN, a technology that completely disaggregates network components, giving operators freedom to pick and choose different elements from different manufacturers.
So far, Ericsson has mostly sidestepped fervent industry discussion about Open RAN. Granted, the company is a member of the Open RAN Alliance, which it joined in February 2019, but it’s been notably less enthusiastic than others. In September 2020, it published a report highlighting multiple security challenges linked with the technology.
Its reticence is understandable, as a fully open and interoperable network design gives operators far more choice. This is a clear threat to traditional players like Ericsson, which until now have mostly focussed on selling proprietary and integrated mobile network systems to operators.
But momentum for Open RAN isn’t slowing down. There’s a growing number of trials from leading operators and support from industry bodies like the Telecom Infra Project. Ericsson’s CEO Borje Ekholm appeared to recognize this on a call for analysts about the company’s latest quarterly results, saying that he expects developments in Open RAN will start to affect its revenue from 2023 onward.
His outlook seemed to align with our expectation, revealed during our recent Predictions Week, that leading operators will commercialize at least a part of their network with Open RAN technology by 2023. And just this month, Vodafone said it would deploy Open RAN at 2,600 sites in the UK by 2027, in one of the biggest operator commitments to the technology so far.
Some of Ericsson’s rivals — notably suppliers like Nokia and Samsung — have already started their own journeys toward Open RAN, although Huawei has perhaps been even more muted on the subject.
Ericsson’s move could be taken as a quiet recognition of an inevitable trend; cloud RAN is going to play at least some role in the RAN of the future as the industry shifts toward more open architectures. It seems the company had little choice but to join the party.
It was surprising, though, that Ericsson made no reference to private networks in its announcement. Although it’s only a small market today, we see this area at the forefront of many of the new applications and revenue opportunities promised by the longer-term vision of 5G. Indeed, another prediction we recently set out is that private networks will become a leading source of growth in 5G by 2023. This area could prove an interesting test bed for future features of cloud RAN.
We also heard little about Ericsson’s plans to integrate its new products with those from the big hyperscale cloud providers, for example Amazon Web Services with its AWS Wavelength service. The union between cloud computing and the network edge has been one of the hottest topics in the industry in 2020, and could be crucial to unlocking much of the value held up in future 5G networks. To succeed, the industry needs to come together to maximize this opportunity, by sharing expertise and collaborating on the development of new technologies and uses. I’m sure Ericsson has a major role to play here.
These are interesting times for Ericsson, which is set to become a major beneficiary of the growing number of restrictions placed on Huawei by national governments. In recent weeks, it has picked up some important contracts, such as a deal to provide the 5G core network for Dutch operator KPN and a RAN deal with EE in the UK. According to reports, other countries such as Italy and Sweden are also set to place restrictions on Huawei, so there appears plenty of opportunity for Ericsson to build on the more than 110 commercial 5G contracts and agreements it has already secured with network operators globally.
Still, I firmly believe that Huawei’s setbacks are unhelpful to an industry that was already suffering from a very small number of leading network suppliers. This lack of diversity is one of the most common concerns I hear in my conversations with network operators. The cost to switch on 5G in Europe alone is already estimated in the magnitude of hundreds of billions of euros. And although Open RAN undoubtedly opens the door to a host of new players in the future — and with it the possibility of lower prices — it remains a fledgling and largely unproven technology.
Ericsson’s Cloud RAN solution is a positive step for the company that gives it an important beachhead in an area with so much growth potential. Deploying it in stages feels like the right approach and fits with Ericsson’s historical playbook of providing customers with a migration path; the technology is still immature and will take time to become widespread. And there’s no guarantee that all operators will wish to deploy it widely anyway. In fact, some may prefer the familiarity of the traditional proprietary approach, which avoids greater complexity from working with multiple suppliers. Let’s face it, operators are generally a pretty risk-averse bunch.
But as networks evolve to become more agile and flexible in response to more discerning demands from consumers and businesses, I expect to hear plenty more about the Swedish company’s cloud credentials in the coming years.
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