Tareq Amin’s Rakuten is the most advanced Open-RAN and virtual carrier on earth. But he wasn’t able to get there using standard parts and equipment.
Rakuten pays hundreds of millions of dollars in non-recurring engineering fees to chipmakers like Qualcomm to obtain the components it needs. …We cannot find the right material at the right cost, the right architecture, to address the future requirements for 5G radiosTareq Amin Rakuten to John Hendel of Politico
That’s an enormous sum, enough to design state-of-the-art chips. I would guess the extra cost ate up all the expected cost savings from the initial deployment. (Below) Important: Please don’t infer from this that Open-RAN is a failure, especially for new networks. Most of these problems will be solved. Meanwhile, don’t believe the hype.
Alex Choi of Deutsche Telekom is enthusiastic about Open RAN and the other buzzwords as near-future technologies, still with challenges. That’s the near-universal consensus of the top network engineers. That doesn’t mean the new networks shouldn’t pioneer, but I’ve been seeing some unfortunate datapoints:
- Vodafone CTO Scott Petty has been one of the most enthusiastic supporters and is doing some deployments. But Laurie Clarke of New Scientist quotes Petty, “We believe by 2023, we may be able to deploy some scale in the rural parts of our network, but it will take until 2025 to be able to deploy at real scale in our denser urban and suburban areas.”
- AT&T was the first strong backer of SDN/NFV/Ecomp, pouring a fortune into open software. It is quietly cutting back. A friend has been receiving resumes from senior people at AT&T, expecting layoffs.
Contrary to general belief, the initial saving from open and virtual RAN is modest. The hardware is cheaper, but hardware is only a small part of the network cost. For large carriers with bargaining power and good negotiators, the price of the hardware is already low.
China Mobile & China Telecom are paying US$23,000 per cell. The antenna, power supply, and a high-performing processing unit will still be required. How much could they really save if they bought radios from Mavenir or Jio/Radisys?
Smaller telcos, like AT&T or Telefonica, order closer to 10,000 cells. Nokia & Ericsson are masters at extracting maximum revenue from customers but if pressed will give great prices on the initial purchases.
Over time, the more flexible systems should be much cheaper to upgrade. Moore’s Law may be slowing, but the systems in five years will be far more capable than today. If open systems deliver on their promises, the upgrade should be cheap and easy. (That’s still unproven.)
Carl Russo at Calix has produced some of the best SDN systems, Verizon tells me. He tells me carriers who just look for initial savings will not reap the full benefit of SDN. Only those who use the flexibility and integrate better management, especially of customer offerings, receive a full return.
Nearly all telcos upgrading and densifying existing systems will likely follow a similar timeline as Vodafone, limiting new systems for several years. New builds are almost all choosing Open.
All of this is speculation until we have good data from the field, of course.