Telefónica and four other large European operators have urged the European Union to contribute to the construction of the Open RAN ecosystem, through a joint statement made public last Thursday. The demand has been made a week after Orange and DT inaugurated two laboratories aimed at promoting the unbundling of link networks and the development of a “strong European ecosystem of Open RAN suppliers”, to face the efforts in this field what they say the United States and Japan are doing.
In mid-January, Deutsche Telekom, Orange, Vodafone and Telefónica signed a memorandum to promote the rapid development of global and non-fragmented networks, with an explicit commitment to deploy them on their respective national networks as soon as they were available. In its day, the initiative was interpreted as an attempt by large European operators to force link network manufacturers to accelerate the development of an Open RAN ecosystem and promote it throughout Europe thanks to their purchasing power and, to the extent if possible, with EU funds or European countries.
Ten months have passed since the memorandum and large European operators have the impression that very little has been done to drive the creation of an Open RAN ecosystem of European origin, which they consider vital. This disaggregated ecosystem should serve, in his opinion, apart from creating more competitive and economical 5G telecommunications networks in Europe, so that European suppliers [Ericsson and Nokia] would also be strengthened globally, with the contribution of other more specialized companies based in Europe.
Experts say that the real interest of large European operators in wanting to boost Open RAN and, at the same time, strengthen the European network industry, is not quite clear, when there are two first-line suppliers and they could be harmed
What the four signatories of the memorandum, which Telecom Italia (TIM) has now joined, did last Thursday is to issue a statement in which they “urge Europe to build an Open RAN ecosystem” and appeal to policy makers , to EU Member States and industry stakeholders “to collaborate and give urgent priority to the Open Radio Access Network (Open RAN)”. The document ensures that “this will ensure that Europe continues to play a leading role in 5G and, in the future, in 6G.”
The statement is accompanied by a report from the US consulting firm Analysis Mason, commissioned by the operators themselves, which establishes five recommendations that, according to the operators, “can bridge the gap with other international regions to create a dynamic and vibrant ecosystem of European actors that sustain the mobile communications of the future ”.
These five recommendations from the Analysis Mason report are: ensure high-level political support for Open RAN, because Europe needs to speak with a common voice and identify Open RAN as a strategic priority; create, by the European Commission, a European Alliance on next generation communication infrastructures and a roadmap for innovation, as it has done with the cloud and semiconductors; for policy makers to provide funding and tax incentives to operators, suppliers and start-ups to support the development of European solutions along the entire Open RAN value chain, based on public-private partnerships, test benches and open laboratories ; promote European leadership in standardization, because globally harmonized standards ensure openness and interoperability and, fifth, work with international partners to promote a secure, diverse and sustainable ICT and digital supply chain.
Essential for European industry
The communiqué attributes to this future European Open RAN ecosystem a kind of panacea that would solve all the ills that afflict European telecommunications. It literally says “that an open, smart, virtualized and fully interoperable RAN (enabling more effective and efficient mobile communications) is essential for Europe to meet its goal of 5G for all by 2030” and “will help drive supply chains and stronger and more resistant platforms, as well as to promote digital autonomy and continued technological leadership ”.
In addition, it is added that “new open and disaggregated architectures, software and hardware, such as the open RAN, give operators the flexibility to extend 5G technology to more users in a cost-effective, secure and energy efficient way” and ” this flexibility will stimulate further innovation in all sectors in areas such as telemedicine and smart factories ”. It gives the impression that the operators are very upset because the community authorities have not picked up the glove that was thrown at them last January and now they are returning to the load with greater urgency.
It so happens that the Commissioner for the Internal Market, Thierry Breton, is a firm defender of digitization and European technological sovereignty to face strong competition from the United States, China, Japan and South Korea in all fields of information technologies and telecommunications. Breton is the right-hand man of Margrethe Vestager, the powerful Community Vice President, and promoter of the Digital Compass 2030, the European path to the digital decade.
Nokia and Ericsson assure that they are the ones that contribute the most to the development of the O-RAN Alliance specifications and have communicated to the FCC that Open RAN networks will be, in practice, more expensive than traditional ones, when they exist.
Thierry Breton was, in his day, president and CEO of France Télécom, the dominant French operator, now called Orange. He knows well, therefore, all the problems of the telecommunications industry and especially of the operators. And of its importance in Europe: the five large operators that signed the statement have a market capitalization close to 200,000 million dollars on the stock exchanges of their respective countries and employ several hundred thousand people.
The demands and situation of European operators are, therefore, well known by all decision-making bodies in Brussels and the Member States, as well as by European telecommunications regulatory bodies, due to their persistent request for greater flexibility in the regulation of the sector. If operators think that policy makers and EU Member States do not pay enough attention to them, it must be because they consider that they have other more urgent and necessary priorities to attend to, and not because they are not informed of the situation of the operators.
Open RAN, subject of controversy
In the last two years, and especially in recent months, Open RAN has been the subject of multiple analyzes, debates and controversies in various international forums on the telecommunications and link networks industry, including regulatory bodies such as the FCC, the United States’ telecommunications regulatory body. In them, there has been no unanimity in determining what should be the best strategy that promotes the Open RAN ecosystem and can benefit everyone: users, industry of the sector, telecommunications operators, national and international interests and legislation.
For the United States, Open RAN may be an opportunity for US companies to have a more predominant role in the telecommunications industry, so far very focused on software but little on hardware. Even the government has approved the allocation of 1.5 billion dollars to finance the development of Open RAN, but now US politicians are realizing that the main organization promoting the development of Open RAN, the O-RAN Alliance, is international. US companies are well represented, with about 82 members out of 237 in total, but there are also about 44 companies that are Chinese, including China Mobile, which is a founding member and sits on the board of the Alliance, and that it has the right to veto in the proposals of new specifications.
The importance of Chinese participation in the O-RAN Alliance was starkly highlighted in mid-September. The US Administration’s decision to blacklist three Chinese companies, members of the Alliance, led Nokia and Ericsson to abandon their technical activity in the Alliance because they did not want to risk problems for collaborating with Chinese companies. Nokia returned to the O-RAN Alliance two weeks later, after providing legal assurances that it could not be prosecuted for collaborating with Chinese companies and after changes to the Alliance participation documents were approved.
Returning to the Alliance, Tommi Uitto, president of Nokia’s mobile networks division, reiterated that his company was fully committed to the O-RAN Alliance and that he believed in its potential. He stressed, however, “that the specifications [of the Alliance] are still evolving and there are technical challenges to be solved” and, “of course, it will take time for the ecosystem to mature”, as can be read on his blog. .
In an attempt to counter the annoying affair that occurred with Nokia and Ericsson, Telefónica announced on the same day as Nokia’s return an agreement with NEC to carry out pre-commercial tests of Open RAN networks in Spain, Germany, the United Kingdom and Brazil, while TIM, the operator The Italian dominant company, which last Saturday received an offer to buy from the investment firm KKR and is going through serious problems, said it would do more tests with open networks.
Just two weeks ago, Deutsche Telekom inaugurated a laboratory in Germany dedicated to network unbundling, of which the German subsidiaries of Telefónica and Vodafone (along with several companies, including Nokia) are also part of the consortium. Meanwhile, Orange opened another laboratory near Paris dedicated to verifying the interconnection of open networks and emphasized the firm commitment of the large European operators to Open RAN. Vodafone had opened another laboratory in England in June and TIM another in southern Italy, apart from doing Open RAN field tests.
At the Orange laboratory presentation, it was surprising that Michael Trabbia, CTO of the French operator, said that Open RAN would help create a “strong ecosystem of suppliers” in Europe and that it would help to overcome Europe’s technical dependence on the United States. and China. Trabbia praised the virtues of the Open RAN technology, calling it a great discovery for the industry and offering “the promise of greater efficiency and flexibility” for mobile networks, statements that a week later have been reiterated in the joint statement of the five European operators last week.
What attracted the most attention at the opening ceremony of the Orange laboratory, to which various specialized media were invited, was that Trabbia particularly highlighted the European element of Open RAN and not so much its technical benefits. He emphasized the fundamental role that Open RAN could play in strengthening European technology in the telecommunications network industry. A week later, thanks to the statement, it has been seen that all this is part of the strategy to strengthen the European network industry, which operators consider to be in danger in the face of efforts to snatch preponderance, especially by the United States and China.
Open RAN is more expensive, according to Ericsson
What is not quite clear, in the opinion of many experts, is the real interest that large European operators may have in wanting to promote Open RAN and, at the same time, strengthen the European network industry. If one thing is clear, it is that between Nokia and Ericsson they now account for about a third of the global telecommunications network market, with a tendency to grow slightly in a relatively stagnant market, while Huawei controls another third approximately and, if it joins ZTE , another Chinese supplier, both represent close to 40%, a percentage that will hardly fall, at least in the medium term, because it is based on the important captive Chinese market and neighboring countries.
In the event that in the medium term, from the second half of this decade, Open RAN began to triumph and establish itself in the network market, the most affected would be, from the outset, Ericsson and Nokia, because they would have one or more new competitors with their offer of supposedly open and unbundled networks, apart from the other current closed network manufacturers, such as Samsung or NEC, who are moving to open networks. Ericsson and Nokia have already said that they will be among the first to offer open networks when the technology matures, but it is clear that their position would be weaker than it is now. Huawei and ZTE could also offer open networks.
For operators, in general terms, this increase in competition could benefit them if the prices of the new “open” networks are really much lower than those of the “closed” networks that they will continue to have and install for many years and under the assuming that the costs of integrating the new network landscape are acceptable and controllable for the operators. What seems clear, at least a priori, is that a benefit for European operators with Open RAN technology would be to the detriment, mainly, of Ericsson or Nokia. The big European operators and Ericsson and Nokia, along with other European manufacturers, could hardly benefit at the same time. European industry would probably be stronger if operators placed orders primarily with European suppliers, as is being done by China, which is relentlessly favoring its indigenous industry.
In any case, Ericsson denies the biggest, that is, that the Open RAN Alliance technology is cheaper than current RAN technologies, fully compliant with international standards approved by the 3GPP, a body dependent on the ITU, the International Union of Telecommunications Mike Murphy, recently CTO of Ericsson North America (previously held the same position at Nokia and previously at Northern Telecom) says that, in fact, Open RAN equipment is more expensive than classic RAN equipment and traditional RAN equipment at a time. Ericsson’s brief filed on Monday of last week at the request of the FCC, the US telecommunications regulator.
Even if the cost savings estimates for an Open RAN unit were true, Murphy notes, it would not offer the same level of performance as a traditional RAN. “Ericsson estimates indicate that Open RAN equipment would be more expensive than integrated RAN, given the need for more equipment to achieve what the tailored solutions offer and the added costs of integration systems.” Ericsson, Murphy tells the FCC, is not opposed to Open RAN technology and proves it that it has contributed many of its own resources to making the O-RAN Alliance specifications successful, with the development of 1,000 of the current 7,000 specifications.
In a communication from Nokia, also addressed to the FCC, which wants to know the opinion of all the parties in this tangled matter, the Finnish company warns of the important risks that Open RAN technology entails, especially in terms of the security of the networks. And it states that declaring that a deployment is “open” does not mean that it is. It can be achieved with a private agreement in which several manufacturers have agreed to use certain specifications, but not necessarily the common ones that the O-RAN Alliance wants to advocate.
Like Ericsson, Nokia notes that much of the specifications that the Alliance has developed are its own. Here too there is a certain misunderstanding, because the operators point out in their statement that only 13 large European companies develop Open RAN products, but it so happens that two of them, Nokia and Ericsson, are the most active and those that provide the most specifications. , as they declare, apart from having an immense portfolio of essential patents. Other companies, like the American Mavenir, participate in many forums, but they are very small.
Nokia, apart, points in its communication to the FCC an interesting topic: the real opening of the supposedly open networks. In principle, an Open RAN network should be based exclusively on the O-RAN Alliance specifications, when they are fully established and tested, and in turn subject to the 5G regulations of the 3GPP. In a subtle way, Nokia criticizes that many suppliers talk happily of “open” networks when in reality they are private agreements between suppliers and operators to use common standards internally. Rakuten, for example, cannot have open and unbundled networks in the sense that the O-RAN Alliance uses, among other reasons because the specifications are not ready yet. In any case, it would use its own rules internally in its networks, which is legal, but cannot be considered open.
Leading telecom consultants agree that Open RAN technology has raised too many expectations and has been over-promoted, because there are multiple issues to resolve, which will take several years. Among them, although not much is said but it is not trivial, is the energy consumption of open link networks. The vast majority of prototypes are currently based on Intel’s process technology, which consumes much more energy per process unit than, for example, ARM, or “closed” networks.
Analysts from Strand Consult, Omdia, GSMA Intelligence and Analysis Mason are skeptical about the future of Open RAN in the short term in interviews conducted by the specialized site Mobile World Live Including Caroline Gabriel, a researcher at Analysis Mason and who has contributed to the report of support to the demands of European operators, recognizes that Open RAN “is not yet commercially important” and that there has been a considerable promotion of the subject, as always happens when it is in the process of development, although he thinks that it would be unfair to disqualify it as a simple public relations exercise.
What is beyond any doubt is that Open RAN will give a lot to talk about next year and the following and there are already fears that there will not be a single open RAN but multiple ones in the future, which would ruin a large part of its advantages. It may even be necessary to talk about it again before the end of this year, because the O-RAN Alliance has made several announcements lately. Ericsson is also not lagging behind with its announcement last week of the development of a platform that ensures that it can automate the operation of multiple link networks, whether virtual, physical, integrated or open, including those already deployed.