Geopolitics should propel telecoms’ momentum towards open interfaces in 2021. Colin Thomson, Practice Lead, Access Partnership, explains why it matters.
The question of who builds 5G and even how it is built looks set to dominate debates on digital infrastructure for the next 12 months.
The West – meaning largely the Five Eyes countries (the US, UK, Australia, New Zealand and Canada) and the European Union – is trying to engineer a new global telecoms market to challenge the dominance of Huawei while avoiding a duopoly of Ericsson and Nokia.
Opening the network
Mobile networks support billions of connections generating hundreds of billions in revenues for service providers annually, making them some of the most important distributed network infrastructure in the world. Yet for years, the huge RAN market has been dominated by three players: Huawei, Nokia and Ericsson collectively represent 80% of the global market.
Mobile operators want to rebalance the market, using open components that give them greater flexibility and lower costs by using commodity hardware. The operators, with some vendors, SMEs, investors and academia, are working on OpenRAN, developing radio networks built on components that are software-centric based on open source, and disaggregate hardware and software.
Bodies such as the O-RAN Alliance and Telecom Infra Project are delivering standards-based technology solutions, specifications, and trials. Rakuten Mobile in Japan and Dish in the US are driving OpenRAN deployments, along with Vodafone in Europe.
OpenRAN has been boosted by the geopolitical situation and commercial requirements, with tensions between Washington and Beijing crystallised around 5G. It was already considered strategic infrastructure, but the Covid-19 pandemic has made 5G paramount for Washington, which has pursued an aggressive strategy of sanctions and diplomatic pressure.
The US Administration’s sanctions against Huawei caused ripple effects in several jurisdictions, in particular the UK and EU countries. The EU, driven by its own “technological sovereignty” agenda, sees a need to preserve European leadership in 5G and beyond – or risk being overtaken by Chinese and American firms.
With the US, UK, France, Belgium, Spain and Germany taking action to limit or remove Huawei, policymakers are reluctant to rely on just two firms, especially as most are banking on digital infrastructure to underpin their Covid-19 recovery plans. They perceive it is too great a strategic risk to rely on foreign firms.
Access to OpenRAN technology provides a vehicle for mobile network operators to address the supply chain security concerns brought about by heightened trade and security tensions, as well as a chance to develop national telecom champions after a decade of consolidation.
OpenRAN is already being specified in mobile operators’ RFPs for new network equipment but more work needs to be done to meet the needs of vendors and governments, and policymakers are willing to put their money where their mouths are.
Commercially, OpenRAN offers a chance to reduce the costs of complying with universal service conditions, which is common obligation in mobile operators’ service licences. It requires high-cost equipment to be deployed in low-return areas (in return for exclusive use of natural resources).
Operators are now leveraging OpenRAN as a cost-effective way to deliver service. By migrating legacy 2G, 3G and 4G networks to OpenRAN architectures, they can reduce the cost and complexity of meeting their universal service obligations in these areas.
Governments back OpenRAN
Having proven the OpenRAN technology with select deployments in their 2G, 3G and 4G networks, mobile network operators are leveraging the technology in their roll-out of 5G.
This trend will increase operators’ buying power, drive competition and result in cost-effective business-driven solutions to the challenges faced by operators and their clients.
It will be supported by taxpayers worldwide. For example, the EU is looking for ways to support telecom innovation with funds from the €1.8 billion Connecting Europe Facility Digital programme, the €6.7 billion Digital Europe programme and the €95.5 billion Horizon Europe programme (equating to more than $130 billion in aggregate), not to mention Member States’ individual initiatives.
The US congress has passed a bill to establish a fund for telecom innovation and “rip and replace”. How much will be allocated is unclear.
The UK has allocated an “initial” £250 million (€289 million) toward its 5G Supply Chain Diversification Strategy and is likely to use its 2021 presidency of the G7 to drive this approach internationally.
The next 12 months will be when these headline commitments start to become concrete actions. For those countries, it is the year when they find out if they can still move world markets.