Can O-RAN truly disrupt the rollout of 5G network tech or is this all hype?

Telecom equipment majors say its disruptive impact is a myth but service providers think otherwise

Can the much-touted open radio access network (O-RAN) truly disrupt the rollout of 5G network technology or is this all hype?

Certainly, telecom companies across the globe, including India’s top three, Bharti Airtel, Vodafone-Idea and Reliance Jio, have embraced the revolutionary technology. That is because it promises network rollout at a substantially lower capital cost, offers better performance and ends the monopoly grip over network technology of a few global incumbent telecom gear makers such as Nokia, Ericsson, Huawei and ZTE.

Ask telecom equipment players and they will bombard you with data to prove that O-RAN has not taken off. For instance, a research report from Strand Consult, a Danish telecom consultancy, said it all in its research headline: “Everyone is talking about O-RAN but no one buys it”. The report projects that O-RAN will account for less than one per cent of global 5G mobile sites in 2025 and not more than 3 per cent by 2030.

Those of the same view point to the fact that nearly all 5G networks that are being rolled out are being undertaken by the big telecom gear manufacturers. One exception is Rakuten of Japan, which is facing serious challenges setting up a complete O-RAN-powered 5G network.

But ask users or telcos in India and the story is very different. “A disruptive technology takes time to mature. The next two years will be crucial for the development of O-RAN technology as all the elements of the technology have to fall in place. We are seeing that happen now, and expect the technology to scale up by 2023-24. And big global players, from tech giants to telcos, see it as serious business,” said a senior executive of a leading Indian telco that has invested heavily in the technology.

Though no telco wants to hazard a guess on what percentage of their network would be on O-RAN, the real picture will emerge when big rollouts start across the world and in India in the next 24 months. Even incumbent telecom gear makers such as Nokia and Samsung, realising the potential disruptive power of the new technology, are already welcoming O-RAN and tweaking their business models.

The power of O-RAN lies in the fact that it is based on an open architecture, which disaggregates hardware and software and gives telcos the freedom to buy off-the-shelf solutions from various vendors, which can optimise costs. So far, telcos have been running their networks on proprietary hardware and software integrated by incumbent telecom gear makers with vendor lock-ins on upgrades as well as annual maintenance contracts, all of which mean relatively high costs.

The new 5G O-RAN is also virtualised, which means many of the radio access functions that were undertaken by hardware are now done by software. Research agencies said costs could drop 30-40 per cent as a result of this, though incumbent telecom gear operators said operating costs would go up.

One of the key elements on which the success of O-RAN is dependent on is the off-the-shelf availability of chips with very high processing capability located in 5G base stations (which are like mini servers) but which also has lower power consumption and supports virtualisation of the network. For their own base stations, incumbent gear makers design their own chips and get them made by third-party manufacturers.

Intel already offers a solution, and telcos said the Sapphire range of processors have huge promise and are expected to be available by next year. And then there is Qualcomm, which is also rolling out chips for 5G base stations. Reliance Jio (in which Intel and Qualcomm have small stakes through Jio Platforms) and even Bharti Airtel have signed up 5G technology tie-ups with both players. “This alone could give us a cost saving of 10-15 per cent in the network for operators as the base band, where all the processing is done, accounts for 20-30 per cent of overall network cost,” said a technology officer responsible for putting together the O-RAN structure.

The second key issue is software, and telcos said there has already been a lot of progress here. O-RAN software companies such as Altiostar and Mavenir are already testing out their software globally and in India. Bharti, for instance, has partnered with Mavenir and is testing 5G O-RAN software in Punjab. So is Vodafone-Idea. And those in the know say US-based Radisys, which has been acquired by Reliance, is experimenting with O-RAN on their networks.

For cloud software there are many contenders — the traditional giants such as Amazon and Google, and the specialised players Red Hat (which has a tie up with Airtel and is testing its offering) and Wind River, for instance.  

Telcos also point out that in the hardware space, massive MIMO radios, the key for enhancing performance and ensuring more efficient use of 5G spectrum, have seen the comeback of Japanese companies NEC and Fujitsu in the telecom equipment business. Technology officers in Indian telcos said NEC has already announced the commercial launch of its radios in 2022, and telcos are testing them.

There is an opportunity for Indian IT players, too, as integrators who will put together the software and the hardware of an O-RAN network. One of the key elements of the Bharti Airtel and TCS tie-up is the complex task of integration, apart from developing specialised software in automation. Tech Mahindra and Hyderabad-based Cyient have also publicly announced that they are ready to take the plunge.

So, who will win the battle — the O-RAN advocates or the incumbent gear makers? The answer, many experts say, could be somewhere in the middle. The disruptive technology will surely help telcos gain more control over pricing, but incumbent operators will also be forced to change their model and offer open architecture disaggregated products to make it more attractive to telcos.