Analysis Hot on the heels of the UK government enshrining in law the power to strip out Huawei, five European carriers have banded together to ask European policymakers to push the development of open radio access network (OpenRAN).
The operators – Deutsche Telekom, Orange, Telecom Italia (TIM), Telefónica, and Vodafone – published a report, "Building an OpenRAN system for Europe" [PDF], asking the EU to throw money and support at whitebox mobile infrastructure.
This is almost certainly in the hopes the (ideally) cheaper, interoperable kit will help the carriers' own bottom lines, but also to regain some control after several years of uncertainty, maintenance of mix-and-match kit, plus the shock of rip-and-replace mandates after many of them thought they had invested in a relatively cheap and lasting solution in the form of Huawei 5G equipment.
OpenRAN replaces existing RAN interfaces with open-standard alternatives, for example, swapping out the Common Public Radio Interface (CPRI) fronthaul interface for an open one. This would mean operators could mix and match – buying remote radio and baseband units from different vendors.
The idea also disaggregates RAN software and hardware, so a carrier buys commercial off-the-shelf hardware based on standard x86-based processors from one vendor, then sources software for the baseband units from an alternative software vendor.
Paolo Pescatore, telco analyst with PP Foresight, told The Register: "The telco industry has a long history in dealing with fragmentation of everything. It is still early days for OpenRAN and the road ahead still remains bumpy. This technology is unproven and many appear to be placing huge bets on it as a replacement for Huawei.
"Furthermore, telcos are struggling to tap into revenue streams while margins continue to be squeezed. In the absence of driving ARPU (average revenue per user), all focus is geared towards managing and lowering costs as much as possible."
In the background of the OpenRAN push is the removal of the biggest of the Big Three telco networking kit makers – Huawei – from 5G buildouts in multiple countries, including the UK, after moves by the US in 2019.
Commenting on the report, John Strand of Strand Consulting said: "If they are right that Europe is lagging behind technologically and that massive political and financial support is needed from the member states of the European Union to help the European mobile industry, then it is interesting to observe that the US has won its 5G leadership position by purchasing European 5G technology. European operators have primarily bet on and are still betting Chinese suppliers such as Huawei and ZTE."
If you've been asleep for the past two years, the US, during the Trump administration, declared a national emergency to protect local IT infrastructure by banning tech made by "foreign adversaries," and put Huawei and 70 of its affiliates on an Entity List making them subject to strict trade restrictions.
The rationale was that Huawei kit was vulnerable because of the corporation's alleged ties to the Chinese Communist Party. According to the US, which has put a great deal of pressure on its allies to exclude Huawei from networks, this puts the telco infrastructure of any country at risk of security backdoors. Huawei has always denied it is beholden to the party or that its equipment has been compromised.
The UK government, under great pressure from US politicians, initiated first a partial and then a full ban. As of last week, businesses that don't follow directions on so-called high-risk vendors could be fined up to 10 per cent of their turnover (or £100k per day). The Huawei Cyber Security Evaluation Centre (HCSEC, aka The Cell), an offshoot of the UK's National Cyber Security Centre, has repeatedly found pisspoor coding practices, but no apparent backdoors.
In the European Union, moves to protect critical infrastructure against security threats include a "common EU approach" in the form of January 2020's 5G toolbox, which leaves the amount of "risky" tech and procurement decisions up to member states. Earlier this year, France put rules into place making it more difficult for operators to use Huawei 5G kit, with operators Altice and Bouygues reportedly removing Huawei from their 4G installations due to incompatibility with the 5G kit they're buying from other vendors. The two mobile operators did not join the request for OpenRAN support from the EU's policymakers. We have asked both of them to comment.
The great Huawei network ban, in some ways, has been a boon to the other two of the networking Big Three: Nokia and Ericsson, which also sell full stack telco networking gear to operators. But it's a close-knit industry and there are still partnerships in place between the Chinese firms and other makers of networking gear. Muddying the waters even more is the fact that Ericsson's bottom line was affected after its home country Sweden slapped a total ban on Huawei equipment in October 2020.
Following the move, a backlash in China saw Ericsson's revenues plunge 74 per cent in the Middle Kingdom.
Huawei by the way, is fighting the Swedish ban in court, and last month appealed a June judgment by Sweden's administrative court upholding a ban on using Huawei and ZTE equipment for 5G networks in the country.
The exclusion of Huawei has critics concerned over the potential of a duopoly – and the push towards OpenRAN is meant to preclude this.
In a statement accompanying last week's report, "Building an OpenRAN system for Europe" [PDF], Vodafone's CTO, Johan Wibergh, said: "OpenRAN will allow more European vendors to enter the ecosystem, accelerating innovation and stimulating competition. This will benefit the European economy and the quality of connectivity services."
It's not just Huawei and other vendors dealing with Entity List issues though. At the same time as vendors and carriers alike are asking for state support and protection, security efforts (which some paint as trade protectionism) have hit work in industry groups as well.
Several members of network industry group the O-RAN Alliance were added to the US government's Entity List a few months back. Nokia said in September it would take a breather from the group while the "compliance-related" concerns are dealt with – which was widely interpreted to mean it was concerned about the impact of rubbing shoulders with these businesses in its own supply chain.
Nokia was keen to point out that it remained fully behind the idea of open radio access networks, however, telling El Reg at the time: "Nokia's commitment to O-RAN and the O-RAN Alliance, of which we were the first major vendor to join, remains strong."
Ericsson was also worried and told us at the time: "The current situation may hamper progress within the O-RAN Alliance and we are keen to see the situation resolved as quickly as possible."
American firms sitting on the same key industry groups as Huawei — including GSMA, ETSI, ISO, ITU and mobile comms, protocols and standards body 3GPP, which is responsible for the 5G standard – have been given licences to ensure they could continue their work.
EU'll never know how much we back you
An EU 5G ecosystem paper recently postulated more than one outcome for a "successful" OpenRAN ecosystem, if this is achieved - and one of those outcomes was so-called Big Tech (in the form of American tech giants and multinationals) jump in and scoop all the contracts - both on the demand and supply sides.)
The study sketched out four scenarios. In scenario one, "incumbent players" drive 5G, with traditional vendors and Mobile Network Operators shaping the ecosystem and equipment from providers considered "high risk vendors... used in non-sensitive areas only."
In scenario two, the pace of 5G rollout slows, competition remains the same or even decreases due to the exclusion of vendors because of geopolitical motivations and/or security concerns.
In scenario three, OpenRAN is a "game-changer in the 5G supply chain with new players (mainly non-European, even with the possibility of GAFAMs copying this network segment) entering into the European RAN market. In this scenario, decentralized, disaggregated and fully virtualized OpenRAN networks may serve Europe."
The final scenario will be one policymakers will be especially keen to avoid: "5G for Big Tech."
In this scenario, network virtualization and disaggregation of software and hardware change the landscape for network equipment, deployment and service provision in the long term. New business models based on OpenRAN architectures and interfaces gain momentum, and new major players enter the market. In this scenario, foreign Big Tech companies increase their overall dominance in the European market on demand and supply sides alike.
There's no discounting what a gigantic pain the rip and replace of Huawei has been to mobile operators in the UK - Vodafone has said it will cost the telco €200m and take five years to sort out. BT estimated the cost at closer to half a billion pounds over half a decade.
A move towards OpenRAN, then, with its interoperable kit, should, in theory, ease some of the key worries of telcos - and successful work on the nascent technology would mean a potential end to uncertainty over supply chains.
Current international 5G radio equipment standards hit release 16 (SA), aka standalone 5G, in July last year. 5G SA no longer requires piggybacking on 4G infrastructure, as release 15 (non standalone 5G) did. Nonetheless, with the exception of testing platforms, much of the 5G infrastructure currently being built by the networks across the world is 5G-NSA (built on top of a 4G core.)
The next iteration - the 5G standalone tech - requires massive investment and years-long commitments with vendors. Getting some momentum behind OpenRAN tech increases the chances a whitebox solution will be available in time. It also means more diversity in the telecoms supply chain when tech shortages still persist in the near term.
In its latest earnings call, Ericsson CFO Carl Mellander added that "the business momentum is really here. The stand-alone 5G Core market window is open. Customers now make long-term commitments in their choice of vendors here."
CEO Borje Ekholm said on the same call that Ericsson has "5G contracts with all three Tier 1 US operators" after a recent deal with AT&T. He added: "However, it's quite clear that our market share in Mainland China has been reduced and this is a consequence [of] the decision Sweden took to exclude Chinese vendors in the buildout of 5G networks in Sweden."
The carriers will be looking for certainty.
Speaking about the OpenRAN report, Pescatore said: "This does feel like another attempt by telcos to regain some form of control. For sure it does open up the market and allow new innovative providers to the party. The weight of support among the leading European telcos should not be ignored. There are some notable exemptions."
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What do we want? Testbeds and cash. When do we want it? Yesterday
At the heart of the move is a plea for funding and backing, and it comes after US prez Joe Biden signed the US $1 trillion Bipartisan Infrastructure Investment into law.
The US already earmarked $750m in special grants this time last year to support the domestic development of OpenRAN.
In the UK, some funding has been made available for OpenRAN security and resiliency testing hubs to make sure kit works with 5G infrastructure.
Germany recently allocated €300m in federal funding towards OpenRAN.
But hasn't Germany banned Huawei? Not exactly - it was the last of the big EU economies to regulate the 5G sector, putting in place tougher regs around "testing" what it calls "untrustworthy" suppliers via the IT Security Law 2.0 in May this year. Under the rule, telecoms operators must notify the government if they sign contracts for "critical" 5G components, which the Bundestag has the power to block. As Politico has noted, actually imposing this law will be up to Germany's new government, and "applying the rules will require political will."
Most of the mobile operators in the country have significant Huawei kit in their 4G deployments. According to a 2020 report in german paper Handelsblatt, a rip and replace of all Chinese kit in Deutsche Telekom's network would take up to five years and cost "at least €3bn."
Deutsche Telekom told The Register it relies on a "multi-vendor strategy," buying "technology on each network level from different suppliers."
"Telekom already decided in 2019 to remove Chinese suppliers from the security-critical core network. Regarding RAN, only 5G technology from the same manufacturer can be built on top of existing 4G technology from one manufacturer.
"That is why we support OpenRAN initiatives, which aim at open interfaces and broadening the number of manufacturers.
"In today's existing network in Germany, components from Ericsson and Huawei are mainly installed in the antenna area."
German chancellor Angela Merkel has come in for a lot of flack during her tenure for a so-called "Wandel durch Handel" (Change through Trade) approach to China that has been criticised as being more Handel than Wandel.
Germany's chancellor-in-waiting, Olaf Scholz, is still in talks to form a three-way ruling coalition between his centre-left Social Democrats party with the Greens and the pro-business Free Democratic Party (FDP), and it is not known what the coalition's position on IT Security Law 2.0 will be.
In the UK, BT has said it was happy with an extension to 2027 for Britain's rip and replace mandate. The telco needs to swap out an underlying 4G base station every time it deploys a 5G (NSA) base station - the two need to be made by the same vendor because NSA kit, as its name suggest, cannot stand alone and is "inextricably linked" to the underlying 4G network. For EE, that was Huawei, a partner since 2003. Back in 2017, Huawei performed the first UK lab test of an end-to-end 5G network with BT.
The nations, the telcos, the carriers and the standards
Behind the scenes there is industry speculation about a divergence in the 5G standards, looked after by 3GPP, between the US and China.
Analysts at the Dell'Oro Group recently revised their forecasts for worldwide OpenRAN revenues upwards - projecting that revenues would hit between $10bn and $15bn by 2025.
This is not insignificant, but in a best case scenario would still only make up just over a third of the topline Gartner has forecast for worldwide 5G infrastructure revenue (excluding mobile core): $40.64bn for this year alone.
For its part, Huawei has always refused to have anything to do with whiteboxing radio, and if the carriers' pricing model depends on cheaper Huawei kit, this might be in the back of mind for the industry.
Claudia Nemat, chief technology and innovation officer at Deutsche Telekom, said in a canned statement accompanying the OpenRAN report: "Decisive action is needed now to ensure Europe maintains its competitiveness in the development of the next generation networks. Especially in North America and Asia there is strong backing for OpenRAN. Europe should not fall behind but seek a leading position in the new OpenRAN ecosystem."
Among other things, the carriers have asked for:
- High-level political support for OpenRAN: A European Commission created European Alliance on Next Generation Communication infrastructures and a roadmap for innovation (as it has done for cloud and semiconductors.)
- Policymakers providing funding and tax incentives to operators, vendors and startups to support the development of "European solutions" along the entire OpenRAN value chain, based on public-private partnerships, testbeds and open labs
- Promotion of European leadership in standardisation. Globally harmonised standards ensure openness and interoperability.
- Working with international partners to promote a secure, diverse, and sustainable digital and ICT supply chain.
On the last point, it's worth noting another warning from Ericsson's Ekholm, who said in August that a split in 5G or 6G standards would mean "formidable competition for the West" in the form of a competing Chinese ecosystem. Ekholm told telco industry site Light Reading in an interview: "It concerns me that end users – customers and enterprises – will feel it in their mobile experience."
Pescatore opined: "Ultimately OpenRAN should form a key part of a telco's next generation network. The move towards a software driven architecture should allow telcos to be more agile (in theory).
"It is all about execution and ensuring networks are carefully designed for the future."
Strand from Strand Consulting commented: "OpenRAN is not an alternative to classic 5G infrastructure. According to the GSA, over 175 commercial 5G networks have been launched globally. These are classic RAN installations there support 2, 3, 4 and 5G in one base station. There is only 1 commercial OpenRAN installation, Rakuten in Japan. OpenRAN only supports 4G and 5G and therefore it is not a 1:1 commercial alternative for 5G networks there support 2G and 3G on one base station.
"OpenRAN is too little, too late to make a difference when it comes to 5G. If OpenRAN gets the success that its proponents predict, it will account for less than 1 per cent of the 5G mobile sites in 2025; not more than 3 per cent in 2030."
No doubt the politics between the vendors building OpenRAN components and potential community infighting will also need to be kept in check for the industry segment to grow faster. ®