Using AI to Transform Cloud RAN from Stepping Stone to Revenue Engine

While cloud Radio Access Network (RAN) announcements have surged since 4Q 2024, nationwide contracts and expansions remain elusive. This evolution is partly in line with 5G standalone deployments. Nokia announced live deployments for Elisa in Finland and du in the United Arab Emirates (UAE), and Nokia is also trialing deployments with Orange in France. Samsung has announced deployments for US Cellular in the United States, Liberty in Puerto Rico, and KDDI in Japan. These deployments, which include the first regional deployments in Europe and the Middle East, raise questions of whether Cloud RAN is overcoming initial challenges and what are the key opportunities for vendors.

Cloud RAN deployments are expanding into new regional markets, but this does not mean the market is in a growth phase yet. The common challenges to cloud RAN— re-platforming legacy, automating deployment, stage-setting with cloud core, and upholding strict security—still weigh heavily on the market. Rather than highlighting a growth phase, new deployments reveal a deeper shift in the business model: Cloud RAN is not about cost savings or open interfaces, but about full-stack platform monetization. This means that the upgrade to Cloud RAN may not only be a costly upgrade, but will also require retooling and new human resource capabilities for telcos. In the current economic climate, this may pose a significant challenge for telcos.

Cloud RAN is not a standalone product. Tier One vendors are bundling Cloud RAN in end-to-end contracts and aim to share virtualization/cloud-native platforms between their core and RAN infrastructure, rather than sell Cloud RAN standalone. Despite Open RAN advocating for greater supply chain diversity, recent RAN contracts indicate a stronger drive to bundle RAN and core into end-to-end contracts, especially for Tier One networks. Despite common messaging that Cloud RAN is an incremental step in evolution toward Open RAN, this is not the selling point. It may have worked in the short term while Open RAN's promises lingered amid market uncertainty, but it will be less effective as vendor disaggregation doubts grow. The real monetization opportunity lies in pairing Cloud RAN with Artificial Intelligence (AI) for network intelligence, orchestration, and differentiated applications.

Operators that once sought greater independence through Open RAN now rely on vendors for Cloud RAN, AI-driven automation, and cloud-native orchestration. This shift presents a new strategic opportunity: Cloud RAN shouldn’t be positioned as a standalone infrastructure investment, but rather as a full-stack AI-driven play. This means bundling Cloud RAN with AI-driven automation platforms (e.g., Ericsson Intelligent Automation Platform (EIAP) and Nokia MantaRay), edge AI infrastructure, and cloud platforms optimized for distributed workloads from core-to-edge. While Open RAN was about breaking vendor control, Cloud RAN is about vendor-led monetization.

Cloud RAN already uses in-line accelerators to boost RAN performance, going against Open RAN's approach. Further augmentation of hardware and software for AI, network slicing, and distributed compute will be the selling point. Network vendors must adapt their RAN portfolios and messaging to meet real demand, shifting the focus to new revenue streams.

Moreover, if Cloud RAN is not being sold as a standalone product, this may allow more flexible service opportunities for delivering Cloud RAN software and AI intelligence as-a-Service. Cloud RAN could also be offered in partnership with Infrastructure-as-a-Service (IaaS) providers such as Amazon Web Services (AWS) or Oracle. This would shift Cloud RAN from a one-time, Capital Expenditure (CAPEX)-heavy investment to a subscription- or usage-based business model with recurring revenue.

Overall, mere support for Cloud RAN on the way to Open RAN will soon be insufficient; network vendors will need to lead in Cloud RAN in close concert with AI offerings. AI should not be forced into an under-monetized Open RAN framework. Integrating AI and Cloud RAN is not only the best path forward; it is the only path forward.