Slowdown of Open RAN Deployment Would Accelerate the Market Consolidation of Suppliers

On May 26, Broadcom Inc. announced plans to acquire VMware and incorporate the Broadcom Software Group into its existing infrastructure and security software solutions under the brand of VMware. Broadcom is a global leading chipset semiconductor and infrastructure software solutions provider. VMware is a leading software provider for enterprise solutions and provides RAN Intelligent Controller (RIC) and applications for Open RAN optimization. This announcement followed another acquisition 2 days earlier. Amdocs, a leading Open RAN platform supplier acquired MYCOM OSI, which provides 5G assurance software for both 5G Standalone (SA) and Open RAN.

In theory, all Open RAN products and services should be fully compliant with O-RAN Alliance standards for interoperation. However, many infrastructure components may not be 100% fully compliant as claimed, according to ABI Research interviews, which is a fact that will likely be exposed before being chosen and tested. A lack of transparency in various Open RAN solutions and incomplete standards might make operators more cautious about deploying Open RAN networks.

To prevent such an issue, operators and the O-RAN Alliance are working with industrial partners to improve the standardization process and test multi-vendor interoperability, Radio Intelligent Controllers (RIC), O-Cloud, infrastructure security, and end-to-end functionality. At the same time, vendors are looking to acquire other solution providers and extend their portfolio coverage on the supply chain, which will help them gain interoperability internally. Besides the two examples mentioned in the News section, earlier this year, Rakuten acquired Robin.io, which was its network function supplier for automation and telco cloud services. And in August 2021, it also acquired Altiostar which was a key software supplier, including Open RAN platforms for Rakuten, DISH Network, Bharti Airtel, Telefónica, etc. Another example is NEC, which is an O-RU supplier and offers a near-Real-Time (RT) RIC platform and xApp solutions for Open RAN networks. NEC also owns Netcracker, which provides a full Open RAN domain automation solution that includes network and service orchestration, a non-RT RIC platform, and rApp solutions.

Open RAN has a small addressable market, even with committed launch plans from a few big operators, such as Vodafone, Orange, DT, Telefónica, and TIM. ABI Research forecasts that the Open RAN installed base will not reach 10% of the total market until 2024. Because of interoperability issues between multi-vendors and technical issues, such as building open interfaces between and within pieces of equipment, as claimed by Mavenir at the recent Open RAN European Forum 2022, operators have to slow down deployments in the short term, which makes it even harder for smaller companies with a narrow focus to survive. Additionally, operators face a significant operational complexity in establishing an Open RAN ecosystem from scratch. For example, Vodafone said that it has worked with over 50 companies in the ecosystem over the past year of deployment, which is challenging for some other operators to do. Suppliers with relatively complete solutions, such as NEC and Rakuten, can be more attractive to operators that commit to the progress of Open RAN deployment, which is also the intention of the acquisitions mentioned above, showing the fierce competition in gaining the first-move advantage.

As the Open RAN market tends to end up with a few consolidated suppliers, it is critical for operators to ensure compliance with the standard and openness of the interface. Standardization can reduce the barrier to entering the market and increase fair competition, which means operators will cooperate with a winner of wide suppliers. Additionally, with an open interface, operators can always add software applications to remain agile. ABI Research has seen that early adoption of Open RAN will be in small, manageable scenarios, such as indoor enterprise solutions for manufacturing, rural areas with low population density, and co-existence with legacy technologies or infrastructures, which requires relevant solutions to use radio resources for those deployment scenarios in the short term.