Telco Cloud Deployment Tracker: Will vRAN eclipse pure open RAN?

Is vRAN good enough for now?

In this October 2022 update to STL Partners’ Telco Cloud Deployment Tracker, we present data and analysis on progress with deployments of vRAN and open RAN. It is fair to say that open RAN (virtualised AND disaggregated RAN) deployments have not happened at the pace that STL Partners and many others had forecast. In parallel, some very significant deployments and developments are occurring with vRAN (virtualised NOT disaggregated RAN). Is open RAN a networking ideal that is not yet, or never will be, deployed in its purest form?

In our Telco Cloud Deployment Tracker, we track deployments of three types of virtualised RAN:

  1. Open RAN / O-RAN: Open, disaggregated, virtualised / cloud-native, with baseband (BU) functions distributed between a Central Unit (CU: control plane functions) and Distributed Unit (DU: data plane functions)
  2. vRAN: Virtualised and distributed CU/DU, with open interfaces but implemented as an integrated, single-vendor platform
  3. Cloud RAN (C-RAN): Single-vendor, virtualised / centralised BU, or CU only, with proprietary / closed interfaces

Cloud RAN is the most limited form of virtualised RAN: it is based on porting part or all of the functionality of the legacy, appliance-based BU into a Virtual Machine (VM). vRAN and open RAN are much more significant, in both technology and business-model terms, breaking open all parts of the RAN to more competition and opportunities for innovation. They are also cloud-native functions (CNFs) rather than VM-based.

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2022 was meant to be the breakthrough year for open RAN: what happened?

  • Of the eight deployments of open RAN we were expecting to go live in 2022 (shown in the chart below), only three had done so by the time of writing.
  • Two of these were on the same network: Altiostar and Mavenir RAN platforms at DISH. The other was a converged Parallel Wireless 2G / 3G RAN deployment for Orange Central African Republic.
  • This is hardly the wave of 5G open RAN, macro-network roll-outs that the likes of Deutsche Telekom, Orange, Telefónica and Vodafone originally committed to for 2022. What has gone wrong?
  • Open RAN has come up against a number of thorny technological and operational challenges, which are well known to open RAN watchers:
    • integration challenges and costs
    • hardware performance and optimisation
    • immature ecosystem and unclear lines of accountability when things go wrong
    • unproven at scale, and absence of economies of scale
    • energy efficiency shortcomings
    • need to transform the operating model and processes
    • pressured 5G deployment and Huawei replacement timelines
    • absence of mature, open, horizontal telco cloud platforms supporting CNFs.
  • Over and above these factors, open RAN is arguably not essential for most of the 5G use cases it was expected to support.
  • This can be gauged by looking at some of the many open RAN trials that have not yet resulted in commercial deployments.

Global deployments of C-RAN, vRAN and open RAN, 2016 to 2023

Image shows global deployments of C-RAN, vRAN and open RAN, 2016 to 2023

Source: STL Partners

Previous telco cloud tracker releases and related research

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Fixed wireless access growth: To 20% homes by 2025

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Fixed wireless access growth forecast

Fixed Wireless Access (FWA) networks use a wireless “last mile” link for the final connection of a broadband service to homes and businesses, rather than a copper, fibre or coaxial cable into the building. Provided mostly by WISPs (Wireless Internet Service Providers) or mobile network operators (MNOs), these services come in a wide range of speeds, prices and technology architectures.

Some FWA services are just a short “drop” from a nearby pole or fibre-fed hub, while others can work over distances of several kilometres or more in rural and remote areas, sometimes with base station sites backhauled by additional wireless links. WISPs can either be independent specialists, or traditional fixed/cable operators extending reach into areas they cannot economically cover with wired broadband.

There is a fair amount of definitional vagueness about FWA. The most expansive definitions include cheap mobile hotspots (“Mi-Fi” devices) used in homes, or various types of enterprise IoT gateway, both of which could easily be classified in other market segments. Most service providers don’t give separate breakouts of deployments, while regulators and other industry bodies report patchy and largely inconsistent data.

Our view is that FWA is firstly about providing permanent broadband access to a specific location or premises. Primarily, this is for residential wireless access to the Internet and sometimes typical telco-provided services such as IPTV and voice telephony. In a business context, there may be a mix of wireless Internet access and connectivity to corporate networks such as VPNs, again provided to a specific location or building.

A subset of FWA relates to M2M usage, for instance private networks run by utility companies for controlling grid assets in the field. These are typically not Internet-connected at all, and so don’t fit most observers’ general definition of “broadband access”.

Usually, FWA will be marketed as a specific service and package by some sort of network provider, usually including the terminal equipment (“CPE” – customer premise equipment), rather than allowing the user to “bring their own” device. That said, lower-end (especially 4G) offers may be SIM-only deals intended to be used with generic (and unmanaged) portable hotspots.
There are some examples of private network FWA, such as a large caravan or trailer park with wireless access provided from a central point, and perhaps in future municipal or enterprise cellular networks giving fixed access to particular tenant structures on-site – for instance to hangars at an airport.

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FWA today

Today, fixed-wireless access (FWA) is used for perhaps 8-9% of broadband connections globally, although this varies significantly by definition, country and region. There are various use cases (see below), but generally FWA is deployed in areas without good fixed broadband options, or by mobile-only operators trying to add an additional fixed revenue stream, where they have spare capacity.

Fixed wireless internet access fits specific sectors and uses, rather than the overall market

FWA Use Cases

Source: STL Partners

FWA has traditionally been used in sparsely populated rural areas, where the economics of fixed broadband are untenable, especially in developing markets without existing fibre transport to towns and villages, or even copper in residential areas. Such networks have typically used unlicensed frequency bands, as there is limited interference – and little financial justification for expensive spectrum purchases. In most cases, such deployments use proprietary variants of Wi-Fi, or its ill-fated 2010-era sibling WiMAX.

Increasingly however, FWA is being used in more urban settings, and in more developed market scenarios – for example during the phase-out of older xDSL broadband, or in places with limited or no competition between fixed-network providers. Some cellular networks primarily intended for mobile broadband (MBB) have been used for fixed usage as well, especially if spare capacity has been available. 4G has already catalysed rapid growth of FWA in numerous markets, such as South Africa, Japan, Sri Lanka, Italy and the Philippines – and 5G is likely to make a further big difference in coming years. These mostly rely on licensed spectrum, typically the national bands owned by major MNOs. In some cases, specific bands are used for FWA use, rather than sharing with normal mobile broadband. This allows appropriate “dimensioning” of network elements, and clearer cost-accounting for management.

Historically, most FWA has required an external antenna and professional installation on each individual house, although it also gets deployed for multi-dwelling units (MDUs, i.e. apartment blocks) as well as some non-residential premises like shops and schools. More recently, self-installed indoor CPE with varying levels of price and sophistication has helped broaden the market, enabling customers to get terminals at retail stores or delivered direct to their home for immediate use.

Looking forward, the arrival of 5G mass-market equipment and larger swathes of mmWave and new mid-band spectrum – both licensed and unlicensed – is changing the landscape again, with the potential for fibre-rivalling speeds, sometimes at gigabit-grade.

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Table of contents

  • Executive Summary
  • Introduction
    • FWA today
    • Universal broadband as a goal
    • What’s changed in recent years?
    • What’s changed because of the pandemic?
  • The FWA market and use cases
    • Niche or mainstream? National or local?
    • Targeting key applications / user groups
  • FWA technology evolution
    • A broad array of options
    • Wi-Fi, WiMAX and close relatives
    • Using a mobile-primary network for FWA
    • 4G and 5G for WISPs
    • Other FWA options
    • Customer premise equipment: indoor or outdoor?
    • Spectrum implications and options
  • The new FWA value chain
    • Can MNOs use FWA to enter the fixed broadband market?
    • Reinventing the WISPs
    • Other value chain participants
    • Is satellite a rival waiting in the wings?
  • Commercial models and packages
    • Typical pricing and packages
    • Example FWA operators and plans
  • STL’s FWA market forecasts
    • Quantitative market sizing and forecast
    • High level market forecast
  • Conclusions
    • What will 5G deliver – and when and where?
  • Index