Tag: disaggregation

Capturing the 5G SA opportunity: towards a multi-vendor approach

The 5G SA opportunity

5G SA is an exciting prospect for telecoms operators. With many operators’ revenues from traditional connectivity beginning to stagnate, or even decline, there is increased pressure for operators to create differentiation and offer new services, including by expanding across the value chain from connectivity-only providers.

STL Partners has described this new era, whereby operators must shift their business models to adapt to the new demands, as the Coordination Age 2. From the 1850s until around 1990, the Communications Age enabled people to communicate over long distances via telephony. Next came the Information Age, in which people could directly access content and applications, increasingly provided by non-telecommunications players. In the Coordination Age, ‘things’ are increasingly connecting to other ‘things’, leading to an exponential increase in volumes of data, but thanks to advanced analytics and artificial intelligence (AI) we can also address some of the most pressing issues facing the world today: ensuring resource efficiency and improving productivity to help us to do more with less.

Operators need to define their role in the emerging coordination age


Source: STL Partners

Transitioning to the Coordination Age requires operators to shift their goals and business models accordingly. Operators will need to offer or enable tightly coupled network services and applications to different industries, and continue to refresh, optimise and scale at an unprecedented rate.

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The transformative potential of 5G SA

5G SA, in comparison to its NSA counterpart, is the evolution of 5G that can deliver on the promises associated with the next generation of cellular networking. 5G SA is intended to be cloud native and adopt cloud-native principles. Without SA, 5G networks are less able to quickly launch new services, enable new use cases, or introduce more scalable, automated operating models.

The opportunities to which 5G SA is expected to give rise have been explored extensively in previous STL research. The ‘full potential’ of 5G SA includes promises around higher throughput, greater capacity, the ability to leverage enhanced mobile broadband (eMBB), ultra-reliable low latency communications (URLLC), and massive machine type communications (mMTC). In summary; do more (including enabling more connections at any given time), faster (down to a latency of a few milliseconds) and at a lower cost (through a variety of actors, including lower power consumption than 4G). These new capabilities are exciting for operators: enabling operators to develop powerful new applications for their customers with truly differentiated use cases.

One particular opportunity that 5G SA represents is network slicing. Slicing can be defined as ‘a mechanism to create and dynamically manage functionally discrete, virtualised networks over a common infrastructure,’ and has been the subject of several STL reports. The increased flexibility and agility of network slicing can enable operators to provide unique policies and differentiated services to their enterprise customers and recoup the substantial investments that rolling out 5G SA requires. However, the benefits and opportunities of 5G SA have implications far beyond the new services it can enable. For the first time, 5G is cloud-native by design, with modular service-based architecture giving
rise to greater flexibility and programmability. Furthermore, it leverages IT concepts of virtualization, cloudification, and DevOps processes. This does not so much enable as actively encourage a more agile operating model. Some of the exciting features of 5G SA include:

  • Automation – Increased automation throughout the network, including deployment, orchestration, assurance, and optimisation can give rise to “zero touch” networks that do not require human intervention, and can self repair and update autonomously on an ongoing basis. The aim of network automation is to reduce human error and the time taken to resolve issues through closed-loop network assurance.
  • Disaggregation – Relies on an open standard network operating system whereby different functional components of networking equipment can be deployed individually and then combined in a modular, fit for purpose way, to suit the requirements of an operator’s network. This architecture relies on the interworking between the multi-vendor components within the 5G core. Disaggregation can allow vendors to offer best in class capabilities for each individual component, providing operators with unprecedented choice and customizability.
  • Avoiding vendor lock-in through a diversified supply base – One of the key benefits of a disaggregated approach to the 5G core is to break vendor lock-in that has tended to dominate legacy approaches. Vendor lock-in can be a key limitation on the speed of innovation and service deployment.
  • Agility – Adopting a continuous improvement and development means accelerated innovation and speed of deployment. A software-orientated infrastructure can enable changes in business processes such as product development management to happen at a greater pace and speed time to market for new revenue generating products and features.
  • Scalability through adopting ‘hyperscale economics’ – Explored by STL Partners in previous research, this term describes the emulation of business and software practices developed by hyperscalers to deliver service innovation at scale whilst simultaneously reducing the level of capex relative to revenue.

Cloud native is the only way to truly unlock the benefits of 5G thanks to the automation, efficiency,
optimisation and mode of delivery that it enables. Ultimately, it allows operators to maximise the
opportunity of 5G to develop differentiated services to consumer and enterprises customers.

 

Table of Contents:

  • Executive Summary
    • Recommendations
  • Preface
  • The 5G SA opportunity
    • The transformative potential of 5G SA
    • 5G SA requires operators to develop and foster a new set of skills
    • Some open questions remain around 5G SA
  • The early adopter 5G SA landscape
    • Orange
    • Vodafone
    • Dish
  • Tier 2 and Tier 3 operator approaches to 5G SA
    • Adherents to a single vendor approach
    • Proponents of a multi-vendor approach
    • Several factors can influence an operators’ vendor strategy
  • Recommendations

Related research

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Pursuing hyperscale economics

The promise of hyperscale economics

Managing demands and disruption

As telecoms operators move to more advanced, data intensive services enabled by 5G, fibre to the X (FTTX) and other value-added services, they are looking to build the capabilities to support the growing demands on the network. However, in most cases, telco operators are expanding their own capabilities in such a way that results in their costs increasing in line with their capabilities.

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This is becoming an increasingly pressing issue given the commoditisation of traditional connectivity services and changing competitive dynamics from within and outside the telecoms industry. Telcos are facing stagnating or declining ARPUs within the telecoms sector as price becomes the competitive weapon and service differentiation of connectivity services diminishes.A

The competitive landscape within the telecoms industry is also becoming much more dynamic, with differences in progress made by telecoms operators adopting cloud-native technologies from a new ecosystem of vendors. At the same time, the rate of innovation is accelerating and revenue shares are being eroded due to the changes in the competitive landscape and the emergence of new competitors, including:

  • Greenfield operators like DISH and Rakuten;
  • More software-centric digital enterprise service providers that provide advanced innovative applications and services;
  • Content and SaaS players and the hyperscale cloud providers, such as AWS, Microsoft and Google, as well as the likes of Netflix and Disney.

We are in another transition period in the telco space. We’ve made a lot of mess in the past, but now everyone is talking about cloud-native and containers which gives us an opportunity to start over based on the lessons we‘ve learned.

VP Cloudified Production, European converged operator 1

Even for incumbents or established challengers in more closed and stable markets where connectivity revenues are still growing, there is still a risk of complacency for these telcos. Markets with limited historic competition and high barriers to entry can be prone to major systemic shocks or sudden unexpected changes to the market environment such as government policy, new 5G entrants or regulatory changes that mandate for structural separation.

Source:  Company accounts, stock market data; STL Partners analysis

Note: The data for the Telecoms industry covers 165 global telecoms operators

Telecoms industry seeking hyperscaler growth

The telecoms industry’s response to threats has traditionally been to invest in better networks to differentiate but networks have become increasingly commoditised. Telcos can no longer extract value from services that exclusively run on telecoms networks. In other words, the defensive moat has been breached and owning fibre or spectrum is not sufficient to provide an advantage. The value has now shifted from capital expenditure to the network-independent services that run over networks. The capital markets therefore believe it is the service innovators – content and SaaS players and internet giants such as Amazon, Microsoft or Apple – that will capture future revenue and profit growth, rather than telecoms operators. However, with 5G, edge computing and telco cloud, there has been a resurgence in interest in more integration between applications and the networks they run over to leverage greater network intelligence and insight to deliver enhanced outcomes.

Defining telcos’ roles in the Coordination Age

Given that the need for connectivity is not going away but the value is not going to grow, telcos are now faced with the challenge of figuring out what their new role and purpose is within the Coordination Age, and how they can leverage their capabilities to provide unique value in a more ecosystem-centric B2B2X environment.

Success in the Coordination Age requires more from the network than ever before, with a greater need for applications to interface and integrate with the networks they run over and to serve not only customers but also new types of partners. This calls for the need to not only move to more flexible, cost-effective and scalable networks and operations, but also the need to deliver value higher up in the value chain to enable further differentiation and growth.

Telcos can either define themselves as a retail business selling mobile and last mile connectivity, or figure out how to work more closely with demanding partners and customers to provide greater value. It is not just about scale or volume, but about the competitive environment. At the end of the day, telcos need to prepare for the capabilities to do innovative things like dynamic slicing.

Group Executive, Product and Technology, Asia Pacific operator

Responding to the pace of change

The introduction of cloud-native technologies and the promise of software-centric networking has the potential to (again) significantly disrupt the market and change the pace of innovation. For example, the hyperscale cloud providers have already disrupted the IT industry and are seen simultaneously as a threat, potential partners and as a model example for operators to adopt. More significantly, they have been able to achieve significant growth whilst still maintaining their agile operations, culture and mindset.

With the hyperscalers now seeking to play a bigger role in the network, many telco operators are looking to understand how they should respond in light of this change of pace, otherwise run the risk of being relegated to being just the connectivity provider or the ‘dumb pipe’.

Our report seeks to address the following key question:

Can telecoms operators realistically pursue hyperscale economics by adopting some of the hyperscaler technologies and practices, and if so, how?

Our findings in this report are based on an interview programme with 14 key leaders from telecoms operators globally, conducted from June to August 2021. Our participant group spans across different regions, operator types and types of roles within the organisation.

Related research

Revisiting convergence: How to address the growth imperative

Introduction

Significant opportunity, high risk of complacency

The opportunity for communications service providers (CSPs) to provide greater value and innovative services to customers through new technology advancements is well-documented. For example, the network capabilities (and programmability) that 5G and cloud native bring is touted to change the way that CSPs address revenue opportunities with customers and partners in a more ecosystem-centric environment. The emergence of FTTx (fibre to the x) technology can optimise the use of operators’ assets in a way that delivers seamless connectivity to customers. These advancements allow CSPs to better serve customer needs in a more flexible, scalable, sustainable and agile way than ever before.

Part of the imperative to address this opportunity and vision stems from significant market disruption with new entrants and new types of ‘co-opetitors’, such as the hyperscale cloud providers and greenfield operators, that challenge operators’ existing business and operating models. As a result, CSPs face growing pressure to respond much faster to market and customer demands and enhance their capabilities in a way that does not inflate their cost base or undermine their net-zero goals.

Although CSPs have identified these green pastures for growth, there is still a considerable disconnect between the vision (and what is required to fulfil the ambition) and what capabilities CSPs have today to meet it. Today, CSPs are grappling with too much complexity, fragmentation and duplication within their networks, capabilities and systems. This not only means costs are too high, but it also poses a significant barrier to how they can accelerate the beat rate of innovation and serve new revenue-generating opportunities. This is a gap that CSPs need to close urgently or be at risk of their market shares and value eroding as a result of competition.

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The imperative that CSPs can no longer ignore

There is therefore a renewed urgency in building a stronger cost base, scalability, agility and innovation, which could soon become a matter of survival. CSPs are evaluating different strategies and means of making better (and smarter) use of their assets and capabilities in a more agile way and provide the services that customers and partners are increasingly demanding. One such strategy that CSPs have long pursued is network convergence. Although the concept is not new and has been consistently explored and sporadically pursued by operators over the years, the interest has now been reignited to address this imperative. The balance of forces between convergence and divergence has also shifted in favour of the latter in recent years. This has been driven by the adoption of cloud native technologies, which enables operators to deliver new innovative services on top of a common platform (versus siloed islands) and drive for more sustainability & efficiency in the network. This has brought convergence back up to the top of operators’ agendas.

Our report therefore looks to address the following questions:

  • Why and how are CSPs converging their networks to fulfil their growth ambitions?
  • What are the key challenges they face and how can they overcome them?

Evaluating the key drivers for convergence

Cost savings are a priority, but CSPs also want top line growth

The key drivers that CSPs are focused on as part of this renewed pursuit of network convergence are internal and external. Although most operators see capital investment savings and reduction of total cost of ownership (TCO) as an essential priority, the majority of interviewees we spoke to also emphasised the need to support greater innovation with customers and ecosystem development. We describe the main drivers we found through our research with operators below:

Four key drivers that CSPs are focused on

Source: STL Partners

Reducing TCO through network simplification and consolidation

Many operators we spoke to cited network simplification and convergence in addressing the need to ‘do more with less’ and the ability to drive economies of scale and serve market requirements. Convergence can address different disparate sub-systems and siloes that don’t interact with one another (e.g. performance management and inventory management, IP and optical). This fragmentation creates unnecessary complexity for network operations teams to run, manage and assure their networks and introduce potential human errors and associated costs. CSPs have an opportunity to move towards having common infrastructure and management toolset to serve multiple needs, reduce overall TCO and to achieve better control and ubiquitous visibility across their networks. This is particularly important for larger and/or multi-service, multi-country operators. The decommissioning of legacy services (in some cases with government support, for example with PSTN services) is a key opportunity for this.

One European operator described the importance of being able to serve fixed (residential), mobile (consumer), enterprise and wholesale customers with a single backbone and transport network. Inherent in this is greater efficiency, ease of management and less capital spend required to serve multiple types of customers. For example, our interviewee cited the economies of scale they have achieved by putting all of their traffic onto a single IP network that supports all types of customers. This includes greater efficiency and simplicity in not having to run separate IP networks for each type of customer group and less spend on IP routers and lower TCO overall as part of the consolidation.

Creating a sustainable platform for scale and massive data growth

New use cases are projected to increase network traffic and demands. Operators need to prepare for this volume expansion, support more types of fibre connections, provide more flexible capacity and address high performance demands (throughput, latency, error rates). Another European group operator described scale as the main driver for convergence, in being able to seamlessly support thousands of points within the network and offer their portfolio of services across their operations as one package to customers in a simpler way.

Operators need to consider how they can maximise the use of their infrastructure to serve increasingly demanding needs. For example, there is a significant need for CSPs to extract greater synergies from their access fibre: two operators we spoke to – one in North America, the other in Asia – are using fibre originally deployed for residential broadband (Gigabit Passive Optical Network, or GPON) to connect 5G cells. Operators are joining national governments and high-profile corporations in making ‘net-zero’ commitments which is leading them to actively identify and implement strategies that will dramatically reduce their own environmental footprint and play a more active role in reducing their customers’ carbon emissions.

Enabling greater control, resilience and automation

Implicit in these developments is the greater need for automation within the network to ensure not only the greatest cost efficient optimisation of network speeds and processing power, but also the ability to navigate greater network intricacy. One particular European operator we spoke to described the need to enable greater automation across the entire lifecycle, introduce CI/CD pipelines for more agile service development and provide much more granular information and visibility across the entire network. By simplifying and converging the network, operators, operators can address some of the inherent complexity and disparate siloes in their networks and create a unified view of their network. This provides better visibility across the entire network for network operations teams and makes the task of assuring their networks easier. A more unified or common management layer also enables a more granular view and creates scope for AI/ML to deliver further gains in operational simplification and automation. In addition to the benefits for service assurance and lifecycle management, CSPs are also looking to better identify priority areas for improvement and develop more granular cost-benefit analysis for future investment planning.

Enabling greater control, resilience and automation

Implicit in these developments is the greater need for automation within the network to ensure not only the greatest cost efficient optimisation of network speeds and processing power, but also the ability to navigate greater network intricacy. One particular European operator we spoke to described the need to enable greater automation across the entire lifecycle, introduce CI/CD pipelines for more agile service development and provide much more granular information and visibility across the entire network. By simplifying and converging the network, operators can address some of the inherent complexity and disparate siloes in their networks and create a unified view of their network. This provides better visibility across the entire network for network operations teams and makes the task of assuring their networks easier. A more unified or common management layer also enables a more granular view and creates scope for AI/ML to deliver further gains in operational simplification and automation. In addition to the benefits for service assurance and lifecycle management, CSPs are also looking to better identify priority areas for improvement and develop more granular cost-benefit analysis for future investment planning.

Supporting greater innovation and ecosystem development

As the industry moves to more ecosystem-centric, B2B2X models, operators need to be more versatile in supporting diverse types of services with different types of customers. As more and more devices become connected throughout the Coordination Age , the network will need to become more responsive to different use case needs. The underlying network infrastructure needs to facilitate the faster development of richer network functionality and the plethora of emerging use cases, in order to support greater innovation. This means the network (and network teams) need to handle fast changing functions and more agile service development, and frequent software updates.

With a resurging interest in more network-enabled applications, from telematics and connected car to different types of location-based services or immersive experiences (AR/VR) that can respond to network performance data, the network needs to become more visible, distributed, programmable and instructible. Operators can leverage and expose these network capabilities to both internal and external parties, including customers and partners such as application developers, to serve new types of revenue opportunities and ecosystem partners . The expansion of 5G will create the risk of added complexity to the network, not least through the increase in access infrastructure including thousands of locations supporting distributed virtualised workloads (both cloud native network functions and other applications). This makes convergence and the simplification of the management layer even more imperative. The ability to dynamically manipulate network functions is just one of many programmable capabilities the network will require but doing this while keeping the network and associated services secured is no simple task.

Table of contents

  • Executive Summary
  • Preface
  • Introduction
    • Significant opportunity, high risk of complacency
    • The imperative that CSPs can no longer ignore
  • Evaluating the key drivers for convergence
    • Cost savings are a priority, but CSPs also want top line growth
  • Revisiting the concept of convergence
    • Convergence is a multifaceted problem and solution
    • CSPs take different approaches to tackle similar problems
    • Logical convergence
    • Horizontal convergence
    • Vertical convergence
    • The whole is greater than the sum of its parts
  • A matter of how? not why?
    • History and market variance play a role
    • Understanding the key challenges
  • Taking the plunge
    • Convergence is not just a technology decision
    • Incremental steps, not radical change

Related Research

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Why and how to go telco cloud native: AT&T, DISH and Rakuten

The telco business is being disaggregated

Telcos are facing a situation in which the elements that have traditionally made up and produced their core business are being ‘disaggregated’: broken up into their component parts and recombined in different ways, while some of the elements of the telco business are increasingly being provided by players from other industry verticals.

By the same token, telcos face the pressure – and the opportunity – to combine connectivity with other capabilities as part of new vertical-specific offerings.

Telco disaggregation primarily affects three interrelated aspects of the telco business:

  1. Technology:
    • ‘Vertical’ disaggregation: separating out of network functions previously delivered by dedicated, physical equipment into software running on commodity computing hardware (NFV, virtualisation)
    • ‘Horizontal’ disaggregation: breaking up of network functions themselves into their component parts – at both the software and hardware levels; and re-engineering, recombining and redistributing of those component parts (geographically and architecturally) to meet the needs of new use cases. In respect of software, this typically involves cloud-native network functions (CNFs) and containerisation
    • Open RAN is an example of both types of disaggregation: vertical disaggregation through separation of baseband processing software and hardware; and horizontal disaggregation by breaking out the baseband function into centralised and distributed units (CU and DU), along with a separate, programmable controller (RAN Intelligent Controller, or RIC), where all of these can in theory be provided by different vendors, and interface with radios that can also be provided by third-party vendors.
  2. Organisational structure and operating model: Breaking up of organisational hierarchies, departmental siloes, and waterfall development processes focused on the core connectivity business. As telcos face the need to develop new vertical- and client-specific services and use cases beyond the increasingly commoditised, low-margin connectivity business, these structures are being – or need to be – replaced by more multi-disciplinary teams taking end-to-end responsibility for product development and operations (e.g. DevOps), go-to-market, profitability, and technology.

Transformation from the vertical telco to the disaggregated telco

3. Value chain and business model: Breaking up of the traditional model whereby telcos owned – or at least had end-to-end operational oversight over – . This is not to deny that telcos have always relied on third party-owned or outsourced infrastructure and services, such as wholesale networks, interconnect services or vendor outsourcing. However, these discrete elements have always been welded into an end-to-end, network-based services offering under the auspices of the telco’s BSS and OSS. These ensured that the telco took overall responsibility for end-to-end service design, delivery, assurance and billing.

    • The theory behind this traditional model is that all the customer’s connectivity needs should be met by leveraging the end-to-end telco network / service offering. In practice, the end-to-end characteristics have not always been fully controlled or owned by the service provider.
    • In the new, further disaggregated value chain, different parts of the now more software-, IT- and cloud-based technology stack are increasingly provided by other types of player, including from other industry verticals. Telcos must compete to play within these new markets, and have no automatic right to deliver even just the connectivity elements.

All of these aspects of disaggregation can be seen as manifestations of a fundamental shift where telecoms is evolving from a utility communications and connectivity business to a component of distributed computing. The core business of telecoms is becoming the processing and delivery of distributed computing workloads, and the enablement of ubiquitous computing.

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Telco disaggregation is a by-product of computerisation

Telco industry disaggregation is part of a broader evolution in the domains of technology, business, the economy, and society. This evolution comprises ‘computerisation’. Computing analyses and breaks up material processes and systems into a set of logical and functional sub-components, enabling processes and products to be re-engineered, optimised, recombined in different ways, managed, and executed more efficiently and automatically.

In essence, ‘telco disaggregation’ is a term that describes a moment in time at which telecoms technology, organisations, value chains and processes are being broken up into their component parts and re-engineered, under the impact of computerisation and its synonyms: digitisation, softwarisation, virtualisation and cloud.

This is part of a new wave of societal computerisation / digitisation, which at STL Partners we call the Coordination Age. At a high level, this can be described as ‘cross-domain computerisation’: separating out processes, services and functions from multiple areas of technology, the economy and society – and optimising, recombining and automating them (i.e. coordinating them), so that they can better deliver on social, economic and environmental needs and goals. In other words, this enables scarce resources to be used more efficiently and sustainably in pursuit of individual and social needs.

NFV has computerised the network; telco cloud native subordinates it to computing

In respect of the telecoms industry in particular, one could argue that the first wave of virtualisation (NFV and SDN), which unfolded during the 2010s, represented the computerisation and digitisation of telecoms networking. The focus of this was internal to the telecoms industry in the first instance, rather than connected to other social and technology domains and goals. It was about taking legacy, physical networking processes and functions, and redesigning and reimplementing them in software.

Then, the second wave of virtualisation (cloud-native – which is happening now) is what enables telecoms networking to play a part in the second wave of societal computerisation more broadly (the Coordination Age). This is because the different layers and elements of telecoms networks (services, network functions and infrastructure) are redefined, instantiated in software, broken up into their component parts, redistributed (logically and physically), and reassembled as a function of an increasing variety of cross-domain and cross-vertical use cases that are enabled and delivered, ultimately, by computerisation. Telecoms is disaggregated by, subordinated to, and defined and controlled by computing.

In summary, we can say that telecoms networks and operations are going through disaggregation now because this forms part of a broader societal transformation in which physical processes, functions and systems are being brought under the control of computing / IT, in pursuit of broader human, societal, economic and environmental goals.

In practice, this also means that telcos are facing increasing competition from many new types of actor, such as:

  • Computing, IT and cloud players
  • More specialist and agile networking providers
  • And vertical-market actors – delivering connectivity in support of vertical-specific, Coordination Age use cases.

 

Table of contents

  • Executive Summary
    • Three critical success factors for Coordination Age telcos
    • What capabilities will remain distinctively ‘telco’?
    • Our take on three pioneering cloud-native telcos
  • Introduction
    • The telco business is being disaggregated
    • Telco disaggregation is a by-product of computerisation
  • The disaggregated telco landscape: Where’s the value for telcos?
    • Is there anything left that is distinctively ‘telco’?
    • The ‘core’ telecoms business has evolved from delivering ubiquitous communications to enabling ubiquitous computing
    • Six telco-specific roles for telecoms remain in play
  • Radical telco disaggregation in action: AT&T, DISH and Rakuten
    • Servco, netco or infraco – or a patchwork of all three?
    • AT&T Network Cloud sell-off: Desperation or strategic acuity?
    • DISH Networks: Building the hyperscale network
    • Rakuten Mobile: Ecommerce platform turned cloud-native telco, turned telco cloud platform provider
  • Conclusion

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Open RAN: What should telcos do?

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Related webinar: Open RAN: What should telcos do?

In this webinar STL Partners addressed the three most important sub-components of Open RAN (open-RAN, vRAN and C-RAN) and how they interact to enable a new, virtualized, less vendor-dominated RAN ecosystem. The webinar covered:

* Why Open RAN matters – and why it will be about 4G (not 5G) in the short term
* Data-led overview of existing Open RAN initiatives and challenges
* Our recommended deployment strategies for operators
* What the vendors are up to – and how we expect that to change

Date: Tuesday 4th August 2020
Time: 4pm GMT

Access the video recording and presentation slides

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For the report chart pack download the additional file on the left

What is the open RAN and why does it matter?

‘The open RAN’ encompasses a group of technological approaches that are designed to make the radio access network (RAN) more cost effective and flexible. It involves a shift away from traditional, proprietary radio hardware and network architectures, driven by single vendors, towards new, virtualised platforms and a more open vendor ecosystem.

Legacy RAN: single-vendor and inflexible

The traditional, legacy radio access network (RAN) uses dedicated hardware to deliver the baseband function (modulation and management of the frequency range used for cellular network transmission), along with proprietary interfaces (typically based on the Common Public Radio Interface (CPRI) standard) for the fronthaul from the baseband unit (BBU) to the remote radio unit (RRU) at the top of the transmitter mast.

Figure 1: Legacy RAN architecture

Source: STL Partners

This means that, typically, telcos have needed to buy the baseband and the radio from a single vendor, with the market presently dominated largely by the ‘big three’ (Ericsson, Huawei and Nokia), together with a smaller market share for Samsung and ZTE.

The architecture of the legacy RAN – with BBUs typically but not always at every cell site – has many limitations:

  • It is resource-intensive and energy-inefficient – employing a mass of redundant equipment operating at well below capacity most of the time, while consuming a lot of power
  • It is expensive, as telcos are obliged to purchase and operate a large inventory of physical kit from a limited number of suppliers, which keeps the prices high
  • It is inflexible, as telcos are unable to deploy to new and varied sites – e.g. macro-cells, small cells and micro-cells with different radios and frequency ranges – in an agile and cost-effective manner
  • It is more costly to manage and maintain, as there is less automation and more physical kit to support, requiring personnel to be sent out to remote sites
  • It is not very programmable to support the varied frequency, latency and bandwidth demands of different services.

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Moving to the open RAN: C-RAN, vRAN and open-RAN

There are now many distinct technologies and standards emerging in the radio access space that involve a shift away from traditional, proprietary radio hardware and network architectures, driven by single vendors, towards new, virtualised platforms and a more open vendor ecosystem.

We have adopted ‘the open RAN’ as an umbrella term which encompasses all of these technologies. Together, they are expected to make the RAN more cost effective and flexible. The three most important sub-components of the open RAN are C-RAN, vRAN and open-RAN.

Centralised RAN (C-RAN), also known as cloud RAN, involves distributing and centralising the baseband functionality across different telco edge, aggregation and core locations, and in the telco cloud, so that baseband processing for multiple sites can be carried out in different locations, nearer or further to the end user.

This enables more effective control and programming of capacity, latency, spectrum usage and service quality, including in support of 5G core-enabled technologies and services such as network slicing, URLLC, etc. In particular, baseband functionality can be split between more centralised sites (central baseband units – CU) and more distributed sites (distributed unit – DU) in much the same way, and for a similar purpose, as the split between centralised control planes and distributed user planes in the mobile core, as illustrated below:

Figure 2: Centralised RAN (C-RAN) architecture

Cloud RAN architecture

Source: STL Partners

Virtual RAN (vRAN) involves virtualising (and now also containerising) the BBU so that it is run as software on generic hardware (General Purpose Processing – GPP) platforms. This enables the baseband software and hardware, and even different components of them, to be supplied by different vendors.

Figure 3: Virtual RAN (vRAN) architecture

vRAN architecture

Source: STL Partners

Open-RAN – note the hyphenation – involves replacing the vendor-proprietary interfaces between the BBU and the RRU with open standards. This enables BBUs (and parts thereof) from one or multiple vendors to interoperate with radios from other vendors, resulting in a fully disaggregated RAN:

Figure 4: Open-RAN architecture

Open-RAN architecture

Source: STL Partners

 

RAN terminology: clearing up confusion

You will have noticed that the technologies above have similar-sounding names and overlapping definitions. To add to potential confusion, they are often deployed together.

Figure 5: The open RAN Venn – How C-RAN, vRAN and open-RAN fit together

Open-RAN venn: open-RAN inside vRAN inside C-RAN

Source: STL Partners

As the above diagram illustrates, all forms of the open RAN involve C-RAN, but only a subset of C-RAN involves virtualisation of the baseband function (vRAN); and only a subset of vRAN involves disaggregation of the BBU and RRU (open-RAN).

To help eliminate ambiguity we are adopting the typographical convention ‘open-RAN’ to convey the narrower meaning: disaggregation of the BBU and RRU facilitated by open interfaces. Similarly, where we are dealing with deployments or architectures that involve vRAN and / or cloud RAN but not open-RAN in the narrower sense, we refer to those examples as ‘vRAN’ or ‘C-RAN’ as appropriate.

In the coming pages, we will investigate why open RAN matters, what telcos are doing about it – and what they should do next.

Table of contents

  • Executive summary
  • What is the open RAN and why does it matter?
    • Legacy RAN: single-vendor and inflexible
    • The open RAN: disaggregated and flexible
    • Terminology, initiatives & standards: clearing up confusion
  • What are the opportunities for open RAN?
    • Deployment in macro networks
    • Deployment in greenfield networks
    • Deployment in geographically-dispersed/under-served areas
    • Deployment to support consolidation of radio generations
    • Deployment to support capacity and coverage build-out
    • Deployment to support private and neutral host networks
  • How have operators deployed open RAN?
    • What are the operators doing?
    • How successful have deployments been?
  • How are vendors approaching open RAN?
    • Challenger RAN vendors: pushing for a revolution
    • Incumbent RAN vendors: resisting the open RAN
    • Are incumbent vendors taking the right approach?
  • How should operators do open RAN?
    • Step 1: Define the roadmap
    • Step 2: Implement
    • Step 3: Measure success
  • Conclusions
    • What next?

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