Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Monday, June 15, 2020

Open RAN: new ecosystem that sees an opportunity in Latin America rural areas

The concept comes to kick the board in the mobile infrastructure ecosystem, by calling into question the role of traditional equipment providers, and enabling the entry of other players to a hitherto restricted field. Three organizations drive the lobby behind Open RAN: Open RAN Policy Coalition, Telecom Infra Project (TIP) and O-RAN Alliance.

The degree of virtualization in the access network is timid in the large mobile operators in Latin America, beyond any specific test. It is estimated that only with 5G Stand-Alone deployments and the need to network slicing for critical services could Virtual RAN (vRAN, an implementation of Radio Access Networks –RAN-) begin to be seen under a more open and flexible architecture than virtualizes network functions on software platforms).

This scenario is ground of opportunity for the Open RAN concept, which refers to the disaggregation of RAN functionalities, based on open interfaces, with components from different interoperable vendors. Some 22 operators worldwide have announced tests or commercial deployments so far, and the consultancy iGR estimates that by 2024 Open RAN will be implemented in operators with 47.2% of the global mobile subscriber base.

Compared to vRAN, oRAN goes one step further: in effect, the RAN can be virtualized but not open (for example, if the software or hardware is proprietary, or if the interfaces are closed), whereas in an oRAN environment Reference designs and standards exist to enable open interfaces without hardware or proprietary interfaces on the RAN. This results in benefits such as a lower Total Cost of Ownership (or TCO, according to Strategy Analytics), the CapEX is reduced by 40% and the OpEx by 34% within a period of five years, compared to a RAN legacy); faster network deployment, because the companies involved come from the IT world; the development of applications and services based on web technology is facilitated; and the cost of hardware is kept to a minimum.

With these qualities, Open RAN comes to kick the board in the mobile infrastructure ecosystem, by questioning the role of traditional equipment providers such as Ericsson and Nokia, and enabling the entry of other players to hitherto restricted ground, vendors of Different components for Open RAN that compete with each other, generating for the operator a range of cost options. Today the central actors in this new scenario are Parallel Wireless, Mavenir and Altiostar, for software; and HPE, Dell, Comba and NEC for hardware, among others.

Behind the new provider puzzle for the RAN there are three organizations as key drivers of the concept: Open RAN Policy Coalition, Telecom Infra Project (TIP) and O-RAN Alliance. The most recent is the Open RAN Policy Coalition, which was established last May to install Open RAN at the government level. Diane Rinaldo, Executive Director of the entity, told Convergencialatina that her objective will be the formulation of policies and "education" on the benefits of opening the ecosystem in public administrations. As a former leader of the National Telecommunications & Information Administration (NTIA), Rinaldo confesses that in her meetings with government leaders, what she finds is the search for options in terms of connectivity, and "that is what we are talking about with Open RAN", she asserted.

While the Open RAN Policy Coalition is agnostic on the technological aspect of open interfaces, the Telecom Infra Project (TIP) has been working since 2016 to promote disaggregated technological solutions, new vendors and ecosystems, not only in the field of Open RAN. Giovani Siqueira, director of TIP Technology Latam, recalled that the access network takes 60% of the TCO of the network. “Along with the savings in TCO, operators are looking for flexibility and greater freedom in choosing network components. Initially in Latin America we will see cases of Open RAN in rural areas, but eventually they will be seen in high-density urban sectors”, he anticipated.

The position of great vendors. On the side of traditional vendors, Ericsson sees Open RAN and the new ecosystem in development as a "complement". Daniel Martello, manager of Technical Solutions at Latam South, said in a dialogue with Convergencialatina that “over time, the cost-performance ratio of the O-RAN specification and standard hardware could improve and make it an attractive complement to current high performance and the energy efficiency of 3GPP radio access networks, further stimulating innovation".

In fact, the Swedish firm is part of one of the three organizations that are promoting Open RAN development, the O-RAN Alliance, from which it actively contributes to the specifications to make it a viable complement to 3GPP in the future. And at the end of May, the incorporation of Nokia to the Open RAN Policy Coalition was known in turn: Brian Hendricks, Nokia VP for Government Relations in the Americas, based the decision on the need to counter the idea of ??a confrontation between old and new providers . "We don't see it as a binary choice", he justified.

Nokia is also active in the Open RAN arena. It is one of the founders of the O-RAN Alliance and TIP, and at the end of May it joined the Open RAN Policy Coalition. Sandro Tavares, Global Director of Marketing of Mobile Networks of the company, specified to Convergencia that they co-lead two working groups in the O-RAN Alliance, focused on the development of the Radio Intelligent Controller (RIC) and the open fronthaul interface. “This transformed ecosystem will bring new companies to various areas of the mobile network, even beyond the provision of radio equipment, and we see it as something positive. Vendors like Nokia will have a strong role in this ecosystem, helping to define standards and provide the critical mass to make it a viable solution”.

These blunders will coexist in the coming years with the development of Open RAN in operators: a recent study by Analysys Mason revealed that a third of tier-1 providers and half of tier-2 providers expect to have already started with this new concept in their networks commercially by the end of 2023.

For its part, NEC surveyed the benefits and difficulties noted by operators in a possible incursion, and found, among the advantages, avoiding depending on a certain manufacturer; flexible deployment and simplified operation; innovation and cost reduction. Regarding the challenges still to be solved, they mentioned the adequate Cloud infrastructure necessary to face this level of virtualization; the maturity of Open RAN providers; and the requirement of high interoperability between equipment. Ricardo Kraus, manager of the Broadband program in the Commercial Direction of NEC Argentina, explained that the Japanese firm is involved in this new ecosystem as a way to reposition itself as a provider for the mobile network in the 5G era. With Telefónica de Alemania they are doing an Open RAN trial, beyond the deployment already operational in Japan with Rakuten.

The “textbook” case. The mobile operator Rakuten, from Japan, was the first to implement, in 2019, a multi-vendor RAN, with equipment from Airspan, Altiostar, Mavenir and Nokia, among others. For development, Nokia opened its radio interfaces to incorporate Altiostar's Base Band Unit (BBU), which ran on a Cisco virtualization platform. In turn, the EPC belongs to Cisco and the IMS to Mavenir. Although it is currently an LTE network, it will be evolved this year towards a 5G NR, with NEC radios and a container-based solution from Altiostar. Rakuten argues that the cost of Open RAN implementation was40% less than a traditional infrastructure.

In turn, the new ecosystem is giving rise to disruptive business models, such as the Internet for All in Peru. The initiative of Facebook, Telefónica, CAF and IDB Invest, which began operations in May 2019 with equipment from Parallel Wireless, constitutes the most advanced Open RAN business case in the region. It currently reaches 1.5 million mobile accesses in rural areas across the country, and is based on the figure of Rural Mobile Infrastructure Operator (RMIO): a wholesale scheme that offers all mobile operators in the market the possibility of leasing their infrastructure to offer their services. Parallel Wireless is the provider of the architecture for this initiative: Russell Ribeiro, Parallel's Regional VP for Latin America, described the current mobile infrastructure as “monolithic, closed and proprietary”, and raised Open RAN as a disruptive concept, which will lead to a new economy of scale.

Meanwhile, John Baker, Senior VP of Business Development at Mavenir, described the current moment as "an opportunity like never before for the actors in the wireless space". His colleague at the company with responsibility in South America, Antonio Correa, warned that there are two types of difficulties in deployments: “commercial, because traditional vendors try to stop negotiations or keep interfaces closed; and on the other, technical, with operators still "shy" to make large deployments. Latin America is active with Open RAN for rural deployments. They consult us, they want to do tests, not for large areas, but for pilot tests in remote areas”, he confided to Convergencialatina.

Mavenir worked with Vivo do Brasil in 2019 for its commercial launch of Open RAN in the north of the country. “Today it is difficult to work with existing vendors. That is why we usually look for new areas to venture into with Open RAN. We believe that it will be made easier with further development of technology and standardization", Correa added.

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