- Börje Ekholm says Open RAN will impact revenues, business models after 2022
- Ericsson will position itself well in time for market shift
- Analyst expectations of Open RAN spend becoming ever more bullish
The CEO of Ericsson, one of the companies set to be negatively impacted by the growing trend towards disaggregated mobile infrastructure models, says he expects Open RAN market developments to “impact revenues” from 2023 onwards.
Speaking during the Swedish vendor’s third quarter earnings call on Wednesday, Börje Ekholm noted, in response to a question from an investment analyst, that “we see a lot of discussions about Open RAN and the pros and cons. What is important to remember is that we have said we're a key contributor to O-RAN [the O-RAN Alliance, the specifications body it joined in February 2019] and we will continue to be so. We believe this is something that clearly is going to happen, so we’re going to make sure we're well positioned. That's also why we need to transition more towards software revenues as well,” stated the CEO.
He added: “I don't really see Open RAN to have a major impact in 2021-22 timeframe, but after that I think it will start to impact revenues for us – it will start to impact the way business models evolve going forward. So one should think of this as an opportunity where we will position ourselves as well. It's no different than other technology shifts that have happened in the industry – it’s all about leading on that development and leading on that front, and then we have a very good opportunity,” stated Ekholm.
The vendor even addressed the topic in its earnings release, suggesting a growing volume of interest from its network operator customers, but that message was more defensive and dismissive that the CEO’s statements.
“Open RAN is a hot topic in our industry today and Ericsson is a strong supporter of openness and actively engages in alliances, such as 3GPP, ONAP and the O-RAN alliance. In the years to come, networks will gradually evolve, as will the current open standards. At the same time 5G is ready and happening now so focus must be on providing early access to 5G networks to enable the broader ecosystem to innovate at scale,” stated the company.
Of the three major traditional radio access network equipment vendors, Ericsson trails Nokia in terms of the Finnish vendor’s efforts on Open RAN product developments and general support for the concept, but is not as negative on the trend as Huawei, which has shown only disdain for Open RAN so far.
But despite its claims to be a key contributor to the development of Open RAN architectures, it has also been sowing seeds of doubt about disaggregated architectures: Only last month, Ericsson issued a blog and paper to lay out the various ways in which the deployment of an Open RAN network could lead to multiple security challenges. (See Ericsson crashes Open RAN party with security scare.)
That quickly attracted a counter response from the CTOs of Rakuten Mobile – Open RAN’s most vocal operator supporter, which has built its 5G network using the model – and Telefónica, one of the many major operators that has publicly stated its intention to deploy significant volumes of Open RAN-based technology in its networks in the coming years: Both CTOs, Tareq Amin and Enrique Blanco, said they thought current closed, proprietary network technology was more of a security challenge. (See Telco CTOs hit back at Ericsson’s Open RAN security scare.)
And there are many more major operators looking to add Open RAN technology to their production networks, including AT&T, BT, the three major Chinese operators, Deutsche Telekom, Dish Network, NTT DoCoMo, Orange, Reliance Jio, SK Telecom, Telus, TIM, Turkcell, Verizon, Vodafone et al. (Watch out for many of these operators. Discussing their Open RAN thoughts and plans in our upcoming Open RAN Summit, which runs 17-19 November.)
That’s likely why industry analysts are becoming much more bullish about the prospects for the Open RAN technology market, with ABI Research in particular expecting significant capex to be heading towards Open RAN vendors by the end of this decade and RAN Research, part of Rethink Technology Research, expecting Open RAN to “account for 58% of total RAN capex spending at $32.3 billion and be deployed at 65% of all sites by 2026.”
All the signs currently point towards Ericsson, and others, having to adjust their portfolios and business models to meet the needs of network operators (telcos and, increasingly, enterprises, it should be noted, as the private wireless network market continues to grow).
What will Ericsson do? The company looks far ahead, so it will have multiple plans about how to deal with the advent of Open RAN (apart from trying to put operators off the idea…) and, if I was to lay a bet, it will involve a mix of R&D and M&A activity, particularly as the Swedish vendor now spies a significant growth opportunity in the enterprise networking sector, where it is shortly to close the acquisition of indoor small cells specialist Cradlepoint and where Ekholm has suggested that further “inorganic” growth is likely to take place.
The only certainty, though, is that Ericsson will need to take action and make its Open RAN plans known to its customer base sooner rather than later.
- Ray Le Maistre, Editorial Director, TelecomTV
Open RAN is one of the hottest topics in the industry right now, with many aspirations and plans but also many unknowns: Keep up with Open RAN developments on the TelecomTV Open RAN channel.
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