The New Wave of Telecoms: How Open RAN May Cause Major Vendor Shakeups

M. Rogers

Summary Bullets:

  • Rakuten has selected Nokia and Altiostar to build its RAN network, two members of the Open RAN Alliance, to have more flexibility in its network.
  • Open RAN initiatives will likely cause a shift in the RAN vendor landscape with new faces like startups and non-traditional RAN vendors gunning for market share.

During its Q3 results update, Japanese Internet giant Rakuten announced the list of vendors which will supply equipment for its mobile network. Nokia and Altisostar were selected for the RAN portion.

Interestingly, both Nokia and Altiostar are members of the Open RAN (O-RAN) Alliance industry group. This alliance, made up of mainly mobile operators, networking technology vendors, and startups, is working toward a new open standard for RAN implementations that would replace the current standard of Common Public Radio Interface (CPRI). CPRI requires semi-proprietary implementations of RAN, which locks in operators to vendor ecosystems. Operators are looking for a more cost-efficient and flexible way to build and manage their wireless networks, and moving from a walled garden approach to an open ecosystem for RAN is one of their key strategies for the future of mobile networks.

It’s not surprising that Altiostar is a member of O-RAN, as it was founded to do just this – be a disruptor in the RAN market. The company provides a more open ecosystem for RAN which uses Ethernet-based fronthaul and cloud-based NFV that is transport agnostic. However, Nokia’s membership is more surprising and more interesting. It is the only leading RAN equipment vendor from the ‘big four’ (i.e., Ericsson, Huawei, Nokia, and ZTE) to participate in an open RAN initiative. A democratization of the RAN portion of the network would mean an influx of competitors that could potentially decimate the market shares of the largest players. However, this may be a prescient move by Nokia, as its operator customers seem to be moving towards open RAN whether the RAN vendors want to or not. Non-traditional RAN players are beginning to research open and virtual RAN in hopes of capturing the lucrative opportunity for 5G RAN buildouts. Samsung, while a technology behemoth in its own right, traditionally stayed away from the radio access business, but in the last few years, it has been very active in developing 5G RAN technologies as well as participating in O-RAN. The company is now supplying 5G RAN equipment to all three Korean mobile network operators as well as Verizon and AT&T in the U.S.

Cisco, like Samsung, has largely stayed away from the radio portion of networks. So, when Cisco took the lead in founding O-RAN, it could be seen as a play to weaken the position of Ericsson and others in this space. While Cisco has yet to sell 5G base stations like Samsung, the O-RAN initiative is the start of a strategic move into RAN. Cisco would be glad to take a piece of the RAN pie, as growth in the network switch and router market is relatively flat.

Altiostar is another way Cisco could enter the RAN market. The ties between Cisco and Altiostar run deep. Not only does Cisco have a direct stake in the company, but the CEO of Altiostar, Ashraf Dahod, worked as a senior vice president at Cisco from 2009 until 2015. Cisco also has a history of making small bets on innovative players and technologies before fully acquiring them and bringing them into the Cisco fold: for example, Meraki, BroadSoft, Jasper, and even Dahod’s former company, Starent. If Altiostar continues gaining momentum and winning deals like the Rakuten one, Cisco could potentially acquire the company outright and begin competing in the RAN space against current partners like Ericsson.

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