Although all the incumbents have developed cloud RAN product portfolios, only Nokia and Samsung have commercial deployments. Recently, Nokia went a step further and announced it would offer a virtualized cloud RAN product suite incorporating O-RAN compliant  interfaces.

Nokia first offered its vRAN 1.0 vCU product back in 2019 and currently has two commercial deployments with SK Telecom and Verizon. Samsung Networks also claims several commercial deployments of a similar product in North America, Japan and South Korea.

Nokia’s vRAN 2.0 Porfolio

Nokia’s 5G AirScale Cloud RAN splits the base station into a Radio Unit (RU) and the baseband into a Distributed Unit (DU) and a Centralized Unit (CU) with O-RAN compliant interfaces between these elements. vRAN 2.0 also includes a fronthaul gateway that can be used with either Nokia radios or with radios from other vendors. The vDU runs on an x86-based platform with Intel’s FPGA-based Vista Creek hardware used to accelerate the baseband Layer 1 processing in the vDU.

A key benefit of the vRAN 2.0 solution is that it provides MNOs with a choice of vRAN deployments. For example, the vCU can be located centrally at a regional edge cloud with the vDU at an edge cloud or located at the cell site (Exhibit 1). Alternatively, the vCU can be co-located with the vDU at the edge cloud or at the cell site. vRAN 2.0 also includes the RAN Intelligent Controller (RIC) which allows third-party apps to be used in the RAN as well as enabling AI and machine learning capabilities to optimize radio and system performance.

Incumbents, key O-RAN players?

Although there is clearly a risk that the incumbents will lose market share if they adopt open RAN interfaces, particular in the case of the radios, Counterpoint Research believes that they will play a key role in open RAN deployment and could be well-positioned to defend their market share, particularly in the short-term:

• Leveraging existing assets - incumbents can leverage their existing MNO customer base by offering them an evolution path to upgrade existing hardware, an option not available to new entrants.
• Best of both worlds - although it promises to reduce costs, open RAN also come with increased complexity and potentially reduced performance. Having an experienced lead vendor will be critical for MNOs at this time. Nokia could market vRAN 2.0 as a single vendor product, thus alleviating MNO concerns about integrating a multi-vendor open vRAN product, while at the same time dangling the prospect of being able to switch to alternative vendors in a few years' time for key components such as radios, for example, when whitebox O-RAN radios become available.
• Preferred Vendor Ecosystem - as an incumbent, Nokia could partner with selected software and hardware providers to offer MNOs “tried and tested” open RAN/vRAN integrated solutions. This would provide “peace of mind” for customers while at the same time minimising market share loss and maintaining some control on the market. This would make it more difficult for the smaller O-RAN players to enter the market.

Exhibit 1:   vRAN Deployment Options (Source: Nokia)

Will other incumbents adopt O-RAN?

Open RAN is an option that MNOs will probably favour and may adopt but it is not their first priority at the present time. As the smallest of the three big RAN vendors, Nokia possibly sees open RAN as an opportunity to differentiate itself from its main rivals and the launch of an O-RAN compliant vRAN product could put pressure on other incumbents, particularly Ericsson. The company recently confirmed that it has developed a vCU-based cloud RAN product based on COTS hardware, which will be launched towards the end of 2020.

In the short-term, the US and possibly Japan will be the most attractive markets for open RAN. With Huawei and ZTE banned, the choice of big vendors in the US is already limited. If open RAN turns out to be a key factor in US MNO decision making and if Nokia gains traction at the expense of  arch-rival Ericsson, then Ericsson will probably quickly follow suit. If not, then Ericsson may resist offering O-RAN compliant interfaces, particularly the fronthaul interface, for as long as possible. Last week, Samsung announced that it will launch a vDU-based cloud RAN product in late 2020 or early 2021, presumably with O-RAN fronthaul interfaces.

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