One benefit to emerge from all the furore around Huawei’s role in many countries’ 5G infrastructures may be a more coordinated approach to fostering competition within the cellular supply chain. The field was already quite narrow and Huawei’s exclusion confines it even further, to a duopoly, or at best triopoly, comprising Ericsson, Nokia and Samsung, with ZTE, NEC and a few others knocking on the door.
It is indeed emerging vendors that have been particularly active promoting Open RAN as a route into major 5G infrastructures for them. But as we discussed last week, efforts to accelerate Open RAN are themselves in danger of defeating their very purpose by attempting to leap forward before the testing capabilities are established and playing into the hands of big established vendors with greater technical resources.
We were discussing the memorandum of understanding recently signed by five major European operators – Deutsche Telekom, Orange, Telecom Italia, Telefónica and Vodafone – and their first document outlining technical requirements for a large-scale Open RAN. The surprise as we noted lay in bringing forward the collective target of starting large-scale roll-out to 2022, while previous statements from Orange, Vodafone and others had indicated that 2025 would be the first year to introduce Open RAN to the 5G macro network.
Such an acceleration is unlikely to materialize without involving operators and other parties beyond Europe. On that count, ongoing efforts by the G7 to stimulate greater competition are relevant and should be consolidated with these efforts by Europe’s big five. These G7 efforts have been spearheaded by the UK, which as we also noted last week is ahead of the other member countries, that is the USA, Canada, France, Germany, Italy and Japan, in creating the underlying infrastructure for diversifying the 5G supply chain. The UK has followed through with a new interoperability testing initiative called SONIC (SmartRAN Network Interoperability Centre).
This is perhaps not surprising given that the UK faces particularly high costs removing Huawei from both its existing 4G/LTE and 5G infrastructure in a process just getting underway. Most other European countries have been more circumspect, with some operators actually using Open RAN almost as an excuse for delaying removal of Huawei from their infrastructure until such time as the new multivendor ecosystem is sufficiently mature and robust. Against this background, that acceleration in the proposed Open RAN timeline by Europe’s big five is indeed surprising, but perhaps reflects a victory for those within the operators impatient for greater vendor choice.
More widely, the G7 countries, as well as the European Union (which provides three G7 members), have been expressing mounting concern over the narrow supply chain, culminating in discussions during its last meeting in April 2017. At that meeting there was acknowledgement of the UK’s lead role at present and agreement to convene a dedicated meeting of the countries later in 2021. “To support existing workstreams on enforcement and policy related to digital competition, we will invite the UK’s Competition and Markets Authority to convene a meeting of G7 competition authorities in 2021,” the G7 put out in a statement. “The purpose of the meeting will be to discuss long term coordination and cooperation to better understand enforcement approaches, market characteristics and policy initiatives related to competition in digital markets.”
The G7 also called for closer coordination between policymakers to complement increased cooperation between the respective competition authorities. There was appreciation that having an agreed standards framework as set out by those big five telcos would have much less impact if individual countries diverged over telecoms policy.
There is though one large elephant in the room of these G7 discussions, and that is China. This increasingly looms over other areas of G7 activity, but at least over national security there is a sense in which it represents a club with common interests containing Chinese power and influence. In the case of Open RAN, China has been a major participant, which makes it harder to realign the initiative to exclude the country without also derailing some of the key developments.
Indeed, a fissure has developed within Open RAN as it has split into two formative bodies, the US-centric Open RAN Policy Coalition, and the longer standing and global O-RAN Alliance, which develops Open RAN specifications.
The Open RAN Policy Coalition was formed only in May 2020, on the face of it with a global remit of “educating global policymakers on the ‘who, what and why’ of open radio access networks”. Its activities so far have been primarily geared to US Congress and FCC, and a glimpse through its list of 60 members reveals that it is in effect more of an anti-Chinese consortium set up to help the rest of the world recruit Open RAN to escape from Huawei. There are no Chinese members, with the list dominated by big US operators and also vendors, although with a smattering from Europe, India, Japan and South Korea.
By contrast the O-RAN Alliance, while still being somewhat US-centric with 82 members, has 44 from China. The big telcos there too would like a broader ecosystem, which is partly why Nokia and Ericsson have been allowed some participation. With the prospect of Nokia and Ericsson being shut out of future contracts in China in retaliation for Huawei being ostracized elsewhere, the telcos have an even greater interest in Open RAN succeeding there too.
ZTE has been a prominent advocate of Open RAN in China, having more to gain from it than Huawei as the smaller vendor there. Both China Mobile and China Telecom, themselves also on the US blacklist as state-run operators, are also active and enthusiastic members of the O-RAN Alliance.
As a result, the O-RAN Alliance has been exposed to the geopolitical fault lines evolving around 5G, which threatened to splinter the movement once again. It was in 2017 at Mobile World Congress when the O-RAN Alliance was formed through the merger of the largely US and western xRAN Forum and the Cloud-RAN Alliance, which was very definitely Chinese-dominated and led by China Mobile. This led to all three of China’s mobile operators plus most principal vendors joining.
The notable omission from that list is Huawei, whose ambivalence over Open RAN was reaffirmed as recently as April 2021 by VP Victor Zhang, quoted in Light Reading. “Within the next two or three years, there are no commercial opportunities for open RAN because of technological maturity,” said Zhang. “There is still a long way to go with open RAN.”
Huawei has a vested interest in holding back Open RAN, as does Ericsson to a lesser degree. Ericsson has been forced to make some concessions, while Nokia has jumped on it as a lever that it hopes will gain market share. Yet for operators the point of Open RAN is to expand choice beyond those established vendors, so support for it will be a tickbox to confirm contracts they would expect to win anyway.
What is certainly true though is that in the short term the Open RAN movement will be weakened by lack of Chinese involvement in the Open RAN Policy Coalition, just as 5G roll outs will be slower as well as more costly. But then operators also know that embracing Open RAN too soon will ramp up costs and disrupt roll-outs further.
The hope is that in the longer term the pain endured will reap dividends, through lower costs resulting from greater vendor choice. One question though is how successful US efforts will be to constrain Chinese involvement in Open RAN procurements, especially in less aligned countries around Asia-Pacific and Latin America. The Chinese are, after al,l strongly placed to develop competitive Open RAN components on the back of domestic scale economies.