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23 August 2022

Mavenir follows Parallel into layoffs, claims just Open RAN growing pains  

Mavenir has put a slightly different spin on job cuts just announced than Parallel Wireless did around six weeks earlier at the start of July 2022, but in both cases most of the losses are in Wireless sales and marketing. Both also are keen to scotch any idea that these job losses reflect loss of momentum for the Open RAN movement, more an inevitable step in its early development.  

 

The job cuts could even be presented as sign of market maturation, as jobs shift from presales and marketing to aftersales, deployment and support. But that would be to gloss over the reality that at this stage, despite some prominent successes, the Open RAN movement has generated a lot more interest than actual deployment.  

 

Parallel Wireless seemed to confirm that when it attributed the shedding of up to half its 850 staff – although with no precise figures given – to slower than anticipated take-up of Open RAN, albeit coupled with supply chain constraints associated in large part with the Covid-19 pandemic and generally weak global economic conditions.  

 

Mavenir likewise has not specified a number, but it looks as though its job losses – as a larger vendor with a greater ongoing revenue base in areas such as voice – are proportionately far smaller. Unlike Parallel Wireless, Mavenir has not blamed global forces beyond its control but rather the changing dynamics of its market.  The company has been underlining growing momentum in Open RAN. John Baker, the firm’s SVP of business development, suggested that, with over 250 customers now – including enterprises as well as major telcos such as Verizon, Dish Network and Telefónica – there was less need for consciousness raising, and more for technical staff at the front.  

 

The company has suggested that, set against ongoing organic recruitment, the job losses in sales and marketing might be cancelled out by the end of the year, leaving the headcount unchanged over the 12 months.  

 

That itself represents a slowdown in expansion, given that Mavenir’s staff count almost doubled over two years from mid-2020 to May 2022, from 3,200 to around 6,000 before the current losses. For Mavenir then, which has been hyperactive as an evangelist for Open RAN and virtualization, it does look like growing pains have arrived, as well as the impact of those geopolitical factors.   

 

There are some other signs of temporary headwinds impeding the Open RAN movement, which could be said to have reached a high point around a year ago in August 2021, when Rakuten Mobile acquired US-based Altiostar for a valuation of $1bn. Rakuten has built its network in Japan around Open RAN and packaged its technology in a platform being marketed around the world and deployed by Telefónica Germany for one. 

 

Since then, another US Open RAN player, Casa Systems, has suffered some reverses, having just reported a loss of $16.7m for its Q2 2022 on revenues of $70.8m. Its share price has declined 54% this year on the back of confounded expectations.  

 

There are clearly varying fortunes among high profile Open RAN players, and the fear is that this fledgling market will end up being dominated by major players such as NEC and Nokia, rather than making space for a far wider ecosystem. That would defeat much of the object of the movement. 

 

But that is being unduly pessimistic. Wireless Watch reported just over a month ago early July 2022 that 55% of smaller equipment and technology developers (rather than operators or customers of Open RAN component suppliers) said in a survey they were seriously considering an Open RAN strategy around their technology development. It could be said this figure should be higher, given the survey excluded the big mobile equipment firms Ericsson, Nokia, Huawei, ZTE and Samsung – some of which might have a vested interest in opposing the technology – and also given that Open RAN is likely to open some doors among potential customers.   

 

But it does signal significant interest, and the relative lack of firm deployments reflects the state of the field, with continuing concerns over security, interoperability, timeline for maturity, and claimed tensions inside the O-RAN Alliance that is charged with specifying some of the key interfaces. Differing interpretations of these concerns lies behind the dichotomy of opinion in the field, among operators, technology providers and even countries.   

 

Most significantly, progress does appear erratic over interoperability, with some areas progressing faster than others, which allowed Ericsson to continue its generally negative campaign in November 2021 when its US VP for government affairs and public policy, Jared Carlson, suggested in a letter to US regulator FCC that lack of resources devoted to the group was holding up progress. He noted that Open RAN fronthaul meetings discussing this critical part of the technology generally only attracted about 60 members, while a typical 3GPP RAN plenary would attract about 10 times that number.  

 

The resulting faltering progress over specifications may lie behind apparent scaling back of Open RAN deployment targets by even some of the most evangelical operators. Telefónica certainly belongs in that camp and yet appears to have reined back slightly on its stated commitment, set out in a memorandum of understanding reached with cloud network pioneer Rakuten Wireless in September 2020, that 50% of upgrades to its radio sites would feature Open RAN technology between 2022 and 2025.  

 

Ultimately it does come down to those big operators like Telefónica and Vodafone to maintain the faith, even if their rate of migration is slower than they had hoped or expected.