While 5G may be going through the inevitable reality check with many operators, it is still a label that helps to drive share prices up and excite venture capitalists. Wireless network equipment has hardly been a hot market for VC investment for many years – the last time was probably the WiFi bubble of the mid-2000s. But the 5G label, and the prospect that a more open, cloud-based approach to mobile networks may make new entrants viable at last, looks to be changing that.
The prospects for start-ups to attract funding for RAN technologies are being boosted by the operators’ desire to support companies which could open up their supply chains; and in the USA, by the politically driven push to revive the defunct north American RAN industry. This is benefiting homegrown companies like JMA Wireless and Altiostar, and the latter has received new investment (of undisclosed size) from Telefónica’s venture arm.
The investors in Altiostar, which was one of the pioneers of virtualized RAN architectures that could use Ethernet fronthaul, indicate the new pattern of funding that RAN start-ups can hope to leverage. All its backers, except Fidelity, are the investment arms of industry players, and all of those players will now form a new technology advisory committee.
They are, in addition to Telefónica Ventures, Rakuten, Cisco, Qualcomm and Tech Mahindra. Cisco, Qualcomm and TechM are all suppliers, along with Altiostar and others, in Rakuten’s deployment of a cloud-native 4G/5G network. In other words, close-knit alliances are forming around the new architectures, encompassing large vendors, start-ups and operators, but pointing to very different supply structures to those of the 3G and 4G build-outs. Even where a large OEM is involved, as Nokia is in Rakuten, they are often no longer the prime contractor, and certainly not the end-to-end supplier.
Of course, the biggest upside of an investment profile that mainly includes industry investors rather than classic VCs is that the backers have a vested interest in using the start-up’s technology. Telefónica has already carried out trials with Altiostar in its tests of open RAN architectures and is now dropping heavy hints that it will use the company’s vRAN technology in some 5G networks in Europe and Latin America (though how extensively it uses the platform will depend on the success of a long line of tests, and how far the Spanish operator is wielding its favorite start-up to force its larger suppliers into line). Altiostar’s technology virtualizes all baseband functions in Layers 1, 2 and 3, divided flexibly between central and distributed units.
Thierry Maupile, Altiostar’s EVP of strategy and product, said Telefónica’s investment is not large in value compared to those of some other investors, partly because Altiostar is fully funded (it has raised an estimated $350m to date). “We are starting to generate cash from operations and will break even before we need to raise more money,” he said. Telefónica’s strategic partnership and support will be far more important, especially if the telco achieves its aim of deploying ALtiostar’s RAN virtual network functions (VNFs) in a legacy network, not just a greenfield environment. The vRAN start-ups clearly need to prove to operators that they can be safely introduced to the heart of the network, not just kept for greenfield deployments which, except in the tiny number of greenfield operators like Rakuten, tend to be of limited scale, and normally focused on small cells.
“Telefónica has concluded that this open vRAN is critical for them even as a traditional operator with a legacy network,” said Maupile.
Besides Rakuten and Telefonica, Altiostar has deployed vRANs in limited areas for Telecom Italia and Mexico’s Telcel, and also counts the small carrier, GCI of Alaska, as a customer. And Altiostar will have its eye on the 5G network RFP recently issued by Dish Network, the USA’s new mobile entrant. Maupile told FierceWireless: “They have no legacy in a mobile network. They have a lot of spectrum. They have fiber in all the key markets. They want to have an open architecture for sure. They have launched their RFP.” In other words, they are the idea candidate for a vRAN.
Dish has just issued its third 5G RFP, this one focused on the physical aspects – obtaining cell sites and permits, and installing antennas, for instance. Its previous RFPs covered the base stations, software and other systems. In July it was looking for network equipment vendors and in September for software and project management suppliers. No vendors have yet been announced though Ericsson was the provider of Dish’s NB-IoT network, whose roll-out it has now suspended in favor of deploying 5G, following a $5bn deal to acquire spectrum and customers from Sprint, assuming that operator’s acquisition by T-Mobile finally goes ahead. If a current lawsuit to block the transaction, filed earlier in the summer by a group of states attorneys general, were to succeed, the deal would be cancelled.
“We’re building a first-of-its kind standalone 5G network and want to employ a diversity of expertise from partners large and small,” Dish’s EVP of wireless operations, Jeff McSchooler, said in a statement. “We’ll build upon the existing relationships we have with deployment vendors from our NB-IoT build-out, while seeking local, regional and national vendors that can apply their strengths to increase the speed and efficiency of our 5G network deployment.”
Telefónica has also been issuing RFPs recently, Maupile said in the interview, including those for new radios, software, servers and services. But Altiostar is not the only vRAN firm the Spanish telco has worked with – Mavenir was also selected for trials following an RFI, issued by Telefónica and Vodafone last year under the auspices of the Telecom Infra Project.
But of course, one of the key objectives of these virtualized, open RAN architectures is to support multiple vendors in the supply chain.