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Recent Developments in the Open RAN Market
by Ron Westfall | September 3, 2021

For this vignette of a recent episode of the Futurum Tech Webcast, Part of the 5G Factor series, analysts Shelly Kramer and Ron Westfall and examine the key trends in the 5G market focusing on recent developments in the Open RAN market segment including the rise of the “Rip and Replace” program in the U.S.

Their discussion covered:

  • Why the $1.9 billion U.S. “Rip and Replace” program administered by the FCC is gaining momentum among independent and regional carriers as provisions include the complete, and not partial, replacement of Huawei and ZTE equipment and operators have one year to complete the rip and replace process.
  • How the rip and replace programs are generating both Open RAN and traditional RAN implementation. Mavenir’s win with Triangle Communications for FWA applications shows Open RAN can play a role and Nokia’s win with Union Wireless indicates traditional RAN as well as services will be instrumental. We expect the majority of rip and replace will use traditional RAN, particularly during early stages.
  • Ericsson is working with 100+ independent telcos including @40% engaged in the rip and replace program and the expectation that number will rise to at least 50%.
  • Why the Rip and Replace program may need to modify and extend its one year deadline.

Ron and Shelly are anticipating more rip and replace headlines over the course of the rest of this year and well into 2022, putting Open RAN but also mobile transition technology into the forefront of 5G ecosystem marketing and news.

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Transcript:

Shelly Kramer: So we’re going to start off our show today, and we’re going to talk about recent developments in the OpenRAN market. And really, what we’re going to start talking about and I know something that Ron’s really dialed in on, is the whole rise of rip and replace in the United States.

And we’ve got some new rip and replace deals that were announced this last month. And so, we want to look at those and get some key takeaways on what’s going on there with rip and replace, Ron. So, dive in and tell us a little bit more about that.

Ron Westfall: Right on. Yes. Rip and replace is rising. And there’s 1.9 billion reasons for this. First of all, when Congress passed the COVID-19 relief funding to the tune of about a trillion dollars, it also included what is now called the Secure and Trusted Communications Networks Act. And that’s allocated funding for what is called the rip and replace program now being administered by the FCC. And the FCC is allocating funds to mostly independent and regional carriers throughout the US to replace equipment from Huawei and ZTE.

And a little background, there are actually over 1,300 independent telcos in the US. So the US market is rather distinct. And many of them are definitely very good at servicing their localities. They actually are high touch. They are very prioritizing having the best equipment that they can use to serve other customers. And so this is actually a very important opportunity for the ecosystem. And specifically, suppliers like Nokia, Ericsson, Mavenir and ADTRAN. All of them have been involved in the development of the rip and replace program, how the legislation was worded.

And the other reasons why rip and replace is taking off is that, in addition to the government funding it, there’s also a provision that it has to be comprehensively done. Meaning you have to rip and replace all of the Huawei equipment, all the ZTE equipment. You can’t just pick some of the equipment and be selective about it.

And there’s also a currently right now, a one year provision. And so that is a tight timetable for many of these smaller carriers, even with their capabilities. And as a result, we’re seeing an acceleration in terms of, “Okay, how can we get on this bandwagon? Can we meet this tight one-year timetable?”

And I think it’s important to note that when this was developed, Nokia advocated extending that one year timetable. And I believe that that will end up happening. But for now, the FCC is sticking to the one-year timetable. Let’s see how this develops. And then we can see if we need to do six month or 12 month extensions. Because it’s one thing to replace, for example, the core, the mobile core. That could take six to eight months. That’s a relatively more straightforward. However, replacing the RAN components and replacing the back-office components, such as the OSS and BSS processes, that can take more time and it could exceed the 12 month limit.

So this is something that’s definitely percolating. For example, Ericson indicated that in working with the 100 plus independent telcos that they’re engaged with, that about 40% of it is a rip and replace effort. And they anticipate that number to increase naturally, as there’s much more momentum, as more carriers board onto this program. So it’s definitely something that we are definitely going to be watching.
And to your point, Shelly, about some of the recent deals. One was Mavenir won Triangle Communications in Montana. They’re a rip and replace effort. And that actually is interesting because not only are they supplying both the hardware and the software components, because Mavenir is a relatively new entrant to the hardware side of supplying RAN equipment, specifically OpenRAN. So this is a feather in their cap. But it’s also specific to the fixed wireless access deployments of Triangle. And so this is indicating that OpenRAN in the early stages of rip and replace, will have a role.

Now, on the other hand, we anticipate that most of the rip and replace will rely mostly on traditional RAN technologies, at least in the early stages. So the good majority of it. For example, Nokia with Union Wireless based in Wyoming, that was both equipment and services. We can anticipate that some carriers will be interested in working with a major supplier they can also provide the services to ease this transition.

Yeah, we’ll definitely be looking forward to seeing more rip and replace headlines over the course of the rest of this year and well into 2022. And so this is definitely something that is putting OpenRAN, but also mobile transition technology into the headlines.

Shelly Kramer: Absolutely. Well, very interesting stuff and much more ahead. Right.

Ron Westfall: No doubt. Yeah. I think what’s also important to note is that rip and replace is US specific, but there’s also concern about how much impact can OpenRAN have if the suppliers aren’t fully aligned with supporting 3G and 2G. Because almost all the headlines related to OpenRAN are related to supporting 4G and 5G networks. OpenRAN is actually very much aligned with 5G specifications. That is, rely on virtualization, separating the control plane and the user plane, using dis-aggregated networking techniques.

And so, it’s very well suited for that. However, PACTware compatibility is important. And as a result last year, for example, Mavenir bought a company called ip.access, just to address this backward compatibility. Another OpenRAN Supplier, Parallel Wireless, made a good deal of headway and differentiation by touting that capability.

And just this month, Mavenir took that extra step of ensuring 2G backward compatibility for OpenRAN. Because for one thing, there’s still 2G connections in North America and the US to this day, as well as Europe. But more importantly, in other parts, including India and Africa and Asia, there are at least a billion plus 2G connections out there.

And so, for OpenRAN to really have much impact on a global basis, you really need to have that built-in backward compatibility. And so, this is actually a very encouraging development to see the suppliers upping their game and making sure that OpenRAN can fulfill all of the Gs in terms of being able to work with the existing networks out there.

Shelly Kramer: Ron, I can always count on you for the clever nuggets. Fulfill all of the Gs.

Ron Westfall: It’s a G thing. Yes.

 

 

About the Author

Ron is an experienced research expert and analyst, with over 20 years of experience in the digital and IT transformation markets. He is a recognized authority at tracking the evolution of and identifying the key disruptive trends within the service enablement ecosystem, including software and services, infrastructure, 5G/IoT, AI/analytics, security, cloud computing, revenue management, and regulatory issues. Read Full Bio.