MNO Migration Strategies: An Update on Virtual RAN

Over the past week, I had the opportunity to get a full status update on Radio Access Network (RAN) transformation at the Telecom Infra Project (TIP) Summit in Amsterdam. I also had the opportunity to speak with a few service providers on the evolution of the telco network. Understanding the pain points and motivation of the carriers is critical to assess future market developments. What I found was that while virtual RAN is the major activity of the TIP ecosystem, the priority of the service providers is to firm up the core network evolution strategy. In this post, I summarize developments in RAN virtualization. I will follow up in a second post on the critical aspects related to the core network.

RAN Virtualization Challenge

RAN virtualization could provide service providers better cost efficiency. But RAN virtualization is a complex technical undertaking because it is where the digital domain borders the analog domain. The complexity and performance requirements make some RAN functions better suited for hardware than general purpose processors. Semiconductor technology is evolving to provide more computational power, but access technology is placing additional requirements: wider channel bandwidths, and higher number of antennas and frequency bands.

RAN virtualization is following a similar path to that of other network elements that have been virtualized over the past decade (e.g. packet core). As such, we see similar challenges related to capex and opex economics, interoperability and the choice of cloud/virtualization models. If past experience is an indication, it takes many iterations before the market scales.

RAN Virtualization 1.0

Over the past 6 years, the industry has worked to identify a RAN architecture that optimizes the cost-performance tradeoffs. A number of pioneering solutions were tested to explore the tradeoffs. Results show that no single architecture fits all service providers: the access network architecture that works for one service provider does not necessarily work for another. One reason for this conclusion are transport requirements within the RAN and between the RAN and the core network.

Another conclusion is that the impact of RAN virtualization diminish significantly where legacy RAN is present. This leaves service providers in a difficult position: they know that they need to change the underlying technology, but have to undertake a difficult network transformation process to reach the desired end-state.

As a result, the approach by service providers to RAN virtualization has been fragmented. Two notable mentions: 1. Rakuten whose Greenfield status liberates it from legacy burden; and 2. Vodafone which announced at TIP plans for a tender for OpenRAN solutions. [see here for more on OpenRAN].

The Status Today

How operators will go about RAN virtualization has critical consequences on how the pie will be divided among ecosystem players. A few points on where we stand today to help map future evolution:

• Today’s virtual RAN solutions focused on LTE. 5GNR is yet to come.
• Virtual RAN solutions are targeted software instantiations that do not leverage cloud-native capabilities.
• The ecosystem is in process of defining interfaces which is critical to enabling disaggregation. O-RAN stands as the leading organization with high-engagement by service providers and vendors.
• Virtual RAN solutions feature lower capabilities than urban macrocells which support higher scalability in terms of number of antennas, number of carriers and frequency bandwidth, and number of subscribers.
• There is divergence in the approach to RAN virtualization by the incumbent vendors and that of the challengers.
  • Incumbent vendors virtualize specific functions and rely on hardware to achieve high-performance as required in urban deployments.
  • The challengers emphasize broader virtualization to differentiate their solutions. They leverage open interfaces to strengthen their product offering.

Further to the last point, virtualization and open interfaces is viewed differently by the incumbents and the challengers. The former want to leverage their installed base to fend off competition. The later see it as a necessity for market entry. This will be an interesting dynamic to watch given the small number of incumbents and the fairly large number of challengers building on the 5G wave. Here again, history shows that such an evolution tends to be a long process.

RAN Virtualization 2.0

Service providers are struggling with increasing network complexity and accumulation of legacy technologies. This adversely impacts opex and leave the network more susceptible to failures. It also leaves the service providers vulnerable from a competitive and business perspective. A few leading service providers recognize these facts and are determined to change the situation. They recognize the challenges and expenses involved in such a transformation, but feel that inaction will be more costly. They are also looking to reduce their reliance on a shrinking field of incumbent vendors. Unfortunately, many other service providers don’t have the capabilities to plan such a transformation. They risk of being left behind and captive by their incumbent vendors.

From a RAN virtualization technology perspective, implementing containerization and micro-services is the next stage of technology development. Another area is scalability of solutions to support the traffic requirements of urban centers. But alongside these developments, there are business decisions to make on how service providers will implement RAN virtualization. One aspect is determining the functions that the service provider will assume and those to outsource to system integrator and vendors. This is a critical aspect as it requires a complete rethinking of the service provider organization and culture. It constitutes, in my opinion, one of the major hurdles facing service providers in their future evolution.

The Bottom Line: The Cost

The initial business case for RAN virtualization centered on exploring different costs: fiber transport, power, site lease, etc. Today, the main target of operators is understanding the impact of virtual RAN on operation and maintenance. This cost item is highly dependent on the vendor’s implementation. Therefore, Vendor selection becomes an even more critical aspect for service providers. Operators need to consider new network deployment and operation processes and decide on what activities to undertake or outsource.