Analyst sticks to long-term outlook, describing slow-down as a “recalibration” and thinks Europe will lead
By 2027, the global Open RAN market share will be smaller than previously forecast by Dell’Oro. This is the first time the analyst house has revised its forecast down since it started tracking the technology and lower than other analysts are predicting. Dell’Oro says its findings suggest “some hesitancy about these next generation architectures”.
However, analysis of the market is complicated as Open RAN adoption is across greenfield and brownfield operators. As greenfield and early adopter brownfield deployments are maturing, it is becoming clear that it will take time for other segments “to match and offset the more stable trends with the early adopters”.
The main findings are:
- Cumulative Open RAN revenues revised downward by 5% to 10% from now to 2027
- Open RAN revenues are still projected to account for more than 15% of global RAN by 2027
- European operators are ahead of the rest of the world in announcing Open RAN targets, but they have been more cautious with deploying Open RAN, building out 5G using traditional RAN.
- The baseline forecast assumes more delays in Europe but thinks the Open RAN market will surpass $1 billion by 2027 and eventually be one of the leading Open RAN markets.
Stefan Pongratz, Vice President and Analyst at the Dell’Oro Group, comments, “We can think of this revision more as a near-term calibration than a change in the long-term growth trajectory.
“This journey of ‘re-shaping’ the RAN was never expected to be smooth and many challenges remain. Even so, our long-term position has not changed. We continue to believe that Open RAN is here to stay, and the growing support by the incumbent suppliers bolsters this thesis.”
Not commercially viable at scale
It’s easy to see why Open RAN vendors are struggling for now. Core Analysis CEO Patrick Lopez bemoans how the Open RAN technical priorities release 3 – published in March 2023 by Deutsche Telekom, Orange, Telefonica, TIM and Vodafone as part of the Open RAN MoU group at the Telecom Infra Project – make it very difficult for vendors to have a commercially viable Open RAN solution at scale.
Lopez, who was global NEC’s VP of product management for 5G products and before that, global vice president of networks innovation at Telefónica Group, uses the Radio Unit requirements to make the point.
“While all operators claim highest urgent priority for a variety of Radio Units with different form factors (2T2R, 2T4R, 4T4R, 8T8R, 32T32R, 64T64R) in a variety of bands (B1, B3, B7, B8, B20, B28B, B32B/B75B, B40, B78…) and with multi band requirements (B28B+B20+B8, B3+B1, B3+B1+B7), there is no unanimity on ANY of these,” he wrote on his blog. “This leads vendors trying to find which configurations could satisfy enough volume to make the investments profitable in a quandary.”
“There are hidden dependencies that are not spelled out in the requirements and this is where we see the limits of the TIP exercise. Operators cannot really at this stage select 2 or 3 new RU vendors for an open RAN deployment, which means that, in principle, they need vendors to support most, if not all of the bands and configurations they need to deploy in their respective network,” he pointed out.
“Since each network is different, it is extremely difficult for a vendor to define the minimum product line up that is necessary to satisfy most of the demand. As a result, the projections for volume are low, which makes the vendors only focus on the most popular configurations,” he said.
“While everyone needs 4T4R or 32T32R in n78 band, having five vendor providing options for these configurations, with none delivering B40 or B32/B75 makes it impossible for operators to select a single vendor and for vendors to aggregate sufficient volume to create a profitable business case for Open RAN.”