Virtualising mobile network functions to save costs sounds tempting, but analysts warn that operators will have to foot a €2.5 billion capex bill over the next five years before they will be able to use cheaper cell site equipment.
According to a new report by Maravedis-Rethink, “Tearing the Network Apart: The Economics of the New RAN to 2018”, a $100 (€72) cell site is possible by 2020, but not until operators have first invested a great deal into LTE RAN equipment, new servers and significant software upgrades.
Pure cloud RAN (C-RAN) networks will be difficult to achieve as they rely heavily on fibre to link cell sites and basebands, and as yet the standards have not been fully worked out, so it is likely that operators will prefer to use hybrid models consisting of Wi-Fi offload, small cells and air interface upgrades.
Maravedis-Rethink does not think that C-RAN will achieve the maximum efficiency, performance and cost benefits unless the technology is fully integrated into the wider heterogeneous network. Once LTE-Advanced is deployed, the CoMP aspect could be a powerful enabler, but flexible networking tools from the major vendors will also be required.
Meanwhile, vendors in the distributed antennas space will see a new lease of life as they seek to provide low cost antennas and radio units to extend coverage at C-RAN sites while processing is virtualised in a base station hotel or in the cloud.
New revenues in this sector are projected to be €942 million over the next five years.
"Cloud-RAN economics are very tempting, but they will only be realised by harnessing standards to ensure interoperability and reduce cost,” said Caroline Gabriel, Maravedis-Rethink's Research Director.
“That, in turn, will create a whole new ecosystem, and operators must resist any attempts by their suppliers to hijack standards for software-defined networking or cell site equipment. Otherwise, this fledgling architecture will remain confined to a few pioneers with the resources to build their own ecosystems, like China Mobile."
At the moment, Asia-Pacific operators such as China Mobile, Korea Telecom, SK Telecom and NTT DoCoMo are engaging early trials and commercial deployments for C-RAN, however they are using largely proprietary platforms.
There is interest from European telcos, and it is predicted that by 2018, roughly 40 percent of operators in the world will have C-RAN deployments. In 2020, Maravedis-Rethink expects there to be about 300,000 macro layer sites equipped with C-RAN facilities, supporting a million sub-sites that will be backhauled by fibre or wireless.