October 24, 2022
Speaking Openly About Open Networks
For Communication Service Providers (CSPs), the story of “open networks” has now been unfolding chapter by chapter for several years. And like many storylines, the tale of open networks has already had quite a few plot twists.
As with previous technology innovations, proponents of open networks have thus far arguably allowed the marketing of the technology to get well ahead of the technology innovation itself. Certainly, that has been the case with 5G, where the early forecasts mentioned that it would take several iterations in the governing 3GPP standards, and 1-2 years beyond those new iterations before supporting radios, core network equipment, and underlying componentry would be available to support those new standards. For example, only a handful of standalone 5G core networks are currently in deployment; those SA cores are crucial in supporting the ultra-low-latency performance required for many enterprises use cases that telecom vendors and operators have been talking up for five years or more.
A similar story is now playing out within the context of open networks where, particularly in the case of open RAN, much of the early promise centered around the ability to dramatically reduce both capital and operating costs through a combination of increasing competition amongst a larger pool of potential vendors, and the ability to squeeze greater efficiency through the radio intelligence controller (RIC).
Cost savings is a big part of the story, of course. However, as the open networks movement has advanced over the past few years, it is becoming increasingly clear that the industry has left out some key details in making the cost savings sales pitch, especially as it relates to the buildout of greenfield networks as compared to brownfield, which most CSPs will start with.
Several examples of cost savings cases illustrate this point:
- With open RAN networks being built to accommodate increasing volumes of network traffic, NEC predicts energy costs will fall by 20% compared to comparable legacy networks. However, in the preliminary stages, energy costs could actually increase slightly compared to traditional configurations.
- NEC expects system integration costs to ultimately fall below current levels as a share of total network costs as standardized interfaces take hold and legacy components are swapped out. The first phase of open RAN deployment is likely to see a short-term jump in SI cost, mainly because of the high percentage of Open RAN deployments that will happen in brownfield scenarios; however, lab research is underway currently by vendors including NEC to streamline and accelerate integration activities, which will generate increasing cost savings over time.
- NEC estimates a 30% lower capex per radio unit due, as well as a decrease of 15% per distributed unit/centralized unit (DU/CU) as configuration scenarios mature and the number of vendors increases. However, it will take a number of larger open RAN deployments before the precise magnitude of the capex savings is clearly established.
So, while it is clear that cost savings will be an increasingly significant rationale for building open networks, CSPs should realize that many of those savings will not materialize right away. Still, while the industry messaging remains ahead of reality, we remain confident that those cost savings will become more apparent as 5G traffic volumes continue to grow and the open networks ecosystem continues to expand and thrive.
NEC estimates that the benefits to Open RAN deployment could range from 16%-19% based on a five-year Total Cost of Ownership (TCO) basis compared to legacy RAN, growing to 23-27% over a 10-year period.
And the sooner the better: as we will address in future articles, NEC believes the earliest adopters will reap the many benefits of open networks first – more automated efficiency through RIC and xApps deployment, more access to new greenfield business opportunities in enterprise and the public sector, energy savings and a lower carbon footprint, more flexibility to continue growing in the cloud-native world, all of which will allow CSPs to better monetize their investments in 5G and beyond.