A recent Dell’Oro Group report stated that Open RAN (radio access networks) radio and baseband projections have been updated in the upward direction. Standard RAN provides the technology necessary to connect users, mobile phones and enterprises to the mobile network over radio waves and is typically presented as hardware or software integrated platform. An open radio network, or O-RAN, meanwhile uses similar technology principles, but supports interoperation between different vendors’ equipment. The goal of O-RAN is to also create solutions that separate hardware and software, and can maintain updates in the cloud.
The Dell’Oro Group Open RAN Advanced Research Report provided an overview of the Open RAN and Virtualized RAN (V-RAN) potential over the next five years for different Open RAN segments such as macro, small cell, regions and baseband and radio. The report also offers projection for V-RAN with discussions about the vision, ecosystem, market potential and the risks.
The market research firm, which specializes in strategic competitive analysis in the telecom, networks and data center IT markets, projects that total cumulative Open RAN revenues will reach $10 billion to $15 billion between 2020 and 2025.
“The momentum with both commercial deployments and the broader Open RAN movement continued to improve during 1H21, bolstering the thesis that Open RAN is here to stay,” Dell’Oro Group Vice President and analyst Stefan Pongratz said. “We are adjusting the forecast upward to reflect the higher baseline and the improved pipeline.”
Big revenue leaps projected for O-RAN by 2025
The Dell’Oro Group Open RAN Advanced Research Report also noted that Open RAN revenues are projected to account for more than 10% of the overall RAN market by 2025, reflecting healthy traction in multiple regions with basic and advanced radios. Additionally, Open RAN Massive MIMO projects have been revised upward to reflect the improved competitive landscape and the improved market sentiment with upper mid-band Open RAN. The report also acknowledged that the move toward V-RAN is not progressing as quickly as Open RAN. V-RAN total projections have not changed much, but it’s still expected to reach $2 billion to $3 billion by 2025.
The revised outlook for Open RAN revenues comes after Dell’Oro’s RAN report noted that revenues for the RAN market have remained relatively flat despite, “the innovation and the progress on the supply side to cope with the explosion in data traffic.” The RAN market’s slow revenue growth is in part due to, “the strong coupling between wireless capital intensity and the RAN market,” according to Pongratz.
“Operators are comfortable with some decoupling in the short-term to accommodate the rollout of new technologies,” he wrote. “At the same time, operators are fully aware of the demand side challenges and have no plans to return to historical capital intensity ratios. Instead, they will continue to operate within a constrained capex envelope and rely on all the tools in the toolkit to do more with a confined budget.”
Move to Open RAN could a create more favorable market
The shift from proprietary RAN to Open RAN should help increase the likelihood of a market concentration trend reversal, however, according to Dell’Oro Group. The result should be three parallel tracks aimed at addressing the current architecture’s shortcomings. These tracks include Centralized RAN (C-RAN) as well as the aforementioned V-RAN and Open RAN.
“These efforts to move compute resources to a central location (C-RAN), use more general-purpose processors (V-RAN), and open up the interfaces (Open RAN) in hope of simplifying the ability to mix and match baseband and radio suppliers are not new and have been around for a long time,” Pongratz wrote.