The primary objective of xRAN was to change the cost of designing, purchasing and operating Radio Access Networks. This can be achieved by a variety of means:
Traditional RAN vendors provide integrated proprietary hardware and software solutions for their equipment. Separating the hardware from the software, and virtualizing the latter yields a variety of benefits:
Part of the hardware can now be purchased commercial off the shelf, based on cost efficient white box designs.
Virtualized software is able to make full use of Software Defined Networking (SDN). When a software is virtualized using virtual machines, we use virtual bridges to connect the VMs with the physical servers. We use virtual switches such as OVS to optimize the servers utilization. Cables and physical switches are used to connect physical servers between each other. Hyperscalers have, early on identified that white box switches can be deployed at a fraction of the cost of the proprietary switches used in telco networks. It is very difficult, in practice to orchestrate VMs that are not on the same servers, as well as VMs with the physical servers’ capacity.
In a software-defined network, the decision-making processes for the categorization, management and routing of IP traffic is separated from the software functions and centralized in the form of a Controller. That Controller can expose (northbound) interfaces to define the rules for traffic handling and (southbound) interfaces to program the traffic management elements. This enables to create sophisticated traffic rules to optimize for performance, latency, congestion or failure avoidance. When applied to the RAN, SD RAN is sometimes used to describe these systems.
A SD RAN can be managed remotely, from a controller API on a web interface, rather than dialing into each network element separately, either remotely of physically. This yields operational savings inasmuch as less in-the-field maintenance is necessary and technicians do not need to physically access the equipment to perform upgrades, patches and maintenance.
Open interfaces and solution disaggregation
RANs are composed of a variety of elements that are tightly integrated in a traditional solution. The interfaces and protocols linking these elements are closed, which means that only the vendor of the solution can perform a change because even if they are using standards based interfaces, they augment them with proprietary parameters and headers.. Opening these interfaces means designing, specifying and enforcing the implementation of standards-based interfaces between these elements without any modification. This yields a variety of benefits:
- These elements can be scaled independently from each other.
- Since the interfaces are open, you can replace an element from one vendor by one from another vendor with minimum testing and integration.
- It is possible to deploy elements from different vendors in the same network configuration, allowing best of breed deployment for specific use cases
Value chain disaggregation
A key means to reduce the cost structure of the traditional RAN value chain is to reduce the dependency on powerful vendors. This can be achieved by breaking the RAN products and services into modular components and essentially go directly to the Original Design Manufacturer (ODM) to try and get better commercial conditions. This tactic is not always effective. These ODM might be eager to get closer to the end customer and shortening the intermediary, but they are usually weary as well to discontent their current customers (OEMs) with whom they have long term relationship and volume commitments. Additionally, the traditional vendors provide valuable design, integration and testing work which now has to be carried by the operator or their new subcontractors.
A better solution is to try and stimulate the market to see the emergence of new suppliers to challenge the supremacy of the traditional vendors. This can be achieved in a variety of ways. Many operators have an investment arm or an incubator or accelerator for start ups. A telecom operator entering a technology company’s capital as a strategic investor is a good signal to the market. When several operators invest in companies in the same market segment, it shows that it is strategic and forces other venture capital companies to evaluate whether they should invest in similar companies. It spurs, in turn, entrepreneurs to create start ups in that area. It is a difficult virtuous circle to create and takes time, but it is powerful once it has sufficient momentum.
Another tactic is the in-house development of a new solution, together with the creation of an open source community. The seed development does not need to be huge, but it needs to show steadfast and long-term commitment to developer community for interested parties to adhere to the project. Open source development can become a force multiplier as start-ups emerge to industrialize and resell the shared code.
The last tactic, and probably the most effective, is the purchase and deployment of these new vendors products and services. Telco operators are notoriously slow to take purchasing decisions and the sales engagement is a marathon, from presentations, to demonstrations, to proof of concept, to lab deployment, to integration tests and hundreds other processes before deployment in the field. It is not surprising therefore, that the best suited vendors are those with robust project / program management and deep pockets, able to sustain long sales cycle by their market reach and scale. Start-ups are usually ill-equipped to sell to large operators and more of them have died during the sales cycle than have emerged successful. There is nothing like focus and the ability to test, refine and purchase volumes of start ups products and services in a short timeframe to signal to the market that an operator is serious about it.
All these tactics combined have seen the emergence of a class of RAN suppliers, smaller, more agile, more efficient than their traditional counterparts. They certainly have a higher risk profile, as they are not as financially sustainable and haven’t reached the operational excellence operators demand in their market, but the cost-ratio with their counterpart is sufficiently important that some operators feel these vendors are good enough for specific use cases.
The introduction of these new vendors in the value chain, with their lower price points and their more open interfaces forces the traditional vendors to adapt their offering, by compressing their margins and / or developing equivalent product lines.