Summary
In recent decades, mobile communications have completely transformed the way that human beings communicate and interact with one another. New technology generations introduced on average every ten years have consistently and fundamentally improved the overall user experience, paving the way for innovation beyond anyone’s wildest imagination.
This end user transformation from the initial voice-centric models to today’s data and video-driven end-user applications has had a profound impact on the network with mobile data traffic capacity increasing roughly 500-fold over the past ten years.
At the same time, the innovation and the progress on the supply side to cope with the explosion in data traffic has not translated to any revenue upside for the radio access network (RAN) infrastructure suppliers—per Dell’Oro Groups’ RAN report, the RAN market has advanced at a 0% CAGR since the year 2000.
Operators have also struggled to extract more revenue from their customers – per Dell’Oro Groups Telecom Capex Report, currency adjusted wireless revenues increased at a 0% CAGR over the past six years, reflecting slowing subscription growth and lack of revenue upside from new sources.
The strong coupling between wireless capital intensity and the RAN market implies that constrained operator revenue growth will remain one of the primary inhibitors of further telco capex acceleration. In other words, operators are comfortable with some decoupling in the short-term to accommodate the rollout of new technologies. 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.
One of the key drivers with the shift from proprietary RAN toward Open RAN is that it should ideally address the competitive landscape and increase the likelihood of a market concentration trend reversal. Per Dell’Oro Group estimates, the worldwide Herfindahl-Hirschman Index (HHI) has advanced nearly 50% over the past 19 years. Preliminary estimates suggest the HHI index for the 2019 RAN market topped 4000 in both North America and China, reflecting the state of the competitive dynamics in these highly concentrated markets.
As a result, there are three broad parallel tracks aimed at addressing the shortcomings of the current architecture, including 1), Centralized-RAN (C-RAN), 2) Virtualized RAN (V-RAN), and 3) 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.
While the standard Dell’Oro RAN report includes RAN systems using centralized, virtualized, and Open RAN, the splits are not provided in-depth with the standard report.
In this report, it is our objective to dig deeper about the Open RAN opportunity and assess if this time is any different—is there enough momentum and progress with Open RAN to ensure this technology will play a significant role in the future 4G and 5G rollouts?
The report addresses such questions as:
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What is Virtualized and Open RAN?
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What is the Open RAN vision?
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What are the benefits of using Virtualized and Open RAN?
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What is the market opportunity and forecast for Virtualized and Open RAN?
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Will adoption happen at a faster or slower pace than previous technology shifts?
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What regions will likely be the early adopters?
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What are the key risks with Open RAN and Virtualized RAN?
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What will be the impact on the network and the market?
The report includes a 5-year forecast for the following areas:
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Open RAN – RAN Function
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Open RAN – RF Output Power
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Virtualized RAN – Baseband Function
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Virtualized RAN – RF Output Power
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Table of Contents
Table of Contents
Executive Summary
Introduction .. 1
Overview... 1
Assumptions . 6
Background ... 7
Worldwide Forecast Tables (Mfg. Revenue and/or Unit Shipments)
Table 1: Worldwide RAN Market – Open RAN ... 1
Table 2: Worldwide RAN Market – Open RAN – RAN Function ... 2
Table 3: Worldwide RAN Market – Open RAN – RF Output Power ... 3
Table 4: Worldwide RAN Market – Open RAN – Regions .. 4
Table 5: Worldwide RAN Market –Virtualized RAN .. 5
Table 6: Worldwide RAN Market – Virtualized RAN – Baseband Function ... 6
Table 7: Worldwide RAN Market – Virtualized RAN – RF Output Power . 7
Table 8: Worldwide RAN Market – Virtualized RAN – Regions 8
Appendices
Appendix 1: Worldwide Mobile Subscriptions 9
Appendix 2: Worldwide Mobile Subscriptions by Region . 10
Appendix 3: Worldwide Real GDP Growth ... 12
Press Release
July 27, 2022 | Press Release
Open RAN and vRAN Forecast Revised Upward, According to Dell’Oro Group
Open RAN Revenues to Approach $20 B
REDWOOD CITY, Calif. – July 27, 2022 – According to a recently published report by Dell’Oro Group, the trusted source for market information about the telecommunications, networks, and data center industries, near-term Open RAN and vRAN projections have been revised upward to reflect the higher starting point and improved momentum. Global cumulative Open RAN revenues – radio and baseband excluding services – are now projected to approach $20 B over the next five years and account for around 15 percent of the 2026 RAN market.
“The Open RAN movement continues to trend in the right direction,” said Stefan Pongratz, Vice President and Analyst at the Dell’Oro Group. “At the same time, we have three separate Open RAN waves right now and they are not all moving at the same pace – greenfields and early brownfield adopters are deploying Open RAN aggressively while the remaining brownfields, which also make up the largest part of the market, remain more cautious navigating this transition,” continued Pongratz.
Additional highlights from the Dell’Oro Group Open RAN Advanced Research Report:
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The Asia Pacific and North America regions are projected to dominate Open RAN investments throughout the forecast period.
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While the Open RAN movement is not confined to a specific technology, RF output power, spectrum band, or deployment configuration – Open RAN macros are expected to drive the lion’s share of the O-RAN capex throughout the forecast period, accounting for more than 90 percent of the market.
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vRAN projections have been revised upward to reflect the improved momentum over the past three quarters taken together with new data suggesting the gap between vCU and vDU implementations will likely be smaller than initially expected.
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Risks remain broadly balanced. On the one hand, more operators are embracing the movement. At the same time, more operators and vendors are now questioning if Open RAN will boost competition and lower prices.
About the Report
The Dell’Oro Group Open RAN Advanced Research Report offers an overview of the Open RAN and Virtualized RAN potential with a 5-year forecast for various Open RAN segments including macro and small cell, regions, and baseband/radio. The report also includes projections for virtualized RAN along with a discussion about the vision, the ecosystem, the market potential, and the risks.
