What do we need to see, condition-wise, for Open RAN (or other open-model networking) initiatives to succeed? There are plenty of articles on this question, but nearly all focus on a single technical/business issue directly related to Open RAN itself. As an industry, we tend to look at technology changes as isolated processes, with little or no relation to either independent drivers or related activities. That’s a pretty doubtful proposition, I think, but what specifically would facing interdependence mean to our view of technology advance? Let’s try to figure it out, starting as usual from the top.
There are two reasons for open-model networking. First, network vendors have their own bottom lines and stock prices to support, and so their goal is for network operators to buy more stuff every year. When the ROI on the “stuff” is declining over time (which it is), operators’ incentive to play their role diminishes. Second, vendors will (privately, usually) admit that incumbency is their greatest asset. A revolutionary change in technology or opportunity can promote a vendor change, so vendors will usually resist revolution if they’re incumbent. If they’re not, their ability to promote it is limited. Catch-22.
Obviously, this boils down to a single point—network operators believe that network vendors are hurting their bottom lines, retarding useful advances, to suit their own interests. The solution? To create something like we have in the IT and data center world, where commodity hardware combines with open software to create a market that commoditizes on prices and focuses on trying to create new features as a means of rising to the top. There are issues with both these goals.
It would be, IMHO, very difficult for an open-model entrant to cover a major swath of network technology on their own. If the technical requirements of a given major segment of the network could be met by simply assembling hardware and software elements, and if price commoditization was the buyer goal, then the revenue model for the vendor would be pretty questionable. Most open-model advocates are focusing on a specific piece of a service/infrastructure puzzle, and relying on integrating other stuff for the rest.
Who does the integrating is an issue here. Unless the open-model player is a significant company, they likely lack both the resources to do a major integration project and the credibility to back it up. That puts the integration onus on the buyer, and that generates a perception of risk, which generates resistance.
Creating new features, meaning providing a benefit beyond simple price commoditization, is a possible solution to this. The problem is that in an open-model network, creating new features without becoming proprietary is a challenge. If the new features are “open”, then they don’t differentiate the vendor, which means that their effectiveness as a dodge for pricing differentiation is limited.
Then there’s evolution. There are few “greenfield” operators these days, which means that the majority of candidates for open-model networking are companies with networks in place, built using proprietary technology from the vendors operators believe are working against operator interests. How does this interwork with new open-model technology, and how do open-model vendors handle the obstruction of incumbents to open-model introduction?
Where we are in open-model 5G relates to all of this. Operators are convinced that their vendors are locking them in and gouging them on pricing, both of which are at least somewhat true. What is just as true is that operators are not necessarily champions of openness, they’re just enemies of lock-ins and gouging. They want their familiar business model to work, and they’re prepared to ask for sacrifice for that to happen—vendors’ sacrifice, of course. Open-model 5G is a way of levering discounts out of their vendors more than a goal to transform the industry, and their own infrastructure.
This is why I believe that AT&T is so important. They’re the Tier One with the most challenges in the “traditional” access/connectivity business model. They’ve demonstrated that they’re prepared to take what most in their space would consider extreme measures. They’ve articulated a series of sensible paths toward a better infrastructure, a better business model.
Open RAN, open-model 5G, and open-model networking in general, are all forces of change, not the determinants of that new model. We don’t yet know what the new model is, but it is something that will respond to all of the forces of change, decisively enough to bring about a change in how we buy and build networks. Linux and its success was the most recent act of an IT shift that started forty years ago and had absolutely nothing to do with the philosophy of open source. It was the intersection of vendor needs and available paths to take. Networking will take the same path, but in its own idiosyncratic way.
IT is populist. Networking is elitist. There are hundreds of thousands of companies that consume IT on a fairly large scale, and over 70% of all network infrastructure investment is made by 25 companies. There are two ways to get that kind of ecosystem to change. One is to have a member (AT&T is the obvious candidate) demonstrate the right path to take. The other is to have a vendor step up and define what the model of the future network will be, with such clarity and charisma that it sweeps through the market.
I’ve said in prior blogs that I do believe that the SD-WAN/virtual-network technology pathway can lead to incremental connection revenue, but that model doesn’t directly relate to the AT&T goal of defining a kind of “service middleware” layer that would add features that partners could leverage in building higher-layer service offerings. Does somebody have to get specific with respect to this new feature set?
This opens the last form of “interdependence”, which is the issue of overlapping business cases. A supply-side view of the market, one that reflects the “build it and they will come” perspective, conveniently dodges the business case challenge. That’s bad, because for things like 5G there are actually a series of interlocking technology changes, each of which requiring a business case. We have a strong business case for 5G New Radio and NSA, but the business case for 5G Core and network slicing is problematic. The relationship between anything in 5G and edge computing is similarly tenuous at this point, since operators have not been using 5G function hosting to justify carrier cloud.
Interdependence is complicated, whether it’s related to open-model networking or anything else, and we live in an age where complexity is something we avoid, even where facing it is essential to making progress. So when you read that all we need to have to make 5G SA and network slicing work end-to-end is integration, reflect on the question of whether instructions on how to assemble a boat would be helpful to someone in the middle of the Sahara. A strong business case is always the place to start.
