The radio access network (RAN) market stumbled into 2024, with market leaders Huawei, Ericsson and Nokia set to fight year-long headwinds, according to a new report from Dell’Oro Group.

The analyst firm reported that the RAN market dropped by up to 30% during the first quarter, “resulting in a third consecutive quarter of double-digit contractions.” This drop included sales of basebands, radio hardware and software, but excluding services.

Dell’Oro Group noted the latest shortfall was “underpinned by poor results across most suppliers.” The top five suppliers in the quarter remained steady, led by Huawei, Ericsson, Nokia, ZTE and Samsung.

“It’s difficult to find a silver lining in the first quarter,” Stefan Pongratz, VP and analyst at Dell’Oro Group, wrote. “We’ve been monitoring the RAN market since the year 2000, and the contraction experienced in the first quarter marked the steepest decline in our entire history of covering this market. In addition to the known coverage-related challenges that the market is dealing with when comps in the advanced 5G markets are becoming more challenging, there are now serious concerns about the timing of the capacity upgrades given current network utilization levels and data traffic growth rates.”

The geographical breakout of the market further highlighted those comments. Nascent markets in the Middle East and Africa were shown as growing; Latin America was considered stable; with North America, Europe and Asia Pacific “declining sharply” during the quarter.

The slow start to the year also forced Dell’Oro Group to reign in its already dour expectations for the year, with the research firm now predicting overall RAN revenues will drop as much as 8% for the year compared with 2023. The firm had previously forecast that overall telecommunication equipment revenues could decline as much as 3% in 2024 compared to last year.

Dell’Oro Group’s latest numbers were extra disappointing as the firm had previously noted the market showed “faint signs of life” ending last year.

Vendors have not been shy about expressing their exasperation in the continued slowdown in telecommunication equipment spend.

Ericsson CEO Börje Ekholm said during the vendor’s Q1 earnings call that it “continues to view the level of industry investments that’s unsustainably low but we can’t in reality impact this in the short term,” further stating that the vendor expects this spending slow down to continue.

Ekholm also dampened enthusiasm toward full-year market growth, noting that Dell’Oro Group estimates at that time of the overall market declining 4% this year “may prove optimistic.”

Two bright spots for the industry could come from RAN market niches: private RAN and open RAN.

Dell’Oro Group recently reported that the private RAN space surged 40% last year, which garnered it a 2% share of the overall RAN market. And it’s expected to grow at a 21% compound annual growth rate over the next five years to as much as $2 billion in total sales by 2028, compared to an expected 2% CAGR drop over the next five years for the public RAN market.

“Although public RAN is still fueling the lion’s share of the overall RAN capex and the overall investment levels are tracking below some of the initial projections provided by the vendors in the early part of the 5G enterprise hype cycle, the fact of the matter is that private wireless is now growing at a formidable pace,” Dell’Oro Group VP Stefan Pongratz wrote. “This stands in contrast to public RAN and enterprise WLAN – both segments are projected to contract in 2024.”

SNS Telecom & IT recently forecast that spending on private 5G networks will grow at a 42% CAGR over the next several years, generating $3.5 billion in annual spending by 2027. It expects “much of this growth will be driven by highly localized 5G networks covering geographically limited areas for high-throughput and low-latency Industry 4.0 applications in manufacturing and process industries.”

“Despite prolonged teething problems in the form of a lack of variety of non-smartphone devices, high 5G IoT module costs due to low shipment volumes, limited competence of end user organizations in cellular wireless systems and conservatism with regards to new technology, early adopters are affirming their faith in the long-term potential of private 5G by investing in networks built independently using new shared and local area licensed spectrum options, in collaboration with private network specialists or via traditional mobile operators,” the firm noted. “Some private 5G installations have progressed to a stage where practical and tangible benefits — particularly efficiency gains, cost savings and worker safety — are becoming increasingly evident.”

Open RAN is also forecast to boom as the year progresses.

Téral Research predicts the open RAN market will grow at a 37% CAGR through 2029, at which point it will surpass $8 billion in revenues and account for 29% of all RAN revenues. Dell’Oro Group noted that while open RAN revenues declined last year, it expects the ecosystem to grow its impact on the overall RAN market from around 10% in 2024, to as much as 30% by 2028.

Ericsson’s Ekholm also touted the vendor’s momentum around its recently announced open RAN-centric deal with AT&T, which the executive said should start to benefit Ericsson later this year.

“It’s generating a lot of discussions in the market and basically with all customers that this is … a bit of an industry shaping type of contract where the customer, in this case, looks at the total opex envelope and the total capex envelope and tried to optimize the investments in revenue-generating equipment,” Ekholm said of the deal. “When they look at this, this is starting to drive a similar discussion in many customer interactions. We saw that in Mobile World Congress just a few months ago at the end of February, where this was one of the key discussion items with a number of customers and we’ll see how we can deliver on that going forward. But it puts us in a very interesting position of very interesting discussions with customers.”