AT&T signed Ericsson to be the base of an extensive multiyear, multi-billion-dollar open radio access network (RAN) deployment across the carrier’s nationwide network. The move is a significant win for Ericsson, which has so far languished in the open RAN space, and a blow to Nokia, which is set to lose business at AT&T.

Igal Elbaz, network CTO at AT&T, explained in a press briefing that the carrier plans to spend around $14 billion over the next five years to deploy open RAN equipment with the goal of having 70% of its wireless network traffic flowing through its open RAN platform by the end of 2026.

“I think this is one of the most courageous and transformational collaboration agreements that I remember in our industry,” Elbaz said. “Not only are we modernizing and evolving our wireless network, being ready for advancement in 5G and beyond, but also, most importantly, we are accelerating the introduction of open routing interoperability in our wireless network in the U.S.”

Decade-long network virtualization effort

Elbaz added that the move takes advantage of AT&T’s decade-long effort in driving SDN and virtualization into its network operations and further allows it to tap into a diverse vendor set to provide network equipment.

“The ability is needed to introduce multiple vendors both on the hardware and the software side, and an open management system,” Elbaz said. “I actually think that AT&T is really uniquely positioned to lead that scale transformation in terms of open RAN in the U.S. simply because of our track record in the introduction and deployment of openness and disaggregation in other parts of our network.”

AT&T’s move also fulfills a promise company executive Chris Sambar made during the recent Brooklyn 6G Summit event. “I promise it is moving,” Sambar said at the time of the carrier’s open RAN efforts.

However, Sambar noted progress was running into a scheduling issue, which Sambar referred to as a challenge in “aligned incentives.” This, Sambar explained, is the ongoing challenge in getting the broader RAN ecosystem to accept a new financial model.

“I think some people in the industry view it as you’re trying to completely commoditize what we do,” Sambar said. “I don’t think that’s true.”

Sambar pointed to a Nokia presentation at the event that talked about using artificial intelligence (AI) to help the management of 6G networks.

“That’s incredibly important, and we need to make sure that [research and development] machine keeps going,” Sambar said. “We’re not just trying to bring everything down to a commodity, but we’re trying to open up innovation with [open RAN] and so getting the incentives aligned in the industry is going to be very important for that.”

Ericsson in, Nokia out

AT&T’s decision to base its open RAN future on Ericsson is also a bold move. ABI Research recently ranked Ericsson as a “mainstream” open RAN vendor in a recent report, alongside competitors like Fujitsu, Samsung, Rakuten Symphony and Parallel Wireless. However, that was below what ABI Research termed “market leaders” in Mavenir, NEC and Nokia.

“We had a vision and I think their transition into their open architecture roadmap satisfied what we wanted to accomplish,” Elbaz said of Ericsson. “That’s the result of extensive conversations about roadmaps and portfolio of products, and we were pleased with what we've seen, and it met our requirements, and it met what we want to accomplish as an operator.”

Ericsson will leverage its highly touted “smart factory” in Lewisville, Texas, to provide what Elbaz said was a “majority” of U.S.-made open RAN equipment for the deal. That facility opened in 2020 and has been cranking out base station equipment for operators like Verizon.

Elbaz also noted that the carrier’s investment would also help broaden the open RAN ecosystem, and that should be the case with Ericsson and Fujitsu being named as suppliers in the open RAN deployment.

Nokia's name was conspicuously absent from this initial push, in spite of having been a long-time RAN equipment provider to AT&T.

Nokia noted in a statement that AT&T accounted for between 5% and 8% of its net sales so far this year, and that the carrier’s decision will reduce Nokia’s revenues over the next few years. The vendor also stated the AT&T decision would delay by up to two years the timing of its recently announced plans to hit double-digit operating margins.

“Whilst the news from AT&T is disappointing, our mobile networks business has made significant progress in recent years, increasing our RAN market share and technology leadership,” Nokia President and CEO Pekka Lundmark stated.

“I firmly believe we have the right strategy to create value for our shareholders into the future with opportunities to gain share, diversify our business and improve our profitability," he added. "Mobile networks are critical to our global connected future and, as I have said before, the cloud computing and AI [artificial intelligence] revolutions will not materialize without significant investments in networks that have vastly improved capabilities. Our customers can rest assured that we continue to invest in R&D and develop market-leading products for them.”

Nokia did add that AT&T continues to be a customer within the vendor’s network infrastructure and cloud and network services businesses, and that it will continue to provide AT&T with products like microwave radio links and small-cell products.

The AT&T move is the second major hit against Nokia in the U.S. market over the past several years. Verizon in mid-2020 removed Nokia as a primary 5G RAN equipment vendor and replaced it with Samsung.

Samsung and U.S.-based vendor Mavenir were also not initially included in AT&T’s announcement.

Elbaz kept the door open to other vendors being added to its plans.

“Our base platform and collaboration is going to be done with Ericsson and as we are moving into a multivendor platform and ecosystem, Nokia as well as others can be part of it,” Elbaz said.

Open RAN momentum

AT&T’s open RAN push echoes that of a number of international operators.

Japan’s NTT DoCoMo last month said it started deploying Nokia’s open RAN equipment in its nationwide 5G network. That deployment runs parallel to the carrier’s recently launched OREX initiative that is designed to provide customizable options of precertified open RAN components packaged for RAN, and NFV management and network orchestration (MANO) services.

European operators like Vodafone and O2 Telefónica are also actively pushing open RAN deployment timelines.

Open RAN progress in the U.S. is more subdued.

Verizon remains an active observer of the technology. Joe Russo, EVP and president of Verizon’s global networks and technology business, told SDxCentral during an interview at this year’s MWC Las Vegas event the carrier was still waiting for the technology to mature.

“At this point, what I typically say is we’re doing a lot of testing, we’re very interested in what that comes to be, but we don’t see it today at scale,” Russo said of open RAN. “It’s not to say that it won’t be at some point, but I think there’s a lot of roads in front of us on the [open RAN] space, so we’ll see how that evolves.”

Open RAN challenges remain

Russo noted that some of the bigger open RAN challenges remain around interoperability, software, the ability to scale and performance.

“We have very high-performance standards on the Verizon network when it comes to voice, when it comes to data, when it comes to getting on the network, staying on the network and being able to do what you have to do. Generally, you know, it’s a pretty high bar if you’re going to work inside of the Verizon network,” Russo said. “It’s been a challenge to make sure that those performance levels are met. … It’s early. I’m not saying that we’re not interested in it. I certainly will see where it takes us.”

T-Mobile US is also interested, but is waiting for its next investment cycle.

“For us, we didn’t go down an open RAN path when we made our big vendor decisions three years ago,” Former T-Mobile President of Technology Neville Ray, told SDxCentral during an interview at the MWC Barcelona 2023 event earlier this year. “The pace and scale that we were moving on, features and capabilities we needed, the ecosystem just was not ready. And the O-RAN guys will tell you that.”

However, Ray did preface his comments by stating, “I think the ecosystem’s maturing.”

“We’ve made massive investments into single RAN in our network environment, and it’s not like we’re repeating that soon,” Ray said. “But clearly, we’re evaluating continually open RAN opportunities. We believe that the ecosystem will be stronger with open RAN. But there isn’t a deployment thing that T-Mobile US is doing now.”

Joe Madden, lead analyst at Mobile Experts, recently explained that open RAN-related revenues were set to slump over the next few years due to broader ecosystem dynamics and operator investment cycles. Madden did add that he expects those investments to surge starting in 2029 tied to the unleashing of new spectrum assets that operators will want to build out. This will also align with larger operators becoming more comfortable with open RAN performance.

“We do see growth in the long term when we get new spectrum into the market,” Madden said. “When Verizon or AT&T or some of the other bigger operators get new spectrum, let’s say around the 2029 timeframe, I think they’re going to go to open RAN from the very beginning … because they will have tested it thoroughly at that point in time and they’re really bought into the process.”