Verizon’s 5G network buildout just got much more expensive. The operator signed a five-year $8.3 billion contract with Ericsson for a sweeping range of 5G radio access network (RAN) equipment and software.

The deal positions Ericsson as Verizon’s top RAN supplier for the foreseeable future. The operator last year inked a $6.64 billion deal with Samsung for 5G RAN equipment that runs through 2025. That agreement followed Verizon’s decision to largely cut ties with Nokia, cutting its RAN spend from three vendors to two, and awarding Samsung nearly half of its 5G RAN budget.

A change in RAN vendors is rare among network operators — even more so in the middle of a generational upgrade cycle like 5G. As such, RAN contracts usually run at least five years and are routinely extended. 

Operators also generally prefer to spread RAN spending to as many vendors as possible to bolster competition in the space, but other factors including performance, cost, and the availability of specific equipment or services also play a strategic role in those decisions.

Ericsson Gains From Nokia's Pain

Ericsson, a long-standing Verizon vendor, likely benefited from Nokia’s unceremonious exit. Barring major mishaps, the Swedish vendor and Samsung will earn the bulk of Verizon’s 5G infrastructure spending through the remainder of this decade. Ericsson is also a primary RAN vendor for T-Mobile US and AT&T.

Verizon will receive multiple pieces and generations of equipment from Ericsson under the new agreement, including massive multiple-input, multiple-output (MIMO) radios and Cloud RAN, the vendor’s virtualized RAN (vRAN) architecture. "This deal mainly focuses on RAN equipment," an Ericsson spokesperson told SDxCentral, adding that the contract is effective immediately.

The operator is buying Ericsson RAN gear that supports low-band, mid-band, and millimeter-wave (mmWave) spectrum. However, much of the early phase will probably focus on mid-band massive MIMO radios. 

Verizon spent $52.9 billion to acquire and clear an average of 161 megahertz of C-band spectrum in this year’s record-high auction, and subsequently increased its capex by a cumulative $10 billion through 2023 to build a 5G network on those mid-band holdings. 

Verizon’s current plan calls for 175 million people to be covered with its mid-band 5G spectrum holdings in 2023.

Ericsson Plays Prominent Mid-Band Role for Verizon

Ericsson Cloud RAN will support mid-band spectrum in the second half of 2022, the vendor said last month. The vRAN offering remains on target for commercial availability by the end of this year with support for low-band networks, Per Narvinger, Ericsson’s head of product area networks, told SDxCentral.

The architecture targets the compute component of the RAN, a framework that splits the baseband into centralized and distributed units with virtualization. Ericsson also anticipates a role for vRAN in mmWave spectrum, but that will require faster baseband processing.

Verizon bet early and wholeheartedly on mmWave spectrum, focusing its 5G network buildout there, but the coverage of that network remains narrow and sporadic, sometimes from one city block to the next. The operator eventually deployed a nationwide 5G network on low-band spectrum in late 2020, but that service is shared and run concurrently with Verizon’s 4G LTE network. 

The new deal also calls for Ericsson to supply Verizon with its dynamic spectrum sharing (DSS) software, which allows operators to run 4G LTE and 5G service on the same spectrum in an on-demand environment. Verizon relies on multiple flavors of SDN for its low- and high-band 5G networks.

The operator was also the first to commercially deploy Samsung’s fully virtualized 5G RAN portfolio earlier this year, an achievement Samsung described at the time as the first of its kind involving a major RAN supplier and 5G operator.

Verizon Still Without a 5G Core

Despite Verizon’s many 5G advancements, the operator has yet to deploy a 5G standalone (SA) core. And it’s not alone. Of the 157 live 5G networks, most are operating in non-standalone mode. KT’s 5G SA core deployment with Samsung this week brings the total global footprint of 5G SA cores to nine. 

Verizon said it successfully completed a crucial 5G SA core test last summer, but it hasn’t shared any updates on that in more than a year. Following the test, Verizon said network traffic would start hitting the new core before the end of 2020, and it pointed to sometime in 2021 for full commercialization.

The operator said several vendors are involved in that effort, but it hasn’t named any. Ericsson might be on that list or in the running for a contribution to Verizon’s 5G core, but it declined to disclose such under this $8.3 billion contract.