The radio access network (RAN) market is, thanks in large part to operators’ 5G investments, growing faster than it has in about a decade, according to Dell’Oro Group. 

Global RAN revenues neared $35 billion in 2020 and were closer to $31 billion in 2010, Stefan Pongratz, VP at the market research firm, told SDxCentral. 

Growth in the RAN space is especially notable because gains have been rare during the last 20 years. Dell’Oro Group adjusted its RAN forecast upward by about 6% for the cumulative 2020-2025 period compared to 2019-2024. The analysts previously upped the firm’s RAN market forecast by 4% to 5% for the cumulative 2019-2024 period. 

“We have tracked this market since the year 2000 and the market has grown at a 0% compound annual growth rate (CAGR) between 2000 and 2020, averaging about $31 billion annually” during the last two decades, Pongratz wrote in response to questions. 

This surge in RAN sales will be short lived however. The market will likely peak next year and then decline through 2025, resulting in a relatively flat CAGR for the 2020-2025 period, according to Dell’Oro Group.

“The Asia-Pacific region, including China, is projected to dominate the capex over the forecast period, accounting for more than half of the investments,” Pongratz said. Indeed, the previous spike was also driven largely by Chinese operators, which collectively pushed revenues to a comparable level when the world’s most populated country deployed 3G services in 2009, he added. 

The analysts expect declines in RAN revenue, which should begin to appear in 2023, to be less severe compared to contractions that followed 3G and 4G LTE deployments in China. 

“While some deviation in the capital intensity ratio is expected in the peak coverage rollout phase, this forecast, with the post-peak pullback projected to approach two-thirds of previous declines, rests heavily on the assumption that the aggregate upside of these smaller non-traditional growth opportunities driven by new fixed and enterprise capex will curb the downside somewhat in the outer part of the forecast,” Pongratz wrote. 

5G RAN investments are occurring at a faster-than-expected pace, not because operators anticipate greater revenue per customer or from new applications, but because of 5G’s ability to lower cost per bit, according to Dell’Oro Group. 

Those savings “vary significantly” depending on bandwidth requirements, spectrum, and the price operators pay to acquire licenses for that spectrum, Pongratz explained. Spectral efficiency improvements average 20% in low-band spectrum, but operators with large mid-band spectrum holdings can realize more material throughput gains and achieve cost-per-bit savings up to tenfold due to the declining cost of massive multiple-input multiple-output (MIMO) radios, he added.

Moreover, while the growth rate of millimeter-wave (mmWave) spectrum deployments will outpace sub-6 GHz spectrum deployments through 2025, the baseline is small and will therefore capture a small portion of total RAN spending, Pongratz told SDxCentral. The firm forecasts total mmWave RAN revenues to more than double by 2025.