Ericsson and MasOrange’s Open RAN Initiative Signals Ongoing Shift Away from Chinese Vendors in Europe, with European Providers Poised to Capitalize

By Sam Bowling | 4Q 2024 | IN-7590

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Ericsson and MasOrange, Spain's largest Communications Service Provider (CSP) by customer base, announced a significant 5-year partnership to deploy Open Radio Access Network (RAN)-ready future networks. Beginning in October 2024, this initiative will coincide with the rollout of Ericsson-powered 5G Standalone (SA) networks in rural areas of Spain. As a relatively new entity following a recent merger between MásMóvil and Orange Spain, MasOrange aims to position itself at the forefront of Europe's open and programmable networks, with Ericsson providing its radio system products and core solutions, including Massive Multiple Input, Multiple Output (mMIMO) radios and RAN compute offerings, all compatible with Open RAN. Additionally, Ericsson will expand network nodes and sites to improve performance, coverage, and capacity, addressing the increasing demand for 5G services across both urban and rural regions, as well as large venues like stadiums. MasOrange plans to extend its 5G network from 3,500 to almost 3,700 municipalities by the end of 2024.

A significant factor influencing the landscape of Open RAN deployment is the ongoing shift away from Chinese vendors, which could serve as a crucial driver for adoption in Europe. This shift is prompting operators to rethink their network strategies, potentially leading to a greater emphasis on Open RAN to diversify supply chains and enhance network resilience. The partnership between Ericsson and MasOrange stands out as one of the few end-to-end Open RAN deployments globally, marking a pivotal moment for the industry. As they work together to implement this innovative network architecture, they not only set a precedent for future deployments, but also demonstrate the practical viability of Open RAN in real-world scenarios.

However, despite this progressive step, European operators are currently unable to fully commit to classifying entire networks as Open RAN. Although they increasingly specify Open RAN in their Requests for Proposal (RFPs), there is a reluctance to fully embrace the concept across the board. This hesitation is closely tied to the economic challenges many operators are currently facing, which have been compounded by the complexities of fully implementing Open RAN architectures. Over the past few years, operators have experienced a significant reduction in Capital Expenditure (CAPEX)-around 50% in some regions-following substantial investments in spectrum acquisitions made in 2022.

Additionally, operators are keenly focused on achieving a clear Return on Investment (ROI) from their existing 5G infrastructure before committing to further network expansion. The Ericsson and MasOrange deal arrives at a crucial time when operators are grappling with financial constraints that have slowed down the adoption of both SA and Open RAN technologies. As they navigate these economic pressures, this partnership highlights the potential for innovation, but also raises questions about how it supports a broader Open RAN ecosystem, given it is a single-vendor deal. This collaboration follows the trend of single-vendor Open RAN deployments seen in large-scale scenarios, similar to Ericsson's partnership with AT&T in December 2023, but here Fujitsu was named as a secondary vendor. Unlike the AT&T deal, no other vendor has been mentioned in this deployment by MasOrange as of now.

The deal between MasOrange and Ericsson marks an important development in the European telecoms sector, as operators increasingly look to replace legacy equipment with more secure and flexible solutions like Open RAN. As more European operators move to swap out Chinese vendors due to security concerns, Ericsson is well-positioned to capitalize on this shift. The company's strong expertise in Open RAN technology is a significant factor in its ability to secure these contracts, as it offers a modular, interoperable network solution that addresses both security and performance needs. Ericsson has already established itself as a key player in the Open RAN space, but the increasing competition from other vendors, such as Nokia and Mavenir, means it will need to continue proving its technological leadership. Nevertheless, Ericsson is likely to win a significant portion of future equipment swap deals, though its success will depend on its ability to stay ahead in an increasingly competitive market.

However, Ericsson's partnership with MasOrange is not without its challenges. Integrating Open RAN technologies could present interoperability issues and require substantial investments in new infrastructure. Moreover, navigating the complex and evolving regulatory environment in Europe adds another layer of complexity to the deployment process. Additionally, the reliance on a single vendor, while offering benefits in terms of streamlined deployment, could limit flexibility and adaptability in an increasingly dynamic market. To address these challenges, ABI Research recommends the following:

• Leverage Chinese Equipment Swap for Open RAN Deployments: European operators should seize the opportunity presented by the need to replace Chinese equipment to invest in comprehensive Open RAN solutions. This transition not only addresses security concerns, but also enhances network flexibility and innovation potential. By integrating Open RAN technology, operators can future-proof their networks and position themselves for long-term success in a rapidly evolving market.
• Ensure Interoperability Proofs: While standardized protocols are largely established, the focus now should be on demonstrating interoperability. Vendors and operators must prove that their components work reliably together and maintain consistent performance. Collaboration on these proofs will simplify the integration process and reduce network management complexity, helping operators to ensure reliable performance across a range of vendor solutions, rather than having to rely on a single vendor for their Open RAN deployment strategies.
• Promote End-to-End Solutions: Operators should advocate for comprehensive Open RAN implementations, rather than partial ones. By investing in full-scale Open RAN solutions, the industry can develop more cohesive network architectures. Currently, many operators hesitate to commit to end-to-end Open RAN due to the significant investment required and concerns about interoperability. However, promoting these solutions can drive innovation, allowing for the deployment of new services and applications that leverage the full capabilities of an integrated Open RAN network.