EU telecoms policy at a crossroads as future networks take shape

Last week separate announcements about Open RAN and European regulation raised questions about how network virtualization could impact the future structure of the telecoms industry.

The European Commission’s report on its consultation into The Future of the Electronic Communications Sector and its Infrastructure stated: “network virtualization, edge cloud, artificial intelligence and open networks are new technologies that will have a significant impact on the electronic communications sector.” No surprise there. And a flurry of Open RAN announcements by telecoms operators, and notably Vodafone, indicate it’s a future several large operators are preparing for.

A major sticking point, however, is the cost of building new infrastructure in a sector suffering from low growth. The EC document reports that around 50% of the EU telecoms sector’s estimated annual revenues of €300 billion would have to be invested over the next five years to meet connectivity infrastructure needs and replace high-risks vendors.

Thierry Breton, European Commissioner for Internal Market, reacted by calling for a “’Digital Networks Act’ to redefine the DNA of our telecoms regulation.” Its aim would be to “facilitate cross-border operations and the creation of true pan-European infrastructure operators with the scale to reap the full potential of an EU-wide telecoms market.”

Pan-European infrastructure has its supporters. Respondents to the EC’s consultation claimed that “being able to operate on the basis of a single 5G core network across the EU, would result in benefits in the range of €200-300 million over the next five years.” The report also highlighted calls for spectrum harmonization: “Most replies among telecom providers, platforms, business and consumer organizations indicate that a more harmonized approach to spectrum management would unlock larger market potential.”

Breton, however, did not spell out what form ‘a true pan-European infrastructure operator’ might take.

Regulatory expert, Richard Feasey, who shared his analysis of the EC report on LinkedIn, observes that: “The Commissioner seems to assume that the large European telecoms firms will remain vertically integrated owners of the physical infrastructure and the virtualization capabilities and will be the providers of services to consumers and businesses.”

If that is the case, then Feasey believes such an assumption would ignore the implications of network virtualization referenced in the report. He writes: “I think network virtualization could allow us to imagine the development of a digital single market in virtualized networks in Europe without requiring regional ownership of the underlying physical asset as the Commissioner seems to anticipate. Ownership of the physical assets could remain fragmented and localized provided that common standards and access allow other firms to build and run regional virtual networks on top of them.”

Made for sharing

In the meantime, Europe’s biggest telcos are already working on disaggregated, virtualized networks based on common, open standards. And for some, Open RAN is integral to their vision.

“Open RAN is a central part of our digital transformation to become a software-centric telco by 2030,” according to Atoosa Hatefi, Responsible for Radio Innovation Department, Orange, in emailed answers to questions from Inform. “As we master automation, disaggregation, cloud, and AI & Data – each of these elements will support and facilitate the introduction of Open RAN.”

And Open RAN is being developed and rolled out with infrastructure sharing in mind. Among the many Open RAN announcements Vodafone made last week was a successful pilot by Orange and Vodafone of 4G calls over a cluster of shared commercial network sites in a rural area of Romania, using Open RAN technology.

Based on interoperable software and hardware components, “Open RAN offers a new way to share active equipment (radio units and servers) without necessarily sharing the software,” according to Orange’s Hatefi. “This enables good cost savings, while increasing the capabilities to differentiate. So, yes, RAN sharing is likely to be a key feature characterizing the roll-out of Open RAN.”

Describing Open RAN as the technology of choice for future mobile networks, Hatefi added that “our commitment to Open RAN also supports the European Commission’s ambitious target to have 5G in all populated areas by 2030.”

Meanwhile Vodafone, which announced a partnership with Nokia to run a commercial 5G Open Radio Access Network (RAN) pilot in Italy aims to have 30% of its masts in Europe based on Open RAN technology by 2030. [Orange and Vodafone hold investments in European towercos, Totem and Vantage Towers, respectively].

As the location of the Orange and Vodafone trial illustrates, European active RAN sharing today is happening in rural areas where it is not economically viable for three or four operators to build separate networks.

The pull of the big city?

But if indications from other regions are anything to go by, that could evolve. Active infrastructure sharing is also becoming a reality in Japan, as telcos there look to reduce costs following huge decreases in revenue from consumer connectivity services. Japan’s largest telco, NTT, for example, recently announced it will transfer ownership of 1,552 DOCOMO towers to JTOWER for JPY17 billion ($114 million). It will subsequently lease back the towers with the goal of promoting infrastructure sharing.

Going forward, NTT sees Open RAN technology facilitating or reducing the price of multi-vendor active RAN sharing, according to Yoshitsugu Shimazu, Vice President, Innovative Technology Office, technology Planning, NTT, in written answers to emailed questions. NTT is also looking to become "an Open RAN service provider for international telecom operators" according to its media release, through its partnership in the 20 vendor-strong OREX, which is “promoting a multivendor, Open RAN-compliant 5G vRAN to the global operator community”. Part of OREX’s offer is software developed by NTT Corporation “to facilitate the efficient design, configuration and monitoring of wireless access networks, enabling autonomous and optimized device operation.”

As in Europe, initial RAN sharing initiatives in Japan have focused on rural areas. However, analysts believe it is possible that Japanese telcos will share passive and/or active RAN infrastructure in more urban areas.

“JTower is already expanding infrastructure sharing to government buildings and newly constructed buildings in city areas, in addition to shopping malls, and I believe it is gradually spreading,” said Kenichi Kusano, Group Director, Infrastructure & Devices Research, IDC Japan. “Since there are advantages for facility owners, there is potential for this service to expand in urban areas as well."

Getting intelligent about services

Operators sharing active network infrastructure, however, will have to find new ways to differentiate. Here again they hope Open RAN will help them do so.

“Open RAN technology delivers the ability to enhance the intelligence in the management and optimization of the network, which should lead to higher operational efficiency and better quality of service in networks, targeting use cases ranging from mobility optimization, traffic steering, or beamforming optimization to energy saving or anomaly detection and resolution,” according to Orange’s Hatefi. “Thanks to the RAN Intelligent Controller and its open interfaces, the open RAN framework is a steppingstone towards AI/ML based optimization, allowing operator customization and enabling greater differentiation between operators.”

An oft-cited benefit of Open RAN is its potential to open the RAN market to fresh competition and reduce the need for monolithic vendor solutions by allowing telcos to use a mix of standardized hardware and software components. In this sense, it echoes other industry standardization initiatives, including TM Forum’s Open Digital Architecture (ODA). Indeed, the proposition for ODA includes a requirement for standard RAN management and operations interfaces, as opposed to vendor specific interfaces, which restrict the ability to share RAN resources.

Another perceived advantage of Open RAN is its role in the development of Cloud RAN. “Centralisation will enable pooling gains, mutualization of workloads and scalability, allowing resources to be optimised and fitted to the exact needs of the network traffic,” stated Hatefi.

Open RAN may be at the core of several large telcos’ vision for software-based, highly programmable, automated, cloud-native networks of the future. And European telcos have every incentive to find cheaper and easier ways to build and operate networks that enable rapid innovation. But Open RAN has its share of doubters among industry commentators, who question whether it will really save money, or foster a larger RAN vendor environment, and whether adoption will spread beyond those 30+ operators helping to develop it. There are also uncertainties about how network virtualization, network sharing, straitened finances and a new regulatory regime might shift the roles and business models of towercos, equipment vendors and hyperscalers in the future.

Nevertheless, Orange believes that technological advances, including progress in adapting IT servers to the requirements of the RAN, give Open RAN more than a fighting chance of success.

“The current environment has greatly evolved compared to a decade ago. Virtualization of networks has initiated a first operational step through core networks, now deployed in live networks,” according to Hatafi. “Operators including Orange [are] taking the lead towards truly open specifications, setting the foundations for disaggregation of hardware (HW) and software (SW), open interfaces between radio units and processing units, and intelligent management and orchestration of a cloud-native network.”