Beyond the Hype: Navigating the Cost-Effective Future of 5G with Open RAN

As the deployment of 5G communication networks unfolds, we stand on the brink of a transformative era in telecommunications.  This technological leap not only promises innovation but also has the potential to redefine network architecture, cost-efficiency, and customer satisfaction.

5G technology offers a unique opportunity to increase capacity, enhance the customer experience, and reduce operational costs. This can be achieved through Open RAN and the expansion and diversification of the vendor ecosystem; by promoting an environment of open and interoperable hardware and software, 5G deployment can reshape the telecommunications landscape, making it more cost-effective for operators and creating a competitive marketplace that ultimately benefits consumers.

As technology advances, our networks can’t be left behind.  Moving to virtualization and software defined networks decreases a network’s hardware footprint, in turn lowering costs and making repairs and upgrades achievable via clicks on a keyboard rather than manual service operations. 

Beyond virtualization and software in general, let’s talk about Open RAN cost in particular. Much has been said about the cost of open RAN vs. traditional systems.

First, Open RAN systems generally rely on and facilitate the move to virtual and software-based networks.  The cost savings of virtual networks are baked into Open RAN networks.

Second, in a market dominated by a few players, marketing strategies have sometimes artificially lowered initial costs, knowing that long-term vendor lock-in and expensive service agreements increase the overall expense. An Open RAN system allows operators to select the best and most cost-effective components and upgrades every step of the way while avoiding vendor lock-in. This increased competition will help keep costs in check throughout deployment and operation, and also lead to specialized components at scale that will further drive down costs.

These factors will change the underlying cost structure for vendors and operators.  The Federal Communications Commission’s (FCC) Rip and Replace catalog, commissioned by Congress via the Secure and Trusted Communications Act of 2019, associates cost with various types of networking equipment. Rural telcos in the U.S. must use the catalog’s pricing when submitting their application to the FCC for funding reimbursement for removing untrusted vendors, and the stark difference in pricing between traditional proprietary equipment and the prices available for Open RAN equipment highlights the positive cost effects of moving to Open RAN equipment. 

A November 2023 EY report titled “Open RAN Will Change the Future of the Telecom Industry” highlights four key benefits of Open RAN. These include reduced capital expenditures, lower operational costs due to competition and increased simplicity, a more secure supply chain providing transparency into shortages or procurement concerns, and a reduction in operational risks thanks to a multifaceted network of multiple vendors.

We are currently witnessing the tangible results of the cost-saving efforts. Analysts from New Street Research recently conducted a report in response to Rakuten Mobile’s assertion that Open RAN offers a more cost-effective solution. The research findings indicate that, on a per-site basis, capital expenditures were 40% lower, and operational expenses were 30% lower.

Next-generation communications networks are ushering in a remarkable era of transformation. As we navigate this evolution, the integration of Open RAN and the expansion of the vendor ecosystem emerge as pivotal elements that can reshape network architecture, enhance cost-efficiency, and elevate customer satisfaction. The promise of reduced capital expenditures, lower operational costs, a secure supply chain, and diminished operational risks signals not just a change in technology but a paradigm shift in the very fabric of the industry. The journey towards a more connected and competitive future has truly begun, with Open RAN leading the way.