Dell’Oro Group made its first downward forecast revision on the open Radio Access Network (RAN) market since it started tracking open RAN, but it’s not something that should raise too many alarms in the open RAN camp.

That’s because the market analysis firm isn’t changing its long-term outlook. It’s characterizing it more of a short-term correction related to the “re-shaping” of the industry.

“We can think of this revision more as a near-term calibration than a change in the long-term growth trajectory,” said Stefan Pongratz, VP and analyst at the Dell’Oro Group, in a statement. “This journey of ‘re-shaping’ the RAN was never expected to be smooth and many challenges remain. Even so, our long-term position has not changed. We continue to believe that Open RAN is here to stay, and the growing support by the incumbent suppliers bolsters this thesis.”

Complicating the near-term outlook is the fact that open RAN adoption has been mixed across greenfield and brownfield operators. As greenfield and early adopter brownfield deployments mature, it will take time for the other segments to match and offset the more stable trends with the early adopters, according to Dell’Oro Group.

Cumulative open RAN revenues have been revised downward by 5% to 10% through the five-year forecast period. Open RAN revenues are projected to account for more than 15% of global RAN by 2027.

The firm’s latest modelling calls for open RAN to eclipse $6 billion in revenue by 2027; that is for RAN equipment only, it does not include services and servers, Pongratz told Fierce via email.  

The top global open RAN suppliers by revenue for the 2Q22 through 1Q23 period are Samsung, NEC, Fujitsu, Rakuten Symphony and Mavenir, he said. Incumbent wireless infrastructure suppliers, including Ericsson and Nokia, are expected to play important and growing roles advancing the movement, according to Pongratz.

European operators are ahead of the rest of the world when it comes to announcing open RAN targets, but they’ve been more cautious with deploying open RAN, focusing on building out 5G using traditional RAN, according to Dell’Oro Group.

The baseline forecast, which assumes more delays in Europe, is for the European open RAN market to surpass $1 billion by 2027 and eventually be one of the leading markets from an Open RAN/RAN perspective.  

Tier 2 and 3 operators lack incentives

So far, the open RAN movement has been led by some of the biggest operators globally, and newcomers like Dish Network in the U.S. Smaller operators haven’t jumped on the bandwagon.

Indeed, during a conversation this week about the lack of funding for the FCC’s rip and replace program, Pine Belt Communications President John Nettles told Fierce that open RAN is not something that’s on his company’s radar.

“It’s an interesting concept,” but with a limited technical staff, the notion of having multiple vendors in the network is not appealing, he said. The integration is a challenge and Pine Belt prefers to have a single vendor that it can go to when things go awry.

Pongratz said that with Tier 2 and tier 3 operators – not just in the U.S. but globally – the reality is there is no marketing value with open RAN, cloud RAN and virtualized RAN (vRAN).

This implies that the decision to move to these next-generation architectures will be mostly driven by total cost of ownership (TCO), performance and the fit with the long-term strategy, Pongratz said.

“Taking into account the TCO challenges and the fit with the broader software roadmap, the Tier1s are expected to lead in this transition,” he said. “The smaller operators will get there as well eventually once it makes more sense from a TCO perspective.”

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