During Nokia’s strategy update Tuesday, executives hammered home the idea that AT&T did not award a big, potentially $14 billion, five-year open RAN contract to Ericsson because Nokia’s technology is somehow inferior.

Far from it. Nokia President of Mobile Networks Tommi Uitto pointed out that Nokia has contributed more to the open RAN specifications than any other company. It already is capable of connecting its central units (CUs) and distributed units (DUs) to five different radio unit (RU) suppliers: Fujitsu, Mavenir, Samji and two others that are not publicly named. And Nokia just commenced that landmark open RAN deal with Deutsche Telekom in Germany.

He said the RAN market will continue to be competitive and noted that Nokia today is the result of consolidation over the years that involved seven different base station makers: Nokia, Motorola, Siemens, Alcatel, Lucent, Panasonic and Nortel.

‘Canard of the year’

What about talk of problems with Nokia’s cooling systems? EJL Wireless Research President Earl Lum predicted that AT&T would ditch Nokia as a RAN vendor a few days before AT&T made it official. One of the big problems with Nokia’s gear is the inclusion of the fans, or cooling systems, he told Fierce at the time.  

At the end of his presentation Tuesday, Uitto was asked to address speculation around the competitiveness of Nokia’s offerings, particularly when it comes to Nokia’s cooling system. He said the article on fans was “the canard of the year.” That “has nothing to do with AT&T’s decision, nothing. And I think I’ve said enough about the competitiveness … Look at what Chris Sambar says. Ask anyone in AT&T what they think about our products and their competitiveness.”

During his presentation, Uitto showed a slide titled “AT&T confirms Nokia’s strong RAN technology and engagement,” with a quote from AT&T EVP Networks Chris Sambar: “Nokia has highly competitive products and services in Radio Access Networks (RAN) and an accomplished R&D shop. I’ve always valued our close engagement.”

In a LinkedIn post after Nokia’s presentation, Lum reiterated his take on Nokia and said “we still stand by our initial assessment that active cooling/fans are bad for radios and if ALL other RAN equipment vendors do not have fans, what makes Nokia so special? We presume that the radio generation after Habrok in 2024 will NOT have any active cooling technology.”

That ‘dichotomy’

As for AT&T’s decision to go big with Ericsson, Uitto alluded to the “dichotomy” in going with a sole supplier in open RAN. Generally, when people talk about open RAN, it’s about supplier diversity and the ability to combine one vendor’s CU and DU with another’s RU. There have been aspirations of splitting CU and DU into two parts, but that’s not the primary goal. He added that there’s no need to go with a sole supplier strategy today to start working on open RAN.

The deal is “a bit unusual” in a lot of ways, he said, which seems to be something most folks can agree on. Last week’s announcement triggered all kinds of questions, like is it truly open RAN? Did it boil down to pricing? What is the role of vendor financing?

Nokia executives talked about AT&T’s unique financial requirements and whereas analysts use the word “price,” they prefer the term “financial.”  

At the UBS conference last week, AT&T CEO John Stankey explained that AT&T saw the chance to take advantage of the “lull” right now in the supplier base. It’s been a rough year for both Ericsson and Nokia amid lower demand, especially in North America, as operators shift their 5G deployments into lower gear.

Saving money?

With a nod to the unusual nature of the deal, analyst Joe Madden, founder of Mobile Experts, said he believes there are motivations that haven’t yet been fully revealed.

Given what is known, the deal is surprising because Ericsson has not been a vocal and enthusiastic supporter of open RAN fronthaul, he said. “But Ericsson has supported Open RAN software concepts from the beginning, and recently they have announced their support of a modified form of Open RAN fronthaul. Alternative radio vendors (like Fujitsu) will certainly support the Ericsson version of fronthaul with a big opportunity like AT&T,” Madden said.

It’s also surprising because it’s counter-intuitive for a network operator to rip out hardware in order to “save money,” Madden said. “This project won’t save money for AT&T, but it could modernize the network so that AT&T can offer premium services more efficiently,” he said.

Ed Gubbins, principal analyst at GlobalData, said he doesn’t see much indication from any of the parties that AT&T chose Ericsson because it’s superior to Nokia in the area of open RAN.  

“One way to look at the deal is to say it’s strange for AT&T to pick Ericsson for a major Open RAN rollout, since Ericsson, with its entrenched incumbent position, is not well-incentivized to eagerly embrace the potentially disruptive force of Open RAN,” he told Fierce.

“Another way to look at this is: If one thing AT&T wants is to use this large-scale deal to try to push the whole RAN ecosystem to move more toward Open RAN, then pushing the vendor that’s least incentivized to embrace Open RAN could have the biggest impact,” Gubbins said, adding that he’s not saying open RAN was the deciding factor.

Will others follow?

It’s unlikely that other network operators rush to follow suit, analysts said. “Possibly, but I don’t expect it to happen right away,” Madden said, noting that most operators will bide their time, test open RAN thoroughly at a small scale, then convert to an open virtual RAN (VRAN) when their next nationwide upgrade comes around, probably with new spectrum in the 2028-2030 timeframe.

Stefan Pongratz, VP at Dell’Oro Group, said it’s likely that large-scale sole sourcing is the exception rather than the new norm.

One of the key objectives with the open RAN movement is to give operators more power and more alternatives, Pongratz said. But it doesn’t necessarily mean they want to work with too many suppliers – they just want to have the option to work with different suppliers, he said.

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