Imagine if you were to assemble a desktop PC. You need to bring together various hardware, assemble it and then install the software. But what if the makers of hardware and software set their own connectivity standards. They aren’t interoperable, not all will work together seamlessly. This will severely restrict one’s ability to choose the best hardware and software.
One has to go with a very limited software and hardware makers plus a kind of lock-in in terms of choice.
Similar thing was there in mobile networks. Earlier equipment makers set their own standard and customers had to follow them. This limited the interoperability of different equipment. This resulted in lock-in by vendors. This Increased the cost.
For years, Huawei, Ericsson, Nokia, Samsung and ZTE supplied most of the wireless network infrastructure equipment (base stations, small cells, core network, etc) for building cellular networks and mobile operators could only pick one for each part of their network.
Enter O- RAN (Open Radio Access Network). The Open Radio Access Network Alliance was established in 2018 by a global consortium of network operators. It aims to specifying uniform interconnection standards which will enable components from discrete suppliers to operate seamlessly together.
Nokia and Samsung have already announced O-RAN products. This has put pressure on other wireless network equipment makers.
Mobile operators can now choose different suppliers for different components.
This will significantly increase the bargaining power of mobile operators. Will enable more innovation and competition in the network equipment space. Help reduce the cost.
Two major part of the 5G network are
1. Software
2. Hardware.
Hardware space has been commoditized and it can be brought off the shelf. Interoperability enables the mobile operator to pick and choose. Software is where the IP (Intellectual property) resides.
Reliance Jio
Reliance acquired US based telecom software firm Radisys in 2018. This will enable Reliance to develop the software. They can buy the open interface hardware off the shelf. Some of the equipment they can also develop in-house. Jio will use the open interface network to develop its 5G network in house.
There are reports that they have running a prototype in Jio Campus. After the testing work is done they can get original design manufacturers from China and Taiwan who also work with the likes of Nokia and Ericsson to manufacture it.
Even if Jio weren’t supposed to do the entire work in-house it will be in a better position to negotiate with vendors.
Given the low ARPU (Average Revenue Per User) in India, it is important to keep the capex for 5G low for it to make business sense.
Mukesh Ambani has announced in the AGM that Reliance Jio has developed a complete 5G solution from scratch. That Jio can easily upgrade its 4G network to 5G, since it is all-IP network architecture.
Mukesh Ambani has also mentioned that once it is proven in India, Jio platforms would be well positioned to be an exporter of 5G solutions to other telecom operators globally as a complete managed service. I believe it will be difficult to convince a mobile operator to let another mobile operator build its network.
It needs to be seen if Reliance may be India’s answer to China’s Huawei.
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