NTT and NEC announced capital business cooperation on June 25th, 2020. The two companies have jointly developed a base station that complies with "O-RAN (Open Radio Access Network)". NEC aims to become the number one base station in the world based on O-RAN, but this O-RAN is also closely related to 5G networks. How do you think the world of mobile phones has changed in O-RAN?
Specifications aimed at the openness of base stations
NTT owns NTT things and NTT DoCoMo, which is responsible for the overall enterprise of NTT Group. As one of the goals of NTT's contribution to NEC, it is to jointly develop internationally competitive base station devices in line with O-RAN.
The base station device refers to a device used as a mobile phone base station, while the goal of NEC is to gain a global leading share of base stations that meet the O-RAN standard. However, at present, the mobile communication equipment business represented by the base station of NEC is almost limited to China, and the global market share is less than 1%.
Still, NEC's goal of leading global market share is quite ambitious, so why should the two companies vigorously develop base stations that meet the O-RAN standard?
そのためにはまず、O-RANが何であるかを知っておく必要があるでしょう。これはNTTドコモと米国のAT&T、中国のチャイナモバイル(中国移動)、ドイツのドイツテレコム(T-Mobile)、フランスのオレンジ(Orange)といった携帯電話会社を中心に設立された「O-RAN Alliance」によって提唱された規格なのですが、その内容を一言で表すと「基地局設備のオープン化」ということになるでしょう。
In fact, most of the networks of mobile phone companies are unified by the equipment of specific communication equipment suppliers, which is a very strong dependence on communication equipment suppliers. Moreover, the suppliers are in a state of oligopoly in which nearly 80% of the shares of Ericsson, Huawei Technology and Nokia are occupied, so these large communications equipment suppliers have a very strong influence, while mobile phone companies have little freedom. it is also difficult to reduce costs.
O-RAN was born there. O-RAN unifies the interface of different base station equipment from each supplier to the open standard of "O-RAN vestibule". If it is a base station equipment that meets this standard, it can mix the base stations of multiple suppliers.
It's good for mobile phone companies and start-ups. What about large suppliers?
O-RAN is produced by mobile phone companies, and it should be mobile phone companies that can enjoy the benefits the most. According to O-RAN, you can reduce costs by selecting base station facilities from multiple vendors that traditionally have to rely on specific vendors based on location, application, and price.
These moves have something in common with actively promoted network virtualization (NFV) such as Rakuten Mobile. In 5G, with the active introduction of NFV, the continuous development of base station virtualization, general-purpose servers have been fully utilized, Intel, Envidia and other new players seem to be actively involved in the work of the mobile phone core network.
In addition, if the introduction of O-RAN vestibule to achieve the openness of base station equipment, especially operators such as NEC with small market share and new operators, it will indeed bring new business opportunities. With the acceleration of the open trend, we are likely to rely to a large extent on major changes in the market structure of large communications equipment suppliers.
Having said that, it is a big issue to say whether the introduction of O-RAN can be carried out smoothly. This is the possibility for leading communications equipment suppliers to stop the spread of O-RAN.
As mentioned earlier, many mobile phone companies rely on large communications equipment suppliers for their networks, so the introduction of O-RAN Front Office requires the assistance of these suppliers, but from the supplier's point of view, the popularity of O-RAN will also lead to a reduction in equipment sales. You don't have to work hard.
In fact, Huawei Technologies is not involved in O-RAN Alliance, and it is unclear to what extent existing mobile phone companies will adopt O-RAN.
Of course, like Rakuten Mobile, it is easy for mobile phone companies that build networks from scratch to adopt O-RAN, but as mobile phones have been used worldwide, most of the new operators will stay in local 5G and other small-scale places in the future. Therefore, if the existing mobile phone companies do not introduce OmurRAN compatible base stations, the market itself may stay in a small scale.
In addition, even if O-RAN is widespread, there are challenges for NTT and NEC. Because openness is not only the leveling of the competitive environment, but also the main reason for intensifying competition among suppliers, suppliers will strongly demand the "cheapness" of machines in the future.
Japanese companies are not very good at using scale to make cheap goods, and if they cannot solve the problem of low cost, they may not be able to gain a high market share. The author's view is that the work of the two companies is "although there is an opportunity, but it is very serious."
Sano Masahiro
From Fukushima Prefecture, graduated from Tohoku University of Technology. As an engineer engaged in digital content development, turned to mobile phone, mobile professional writer. Now, from industry trends to culture, he is engaged in writing in a wide range of fields related to mobile phones.
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