In a move that could see AT&T spending about $14 billion over a five-year deal with Ericsson, the U.S. telecom is seeking to become a leader in 5G commercial scale open radio access network (Open RAN) deployment in North America.
The plan is for about 70% of AT&T’s network traffic to flow across open-capable platforms by late 2026 and will have fully integrated Open RAN sites operating in 2024 in collaboration with Ericsson and Fujitsu. Additionally, in 2025, AT&T will scale its Open RAN environment through its wireless networks in coordination with Corning, Dell Technologies, Ericsson, Fujitsu and Intel Corp.
AT&T said the move to an open, agile, programmable wireless network versus a proprietary network comes at a critical moment in 5G’s lifecycle. As Open RAN will:
- Enable lower power sustainable networks
- Deliver higher performance for users
- Offer a foundation for innovation
- Bring new suppliers to the sector
- Foster modernization and competition
"High-performance and differentiated networks will be the foundation for the next step in digitalization,” said Börje Ekholm, president and CEO at Ericsson. “Through this shift, and with open interfaces and open APIs, the industry will see new performance-based business models, creating new ways for operators to monetize the network.”
The move is a major blow to Ericsson competitor Nokia who has previously had a long-standing relationship with AT&T for wireless, wireline and other networking technologies.
The deal will significantly impact Nokia’s market share in the networking equipment sector as Ericsson’s equipment will replace existing Nokia equipment in several areas of AT&T’s networks.
Nokia said it will continue to supply AT&T with products and services like network infrastructure, cloud and network services businesses. AT&T will also buy microwave radio links and femto solutions from the telecom equipment vendor, Nokia said.
Nokia’s president and CEO Pekka Lundmark said it is “disappointing” news from AT&T but Nokia has “the right strategy to create value” in the future and will continue to invest in R&D and develop network products for future communication needs.
The companies said that committing to Open RAN with its suppliers deploying open hardware, migrating to cloud RAN and introducing third party radios will yield more innovation and efficiency, thereby creating more competition.
Specifically, Open RAN will allow for flexibility in choosing equipment, lower networking costs and improved operational efficiencies.
Additionally, competition will come from AT&T offering package deals for both fixed broadband and wireless and using it as motivation for the Open RAN infrastructure commitment. AT&T said many customers desire to have just one provider for both sectors and this is an additional way to expand its fiber footprint in coming years.
Ericsson said it will use its 5G smart factory in Lewisville, Texas, to manufacture the 5G equipment needed for the five-year contract.
The factory opened in 2020 and recently completed an expansion to bring its production floor to more than 107,000 sq ft. The facility produces 5G and antenna system radios and has achieved compliance with the Build America, Buy America Infrastructure Laws Act.