AT&T announced on Monday evening that it had chosen Ericsson to build a telecommunications network using only ORAN technology, which will cover 70% of its U.S. wireless traffic by the end of 2026. The ORAN (open radio access network) network promises to significantly reduce costs for telecom operators, as it uses software based on cloud computing.The ORAN (open radio access network) network promises to considerably reduce costs for telecoms operators, as it uses cloud-based software and equipment from a wide range of suppliers, rather than relying on proprietary equipment supplied by companies such as Nokia, Ericsson or Huawei, which do not communicate with each other.
While several telecom operators, including Telefonica and Vodafone, have been testing this technology, mass adoption has been slow among existing operators. The new networks of Dish and Japan's Rakuten use ORAN. AT&T had been analyzing this technology for months, with a team of several hundred people. "All the new equipment we're bringing to market will be ORAN-compatible," Chris Sambar, president of AT&T Network, told Reuters. AT&T's spending could amount to nearly $14 billion over the five years of the Ericsson contract, the company said.
Hard blow for Nokia
Winning the Open RAN contract will make Ericsson AT&T's biggest supplier at the expense of Nokia, whose shares fell by 6.5% yesterday, and by a further 9% this morning. In 2020, Nokia suffered a setback when Samsung won a $6.64 billion contract to supply 5G equipment to Verizon in the US.
ORAN struggled as major telecom providers refused to open their proprietary interfaces to other companies for fear of losing business. But Ericsson agreed to open up these interfaces. AT&T will still have contracts with other ORAN providers outside this agreement. AT&T plans fully integrated Open RAN sites operating in coordination with Ericsson and Fujitsu, starting in 2024. By 2025, the company's network will feature equipment from several suppliers.