AT&T Deploys Open RAN In $14bn Deal With Ericsson

Ericsson's headquarters in Sweden. Ericsson

AT&T to modernise US network with cost-cutting Open RAN equipment from Ericsson in $14bn deal, eroding Nokia market share

AT&T is to work with Sweden’s Ericsson to modernise its wireless network with Open Radio Access Networks (O-RAN) technology that is intended to open up competition to more vendors in a deal worth nearly $14 billion (£11bn) over five years.

The move is a blow to Nokia, which has seen its share price plummet more than 14 percent over the past five days amidst speculation that its position in North America was being eroded.

The company said in October it would cut 14,000 jobs, up to 16 percent of its workforce, following a 70 percent drop in third-quarter profits due to a 40 percent decline in North American sales.

Ericsson’s share price has risen more than 9 percent over the same period, with a 5 percent jump in early Tuesday trading after it and AT&T announced the news late on Monday.

network, 5g ericsson

North American expansion

Ericsson already provides about two-thirds of AT&T’s US network equipment, with Nokia providing the other third.

With the deal AT&T continues to have other providers apart from Ericsson, including Nokia.

Nokia said its revenue from AT&T, which accounted for 5 to 8 percent of income for its mobile networks unit, would decrease over the next 2 to 3 years.

The Finnish firm said the unit was expected to remain profitable in the coming years but would delay achieving double-digit operating margin by up to 2 years.

Open architecture

Open RAN technology uses cloud-based software and an open interface that can work with base station equipment from multiple vendors, opening up competition and potentially lowering costs to network operators.

It has been slow to attain mass adoption as vendors have been reluctant to open their interfaces to competitors, but Ericsson has agreed to do so.

“Through this shift, and with open interfaces and open APIs, the industry will see new performance-based business models,” said Ericsson chief executive Börje Ekholm.

AT&T executive vice president Chris Sambar said the two companies would “open up radio access networks, drive innovation, spur competition and connect more Americans with 5G and fiber”.

Vendor competition

The company said it has been analysing Open RAN for six months and expects to have fully integrated sites using the technology operating with equipment from Ericsson and Fujitsu starting next year.

Sambar said in 2025 the company network would also be using equipment from suppliers such as Corning, Dell Technologies and Intel.

Providers including Telefonica and Vodafone have adopted Open RAN, with Vodafone UK signing a deal in June 2021 to create what it said would be Europe’s first wide-scale commercial deployment of Open RAN.