The Geopolitics of Open RAN
The Geopolitics of Open RAN
The United States is using its economic and political power to encourage the development of “Open RAN.” The quotations in this case are necessary because it is becoming harder to define what “Open RAN” means by the week. OpenRAN, for instance, is the Telecom Infrastructure Project’s group focused on developing vendor neutral telecoms hardware. O-RAN is an architecture developed by the O-RAN alliance of global mobile operators and vendors trying to make radio access networks (RANs) virtualized and interoperable. The Open RAN Policy Coalition, which was born just last week, is a group of 31 tech companies that promote “open and interoperation solutions” in RANs as well.
“Open RAN” however is not a group. It is a concept, and a deceptively simple one. In this context, a “RAN” is the part of the mobile telecommunication system that connects an individual device (like a mobile phone) to other devices on the network through radio waves. Right now, three companies dominate the RAN equipment market: Huawei, Ericsson, and Nokia. There is a catch though: When a telecom operator chooses one of these companies as the equipment vendor for its RAN, it also has to go with that vendor for all the other parts of the system because the equipment is not interoperable.
Open RAN is the idea that this need not be the case: that telecom operators should be able to choose from a menu of general purpose, vendor-neutral hardware solutions when deploying the RAN portion of their networks, especially future 5G networks. But even that is not the version of “Open RAN” that the United States is supporting. For the US, “Open RAN” might as well be a synonym for “Not-China RAN.” Having identified China as a strategic competitor and 5G as a matter of national security – and having realized China, and in particular Huawei, has become the most influential global standard-setter for 5G networks – the US is appropriating the idea of “Open RAN” for a geopolitical end.
There are a number of problems with the U.S. approach, but the chief one is that it is an oversimplification of the real problem. At issue is not Huawei’s dominance, but the underlying structural forces that led to Huawei’s dominance, which “Not-China RAN” will do little to fix. To achieve the envisioned level of increased performance on a 5G network will require capital costs many orders of magnitude greater than previous networks. In terms of infrastructure, deploying 5G means “hundreds of thousands of new cell sites, new or upgraded connective nodes and central switches, new software, and redesigned mobile devices.” That translates into hundreds of billions, if not trillions, of dollars, and the simple fact is “making a profit on that investment will be difficult in an industry that isn’t growing much anymore.”
As a result, the potential economic gains 5G could bring to national economies are tantalizing to everyone except the very companies that have to spend to roll them out and maintain them. Without a clear path to immediate profit, U.S. companies did not (and still technically do not) have sufficient financial incentive to pursue the necessary research, development, and infrastructure deployment of 5G networks at the rate the U.S. government wants. Nor would they even if “Open RAN” was realized. Consider that Mavenir and Parallel Wireless – two U.S. companies eager to capitalize on Open RAN, are “optimistic that production can be shifted economically if authorities stipulate it must happen on U.S. soil.” (Emphasis added.)
Let that sink in for a moment. It is a far more radical notion than Open RAN. After all, production of any product can be re-shored if government authorities put enough policies in place that make production impossible elsewhere. In a recent presentation to the Federal Communications Commission, Mavenir not only admitted that “availability of radios in the US is a fundamental weakness,” but that “no U.S. manufactured radios exist.” That is because the US gets cheaper and better radios not just from China, but from allies like Japan, South Korea, and Taiwan. The U.S. is not going to become a cost-effective producer of best-in-class telecoms equipment just because the U.S. government decides that it wants to reverse the last 30 years of globalization overnight. Even in the platonic ideal of an Open RAN world, the best vendor-neutral equipment will be built in Asia – and probably in China!
The fact of the matter is, for as many disadvantages as China’s top-down controlled economy has relative to the United States, when it comes to the roll-out of 5G networks, China has two things the U.S. does not: the political will to make 5G a national priority and a fundamental apathy towards the cost of achieving this Chinese Communist Party-defined goal. If the US wants to leapfrog China when it comes to 5G, it is going to take a good deal more than throwing a few billion dollars towards ripping-and-replacing Huawei equipment already in U.S. telecom networks or encouraging U.S. “innovation” in the race for 5G. It is going to take a complete reconceptualization of the role government should play in the economic life of the country.
It would hardly be an unprecedented reconceptualization. Despite the fact that electricity in the US was widespread in most urban areas in the 1930s, in 1935, “fewer than 11 of every 100 U.S. farms were receiving central station electric service.” The reason was simple: “rural electrification was justifiably not appealing for private utilities, which could see high financial hurdles in the construction of an extended distribution network to remote, sparsely populated areas.” Sound familiar? Even before 5G became a national security issue, major US mobile providers were guilty of exaggerating their coverage maps because providing 4G LTE signal throughout the country was not prudent for their bottom lines. “Fly-over country” turns out to be “badly-connected” country as well.
The U.S. solved its electrification problem by making it the federal government’s business to electrify the country. By executive order, then-President Franklin D. Roosevelt established the Rural Electrification Administration with the goal of distributing electric energy to rural areas by practically any means deemed necessary. If the US wants to accelerate its 5G roll-out and reduce its dependence on foreign manufacturers for the equipment necessary to do so, it would have to make a similar, all-in move. While there is some historical precedent for the US to do so, it is also not hard to see that neither President Donald J. Trump nor Joseph R. Biden are cut from the same ideological and political cloth as Franklin D. Roosevelt. Nor has there been a party of either persuasion in power in over half-a-century eager to involve Washington in the economic life of the nation at such tremendous scope.
By definition, for Open RAN to truly be “open,” it has to be open to Chinese manufacturers too. Open RAN that excludes China is not actually Open RAN – it is a euphemism for what amounts in practice to a U.S.-led trade embargo of Chinese telecoms equipment. At its core (pun intended), Open RAN could potentially undermine the long-term (think 10 years out) dominance of Huawei, Ericsson, and Nokia in the telecom equipment sector. As such it is an inherently “globalist” approach – increasing transparency and openness and disrupting a three-company cartel’s relative advantage by opening up the market to production at the lowest price no matter the location. Open RAN-sans-China is not globalist at all: it is a protectionist approach that would require significantly more U.S. government involvement than Washington has thus far been willing to imagine.
Perhaps that is why six Republican Senators urged the U.S. Department of Commerce in April to reauthorize U.S. participation in global 5G standards-setting organizations where Huawei is present and why the U.S. Commerce Department is on the verge of doing so. Perhaps the U.S. is beginning to realize that it does more harm than good to use coercive powers to block Huawei from global markets. At minimum, doing so significantly slows 5G rollouts around the world, and could even push some countries into China’s orbit that care very little about geopolitics and much more about getting the best 5G tech for the cheapest price. That is the ironic thing about American power: it is at its strongest when it isn’t trying so hard. The key to unlocking Open RAN’s potential benefits is for the US to get out of its own way. Easier said than done.