The stated goal of the O-RAN Alliance (O-RAN = OpenRAN = Open Radio Access Network) is to "enable a more competitive and vibrant RAN supplier ecosystem with faster innovation" by virtue of modularizing mobile network infrastructure through standardized interfaces. If OpenRAN (or "O-RAN") is clearly superior over the current architecture, it's striking that even the most optimistic projections come down to approximately 10% of the global RAN market by 2025.
There are hurdles to be taken and concerns to be addressed. In this post I can't talk about them all. To give just one example of a serious technical question, it is debatable whether a mobile network that runs partially on the cloud ("vRAN" or "virtual RAN") could ever match the reliability and performance of traditional equipment, and whether the optimized use of resources that cloud-based solutions potentially offer outweigh security and other risks. I may very well discuss some of those architectual and practical issues on other occasions.
Today I'm going to focus on what is--for this blog--the obvious starting point of the analysis: standard-essential patent (SEP) licensing and litigation. From that angle, O-RAN has zero upside--literally zero--but comes with a significant downside:
1. Not a single cent will be saved in 5G license fees
O-RAN relates to the infrastructure side. Communication between the network infrastructure and end user devices (such as handsets and connected cars) still relies on the same standards--presently, that means 5G first and foremost.
O-RAN doesn't make 5G cheaper. It has no impact on handsets, and the only way that carriers would pay lower 5G royalties would be if O-RAN delayed the rollout of 5G, which no one wants to happen.
2. Additional patents--partly from additional patentees--will have to be licensed, and they will not be free
Not only will there be more patents to be licensed but definitely more patents and--very likely--more holders of relevant patents.
On top of the standards that those mobile networks already have to implement, their infrastructure will have to implement the O-RAN interfaces. While the "Open" part of the standard's name does stand for a connection with open-source software, participants in the standard-setting process (such as ETSI members) will be entitled to FRAND royalties (and not FRAND-0, to be clear). Some relevant patents may end up belonging to companies that are not bound by a FRAND pledge. I don't even want to get into a doomsday scenario of different major markets in the world potentially going in different directions, which may result in a huge number of patents that are essential to a standard in one region but belong to patent holders who did not participate in the relevant standard-development process.
3. More implementers will have to take licenses
At the moment, the number of relevant implementers in the mobile infrastructure market is small: a few base station makers, and their suppliers, such as chipmakers. That number will go up with O-RAN, as the whole idea is to bring in more players (most of them U.S. based, as this is primarily an initiative by the U.S. government and U.S. carriers, with Apple apparently looking at O-RAN as an opportunity for infrastructure-side services that lock customers even more into the iOS ecosystem).
The more licensees there are, the more costly the licensing process becomes, which in the end increases costs.
4. Virtualization and modularization exacerbate the forum-shopping problem
Should parts of the functionality be moved to the cloud, the holders of certain types of patents may be able to choose between enforcing them where the servers are hosted or in the jurisdiction in which those cloud services are used by a carrier.
Even without virtualization, some forum-opportunities will likely result from the fact that different components are made in different jurisdictions, and that some patents may be infringed directly only by the carrier, but particular component makers may be liable for contributory infringement.
5. The availability of drop-in replacements weighs in favor of granting patent injunctions
Just like "plug & play" (relating to personal computer hardware) was derided as "plug & pray," it's doubtful that carriers will be comfortable replacing a patent-infringing O-RAN component with a rival offering. In some cases, carriers will have had reasons for choosing one particular component over the other options.
But patentees who prevail in infringement litigation will be able to leverage the O-RAN marketing promise against defendants. They'll argue that an injunction does not cause irreparable harm (and won't impact third parties) as a component held to infringe the patent(s)-in-suit could be replaced with another.
6. Today's leading infrastructure makers may step up patent monetization
Should O-RAN adversely impact mobile infrastructure sales by today's market leaders, they may further step up their patent enforcement.
I'm not saying that one should oppose O-RAN just over the foreseeable patent licensing and enforcement issues outlined herein. Patent licensing is sometimes just a cost of doing business. But when weighing off the pros and cons, the licensing and litigation aspects are undoubtedly in the "con" column.
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