RAN slump continues as new growth areas fail to trigger upturn

So claims Dell'Oro, which this week headlined the announcement of its newly-updated RAN forecasts with the claim that the RAN decline will extend beyond 2023, and shared a couple of regional trends to illustrate its point.

The announcement effectively confirms what we already knew. The analyst firm in November said it was optimistic about the long-term growth prospects of the RAN space, but simultaneously noted that after a peak in 2021, RAN revenues will track downwards until the second half of the current decade; overall it predicted a 1% compound annual growth rate between 2020 and 2030.

A couple of months on and the analyst firm is sharing new data, but a similarly gloomy short-term trend.

After strong growth between 2017 and 2021 – around 40% – and a flat 2022, global RAN revenues "are on target to decline sharply in 2023," Dell'Oro said. It expects market conditions to "remain challenging" in 2024, but adds that the pace of decline in subsequent years should be more moderate. Overall, RAN revenues will experience a CAGR decline of 1% over the next five years, it predicted.

"The big picture has not changed," said Stefan Pongratz, Vice President at Dell'Oro Group. "MBB-based investments are now slowing and the upside with new growth areas including FWA and private wireless is still too small to change the trajectory."

Those two areas feature on a list of RAN market subsegments that Dell'Oro expects to grow over the next five years, thereby bucking the broader trend, although not enough to make a difference. The list also includes 5G new radio, small cells, mmWave, Massive MIMO, and Open and virtualised RAN.

You could be forgiven for thinking that Open RAN would be a shoo-in to boost overall RAN revenues – albeit not necessarily for the same vendors – given the amount of airtime it receives at present.

Nokia's move late last year to lower its guidance after AT&T announced a $14 billion Open RAN plan with rival Ericsson helps to give the impression that the market is booming. But it was something of an anomaly and, despite the best efforts of certain interested parties, the technology remains fairly niche.

For example, the US and India made a big deal of their latest pledge to work together on Open RAN when they formalised the much-discussed US-India OpenRAN Acceleration Roadmap last week. But one of the key purposes of the collaboration is to push Open RAN deployments in India, where to date they are largely lacking.

Speaking of India, the market is one of the drivers behind the ongoing RAN decline predicted for this year. Dell'Oro points to the market pulling back in 2024, presumably as after an initial flurry of spending from the likes of Reliance Jio and Bharti Airtel, the rapid pace of 5G investment slows.

It comes as little surprise then that Dell'Oro's data shows the Asia-Pacific region leading the global RAN revenue decline. North America has better growth prospects, it points out, but it's all about comparisons; North America saw a sharp decline last year, with operators in the US having for the most part passed the peak of 5G spending, therefore this year will look better, relatively speaking.Dell'Oro did not say as much, but it stands to reason that with technologies like Open RAN gaining more traction, North America will likely help to pull the world out of the RAN slump later this decade. The vendor community will certainly hope so...provided they can secure the big name customers, of course.