AT&T awards $14 billion open RAN contract to Ericsson, dealing blow to Nokia

Just when the open Radio Access Network (RAN) movement appeared rather idle in the U.S., AT&T announced it’s jumping in headfirst with a multi-year collaboration with Ericsson. 

It’s a blow for Nokia, whose shares slid more than 9% on Monday. Reports had surfaced Friday that AT&T might be giving Nokia the boot as a RAN vendor.  

AT&T’s open RAN plan is for 70% of its wireless network traffic to move across open-capable platforms by late 2026. The company expects to have fully integrated open RAN sites operating in coordination with Ericsson and Fujitsu starting in 2024.

It's a five-year contract with Ericsson and AT&T’s spend could approach roughly $14 billion over the term of the deal, according to a press release. Ericsson said it will leverage its 5G Smart Factory in Lewisville, Texas, for the manufacture of 5G equipment for the contract. 

Big move

In a call with media on Monday, AT&T Network Chief Technology Officer Igal Elbaz called the move transformational. “Personally, I think this is one of the most courageous and transformational collaboration agreements that I remember in our industry,” he said.

Not only are they modernizing the wireless network, but they’re accelerating the advancement of open RAN in the U.S. It involves the introduction of new hardware and software with multiple vendors. Besides Ericsson and Fujitsu, AT&T named Corning, Dell Technologies and Intel.

Ericsson is at the foundation of all of it. AT&T Network EVP Chris Sambar told The Wall Street Journal that AT&T’s move will mean replacing existing equipment from Nokia in many locations. Nokia makes up about a third of AT&T’s wireless footprint.

Elbaz said Ericsson met AT&T’s requirements and what it wants to accomplish as an operator.

“This is a journey,” he said, noting the multi-year nature of the agreement. He said the open RAN ecosystem is starting to get to the level of maturity where major vendors are starting to open up their interfaces, allowing an array of suppliers to jump in and deploy open RAN components.

Ericsson hasn’t always been a big open RAN proponent, in part because it was designed to lessen operators’ reliance on the biggest infrastructure players and get more competition into the mix. For some time, Nokia appeared quicker to get behind the concept. But according to wireless analyst Earl Lum, Nokia hasn’t been delivering the goods.

Ericsson as 'logical choice'

In a LinkedIn post on Friday, Lum, who is president of EJL Wireless Research, outlined how AT&T was in the process of removing Nokia from their RAN vendor list. Lum told Fierce that he wouldn’t be surprised that if AT&T were to choose between Nokia and Ericsson, “the logical choice would be Ericsson because they have all the stuff that AT&T wants.” 

The open RAN movement has been underway for a number of years, gaining steam with operators who like the idea of getting more flexibility in choosing equipment, lower network costs and better operational efficiencies.  

AT&T has a history of undertaking big network initiatives. It first outlined its desire to virtualize its network in 2013 as part of its Domain 2.0 initiative. In 2014, it announced a goal for having 75% of its core network functions virtualized by 2020, which it did. 

AT&T is one of the five founding members of the Open RAN Alliance and executives in the past have been vocal about plans to implement architecture with open interfaces. An AT&T representative confirmed that AT&T’s network upgrades will follow O-RAN Alliance specifications.

Its wireless rivals T-Mobile and Verizon haven’t been as quick to jump on the open RAN bandwagon. Verizon President of Global Networks and Technology Joe Russo told Fierce in September that Verizon is in a testing phase when it comes to open RAN. At an investor conference last week, he said open RAN at this point isn’t where he’d like it to be when it comes to Massive MIMO performance measures.