Following a blowout 5G spectrum auction earlier this year, in which a massive NT$142.19 billion (US$4.7 billion) worth of bandwidth was purchased, Taiwan’s major telecom service providers are moving swiftly to start building their 5G networks. Taiwan Star Telecom locked down a contract with Nokia in late May to support its construction of a 5G non-standalone network, while Chunghwa Telecom in March chose to partner with both Nokia and rival Ericsson. Chunghwa’s business plan and information security plan – requisites for government approval to build 5G networks – have been accepted by the authorities, and it plans a 5G rollout in Q3 this year.
Considering the rush with which Taiwan’s telecom operators must now get their respective networks up and running, it’s understandable that they’ve resorted to the traditional turnkey solution for the buildout – contracting a single vendor to provide all the equipment and labor for the network infrastructure. However, as these companies begin moving from non-standalone to standalone 5G networks, companies such as U.S.-based tech multinational Cisco Systems see great potential in an alternative solution – the O-RAN, or open radio access network.
Under the current model, the whole telecom service provider architecture – from the radio access network, to the transportation network, to the core network – is created from the proprietary hardware and software of just one vendor. It is a closed system, and because of the proprietary nature of the equipment used, it can be very expensive.
With an O-RAN architecture, however, multiple vendors could get involved in the process with competitive bidding, significantly reducing costs for telecom operators and allowing them to develop local supply chains. This presents a huge opportunity for Taiwan, given its strong background in tech hardware manufacturing. It can also help with reducing Taiwan and other countries’ reliance on China for their tech supply chains. “With O-RAN, you’re not putting all of your eggs in one basket,” says Jeffrey Wang, regional manager of Cisco Systems Taiwan.
The time-to-market in O-RAN systems is also much shorter. Modifications to a network that might take months with the legacy systems currently in place for most telecom operators could be shortened to a matter of days if they chose to move to an open system. This is because under the turnkey system, all of the modification applications are in the hands of the equipment provider. But with open infrastructure, telecom operators become their own systems integrators, allowing them to make whatever change they need whenever they need.
Furthermore, O-RAN infrastructure provides Taiwan with an opportunity to develop strong end-to-end software applications and cybersecurity solutions for 5G networks. “Taiwan should not just focus on the tech hardware aspect of 5G,” says Wang. “We have a growing pool of software talent here who are capable of doing this kind of application development; we just need to lead them in the right direction.”
Despite the obvious benefits of developing an O-RAN system, there could be some heel-dragging on the part of Taiwan’s telecom service providers given the newness of the solution. Since the leadership at these companies tends to be a bit more conservative, they may prefer to pay a higher price to stick with something they see as safe and reliable.
Yet there is at least one example of successful implementation of O-RAN that industry players in Taiwan can look to. Japanese conglomerate Rakuten last year unveiled its plan to build a greenfield network – a fully virtualized cloud-native mobile network – which was launched in Japan in April. Cisco was instrumental in helping Rakuten develop its telco cloud technology for this new system, which is powered by Cisco’s NFVI and Orchestration technologies. The company also provided the hardware and software for the network’s data center architecture and the software for the evolved packet core (EPC), among other contributions.
There are estimates that the total cost of ownership of this system, including capital and operating expenses, could be as little as half that of a legacy system. Many service providers in the U.S. are also pushing for open RAN architectures, and some have paired their old systems with new, open ones.
The question now is: when will Taiwan see a Rakuten-type service provider emerge? Getting the ball rolling towards an open infrastructure for telecom networks is likely going to require some encouragement from and cooperation among government agencies and the local telecom industry.
Wang draws a comparison between the current movement toward O-RAN – spearheaded by the international O-RAN Alliance, of which Cisco is a member – and the switch from mainframes to laptop and desktop personal computers in the 1990s, and then on to the cloud-based, server-less world we now inhabit. “This is the future of telecommunications technology,” Wang says. “Taiwan, with its robust tech ecosystem and good relationships with multinational tech companies, needs to get on board and seize this opportunity.”