Efficiency Up with DIY Base Stations... 8 Trillion Won Market in 3 Years
US Leads to Curb China, No.1 in Telecom Equipment
Korea's Dual Strategy: Global Cooperation & Ecosystem Development
The global telecommunications industry, centered on the United States, has also begun targeting China. Leading the way, major telecommunications powers worldwide have been competing to declare the development and commercialization of Open RAN (Open Radio Access Network) technology.
Open RAN is a standardization technology that allows interoperability between communication equipment made by various manufacturers. Currently, base station equipment such as wireless devices, hardware, and software are used from a single vendor. Therefore, once a telecom operator builds a network with equipment from Company A, it is difficult to switch to equipment from Company B later. In the existing environment, telecom operators were dependent on the manufacturer's equipment, but by adopting Open RAN technology, they can mix base station equipment from multiple manufacturers and update only the software. It is a kind of DIY (Do It Yourself) base station. Flexible use of equipment increases network management efficiency, intensifies competition among suppliers, and reduces network construction costs. Previously, telecom operators were dependent on equipment vendors, but with Open RAN, the operators gain stronger control. The burden of network maintenance is also reduced. China accounts for 43.5% of the global telecommunications equipment market.
8 Trillion Won Market by 2026... US Leads Telecom Equipment, Checks China
Open RAN is a weapon that will shake up the telecommunications equipment market order dominated by China. Fifty telecom operators from 33 countries, including the US and Japan, have identified Open RAN as a core technology and are focusing on its development. Currently, the telecommunications equipment market is led by Chinese and European equipment manufacturers. According to Omdia's research, in 2022, the world's top mobile network equipment vendor was Huawei (market share 31.3%). Another Chinese telecom equipment company, ZTE (market share 12.2%), ranked fourth. The Chinese companies' market share reaches 43.5%. European companies Ericsson and Nokia hold 25.7% (2nd) and 17.8% (3rd), respectively. Samsung Electronics ranks fifth with a 7.6% market share.
Despite being a global technology leader, US companies have not been very influential in the telecom equipment market. The US is driving Open RAN to weaken the influence of Chinese companies and secure global leadership in telecom equipment. Citing concerns over national security threats, the US excludes Chinese telecom equipment and strengthens cooperation with allied countries as part of its strategy.
Open RAN technology has not yet spread widely. However, new overseas telecom operators are gradually adopting Open RAN. US-based DISH Network had built a network covering 20% of the population by June last year. Japan's fourth mobile carrier, Rakuten Mobile, is converting its entire network to Open RAN in conjunction with its subsidiary Rakuten Symphony's cloud. Existing major operators are testing the technology while continuing to use their previously built networks. Verizon, the largest US carrier, announced plans to install Open RAN within the year. Although still in the early stages, experts predict rapid market growth as developing countries, which are beginning to build 5G networks, adopt Open RAN. Omdia forecasts the Open RAN market to grow more than fivefold from $1.2 billion (approximately 1.5924 trillion won) in 2021 to $6.4 billion (approximately 8.4928 trillion won) in 2026.
The full-scale adoption of Open RAN poses a threat to major existing telecom equipment providers like Huawei and Ericsson. If equipment can be easily replaced, the advantage of market dominance disappears. However, it presents new opportunities for latecomers such as Samsung Electronics and small and medium manufacturers. They can penetrate market niches tightly held by major players. The US is also aiming for this effect.
Korea Builds Ecosystem Through Public-Private Cooperation and Global Collaboration
Korea has recently accelerated efforts to secure Open RAN technology by establishing a public-private cooperation body. On the 16th, the Open RAN Industry Alliance (ORIA) was launched, with participation from the three major telecom operators, Samsung Electronics, LG Electronics, and 29 other companies and institutions. The government plans to foster the ecosystem through the 'Open RAN Activation Policy Plan,' including establishing an international certification system for Open RAN equipment (K-OTIC). Global cooperation is also accelerating. Following the Korea-US-Japan summit, the government plans to strengthen Open RAN collaboration.
The three major telecom operators are actively developing Open RAN technology. SK Telecom successfully built an Open RAN in-building (indoor) test network with domestic SMEs at its Bundang headquarters in March and achieved service interoperability. KT conducted a test in June to interconnect Open RAN virtualized base station multi-vendor equipment. LG Uplus recently developed test verification equipment that analyzes Open RAN interconnection errors.
Yeo Jae-hyun, Senior Research Fellow at the Korea Information Society Development Institute (KISDI), said in the report "The Return of Open RAN and Mobile Telecommunications Industry Policy," "Korea is an ally of the US based on security cooperation and a latecomer in the network manufacturing industry, so strengthening Open RAN cooperation with the US could be advantageous." He added, "It is necessary to consider linkage measures to activate the use of Open RAN by new mobile operators and SMEs in the 5G ecosystem."
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