NEC finds Open RAN a tough sell

VMO2 fallout. Departure of Global Head of 5G. Where next for NEC's Open RAN ambitions?

NEC is one of the companies that identified Open RAN as an opportunity for it to become a more serious player in global network sales. Strong in its home market, as a major supplier to NTTDoCoMo and latterly Rakuten, it took international telcos at their word when they said they wanted to see more vendor diversity, something that would be driven by insisting that vendors deliver disaggregated solutions with open interfaces.

Accordingly, it set up an Open RAN Centre of Excellence in the UK, and an Open RAN laboratory in India. It bought Blue Danube in the US and is using that acquisition to set up a development and customer briefing centre in New Jersey.

But although it has been present as a supplier in many early trials and projects, recent times have been tougher for the company. This week, Virgin Media O2 (VMO2) announced that it was selecting Mavenir as its “Open RAN vendor” and prime integrator. This was a switch of partners after VMO2 and NEC stepped onto the dance floor last year to trial five live sites in the UK.

TMN has also learnt that Partick Lopez, Global VP of Product Management for NEC Corporation’s 5G products and solutions, left the company in March this year.

Lopez was responsible for the management of all NEC’s 5G products and solutions, including aligning and heading up its efforts in Open RAN – leading product teams responsible for Open RAN RU, Open RAN CU/DU , RIC, cloud native converged 4G/5G Core network and 5G technologies and services. He joined NEC from Telefonica where he was Global VP of Networks Innovation, a role that included overseeing access networks disaggregation and virtualization and the deployment of the operator’s first OpenRAN commercial deployment – in South America.

Lopez didn’t want to comment on the reasons for his departure, nor on NEC’s current status with Telefonica and VMO2. (UPDATE 24-4-23: NEC has also chosen not to answer questions related to Lopez’s departure.)

VMO2 has remained tight lipped about its reasons for going with Mavenir rather than extending its work with NEC as integrator. (The one media interview it decided to give around the Mavenir announcement didn’t shed much light on the reasoning.) TMN has heard from one source that NEC was perhaps seen as too passive as a Systems Integrator, neither challenging its vendor partners enough or taking the lead enough with its customer. There could also have been a further complication with Rakuten Symphony acting as the vRAN provider to NEC as integrator. That may have invoked a conflict at the cloud platform layer, with VMO2 preferring to leverage its investment in VMWare’s Telco Cloud infrastructure and Symphony bringing its own cloud platform preference along with its vRAN software.

TMN has been waiting for an official response from NEC both on the current and ongoing state of its relationship with Telefonica and on Lopez’s departure. The company has to this point not been able to provide a response. Unofficially one source did tell us “we [NEC] continue to work closely with Telefonica as they prepare for their multi-country rollouts.”

A source within Telefonica added that the recent agreement with Mavenir wouldn’t necessarily rule out Rakuten as a future vRAN provider.

—————- UPDATE 24-4-23 —————
NEC has now responded to three questions – we produce their answers in full below.

Was there a breakdown in relationship between NEC and VMO2, and if so, when did that become apparent and what caused it?

NEC’s relationship with Telefonica and the VMO2 project is ongoing. The decision to move forward on these new trials with a different vendor was not a surprise to us, nor does it represent a breakdown in our relationship with VMO2. A multi-vendor environment is fundamental to Open RAN. As one of Open RAN’s pioneers, it’s logical that VM02 would look to trial other vendors in this ecosystem. 

Can you update on the current status that NEC holds in VMO2 and also in the wider Telefonica Group with regards to its status as a system integrator for Open RAN deployments?

NEC continues to work closely with the Telefonica team and VM02. As the prime integrator for Telefonica’s global rollout, our goal is to deliver the best possible experience for our customer and we work closely with them to determine the best way forward for each trial, test, and project segment. In some cases, the best way forward may be for NEC and other vendors to trade responsibilities based on the specific scope of work and/or what’s best for our customers. 

Does work continue with Spain, Germany and Brazil?

NEC continues to work with Telefonica and its regional entities and partners on future Open RAN deployments. Specific details of these activities will be released by the operator(s) at their discretion.

————— END UPDATE ——————

At the end of February at Mobile World Congress, in conversation with TMN, NEC’s Head of Marketing for 5G Solutions David Cohen said that the vendor was finding the sales cycle longer than it had anticipated, and admitted the vendor still had few volume sales deals outside Japan.

There’s been a lot of activity, but nobody has really gone, OK we’re ready for thousands of sites, let’s do it, let’s move forward.

“After we successfully deployed 5G Open RAN in Japan, we put together a globalisation strategy to grow outside of Japan and to become a global player in the Open RAN business.We knew that it was an opportunity for NEC to use our scale, our history of innovation, and our positive brand equity to take on the incumbent vendors in the space – because the operators were expressing a desire for more choice and we had the technology and the scale to begin making that foray.

“But it’s not something that happens over night. That decision was made about five years ago and the early results in the first couple of years were quite positive, mainly in Europe. So we started doing work with Telefonica, Vodafone, Orange, Deutsche Telekom, 1&1. They continue to be active customers with us: we’ve been doing tests, things like [DT’s] O-RAN Town, Virgin Media O2 did a small test in their live network. There’s been there’s been a lot of activity, but nobody has really gone, OK we’re ready for thousands of sites, let’s do it, let’s move forward.”

Despite that, NEC was encouraged enough to extend its strategy beyond being an RU supplier, to develop its own CU-DU vRAN software. At MWC it announced it is using Qualcomm’s SoC to power a vDU that could be available in Q3 2023.

Cohen: “That kind of vote of confidence of being chosen as a part of nearly every Open RAN project that was happening over the past couple of years really emboldened us and led us to believe that there was a reasonable chance for success to drive beyond Europe into North America, Latin America as well.”

But Cohen admitted that there are headwinds.

Although the company was not selected as a supplier by DISH, Cohen said that NEC hopes to turn the New Jersey facility into another Centre of Excellence to do testing and integration of Open RAN solutions. And Cohen said, “We are currently talking obviously, to all of the American operators. We did not win the initial tender with Dish* but we continue talking to them. And, you know, we believe at some point, we’ll be part of that deployment as well.”

(* NEC has now clarified that it did not take part in the initial tender, but is in ongoing discussions for future deployments)

As for Telefonica, at MWC Cohen said that the original plan to have NEC as SI in Brazil, UK, Germany and Spain was “still the plan as far as I know, although their plans have changed – and they haven’t fully articulated what those plans are. But as far as I know we’re still working with them. Until I hear differently. That’s what I’m commanded to say.”

Since those comments, perhaps he has heard differently – at least with the UK part of Telefonica articulating its intention by choosing Mavenir as vRAN supplier and prime integrator.

There are still some successes. Via its Partner Rakuten Symphony, NEC has sold about 1,000 radios to German greenfield operator 1&1.

“Beyond that there have been proofs of concept with those European operators. But like you said, none of these, none of these go beyond 100 sites .We anticipated this type of slow roll; it’s a little bit slower than we anticipated. But we didn’t believe that these entities – who are largely building brownfield networks – were going to say, ‘Okay, let’s do it. And let’s do it now. You know, here’s my three billion dollars.'”

Despite that, the company is moving ahead developing its product line. Cohen said that the vDU is a sign that the company is being asked by its customers to develop more of its own end-to-end capability. Here, he claimed the “lull” in the market would in fact give NEC the chance to focus on product development.

“We are developing our own vRAN solution and we have started marketing its availability. The issue is now that the market has shown some willingness to hesitate – to put it in a politically correct way – so we’re taking advantage of this lull and redoubling our efforts to build a vRAN offering that is that is going to be – it’s going to be two years better in two years, let’s put it that way. It’s going to be more powerful, it’s going to be more energy efficient, it’s going to be lower latency, it’s going to support the RIC in a different way. So it’s going to be a better solution.”

As Cohen mentioned, the company is also going to develop a RIC and RIC apps that “will begin to be rolled out at some point in 2023.”.

NEC, with its deployments within NTT DoCoMo and Rakuten in the RAN and core, and its provision of a range of RUs, is still clearly a key player in the Open RAN ecosystem. In August 2022 it appointed industry veteran Alla Goldner to co-ordinate its standardisation activities across TIP, O-RAN Alliance, MEF and other SDOs. Goldner sits on the technical committe in TIP and oversaw an O-RAN Plugfest last year. Despite the company not providing official comment to TMN, the back channel line was that the company continues to work closely with the carrier.

In may ways, this is far from being a story only about NEC. Other carrier decisions – for any RAN vendors – are still some way off, as most of the major brownfield operators work their way through their existing 5G rollouts with “incumbent” vendors. Announcements to date have been at smaller or unspecified scale – or have included larger players such as Samsung (Verizon/Vodafone) and Nokia (DT) in the Open RAN mix. The European big 5 have all indicated that there won’t be volume Open RAN-compliant deployments until the second half of this decade.

For now, the industry as a whole continues, “until told otherwise.”