Key Highlights
- AT&T Chooses Ericsson for ORAN Network: AT&T chooses Ericsson to build a new telecom network in the U.S., exclusively using ORAN technology, aiming to cover 70% of wireless traffic by late 2026
- Cost-Cutting with ORAN Technology: ORAN promises significant cost reductions for telecom operators by utilizing cloud-based software and equipment from various suppliers, breaking away from proprietary solutions from companies like Nokia and Huawei
- Strategic Shift Away from Nokia: Ericsson’s win in the ORAN deal positions it as AT&T’s largest supplier, gradually taking over Nokia’s share, causing an 8.7% drop in Nokia’s shares amid speculation of losing the AT&T contract
- Industry-Changing Move: AT&T’s commitment to Open RAN technology signals a significant shift in the industry, with the expectation that all new AT&T equipment will be Open RAN capable, influencing broader adoption
- Ericsson’s Open Interface Commitment: Ericsson’s agreement to open up proprietary interfaces across its footprint addresses a historic resistance by major telecom vendors, potentially paving the way for increased collaboration and innovation in the industry
AT&T Chooses Ericsson for Groundbreaking Open RAN Technology
On Monday, AT&T announced that it has selected Ericsson to build a new telecom network in the United States. This network will exclusively use ORAN technology and is expected to cover 70% of AT&T’s wireless traffic by late 2026. ORAN, which stands for open radio access network, is a technology that aims to reduce costs for telecom operators by utilizing cloud-based software and equipment from various suppliers, rather than relying on proprietary equipment from companies like Nokia, Ericsson, and Huawei.
While some telecom providers, such as Telefonica and Vodafone, have tested ORAN technology, widespread adoption has been slow among existing carriers. New networks by companies like Dish and Japan’s Rakuten are already using Open RAN. AT&T has been evaluating Open RAN for the past six months, considering proposals from multiple vendors. Chris Sambar, the president of AT&T Network, stated that all new equipment deployed by AT&T will be Open RAN capable.
Ericsson Wins AT&T Contract, Alters Industry Dynamics
The contract with Ericsson is expected to cost AT&T around $14 billion over the five-year term. Winning this deal will make Ericsson AT&T’s largest supplier, gradually taking over Nokia’s share. Nokia’s shares fell on Monday amid speculation that the company might lose the AT&T contract, similar to a setback it faced in 2020 when Samsung won a significant contract with Verizon.
Nokia acknowledged AT&T’s plans and anticipates a decline in revenue from AT&T in the mobile networks business over the next two to three years. Open RAN has faced challenges as major telecom vendors were initially hesitant to open up their proprietary interfaces. However, Ericsson has now agreed to open up these interfaces across its footprint.
AT&T expects fully integrated Open RAN sites to be operational in partnership with Ericsson and Fujitsu starting in 2024. By 2025, AT&T’s network will include equipment from multiple suppliers. This move is seen as a significant shift in the industry, according to Chris Sambar. Despite the exclusive deal with Ericsson, AT&T will still maintain contracts with other Open RAN vendors outside of this agreement.
Source: Morningstar
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