Should the feds tie $9B in 5G subsidies to open RAN?

A brewing debate at the FCC centers on whether open RAN technologies should receive an extra boost as part of the agency's efforts to push up to $9 billion in subsidies for 5G networks in rural areas.

Unsurprisingly, the Open RAN Policy Coalition (ORPC) lobbying association thinks so.

"ORPC members believe that open RAN solutions are currently viable possibilities for many deployment scenarios that could be supported by the 5G Fund," the Open RAN Policy Coalition wrote of its recent meeting with some FCC officials. The FCC continues to consider the contours of the 5G Fund, which promises to release up to $9 billion in subsidies to encourage network operators to build and operate 5G networks in rural parts of the US.

Interestingly, the Open RAN Policy Coalition acknowledged that the FCC does not want to place open RAN requirements on the fund. "With these commission priorities in mind, we discussed several possibilities for postauction incentives that would promote opportunities for open RAN deployment through opportunities that would be available for all winning bidders."

The FCC will likely distribute 5G Fund money in a reverse auction, where the lowest bidder for a particular deployment receives fund subsidies.

The ORPC urged the FCC to instead consider other options to promote open RAN without putting up-front requirements on companies interested in participating in the 5G Fund. Specifically, the association suggested that the FCC offer additional cash to companies that select open RAN equipment, that it offer more flexibility in its buildout requirements to open RAN proponents, and that it offer "technical assistance and lessons learned" on open RAN deployments.

"We believe that post-auction incentives such as these will provide winning bidders meaningful opportunities to choose open RAN solutions for their deployments, thereby advancing the commission's core goals for the 5G Fund and promoting advances in open RAN at the same time," the association wrote.

Putting open RAN into the 5G Fund

The FCC last year opened a proceeding to discuss how to allocate the $9 billion in the 5G Fund to network operators in rural areas in the US. One of the agency's questions: How might it promote open RAN technology through the fund?

Some companies argued the FCC should not place strict open RAN requirements on the 5G Fund. "While AT&T is generally supportive of Open RAN, it should not be a requirement imposed on 5G Fund recipients," AT&T wrote to the FCC last year.

Others generally agreed. "RWA supports encouraging deployment of open RAN through the 5G Fund, but it believes that there are viable alternatives that would allow the commission to incentivize open RAN deployment without mandating use of such equipment for all 5G Fund recipients," wrote the Rural Wireless Association (RWA) last year. The group represents many of the smaller wireless network operators in the US. "Incentives such as auction bidding credits or extensions of service milestone timelines are equitable ways to incentivize use of open RAN deployment, which should effectively promote competition in the marketplace and thus lower costs for 5G Fund recipients."

Perhaps not surprisingly, open RAN network operator Dish Network urged policymakers to promote the technology in the 5G Fund. "Dish ... encouraged the commission to give greater weight to prospective 5G Fund participants that utilize open RAN in 5G Fund deployments," the company wrote earlier this year. "By doing so, not only can the commission ensure that federal funds are being used to close the digital divide, but it can facilitate deployments that will connect communities well into the future."

To be clear though, several other topics generated far more commentary. For example, a number of companies debated the speeds that the FCC should require 5G Fund recipients to provide, including 35 Mbit/s download speeds and 5 Mbit/s upload speeds.

Further, a number of companies urged the FCC to tie the 5G Fund into the NTIA's massive $42.5 billion Broadband Equity Access and Deployment (BEAD) project, which is primarily funding fiber networks.

"We believe the prudent course is to allow all of the BEAD funding decisions to be made before 5G Fund allocations take place," UScellular CEO Laurent Therivel said earlier this year during his company's quarterly conference call.

The ongoing open RAN push

Top officials in Washington have long hyped open RAN as a "Huawei killer." Their argument basically centers on the notion that open RAN technology can help foster domestic 5G suppliers in a counter to the rise of China's telecom equipment giant.

A wide range of policy efforts in the US have emerged from this belief. For example, the FCC previously attempted to encourage companies in its Huawei "rip and replace" program to purchase open RAN-capable equipment. However, most do not appear to have done so.

Separately, the NTIA continues to issue grants through its $1.5 billion Public Wireless Supply Chain Innovation Fund. The fund is specifically intended to foster the open RAN market in the US and elsewhere.

And on the international stage, the US Trade and Development Agency (USTDA), the US Agency for International Development (USAID) and others have been funneling millions of dollars into countries like Brazil, Indonesia, Nigeria, Malaysia, Thailand, Vietnam, Peru and the Democratic Republic of Congo to support open RAN products and services. And President Biden himself has discussed open RAN with leaders from India, Saudi Arabia and elsewhere.

Further, in recent months big US network operators have been making more noise on the open RAN topic. For example, AT&T in December inked a massive $14 billion agreement with Ericsson, and boasted that the deal would put the company on the path toward open RAN. And Verizon in January said it now has 130,000 radios in its network capable of using open RAN specifications.

Nonetheless, most industry watchers still see open RAN as a relatively small part of the broader wireless marketplace. "Single-vendor open RAN is expected to drive the lion's share of the open RAN market. Multi-vendor open RAN is projected to account for 5% to 10% of total RAN revenues by 2028," according to Dell'Oro Group.