Cloud-RAN Architecture - An Overview
Cloud-RAN (Radio Access Network) is also known as centralized-RAN or C-RAN. It facilitates the expansion of mobile networks by addressing issues pertaining to their capacity and coverage. C-RAN reduces operational expenses and offers better network security. It also makes the network agile and flexible. Apart from these, Cloud-RAN also enables software control and management, and network self-configuration.
It does this through SDN - Software Defined Networking, and NVF - Network Functions Virtualization. China Mobile Communications Corporation was the initiator of Cloud-RAN network architecture. It introduced Cloud-RAN in April 2010 at its research institute. The company estimates total ownership costs to reduce by 30-60 percent due to the rising adoption of Cloud-RAN.
Growth Drivers
The Cloud-RAN market was worth USD 1.7 billion in 2013. It is expected to grow at a CAGR of 45.9% over the next five years. By 2018, the total market revenues will reach approximately USD 11.5 billion.
Network architectures that support efficient operations, reduced power consumption, agility, and reliability are indispensible to modern businesses. Cloud-RAN’s centralized processing greatly reduces the number of base station sites. Cloud-RAN architecture improves spectrum efficiency. Its load-balancing capability permits the efficient handling of non-uniform data traffic.
These advantages are contributing to the growth of the Cloud-RAN market. Rapid developments in telecommunications technology is also a critical market driver. The widespread use of tablets and smartphones all over the world coupled with high broadband penetration also proves favorable for the market. More than 88% of the North Americans living in urban areas uses either a smartphone, or a tablet, or both.
Increasing data traffic that generates the need for improved and more affordable communications network will fuel the market. Mobile data traffic in the world increased by more than 80% in 2013. By 2018, it is anticipated to surpass 15.8 exabytes - EBs per month.
Challenges
Although Cloud-RAN architecture offers considerable savings, it requires huge initial investments. This is expected to deter the Cloud-RAN market. Furthermore, its set-up is dependent on the availability of fiber. Only those players with ample fiber resources can execute Cloud-RAN architecture on a large scale. This is a key reason for the restriction of Cloud-RAN deployment in the fiber-rich Korean, Chinese, and Japanese companies.
To overcome this challenge, market players are targeting various substitutes offered by communications technology. These include wireless fronthaul, bi-directional fiber, and CPRI (Common Public Radio Interface) compression. Players lacking significant fiber footprints also resort to ‘local centralization.’ This involves centralizing neighbor base stations within a limited area that requires better performance triggered by huge data traffic.
Market Segmentation
Components
Components of the Cloud-RAN market include optical transport networks, remote radio units, servers, processors, baseband units, and test & measurement equipment. Optical transport networks consisting of Ethernet, microwave and fiber, will be an important component in the coming days.
Services
Cloud-RAN services comprise network services, systems integration, and custom services. Market participants assist in planning, deploying, maintaining, and enhancing these services.
Geography
The worldwide Cloud-RAN market can be divided into five regional segments. These entail Europe, Middle East & Africa, Asia Pacific, Latin America, and North America. Emerging economies of Asia Pacific will generate significant demand in the near future. The wireless industry in Asia Pacific is highly advanced. Moreover fiber in abundant supply coupled with dense population lends economic feasibility.
Competitive Profile
The eminent players in the Cloud-RAN market are Intel Corporation, Datang Mobile Communications Equipment Company Ltd., ZTE Corporation, Alcatel-Lucent S.A., and Nokia Siemens Networks (NSN). Agilent Technologies, Aricent Technologies, Ericsson, Huawei Technologies Co. Ltd., Hitachi Data Systems, IBM Corporation, Texas Instruments Inc., and Xilinx Inc., are the other key players.
The industry is characterized by consolidation through acquisitions, mergers, alliances, partnerships, and joint ventures. This is done with the intention of gaining market share and staying competitive. In 2013, Intel Corporation acquired the wireless assets business of Mindspeed Technologies Inc.. Through this acquisition, it aims to equip mobile devices with communication capabilities.
