Business Today
Loading...

Why telecom equipment market might get localised in 5G era?

Kosei Takiishi, Senior Director Analyst at Gartner says that telecom service providers might prefer local vendors in the future which will lead to each major country having its own set of local players

twitter-logoManu Kaushik | April 2, 2021 | Updated 17:56 IST
Why telecom equipment market might get localised in 5G era?
Experts say that a new trend is emerging which is going to make the telecom equipment market localised

Gone are the days when telecom equipment market was controlled by a handful of players like Ericsson, Nokia, Huawei, Samsung, ZTE, Cisco and NEC. For a long time, these proprietary vendors controlled over 80 per cent of the global telecom equipment markets. But things have changed in the past few years.

A bunch of players have entered the market providing specific solutions. For instance, companies like Mavenir, Altiostar, Parallel Wireless, and others provide software solutions. At the same time, hyperscalers like Amazon, Google, IBM and Microsoft have expanded their presence in this space by providing cloud, networking, and internet services. Finally, Rakuten, Reliance Jio, Tech Mahindra and others have emerged as system integrators who are joining hardware and software pieces together.

Experts say that a new trend is emerging which is going to make the telecom equipment market localised. Kosei Takiishi, Senior Director Analyst at Gartner says that telecom service providers might prefer local vendors in the future which will lead to each major country having its own set of local players. "There are initiatives being taken in Japan, Vietnam and India on these lines," he says.

There are primarily three reasons that are driving this change: ban on Huawei in various countries, the general pessimism around using foreign equipment due to national security concerns, and telecom networks getting virtualised which reduce the dependence on hardware.

"Huawei ban has had an impact on telcos. In India, Jio is using Samsung gears. Airtel and Vi have Chinese and European equipment. Lesser number of vendors is not good as telcos don't like oligopolistic situation. Each country would want to have local vendors because of the national security issue," says Takiishi.

Not just telecom, companies typically want to have more options so that they can choose the best from the lot. But with lack of clarity on Huawei in India, telcos are looking for other solutions. Both Jio and Airtel are betting on O-RAN (Open RAN) for 5G. But what's O-RAN? In layman's terms, O-RAN breaks down the network infrastructure into different layers (hardware, software, network integration), and gives option to companies like Jio to design their own network from scratch. O-RAN is also cost effective compared to traditional networks.

But there is already scepticism around O-RAN. For instance, Japanese telco Rakuten, which pioneered O-RAN, still doesn't have 5G commercial contracts with telcos. Jio, which claims to have developed in-house 5G solution, is yet to test its capabilities on a bigger scale.

"These are ambitious projects. It's a totally new area with no global examples. O-RAN does give hope to telcos to pursue their goal to have more freedom, but I feel that there are going to be huge challenges - like inter-operability which is to integrate new solutions with existing 2G/3G/4G systems," says a telecom analyst.

Also Read: Spectrum sold in the recent auction can be used to provide 5G: MoS telecom

Also Read: After just 38% sale in telecom auctions, 5G spectrum prices likely to be reduced

  • Print
  • COMMENT
BT-Story-Page-B.gif
A    A   A
close