[1/2]FILE PHOTO: The AT&T logo is displayed on a screen on the floor at the New York Stock Exchange (NYSE) in New York, US, September 18, 2019. REUTERS/Brendan McDiarmid/File Photo Obtaining licensing rights
STOCKHOLM (Reuters) – AT&T (TN) said on Monday it has selected Ericsson (ERICb.ST) to build a communications network using only so-called ORAN technology that will cover 70% of wireless traffic in the United States. By late 2026, marking a milestone for the new technology.
ORAN, or Open Radio Access Network, promises to significantly reduce costs for telecom operators because it uses cloud software and equipment from many suppliers rather than relying on proprietary equipment provided by companies such as Nokia (NOKIA.HE), Ericsson and Huawei (HWT. UL) that do not operate With each other.
While several telecom providers such as Telefonica (TEF.MC) and Vodafone (VOD.L) have tested the technology, mass adoption has been slow by incumbent carriers. New networks from Dish (DISH.O) and Japan’s Rakuten (4755.T) use Open RAN.
AT&T has been analyzing Open RAN for six months with a team of hundreds, and has looked at several vendors and requested proposals, one executive said.
“All of the new equipment we’ll be rolling out will be able to run Open RAN,” Chris Sambar, AT&T’s network president, told Reuters.
The company said AT&T’s spending could approach $14 billion over the five years of the contract with Ericsson.
The company said winning the Open RAN deal would make Ericsson the largest supplier to AT&T as it slowly takes over Nokia’s stake.
Nokia shares fell 8.7% in New York on Monday amid speculation that the company could lose the AT&T contract, analysts said. In 2020, Nokia suffered a setback when Samsung (005930.KS) won a $6.64 billion contract to supply 5G equipment to Verizon (VZ.N) in the United States.
Open RAN has faced difficulties as major telecom vendors have resisted opening their own interfaces to other companies due to fears of losing business.
Sambar said that Ericsson has now agreed to open these interfaces through its presence.
“You have to give them something they really want and in return, we’ll get something that not only AT&T wants, but the entire industry wants,” he said.
AT&T will still have contracts with other Open RAN vendors outside of this deal.
AT&T expects fully integrated Open RAN sites to operate in coordination with Ericsson and Fujitsu (6702.T), starting in 2024. In 2025, the company’s network will contain equipment from multiple suppliers.
“This is not a spinoff. We and our partner are 100% involved in this, so we think this will really change the industry,” Samper said.
Reporting by Subantha Mukherjee in Stockholm, Editing by Matthew Lewis
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