Cloud-RAN was supposed to be in our present, not our mobile future. But carriers have been slow to adopt small cell HetNets and appear to be slow to adopt cloud-RAN even though it is clearly superior to the higher-cost and more fragile networks built by the carriers themselves. Carriers' radio access network designers have been toying with the C-RAN concept for the last couple of years. Also known as central-RAN, cloud-RAN has spawned multiple startups and drawn the strong interest of the venture community.  Potentially, mobile carriers could be delivering most of their 4G and future 5G from cloud-RAN radios.

So just what is cloud-RAN? It is simple, and complicated, at the same time. The simple: Cloud-RAN is a neutral, small cell mobile LTE (News - Alert) base station network.  A neutral provider deploys both LTE eNodeB small cell radios and backhaul (also called front haul) for the small cells and leases use of the small cells to various competing carriers. The fiber backhaul delivers the radio signals to a data center where the competing carriers meet the C-RAN provider. The complicated: Each carrier controls a software controlled antenna and radio using software and chips in the same small cell. The model eliminates the need for carriers to spend billions building out their own small cell networks.

For cloud-RAN, think of a network of small cells but similar in cost to Wi-Fi networks. The cloud-RAN will have Wi-Fi-like network deployment, standard commercial servers, low capital costs, and low operating expenses all the while delivering LTE service far superior than a macro-cell today. There could be hundreds of small cells in a single square mile. Cloud-RAN will be the replacement for distributed antenna systems. We will start to see cloud-RAN deployments in stadiums, campuses, and buildings. For example, rather than a single mobile carrier building DAS in a large office building to make sure that the hedge fund (possibly trading the carrier's stock) on the 28th floor has good service, a neutral provider will deliver a cloud-RAN cell to the 28th floor connected with fiber back to a data center, allowing all carriers to deliver quality cell service in the building. 

Carriers have complained that with other neutral DAS systems or small cells networks, that the carrier loses control over the RAN operation because the carrier does not control the small cell. With cloud-RAN, the carrier can operate the deployed system’s antenna and radio. Control allows each carrier to select its own unique spectrum, power, and antenna direction and sizing using software. Carriers can use cloud-RAN to make more efficient use of spectrum and to flex based on user demands. This functionality of separating the control of the radio parts using software from another location is called network functions virtualization. At the same time, other carriers can also use the same cloud-RAN equipment, which lowers build out capital expense, time to deliver the network, and most significantly operating expenses such as power, leases, and backhaul. 

What this means is that mobile carriers are very close to being disconnected from their own, exclusive RAN macro-cell networks. The future values for mobile carriers will be based on owning clean, well-propagating spectrum and marketing superiority, and not on outside plant assets. Neutral network builders will deliver quality and spectrum use efficiency at the endpoint; in this case the endpoint is a low-cost eNodeB radio near the user. 

But mobile carriers will be giving up control of the hardware and backhaul networks, something they value for both network quality and possibly competitive exclusivity. If the cloud-RAN neutral networks can lower the mobile carrier’s network build out cost and total cost of ownership by significant multiples, then cloud-RAN could enable new mobile carrier entrants into the market that will use less valuable spectrum or even unlicensed spectrum. All carriers will be using the same outside cloud-RAN radio networks, giving the new entrants a foot in the door for competition that is not available today.

There are many equipment players in the space, including the long-term small cell providers like Airvana (News - Alert), recently purchased by CommScope, and new entrants like Boston-based Altiostar Networks. Altiostar has received $150 million in funding from investors including Cisco (News - Alert). 

The bottom line is that cloud-RAN networks may significantly alter our mobile landscape both in terms of dramatically increasing quality and throughput of service, which we end users continue to experience as the No. 1 mobile service problem, and in lowering the capital cost hurdles for new mobile competitors.  For example, we may see in the future FirstNet, now fully funded by the AWS-3 $45 billion FCC (News - Alert) auction, being designed with cloud-RAN.