On Monday (Dec. 4), AT&T announced its decision to award Swedish telecommunication company Ericsson a $14 billion contract to develop its open radio access network (RAN) infrastructure. The partnership was a loss for Nokia, which had also been pursuing the contract. Through the five-year deal, Ericsson will revamp AT&T’s 5G technology infrastructure in the U.S., while Nokia will lose a large part of its presence in the North American market.
AT&T CEO John Stankey explained his thinking behind the decision yesterday (Dec. 5) at the UBS Global Media & Communications Conference in New York City. “We stepped back and said, ‘How can we get to the most modernized network that gets the most amount of traffic across open—potentially open interfaces?’ And it was this path that we chose with Ericsson,” Stankey said.
Before the deal, Ericsson supplied two-thirds of AT&T’s U.S. network, and Nokia supplied the rest.
Nokia’s business, which many know for cellphone production, spans telecommunications. The company’s largest division is Nokia Networks, which supplies equipment for network solutions like broadband and data centers. Nokia is a part of the O-RAN alliance, which was founded in 2018 for companies involved in developing open RAN technology. It is also a member of the Open RAN Policy Coalition, which seeks to push policies that advance Open RAN development.
RAN is an access network that connects user devices like smartphones and computers to a cloud server. Open RAN breaks down the traditional RAN into smaller components that can be supplied by different vendors and also interact with each other. The contract with Ericsson to develop AT&T’s open RAN will allow AT&T to open itself to multiple vendor opportunities in the future instead of having to rely on just one.
AT&T chose Ericsson over Nokia, in part, to take advantage of a slowdown in the vendor market, according to Stankey. He said a “lull in the supply base” as well as an indecision on government policies around 6G provides an opportunity for the U.S. carrier to focus on becoming more efficient before the next big wave of investment starts.
Stankey did not rule out a partnership with Nokia down the road, saying he would like to see a diverse group of sellers work with AT&T when the majority of the infrastructure is built out by 2026 and there’s more availability for vendors.
“Nokia could be one of those suppliers of that more diverse vendor base that we ultimately start working toward,” Stankey said. “We’d obviously like to see multiple players there.”