An Economic Comparison of LTE RAN with 5G Cloud RAN

This study compares the total cost of ownership (TCO) of a traditional LTE RAN with a 5G cloud- native Open RAN (O-RAN) in regions consisting of dense urban, urban, suburban, and rural areas. The LTE RAN uses a physical RAN architecture consisting of radios, ASIC based BBUs, and backhaul routers located at the base station. The 5G O-RAN uses a virtualized cloud-native architecture consisting of radios, vCUs, vDUs, servers, and X-haul routers. In the 5G O-RAN analysis we also compare a distributed O-RAN where the CU/DU are located at the base station with a centralized O-RAN where the CU/DU are located in edge data centers. In all cases the 5G O-RAN uses cloud-native technology with orchestration and automation to reduce labor expenses.

Our results show that the cost per Gbps for 5G O-RAN is 8% of the cost of an LTE RAN in a typical region. This is because a 5G network in a region can carry 12 times more traffic than an LTE network in the same region. This allows the 5G network to provide higher network throughput to end users and support more mobile devices. These benefits are higher in dense urban and urban
areas. The reason for the cost benefits of 5G are:

• 5G radios can provide much higher peak data rates than LTE radios

• 5G O-RAN uses disaggregated cloud-native virtual infrastructure

Cloudification of the RAN provides cost savings because the disaggregated virtual cloud-native architecture allows for an ecosystem of vendors and technologies that will drive down the costs for radios, software, and other infrastructure while also reducing labor expenses through modern cloud orchestration and automation technologies. The 5G Open RAN architecture dramatically reduces the cost per Gbps of RAN communications as a result of these benefits. The 5G RAN is an extensive network and is the largest component of cost in a mobile network; 5G O-RAN spreads its cost savings over a substantial number of users and data.

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