Telefónica's LatAm plans for open RAN and infrastructure sharing

Spain’s Telefónica is committed to an open telecommunications networks model, which includes infrastructure sharing and open RAN and is increasingly popular in Latin America.

Work on this approach has started in Mexico, where it has an agreement with AT&T for network usage, and in Peru, where, together with CAF, IDB and Facebook, it formed a joint venture to create a wholesale operator in rural areas. In addition, Telefónica recently launched an alliance with KKR to operate its Chilean fiber optics network. A similar alliance is in operation in Colombia.

In Argentina, it has an alliance with Sion to use installed infrastructure and migrate users that still rely on copper cables.

At the technological level, Telefónica has a series of open RAN open technology tests underway and announced new pilots in its strategic markets Brazil, Spain, Germany and the UK for 2022.

However, commercial deployment of the technology is not expected before 2023.

BNamericas spoke with Andrea Folgueiras, CTO of Telefónica Hispanoamérica to gain insights into the company’s regional open RAN plans.

BNamericas: How are you using open RAN?

Folgueiras: This is a path that takes time and work. It is something that we are promoting with several operators because we felt the need for a new model and costs that adapt to our time. It is the first time that operators are promoting an open hardware architecture, open software and open and interoperable interfaces.

As Telefónica we have been developing pilots in all countries, including Latin America. One of them is in Argentina, which is a pilot that has real traffic and that involves an overlay of a 4G band.

This is for learning and ensuring that a bunch of separate pieces will work. In telecommunications, we cannot afford to take the platform or the networks down for maintenance.

BNamericas: Telefónica has just announced tests with NEC. What did that involve?

Folgueiras: Yes, what Telefónica announced is one more step to carry out tests during 2022 in Brazil and Europe. But we in Latin America are not going to participate, we have another vision and other priorities. We are moving toward 5G. We won a band in Chile and we are deploying the traditional method.

I would love to be able to massively deploy 5G or 4G with open RAN but I think the conditions are not fully [in place].

But since we are part of the group, we are going to benefit from everything that Telefónica is doing in international standardization organizations and from tests in other countries as well. The group is thinking that in 2023 or 2024, we can start the first open RAN deployments.

But of course, there are still a lot of things that have to be tested and a lot of interoperability tests have to be done. For this reason, Telefónica also chooses a partner, which in this case was NEC, to simplify and have a single interlocutor.

What we are looking for is that, when we do the deployments, they can be done just as quickly as what we have been doing.

BNamericas: What use cases do you see for open RAN?

Folgueiras: One change open RAN brings is that the distribution of costs is not the same as before.

Although this may change, I do not see that technology is for limited or very small deployments because there are elements that justify using them to their full potential. There are pieces that are designed for large capacities. So for small solutions, like private networks, it can be more expensive and less efficient.

BNamericas: What about the shift from a capex to an opex model that open RAN will bring?

Folgueiras: I think it's really about becoming independent of restrictions and ties when buying software and hardware because today the interfaces are not open.

Now, if we go to the discussion of investment models, we believe in alternative models, such as the sharing of open networks as we have just done in Chile and which we have also announced in Colombia.

With the margins that we have today, and more so in Latin America, we have to open our minds and think that it makes no more sense for each of us to have individual deployment.

BNamericas: Do you see sharing to become common also for mobile lines?

Folgueiras: What I believe is that deploying three or four networks in each country does not make any sense. It is proven that there are enormous efficiencies when you join mobile networks, either by sharing agreements or by the sale of some company.

We have a concrete example in Mexico where we no longer have a mobile access network and we are using the AT&T network.

BNamericas: Are operators interested in sharing more infrastructure?

Folgueiras: I am not going to speak for other operators but it is true that you need two parties for these agreements. Technically, you have to change business models and organizational culture. It is a job that requires a lot of time and patience because you need to find two wills that pull the same side.

At Telefónica we are at the forefront and convinced of what we want to do and working to make it happen. We have been giving very concrete examples with the mobile agreement in Mexico and the fiber agreements in Chile and Colombia, and I’m telling you that we are going to continue on that path.