Can NVIDIA Boost Nokia's RAN Plan?

Nokia said this week that it will collaborate with NVIDIA on cloud-native radio access network (RAN) solutions that evolve to a virtualized “AI-RAN.”

The announcement highlights Nokia's intention to pair artificial intelligence (AI) with mobile networking as a means of accelerating more efficient and modern architecture. It also speaks to a general market demand by telcos for solutions that enable them to reduce operational costs while breaking out of the malaise in which their business services are often mired.

“This is an important collaboration with NVIDIA that will explore how artificial intelligence can play a transformative role in the future of our industry,” said Tommi Uitto, Nokia’s president of mobile networks, in the press release.

How Nokia Will Use NVIDIA

Specifically, Nokia plans to incorporate NVIDIA’s components in concert with its own anyRAN lineup of software, which is designed to let telcos implement traditional, hybrid, or cloud RAN environments using white-box hardware, other vendors' kit, or Nokia's AirScale base stations and AirFrame servers.

NVIDIA’s Grace CPU Superchip will be deployed for processing at the data link layer and above – fueling Nokia’s Open RAN distributed unit (DU) and centralized unit (CU) functions with NVIDIA’s top-of-the-line CPU designed for high performance and cloud computing. Nokia will also use NVIDIA graphics processing units (GPUs) to accelerate virtual RAN functions and to run AI applications within the RAN.

Notably, the Grace CPU Superchip, which is cited by Nokia, is distinct from NVIDIA’s GH200 Grace Hopper Superchip. The latter combines CPU and GPU for what NVIDIA calls “giant-scale AI and HPC.” It was not mentioned in Nokia’s announcement.

The Solution to the 5G Problem?

Nokia’s strategy with NVIDIA speaks to a major issue for today’s telcos, namely, how to make money from business 5G. The loss of business wireline access and wholesale business connections hasn’t always been balanced out by uptake of private 5G, which industry sources say may not pick up for another few quarters. Instead, telcos are drastically cutting back on business wireline, putting the emphasis on fiber and mobility, while reducing headcount and consolidating products in an effort to make ends meet.

AT&T, for instance, saw its Business Wireline revenue fall -7.3% for 2023 compared to the prior year, and the segment’s operating income fell -43.7%. Verizon saw Business Group revenues slide 3.6% year-over-year at the end of 2023. The group was devalued in Verizon’s accounting by $5.8 billion last year. And in Europe, Orange Business has discontinued about 150 products and services and eliminated roughly 650 jobs in France in an effort to improve the division’s financials, which showed flat growth in 2023.

Nokia itself has had a tough time of it, having lost a couple of key Open RAN contracts to Ericsson and Samsung. The company’s shares have plunged more than 24% over the past year. And on the company’s latest earnings call, CEO Pekka Lundmark stated:

“The fourth quarter [2023] saw a continuation of the trends we saw in the third quarter, with customers remaining cautious on spending due to the macro environment and as they work down inventories. This meant we saw sales decline 21% in the quarter primarily driven by Network Infrastructure and Mobile Networks which were both a bit weaker than we expected a quarter ago.”

Will Telcos Respond?

Can AI solve these problems? Can it generate more interest in 5G mobility? Will it accelerate adoption of Open RAN? On the face of it, it seems possible. AI can reduce the need for multiple vendors’ hardware and simplify implementation and management, leading to greater density of 5G installations – and more subscribers. AI could also add automation and better observability to the network, improving resiliency and security.

The question is whether the telcos will take this as an opportunity -- and whether they can afford the cost of doing so. Many of them are notoriously slow to change and often strategically cumbersome, even when it comes to advancing their own interests.

Also, everybody these days has a deal with NVIDIA. And if they can get Jensen Huang onstage with them, that’s a bonus. But it won’t guarantee success unless the implementation meets market demand. When it comes to the telcos, that remains a question.