In a statement released on Monday, AT&T (T.N.) said it had selected Ericsson (ERICb. S.T.) to construct a telecom network covering seventy percent of its cellular traffic in the United States by the end of 2026. This decision represents a significant milestone for emerging technology.

ORAN, which stands for open radio access network, promises to significantly reduce costs for telecom operators instead of relying on proprietary equipment from businesses like Nokia (NOKIA.HE), Ericsson, and Huawei (HWT.UL), which do not communicate with one another. This is because ORAN uses cloud-based software and gear from various suppliers.

Even though several telecommunications companies, including Telefonica (TEF.MC) and Vodafone (VOD.L), have conducted tests on the technology, incumbent carriers have been sluggish to embrace it on a widespread scale. Using Open RAN are the new networks that Dish (DISH.O) and Rakuten (4755.T) of Japan have launched.

An official stated that AT&T has been analyzing Open RAN for over six months with a team of hundreds of people. Additionally, AT&T has investigated several different suppliers and requested offers.

Chris Sambar, the head of AT&T Network, stated to Reuters that all of the new equipment the company will release will be capable of operating in an Open Radio Access Network.

AT&T’s expenditures may potentially surpass $14 billion during the five-year period of the contract with Ericsson, according to the firm. As the firm progressively takes away Nokia’s market share, Ericsson will become the top supplier to AT&T if it successfully wins the Open RAN agreement, according to the company.

As a result of concerns that the business would lose the AT&T deal, Nokia shares dropped 8.7% in New York on Monday, according to analysts. Samsung (005930. K.S.) was awarded a contract worth $6.64 billion to sell 5G equipment to Verizon (VZ.N.) in the United States in 2020, another disappointment for Nokia.

On Tuesday, Nokia stated that it was aware of AT&T’s intentions and anticipated that its income from AT&T in the mobile network industry would decrease over the next two to three years.

“Nokia expects Mobile Networks to remain profitable over the coming years, but this decision would delay the timeline of achieving a double-digit operating margin by up to 2 years,” according to a statement from the company.

As a result of prominent telecom vendors’ reluctance to give up their proprietary interfaces for other businesses out of fear of losing revenue, open radio access networks (RAN) have been experiencing difficulties.

SambarSambar has reported that he has now consented to open up those APIs throughout its footprint. “You’ve got to give them something that they want, and in return, we are going to get something that not only AT&T wants, but the entire industry wants,” said the executive.

AT&T will continue to have contracts with other Open RAN suppliers not included in this transaction.

AT&T anticipates that 2024 fully integrated Open RAN sites will be operational, and they will work in conjunction with Ericsson and Fujitsu (0702). In the year 2025, the firm’s network will be equipped with equipment from various providers.

However, this is not a trial on a subscale. We and our partner are putting our whole support behind this endeavor, and as a result, we believe that this will bring about a significant shift in the industry,” Sambar stated.