During the past few years, architectures for cellular radio networks like 3rd Generation Partnership Project (3GPP) Long Term Evolution (LTE) have evolved towards flatter topologies with fewer centralized nodes, shifting more and more radio-related processing towards the base station or even further into so-called remote radio heads near the antennas. With Internet Protocol (IP) traffic growth, user traffic lost its predictability, which resulted in the need for the over-dimensioning of processing and forwarding resources in the radio path. This is especially true in upcoming picocell and femtocell configurations in heterogeneous cellular architectures. To hold down costs resulting from these emerging architectures and deployments, we developed a concept of a cloud base station. Developed as a candidate for a lightRadioTM evolution, this cloud base station leverages virtualization techniques such as dynamic and elastic allocation of baseband processing resources between small and large cell sites, as well as load balancing between temporarily overloaded sites and their less utilized neighbors. A cloud base station in a virtualized radio access network (RAN) can serve to ease a smooth standards migration towards LTE-Advanced with the same deployed equipment, and in the future, support the transformation of dedicated baseband hardware into general purpose processing platforms. In this paper, we discuss the tight networking requirements of a cloud base station in a virtual radio access network, architecture challenges, and our cloud management solutions. We also demonstrate research results on the concept, provide validation based on simulations, and discuss business case related implications. © 2013 Alcatel-Lucent.