The introduction of functional splits in C-RANs brings a tradeoff between radio performance and transport capacity. Higher-layer splits relax transport capacity requirements, whereas radio performance is not guaranteed. Lower-layer splits are beneficial for the radio performance, but they may require a more expensive and high capacity transport network. Facing the challenge of how to deploy 5G RANs in the short-term future, network operators need to find the best functional split options able to accommodate radio performance requirements without incurring excessive transport network costs. This article presents an architecture referred to as F-RAN able to choose the most appropriate split option while considering time-varying radio performance and the availability of transport resources. F-RAN can accommodate these needs by means of an SDN-based orchestration layer and a programmable optical transport network. The performance of F-RAN is benchmarked against a conventional C-RAN architecture in terms of the number of wavelengths and transponders to be deployed. Simulation results confirm the overall benefits of F-RAN in terms of better utilization of transport resources.