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March 13, 2023
A funny thing happened during the pandemic: The giant cloud hyperscalers burst into the telecom industry.
And now it's time for everyone to get acquainted with them.
Why? Well, it seems increasingly inevitable that a certain percentage – ranging from "a little" to "most" – of telecom operators' network functions are going to run in some kind of cloud. Of course, that's not necessarily a surprise: Operators and vendors have been working for more than a decade to replace proprietary boxes of hardware with virtualized bits of software that can run on top of regular, standardized computers. This shift has paved the way for network operators to at least consider the possibility of putting those little virtualized bits of software ("network functions" if you want to get formal) into a cloud computing environment.
But exactly what kind of cloud should operators use? Many have already built their own, mainly as a way to take advantage of the cost savings and flexibility involved in the shift to network function virtualization and software-defined networking.
Now, though, they're facing the difficult and potentially expensive task of maintaining and expanding their cloud as network traffic rises. Meanwhile, telecom operators' revenues have mostly flatlined.
And that's why Google Cloud, Microsoft and Amazon Web Services (AWS) have suddenly and loudly entered the telecom industry. They promise the savings and scalability of a cloud managed by a third party that's shared among thousands of other enterprise customers.
The recent MWC trade show in Barcelona, Spain – the first such international telecom gathering since the COVID-19 pandemic started – was the big coming out party for these giant cloud computing vendors. Google Cloud, for example, had never attended MWC before.
Cloud traits and attributes
Dennis Hoffman, the head of Dell's Telecom Systems Business (TBS), explained that each of the big hyperscalers is approaching the telecom cloud market from its unique position of corporate strength. Google, for example, is a company designed around mining digital data and analytics, whether that's searchable Internet content or precisely targeted advertisements. That's why one of the company's big MWC announcements was its "Telecom Subscriber Insights" product. According to Google Cloud, it "helps CSPs [communication service providers] extract insights using their own existing data sources in a privacy-safe manner."
Gabriele Di Piazza, an executive with Google Cloud, explained that the company's new Insights product essentially combines all of Google's customer-analytics data – from Internet searching, Android phones and elsewhere – with an operator's own trove of customer information. The result allows operators to blast "contextual and hyper-personalized offers" to their customers.
It's a product that's uniquely Google – AWS and Microsoft don't really specialize in those kinds of targeted and personalized ads.
Figure 1: (Source: Unsplash)
Instead, explained Dell's Hoffman, AWS and Microsoft are leveraging their own respective corporate strengths in their pursuit of the telecom cloud.
In the case of AWS, he pointed out that it's the cloud computing offshoot of e-commerce giant Amazon. As a result, AWS is looking to lower operators' costs while taking a tiny cut of each cloud computing transaction. That's the basis of its retail-focused sales pitch in the telecom industry.
Microsoft, meanwhile, hails from the world of corporate platforms and applications, whether that's Windows 11 or Outlook or Teams. Thus, it's selling its Azure for Operators as a computing platform, complete with the core network functions that Microsoft acquired from Affirmed Networks and Metaswitch Networks.
To be clear, Google, Microsoft and AWS aren't network operators' only options. For example, Verizon has made it clear that it plans to keep most of its network functions inside its own cloud environment. "I strongly believe that large telcos should own their own destiny – so, for example, I will never be putting our core network on a hyperscaler," Verizon's Sowmyanarayan Sampath said last year. Sampath was recently named the CEO of Verizon's consumer unit, the company's biggest.
And Neville Ray, T-Mobile's outgoing networking chief, said at the recent MWC show that he has a similar attitude.
Matt Beal, senior VP of software development for Oracle Communications, argued that there's a middle ground. Indeed, Oracle is one of the leading cloud computing vendors in telecom, which Beal attributed to the company's fluid and flexible cloud strategy.
"We believe fundamentally in multicloud," he said. That position represents a clear response to operators' fears of getting locked into a single cloud provider's environment.
Like many of the cloud proponents in the telecom industry, Beal sports an extensive resume among network operators, with leadership positions at the likes of Vodafone, CenturyLink and BT. That's no surprise: Beal "speaks telecom," thus making him a suitable cloud salesman for operator executives wary of the shift to the cloud.
As for Oracle's own cloud sales pitch, Beal said the company has a long history in the telecom industry, stretching back to its acquisition of Tekelec more than a decade ago. As a result, he said Oracle has a deep understanding of operator needs, including in the cloud computing space. He added that the company doesn't levy extra fees on operators that move their data outside of the Oracle cloud. Finally, he said the company manages cloud operations in dozens of regions around the world, which is critical for telecom network operators looking for cloud options that are geographically close to their coverage areas.
Beal said Oracle is making progress in its efforts to convince telecom operators to run their network functions in the company's cloud. The latest: AT&T Mexico is moving its OSS/BSS workloads, analytics and databases into Oracle in that country.
The role of the edge
Any discussion of cloud in telecom often transitions into a discussion about the edge. That's because there's a looming fear among network operators that they'll become increasingly irrelevant as they shift more and more operations into the cloud. After all, if the network runs in the cloud, what's to stop a Google or a Microsoft from simply offering its own cloud-based networking services?
According to Tom Craig, a top executive at computing vendor HPE, that's why the edge is so important. Operators must maintain control over the edge of their networks to make sure they play a leading role in the telecom industry of the future. Dell's Hoffman agreed.
Such control would primarily involve ensuring that traffic generated in one location is properly routed to the nearest computing resource. That kind of setup requires an operator to correctly route that traffic, and a participating cloud computing provider to be ready to receive it.
But the network "edge" remains more of a concept than an actual opportunity. That's because it involves the deployment of cloud computing equipment in potentially thousands of locations across an operator's network, like at the base of every single cell tower. Such a deployment would allow an operator to offer lightning-fast, hyper-responsive applications – think real-time augmented reality (AR) – but so far there are no wide-scale applications that demand that kind of performance.
Some believe that those kinds of applications are coming and operators need to be ready. "The emergence of multiple, scaled deployments of a cloud-native telco edge by operators indicates 2023 may be the year that the telco edge reaches escape velocity," wrote the analysts at STL Partners. They pointed to operators like Dish Network in the US and Rakuten Mobile in Japan, which are building cloud-based networks that could address the edge opportunity.
Others, though, remain skeptical. "We don't doubt that edge computing is a real trend," wrote the financial analysts at MoffettNathanson in a 2021 report. "Instead, our suspicion is that most edge computing needs can likely be met with regional deployments in locations like traditional data centers rather than deployments at the base of a cell tower."
It's worth noting that, earlier this year, Verizon executives admitted that the company miscalculated the edge opportunity.
Broad demand for edge computing is "still probably three, four years out," agreed American Tower CEO Tom Bartlett at a recent investor event. His comments are noteworthy considering that his cell tower company recently purchased data center giant CoreSite in a $10.1 billion deal.
Leveraging the cloud in pursuit of the enterprise
"There's a lot of belief that 5G is the enterprise G," said Hoffman, the Dell executive. He explained that a cloud-native telecom network can quickly and easily respond to the wants and needs of an enterprise customer.
Hoffman isn't alone. Dish Chairman Charlie Ergen, for example, said last month that "our network is designed for enterprise." And that's critical considering that a large portion of Dish's corporate growth is contingent on the company selling flexible 5G connections to enterprise customers.
In pursuit of that enterprise goal, Dish has already published a handful of application programming interfaces (APIs) into its network that promise to give enterprise developers never-before-seen control over their wireless connections. And Dish isn't the only 5G provider keen to do so. At the recent MWC trade show, operators all over the world pledged to publish their own APIs for similar services.
Not surprisingly, the big hyperscalers loudly support the concept of these "network" APIs. During the MWC show, Ishwar Parulkar of AWS said augmented and virtual reality services would need a mixture of AWS' cloud APIs and operators' network APIs.
And therein lies the future. After all, lightweight AR glasses from Apple or another vendor won't be able to display real-time data without clear partnerships among the cloud computing vendors storing that data and the network operators transmitting that data.
The only real question is how the resulting revenues might be split. If history is any indication, most of the profits will escape the network operators.
Editorial Director, 5G & Mobile Strategies, Light Reading
Based in Denver, Mike has covered the wireless industry as a journalist for almost two decades, first at RCR Wireless News and then at FierceWireless and recalls once writing a story about the transition from black and white to color screens on cell phones.
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