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The Edge

How Amazon, Microsoft and Google are courting – and challenging – telcos

The big three public cloud providers are investing in tools to help telecom operators handle 5G traffic at the network edge. And they also are hoping to create new business opportunities in 5G service delivery, private networking and the Internet of Things.

At the same time, telecom operators are increasingly looking at the cloud providers as a way to optimize their edge networks and make low-latency applications like virtual reality and multi-player gaming feasible.

However, don't expect telecom operators to put all their eggs into one public cloud basket. Analysts say that carriers are unlikely to sign an exclusive deal with one cloud provider and will most likely have agreements with two or three public cloud providers. "The telcos don't want exclusive deals. They want to give customers a choice and create competition. AWS, Google and Azure will all be in there," said Roy Chua, founder and principal of AvidThink, a research and consulting firm.

Chua added that wireless operators realize that the cloud providers are also competing with them, particularly in the enterprise area, which makes it unlikely that there will be any one cloud provider that will dominate in the telecom space.

Chua also said that operators are in the process of trying to figure out their cloud strategies. And he said that, while there have already been a few deals between operators and public cloud providers, there will likely be more in the coming months and years.

Microsoft moves to the edge
The overlap between the cloud companies and the telecom players became more evident recently with Microsoft's March acquisition of Affirmed Networks, which makes virtualized evolved packet core (vEPC) platforms to support 5G deployments, and its May acquisition of Metaswitch Networks, which makes a virtualized IP multimedia subsystem (vIMS) platform.

In addition, last March Microsoft announced Azure Edge Zones, which is the company's attempt to blend cloud computing with mobile networks to bolster edge computing for applications that require low latency.

At the time, Microsoft revealed that it had partnerships with several operators including AT&T, CenturyLink, Etisalat, SK Telecom and Vodafone. The company also said it will deploy standalone Azure Edge Zones in various cities in the next year.

Some in the industry viewed Microsoft's acquisitions of Affirmed and Metaswitch as an attempt to gain further adoption of its Azure public cloud and become a bigger threat to market leader Amazon Web Services (AWS).

AWS is the public cloud leader with 33% market share. Microsoft's Azure is No. 2 with about 18% share and Google is considered No. 3 in the public cloud space with a market share of about 8%, according to Synergy Research Group.

However, others saw Microsoft's acquisitions as a way for the company to make a play in private networking. "Using licensed and unlicensed spectrum (CBRS, in particular), bundling in security, the Office Apps and full private networking they can be a turnkey provider of not just a communications services, but key applications such as MS Office as well," said Chris Nicoll, principal analyst for wireless and networking with consulting firm ACG. "They could easily approach a university, or business campus, for example, with a secure, private network with links to the service provider mobile network."

Still others believe the Affirmed acquisition is a way for Microsoft to extend its IoT strategy and also become a connectivity provider. "In my view, the Microsoft/Affirmed acquisition will support Microsoft's burgeoning IoT strategy, which in turn underpins what is often considered to be the largest revenue opportunity for 5G," said Caroline Chappell, lead analyst with Analysys Mason's digital infrastructure strategies research program. She also agreed with Nicoll that Microsoft through its acquisition of Affirmed will become a "connectivity provider in its own right." In fact, she sees this as a way for Microsoft to compete with other IoT platforms such as Nokia's Worldwide IoT Network Grid (WING).

But Microsoft doesn't have a chokehold on the telecom space. For example, AT&T is partnering with both Microsoft and Google. Igal Elbaz, SVP of wireless technology at AT&T, said during a recent investor call that AT&T is working with both Microsoft Azure and Google Cloud to push its network closer to its customers to help with low-latency applications. Elbaz said that by working with these cloud companies AT&T can run third-party applications on the public cloud but also collocate them with AT&T's multi-access edge compute (MEC) network. "It is much easier for us to extend our wireless network into the enterprise," Elbaz said. "The data doesn't leave the premise and that provides benefits to the enterprise."

AWS brings the cloud to Verizon's edge
AT&T isn't the only operator that is working to bring cloud computing closer to the network edge. Last December Verizon announced that it was going to use Amazon Web Services' Wavelength edge computing platform to power low-latency applications on its 5G network.

AWS Wavelength embeds AWS cloud compute and storage services in telecom operators' data centers at the edge of their 5G networks. This makes it possible for application traffic to be able to reach servers in Wavelength without having to leave the mobile network, preventing latency that can develop when traffic has to make multiple hops to the Internet.

Speaking at an investor conference in December, Verizon's Adam Koeppe said the company was going to integrate AWS Wavelength at certain locations within its 5G network to allow developers to create low-latency applications running in 5G. Such applications could include smart cars, multiplayer gaming and virtual reality.

Verizon isn't the only telecom operator using Wavelength. AWS said it also is working with SK Telecom, KDDI and Vodafone Business.

Google Cloud's Anthos edge play
Like Microsoft and AWS, Google also has an edge cloud strategy. The cloud provider has created Global Mobile Edge Cloud, an open cloud platform that will provide network operators with a way to develop applications and also have a distributed edge. Google's operator partners include Vodafone, Wind TRE, Altice USA, AT&T and T-Systems.

In addition, the company recently introduced an open platform, called Anthos for Telecom, that is a cloud-native application platform that is intended to allow telecom companies to run their applications at the network edge.

Relying on the cloud
For mobile operators to deliver the low-latency services promised by 5G and edge computing, they have to build close partnerships with the public cloud providers. But cloud providers may well become competitors when it comes to providing enterprises with private networking options.

This will likely become a difficult balancing act for both wireless operators and public cloud providers in the coming months and years.

— Sue Marek, special to Light Reading. Follow her @suemarek.

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