Managing mobile telecommunications networks is increasingly done by software, which it can be delivered from the cloud. The roll-out of 5G is a catalyst for so-called ‘telco cloud’, but the paradigm shift is a challenge that has the potential to disrupt the sector.
What is telco cloud?
Telco cloud describes the delivery of software-defined network management functions for telecommunications providers from the cloud, whether public or private.
Mobile telecommunications networks have undergone the same evolution in the past decade as enterprise IT infrastructure. First, network function virtualisation allowed telcos to abstract network management functionality from the underlying hardware.
Since then, software-defined networking has meant that sophisticated network management features can be supported on commodity hardware. That, in turn, has allowed mobile network management functions to move into the cloud.
The ongoing upgrade of mobile networks to the 5G standard is a catalyst for telco cloud. Some mobile operators are building private clouds, using infrastructure from market leaders VMware and Red Hat. Deutsche Telekom, for example, is building its 5G infrastructure on VMware Telco Cloud.
Others are partnering with public cloud providers to help them develop their 5G offerings. In January, for example, Norwegian telecommunications giant Telenor announced a new partnership with AWS. Last year, Telenet, Belgium’s third-largest telco, announced Google Cloud would be one of three vendors that would provide support for its 5G network, alongside telecommunications equipment makers Nokia and Ericsson.
Ahmad Latif Ali, associate vice-president for European telecommunications at IDC, expects more tie-ups such as these as the mobile telecommunications sector ramps up its 5G roll-out. Mobile telcos “want to extend infrastructure and services to match the market demand and expectations of 5G,” he explains.
“Cloud providers and hyperscalers are going to be key partners in this ecosystem to really enable the high bandwidth, low latency and high connection density of 5G.”
The challenges of telco cloud
These partnerships may not be straightforward, however. In a poll taken at last month’s Digital Services Provider Leaders Forum, 44% of telcos identified competition from hyperscalers as their principal challenge. Nearly as many cited ‘ill-defined services or cloud strategy’ as the chief barrier to building on their success.
Relationships between telecommunications companies and cloud providers are "complicated and still evolving," says Ali. “Most telcos are in the process of refining their network transformation strategies and roadmaps, while having to decide between using their own private network cloud solutions or working with the public cloud providers".
A small number of 'greenfield' telcos, who are building 5G services from scratch, are going all-in on cloud, Ali explains. Examples include DISH Wireless, a US satellite TV company that is building a cloud-native 5G network on the Open RAN standard. Incumbent telcos tend to be more conservative, Ali adds, with "pragmatic" providers falling somewhere in between.
Occasional cloud outages - such as AWS's three service disruptions last December - make some traditional telcos nervous about migrating to the public cloud, Ali says.
“While the outage was confined to AWS’s main US-East-1 region and mostly affected North American customers, there was a backlash from some European telcos who are sceptical about putting their core network functions into the public cloud exclusively."
Long-established companies may also struggle to adapt to the new 'cloud-native' approach to managing their networks, says Yesmean Luk, principal analyst at STL Partners, a London-based telecommunications consultancy.
"Cloud-native networking is not just an evolution of technology but it has to be combined with a new operating model, practices, skills and new way of working," she explains. "Many operators see the transformation of skills and operational models as a challenge and feel they lack the right capabilities, skills and resources to fully adopt a cloud-native approach."
Disrupting network equipment vendors
It is not just the telcos themselves that are wrestling with the 'telco cloud' paradigm shift. For network equipment vendors such as Nokia and Ericsson, the move to software-defined functionality delivered from the cloud is potentially even more challenging, as it requires a shift from a product-based business model to one based on services.
This is not a trivial change, as analyst company ABI Research explains in a report published this week. Selling network management as a service requires the same upfront investment in R&D, but returns are delivered incrementally. Nevertheless, this shift is underway: earlier this year, Nokia launched its first suite of software-as-a-service tools for telcos.
With 5G, the mobile telecommunications sector is trying to sell the world on a new technology paradigm. Perhaps ironically, the advent of 5G is catalysing a paradigm shift within the sector that many providers may not survive.
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