A December 2021 report from STL Partners found that telecom operators view hyperscale cloud providers in three ways: Partners, threats and models. Business partners, because they can “drive new areas of demand and provide infrastructure-as-a-service for operators’ IT and operational payloads.” Threats, because they commoditize operators’ core business through over-the-top and so-called “under the network” services. And models, because operators want to learn from and adopt hyperscalers’ technology innovation and their business and operational models.
“The value of networks has shifted from the networks themselves to the services that run over them,” said Yesmean Luk, telco cloud practice lead at STL Partners and author of the report. “We are seeing that through the incredible business growth of cloud providers and the huge breadth of cloud-based services and applications that are being rolled out. As operators evolve to more advanced data-intensive connectivity services such as 5G and fiber to the home, they will benefit from the growing demand for capacity and throughput but as their capabilities grow, they will need to manage costs in a more sustainable and optimal way. A cloud-like architecture has been proven to support that and enable new revenue streams from expanded service offerings and the agility to address these. Hyperscale providers serve as the model.”
Operators aren’t going to beat hyperscalers at their own game, so their attitude appears to be “if you can’t beat ‘em, join ‘em.” Let’s run through a few of the notable deals that telecom companies have struck with hyperscalers.
-Verizon is launching some of its 5G markets in conjunction with availability of AWS Wavelength locations to enable very low-latency applications such as real-time medical imaging. Recently, the carrier announced a proof-of-concept trial with Bloomberg Media, Zixi and AWS to enable 4K content streaming via 5G, without the use of satellites.
-AT&T is running “edge zones” with Microsoft Azure, and is also working with Google Cloud to develop 5G and edge capabilities targeting enterprise customers. “5G, cloud services and edge compute each have a tremendous amount of promise as standalone technologies,” says Jason Leigh, research manager for 5G and mobile services research at IDC, in a statement on the Google Cloud/AT&T deal. “But coupling these three as complementary, enabling technologies both accelerates and extends the promise of digital transformation in many more business settings.”
AT&T actually sold its Network Cloud to Microsoft Azure in 2021, after building up its development as part of the carrier’s pioneering work to virtualize its network. In an update on the AT&T Network Cloud acquisition in a January 2022 blog post, Shawn Hakl, Azure for Operators’ VP of 5G strategy, said that the partnership was novel in three ways: “This is the first time that a tier-one operator has embraced commercial hybrid cloud technology to run mobility network workloads that support their existing consumer base,” Hakl wrote. “The second aspect that’s unique is that the effort is entirely focused on the mobility core network versus go-to-market collaborations at the edge. And third, the arrangement is multi-vendor.” He wrote that Microsoft’s hybrid cloud technology supports an AT&T mobile core network that “spans more than 60 cloud-native network functions (CNFs) and virtual network functions (VNFs) from 15 different vendors.”
-Operators are also leaning on cloud providers to support their own digital transformation efforts. BT announced earlier this month that it would work with Google Cloud as a strategic partner on driving the use of AI and analytics across its business. In a Google Cloud case study of its work with Telefónica, the operator was able to “simultaneously double [its] analytical capabilities and lower its infrastructure costs” in eight months. Read that case study here.
-In March of last year, Nokia announced deals with the three major cloud providers — Microsoft, AWS and Google Cloud. With Google Cloud, the NEM focused on developing solutions combining its integrated RAN, Open RAN, vRAN and edge products with Google’s edge and application ecosystem, including its Anthos edge platform. With AWS, Nokia focused on cloud RAN proofs-of-concept and how to use AWS to support 5G deployments and put together new use cases. The partnership with Microsoft Azure focused more explicitly on enterprise, primarily around developing private 4G and 5G private network use cases to “drive end-user business outcomes.”
“The power of 5G, IoT, and real-time AI will unlock new and innovative services for enterprises across the world to accelerate their transformation toward Industry 4.0 as they evolve and adopt diverse new business models,” wrote Tad Brockway, corporate VP of Microsoft Azure for Operators, in a blog post when the company announced Azure private edge compute last year. “The partnerships created by operators, managed solution providers (MSPs), and cloud solution providers (CSPs) will be at the center of this transformation.”
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