Those who pay attention and follow the 5G space have probably noticed the phenomenon of Operators moving their infrastructure over to the cloud providers. This is a trend I called out a year or so ago – https://www.vamsitalkstech.com/5g/six-areas-where-hyperscalers-telcos-should-collaborate-in-2021/. 451 Research just released a report[1] on the same topic where they called out the prominent partnerships between Telcos and hyperscalers.
A Match made in 5G heaven?
Network Operators clearly have substantial assets – 4G/5G networks, immense geographical reach, customer engagement at the consumer level, domain expertise, radio expertise, and wide area networks. On the other hand, hyperscalers such as AWS have established internet-scale cloud platforms with exciting edge offerings as well as a host of up-the-stack services (ML, AI, BPM, IoT platforms, etc). While there exist opportunities for collaboration beyond the operator/vendor relationship, there will still be competition. First, a key lesson for operators from the time of 4G is that they shouldn’t just be in the business of building pipes but should also offer value-added services. The hyperscalers will be great partners here. Secondly, telcos and hyperscalers can partner in the B2B market offering services around private mobile networks. Telcos are very attractive partners to hyperscalers, and it is not uncommon to see operators partner with multiple cloud vendors. Expect to see much more revenue sharing, joint GTM, and marketing as 5G becomes reality in late 2021.[2]
AT&T and Microsoft
Though AWS has deep, lucrative relationships with America’s top wireless providers, each of its competitors offers a unique set of capabilities to its wireless partners. Verizon and AT&T, for example, have extensive relationships with Microsoft Azure and Google Cloud. In particular, AT&T entered into a partnership with Microsoft Azure in 2019 reportedly valued at over $2 billion. Two years later, they cemented that partnership with Microsoft by acquiring AT&T’s carrier-grade Network Cloud platform technology in a deal that moved the telecom operator’s 5G mobile network to Microsoft’s Azure for Operators cloud platform. AT&T’s 5G mobility core is fully cloud-based, integrating network functions from multiple vendors hosted on the Network Cloud platform technology. “Of the hyperscale operators, Microsoft has been boldest in its willingness to acquire core telecom network software and IP,” wrote 451’s Partridge in a research report.[1]
Google and the rest
Google Cloud Google developed the Google Distributed Cloud, which allows communications service providers to deploy Google infrastructure at the edge of their networks to deliver 5G and LTE services to business customers with the separation of workloads into microservices through a container management platform.
“With [Google Distributed Cloud], Google now has a direct answer to AWS Outposts and Azure Edge Stack, which will enhance their attractiveness for [communications service providers] seeking to bundle managed edge stack capabilities with private networks and services,” Partridge wrote.
International Business Machines Corp. has also supported cloud-based expansion at wireless companies. In 2021, Verizon chose IBM and Red Hat to help build and deploy an open hybrid cloud platform as the foundation of its 5G core to harness applications that can support advanced 5G use cases. T-Mobile used tools from IBM Cloud Pak to integrate two networks after its merger with Sprint in 2020.[1]
A Few Key Observations –
I will round off the report with a few observations –
- It is still early days for the 5G buildout in the industry. Expect the hyperscalers to start with the Public 5G side and then move over to the Private 5G side
- A given Telco will have (non-exclusive) relationships with multiple hyperscalers
- The nature and scale of these relationships will vary in the sense that some of these will be focused on 5G compute (Core and RAN) while others will focus on applications that run on top of them
- But notice that data sovereignty and national sovereignty mandates for 5G infrastructure will drive some of the Operator choices
- Operators are still seeking to form a unified strategy around multi-cloud
- As network slicing gathers steam, expect these partnerships to evolve beyond compute to areas such as DevOps, CI/CD, Serverless, and AI/ML
References
[1] https://www.spglobal.com/marketintelligence/en/news-insights/latest-news-headlines/the-cloudification-of-telcos-presents-major-opportunities-for-cloud-services-70975489
[2] https://www.vamsitalkstech.com/5g/six-areas-where-hyperscalers-telcos-should-collaborate-in-2021/
Featured Image by Michael Schwarzenberger from Pixabay