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Could AWS have telco ambitions?

Could Amazon Web Services (AWS), the juggernaut of cloud platforms, become a telco? It has been expanding its role in supporting cloud services for customers in the telecoms and pay-TV world, as highlighted by recent announcements at the IBC (International Broadcasting Conference) event and its alliance with AT&T.

Amazon’s experiments with connectivity have been less publicized or wide-ranging than Google’s, and have been assumed, in general, to be geared to a possible connected consumer offering based around Alexa.

However, there are other motivations to take more direct control of connectivity, directly or via telco deals. The vulnerability that even mighty AWS has in the enterprise is that customers can use multiple clouds, and move easily between, for instance, AWS and Microsoft Azure. The constant factor in that is the telco, and AWS might well eye that link in the chain to strengthen its grip on an enterprise, even in a multi-cloud environment.

AWS and its parent have their fingers in so many links in the web, cloud and media chain now, that a telecoms play would be logical. Just this year, we have seen Amazon scoring over Google and Apple in the AI-enabled smart home with Alexa; launching the significant Greengrass technology to support edge-based IoT applications from its cloud; funding the AI-heavy smartphone venture by Android developer Andy Rubin (Amazon’s lack of mobile device success remains a challenge, especially with Google expanding its hardware efforts following the purchase of much of HTC).

And Amazon has been getting more interested in the connectivity that underpins the AWS cloud services, as well as the Amazon consumer offerings. Earlier this year, the company applied to the FCC for Special Temporary Authority to conduct tests using prototype equipment and spectrum frequencies including parts of the 700 MHz, 800 MHz and 1.9 GHz bands.

Back in 2013, it sent shivers down some providers’ spines when it was trialling TLPS (terrestrial low power service) with Globalstar. This would have run a private network, using WiFi-like technology, in the band adjacent to the 2.4 GHz spectrum. The plan foundered on FCC and mobile industry opposition, but it was an early indicator of Amazon’s desire to find a network which it could control without actually building it out single-handed. Had Globalstar succeeded, Amazon could have been an anchor tenant, with strong ability to drive the way the network was planned and deployed to suit its own applications.

A new version of that approach has been mooted in partnership with Dish. The satellite TV supplier has a strong portfolio of spectrum these days, but has still not launched its long-awaited cellular network (apart from plans to keep the FCC happy with an NB-IoT roll-out).

The thinking behind a tie-up with Amazon, according to reports which surfaced in July, is that the retailer would help fund the build-out of a network in Dish’s spectrum. For Amazon, that would bring it a mobile network which could be optimized for its own ends, from internal IoT usage to AWS services to supporting mobile Prime services. This would come at far lower cost than seeking its own spectrum, but with better control than an MVNO or WiFi approach. For Dish, the investment and the anchor tenant would make the economics work at last, and it could also launch mobile options to its TV customers in bundles, to make it more competitive with AT&T’s DirecTV and with cable providers.

One way in which such a venture could deliver more than the sum of its parts would be in the IoT. Dish already plans an NB-IoT roll-out, and while this looks largely designed to address FCC build-out demands associated with some of its spectrum, it could be expanded in scope to provide the first US network fully optimized for machine-to-machine purposes, rather than bolted onto a mobile broadband platform and business model.

The resulting network could be used by Amazon, as the anchor customer, for its own logistics purposes (it is an increasingly heavy user of wireless delivery and tracking, including drones); and to offer IoT services to enterprise AWS customers. AWS could layer new services onto a wireless network over which it had significant control. The recently launched AWS Greengrass edge cloud platform could be an effective way to address low latency IoT requirements, for instance, if integrated into the mobile network via ETSI MEC (Multi-Service Edge Computing).

AWS Greengrass was first unveiled in December. It provides edge computing capabilities for IoT applications over fixed or mobile connections (see Wireless Watch June 14 2017). AWS hopes to insert itself into the distributed content and IoT value chains at every point with Greengrass. The CTO of AWS, Werner Vogels, said: “With AWS Greengrass, we can begin to extend AWS into customer systems—from small devices to racks of servers—in a way that makes it easy to do the things locally that are best done locally, and to amplify those workloads with the cloud.” In some scenarios, this will be done best over a cellular connection – one Amazon could even bundle into the service, if it had cost-effective access to an optimized network.

Of course, Amazon does not need to acquire its own networks. It could deepen its alliance with key telcos in target markets, initially the US, where it has a close relationship with AT&T. Indeed, that alliance, announced a year ago, epitomizes the balance of power which strong telcos and cloud providers could achieve if they work together to harness one another’s strengths.

The companies agreed to integrate their respective networking and cloud capabilities, going well beyond existing work to connect devices to the cloud – they are initially seeking to optimize those links, but also preconfigure sensors and devices for efficiency in the Internet of Things (IoT), and work on overall platform security and threat management.

This seems to show AT&T acknowledging a reality which most carriers will have to do too – that they are not in a position to compete with Amazon AWS or IBM directly in offering cloud services. But they have highly valuable expertise in device connectivity and management, and in provisioning and monetizing large numbers of gadgets and consumers. So alliances like this one are sure to proliferate, though some telcos will be more successful than others in avoiding a bitpipe role in the cloud, and securing a significant role in the value chain when they join forces with Amazon, Microsoft or vertical market platforms like GE’s Industrial Internet Initiative (in which AT&T is also the primary carrier member).

Likewise, the public cloud majors still lack the ability to look deeply into the networks, so alliances with operators will hold significant value for them, especially in the Internet of Things with its vast numbers of connections and sensors.

Clients of either company gain an end-to-end view of the platforms, including data from applications which will sit in the AWS cloud. That app data will soon provide an additional input to AT&T’s threat intelligence system, Threat Intellect, widening the security perimeter and saving customers from having to bring their own security to the applications layer. Through its alliance with AWS, AT&T will provide app layer security as a managed or unmanaged service.

Mo Katibeh, SVP of Advanced Solutions at AT&T Business Solutions, told Light Reading:
“One of the things we hear a lot is ‘We need end-to-end visibility to what is happening to our ecosystem from a customer perspective, what is happening at the premise, what is happening in the network and what is happening in the cloud’.”

This was the latest in a string of telco-oriented partnerships for AWS, which was already working with Telstra in Australia and others. It is also likely to push Google towards a closer partnership with Verizon on the cloud side – the two firms have drawn nearer in a variety of areas recently and may join forces to counter the deal between their respective arch-rivals in the US.

Meanwhile, AWS is also increasing its influence over the video and TV operator market. It claimed the buzzword crown at IBC in Amsterdam last week – hardly a meeting went by without the mention of an AWS integration and the promising prospects its mega web infrastructure can help spin up as vendors strive for scalability.

Two years on since its takeover of encoding pioneer Elemental, the cloud giant is growing exponentially, at around 100% a year and gaining market share from Azure in the video space. For instance, US over-the-top video specialist Kaltura announced a joint cloud-based TV system with AWS at IBC, building on a long term partnership between the two. The aim is to deepen Kaltura’s focus on the migration of pay-TV to the cloud, helping its customers make the transition. It projects that cloud-based video will become the be-all and end-all of TV – noting that scalability is key.

The new live TV cloud offering combines the Kaltura TV Platform with AWS Elemental Live for transcoding, plus just-in-time packaging from AWS Elemental Delta with encryption and origin services. It allows operators big and small to launch a live TV service with cloud digital video recording and time-shift features, since AWS is known for handling substantial amounts of traffic. We’ve been promised customer announcements some time in Q4 this year, in the form of a large MENA sports firm and an APAC-based media group.

Falling cloud prices have naturally opened up a world of opportunity for firms to get the ball rolling, and AWS Elemental’s CMO Keith Wymbs noted in conversation with Wireless Watch’s sister service, Faultline, at IBC, that the company has slashed its prices 40 times in the past eight years. The industry is already at the point now where AWS Elemental is even processing 24/7 live transcoding in the cloud for broadcasters in Korea and of course for its parent company’s live video assets – a feat which most companies could simply not afford to do several years ago.

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