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13 September 2021

Germany and Italy plan national clouds, but cannot avoid US technology

European governments are very interested in the idea of national clouds that would support data sovereignty and privacy, guard against cyberattacks, and exclude Chinese technology.

The national telcos are obvious partners in establishing such platforms, especially as they are themselves considering whether to invest in their own cloud infrastructure to support virtualized networks. That would give them greater control over their networks than a public cloud strategy like that of US operators AT&T or Dish. It would also enable them to monetize the cloud as well as supporting their own network functions. However, it would represent a major investment, and would place them in direct competition with the hyperscalers.

One often discussed option is for several European groups to co-invest, to achieve economies of scale and regional reach – there is speculation that the same operators that participated in the ‘Gang of Five’ memorandum of understanding to support Open RAN could invest in a jointly owned cloud (they are Orange, Telecom Italia, Vodafone, Telefónica and Deutsche Telekom). Another option, of course, is to work with the US hyperscalers, but under conditions that would enable the national governments to dictate terms on key issues like data location and protection.

Orange has already unveiled a ‘trusted cloud’ in France, though this relies on Microsoft Azure technology. Now there are reports of national cloud projects in Italy and Germany also.

Telecom Italia is working with three partners –  defence and aerospace group Leonardo, state-owned IT firm Sogei, and investment bank Cassa Depositi e Prestiti – to prepare a bid to create a national cloud hub in Italy. The government recently said it planned to spend €900m ($1.0bn) to create the cloud hub, called Polo Strategico Nazionale, as part of its post-pandemic national recovery plan and in a bid to make Italy more cybersecure, and less reliant on the technology of global hi-tech firms.

This is not all about China and allegations of malware embedded into core technologies. The European governments are also concerned about the USA’s 2018 Cloud Act, which says Washington can require US-based firms to send data, even if it is stored overseas, to the US government.

However, governments are aware that US giants are far ahead of European players in their advanced technology and their ability to invest at scale and provide attractive pricing and services to enterprises. So there is almost certain to be cooperation with the hyperscalers on the technology front, as long as data ownership is retained for national entities.

Italy’s Innovation Minister, Vittorio Colao, has said he wants the winner of the national cloud hub project to use cloud technology developed by major global vendors, while ensuring data is stored locally. This was the approach taken in France, where Microsoft’s technology was licensed for a cloud that will be operated, and the data managed, by Orange.

If Telecom Italia’s consortium does win the project – a decision that should be made in October – it would be a major boost to its recently expanded cloud strategy. Earlier this year, it acquired Google Cloud’s Italian partner Noovle, which is now the basis of its cloud and edge computing services business, one of its main growth areas. Noovle operates 17 data centers in Italy and is preparing another six, and is targeting €1bn in revenue by 2024. This could be an important counterweight to Telecom Italia’s overall revenue decline over the past 18 months – while total revenues fell in each quarter of 2020, most seriously in Q3, by 10%, cloud services were up by 18% for full-year 2020, compared to 2019.

Another bid to expand revenues and infrastructure scale was Telecom Italia’s proposal to take control of state-owned Open Fiber and create a single national broadband network, but this is reported to have been blocked by European competition authorities, and could have restricted Italian access to EU Covid-19 recovery funds.

Noovle has also signed a partnership deal with Cisco to develop cloud services for companies and public administrations, while Telecom Italia’s prospective co-investor Leonardo has a deal with Microsoft to offer cloud services to Italy’s public sector.

In Germany, there has been a stronger call by local operators and other firms to use local technology for a national cloud. Deutsche Telekom, for instance, has been a major supporter of the Gaia-X initiative, set up last year to develop a federated data infrastructure built on European data privacy principles. The Gaia-X European Association for Data and Cloud AISBL was launched in January 2021 and is chaired by Maximilian Ahrens, CTO of DT’s IT services unit T-Systems.

However, international cooperations have a habit of dragging on before they support real results, so in the meantime, T-Systems has announced plans to build its own ‘Sovereign Cloud’ for Germany. Despite the strong backing for Gaia-X, though, DT has acknowledged that, at this early stage at least, it is tough to build a competitive cloud without tapping into US technology. So T-Systems will work with Google Cloud.

The new offering will be available in mid-2022 as a joint service from Google and T-Systems, and will enforce and manage various sovereignty controls and measures, including encryption and identity management. The service could be extended to Austria and Switzerland in future.

This is not DT’s first foray into public cloud. It already has a business called Open Telekom Cloud, and T-Systems previously had a deal to be the ‘data trustee’ for Microsoft’s German cloud services, although that agreement ended in 2018.

A DT spokesperson told LightReading that platform, called Microsoft Cloud Deutschland/MCD, differs from the new Sovereign Cloud from T-Systems and Google Cloud, in an important respect. “The MCD offering was an offer disconnected from Microsoft’s global cloud platform. It provided less functionality and slower innovation at a price premium for the added security, a proposition that ultimately didn’t resonate in the market,” said the spokesperson.

By contrast, the new cloud is “a fully connected version of the GCP platform and as such benefiting from all upgrades and updates and innovations without delay. Our concept of sovereignty is not built on physical separation and disconnecting, which is more a heritage of the on-prem world, but by adding protection through a whole set of controls, exercised by T-Systems.”

In France, a project by Orange and integrator Capgemini, to build their own cloud, was announced in June in response to specific rules set out for France and its public sector. The two companies plan to launch their own cloud operator and platform, called Bleu, to provide a sovereign cloud solution in France, in line with the government’s ‘cloud de confiance’ (trusted cloud) strategy.

The new platform will be based on Azure, and will enable public sector customers with access Microsoft cloud services such as 365. However, Orange and Capgemini will build their own platform on top, conforming with French regulations on security, data privacy and trust. All data centers will be in France and strictly separated from Microsoft’s global data center infrastructure; and  Bleu will be operated by its own staff in France.

“The important point to note,” said an Orange spokesperson, “is that this is the first time that we have a sovereign cloud offer that includes access to a hyperscaler’s offer, for example, for users to still be able to use programs like Microsoft Word or Excel.”

Bleu will offer public sector customers such as government departments, hospitals and regional authorities a large catalog of digital solutions and collaborative tools, said the operator. These customers will require a trusted cloud to handle their sensitive data and workloads. And Orange would not rule out that Bleu could also support telco applications for 5G in future.

Bleu was described as “an unprecedented French hyperscale cloud, fully under French and European jurisdictions”, but Orange CEO Stéphane Richard does not seem to regard this as a requirement that is peculiar to his home country. He said platforms like Bleu would meet a “growing need in the digital world”.

He added: “Orange, as a trusted partner for the digital transformation of businesses, operates, integrates and manages a range of trusted infrastructure services for its customers, whether they are public or private entities. We are delighted to partner with Capgemini to create a trusted cloud solution for our existing and future B2B customers and public organizations that will provide a wide range of services, and in particular Microsoft 365, from within a sovereign infrastructure.”

In May, the government of France outlined its national cloud strategy, which mandates standards of performance and trustworthiness that must be met in public sector deployments, and that will be certified by the French National Agency for Information Systems Security (ANSSI) through its SecNumCloud label.

This is the latest in a portfolio of Orange cloud activities. Orange Business Services  provides a global public cloud solution called Flexible Engine, based on a Huawei distribution of OpenStack. Orange has also joined Microsoft Azure’s Networking Managed Service Provider (MSP) program and has alliances with Google Cloud and AWS.

Both DT’s Sovereign Cloud and Orange’s Bleu envisage being part of Gaia-X despite their US technology partnerships.

Gaia-X aims to be “a pan-European, open network of cloud providers and users. The vision of Gaia-X is primarily to enable data-driven innovations for European users: cross-company, sector-specific data spaces based on cloud infrastructures that comply with European values and rules,” said DT, claiming that did not necessitate only local technology.