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27 October 2020

Verizon keeps potential rivals close with Nokia and Azure deals

Verizon has announced two new partnerships to address the private cellular networks market – with Microsoft Azure and Nokia. In both cases, these alliances will extend and strengthen the US operator’s offering in enterprise 5G/edge platforms and services.

Also in both cases, they may help Verizon neutralize the competitive threat from two companies which have their eyes firmly set on the growing private cellular opportunity. Both Nokia and Microsoft are developing platforms that are currently offered mainly in collaboration with operators, but which could just as easily squeeze out the MNO, as more private networks become enabled by unlicensed spectrum and by core and access networks deployed in the cloud.

The private network provider landscape is becoming complicated. Verizon Business’s deal with Nokia was announced just after the Finnish company revealed an agreement with AT&T – which is also working on private networks with Ericsson (in both cases, the focus is on the USA’s CBRS shared spectrum for now). Meanwhile, Verizon has edge/private 5G relationships with both Azure and AWS.

While AT&T is working with the two network equipment giants on CBRS solutions, Verizon’s Nokia partnership aims to expand the operator’s private networks footprint beyond the USA, by offering a cloud-based managed 5G solution, presumably in shared or industrial spectrum, in European and Asia-Pacific markets. Verizon will combine Nokia’s Digital Automation Cloud (NDAC) tools with its own network-as-a-service (NWaaS) offerings, particularly targeting multinational organizations (which might be users of its own spectrum and networks in the USA).

The resulting managed service solution will consist of the Nokia NDAC, which provides cloud-based core and radio networks, and an enterprise app store. This will be combined with Verizon’s portfolio of managed WAN and LAN services, plus “professional services to define exact requirements for a given use case”. Verizon will also offer services to help enterprises apply for their own spectrum, where appropriate.

Nokia claims to have 180 private cellular customers, with more than two-thirds being outside North America. This gives operators a powerful incentive to partner with the vendor, in order to retain a strong role in the value chain – since Nokia has been clear that it will address enterprises directly as well as through operators. Nokia says about half of its private network engagements are direct, while the other half go through operators or other partners such as local systems integrators.

Striking the right balance in the value chain becomes even more fraught for operators when edge computing is involved too, but many private networks will be planned around 5G rather than WiFi, precisely because of the way emerging 5G enterprise networks are being deployed on the edge cloud, providing various benefits for industrial users – flexibility of virtualized, software-defined platforms; localized data processing and analytics capabilities; support for low latency response; and the option to have the RAN and core hosted and managed by the service provider, while keeping key data close to home.

Verizon has mobile edge partnerships already with AWS, IBM and Cisco, and has now added Microsoft Azure for on-site 5G edge capabilities for enterprises. This will see Azure private edge cloud services integrated with Verizon 5G and mobile edge computing (MEC). The two companies will also cooperate on developing new services for specific verticals such as manufacturing and healthcare.

The local networks will be jointly managed by Verizon and Microsoft, with a small cell connecting to Verizon’s private network platform and to an Azure edge box. That will support secure, integrated access, for Verizon’s enterprise customers, to all Azure services and its development ecosystem.

“There would be an actual network, a small portable network that is obviously connected to the macro network from Verizon, that would be deployed on, say, a campus, and that would then also have an on-premise Azure solution integrated with our overall network,” Rima Qureshi, chief strategy officer at Verizon, told SDxCentral.

Verizon gave the example of Ice Mobility, a logistics company which is testing the resulting 5G Edge offering to support computer vision for quality assurance of product packing. Ice is targeting reductions of 15% to 30% in processing time by using real time data to identify packing errors.

This arrangement is different from Verizon’s edge relationship with AWS, which is focused mainly on public edge cloud services. Last year, the two firms announced that Verizon was the first partner for AWS’s Wavelengths initiative, which sees the webscaler’s edge platform deployed in Verizon locations, such as central offices, and integrated with its connectivity. The Azure deal focuses, instead, on edge and 5G deployed on enterprises’ premises.

It is likely that Verizon will pursue an multicloud strategy in the private enterprise space, as it is doing elsewhere, but the new deal does see Microsoft becoming an increasingly important partner. Earlier this year, the companies announced the integration of Verizon’s ThingSpace IoT platform with Azure’s IoT Central.

Yousef Khalidi, corporate VP for Microsoft’s recently announced Azure for Operators offering, said: “The combination of Verizon and Microsoft’s capabilities will support customers with needs for ultra-low latency access to compute, highly localized processing and resilient solutions across industrial automation, intelligent video processing, mixed reality and digital twin scenarios, and localized AI applications.”

Sampath Sowmyanarayan, president of global enterprise at Verizon Business, said 5G supported specific capabilities such as device density, ultra-low latency and low power consumption, but that WiFi 6 would have a role too. “This is not religion,” he said. “There are some use cases where WiFi 6 works very well, for example if you’re streaming video. But when you’re looking at mission-critical applications… you need access to dedicated spectrum, a high quality of service and very, very high reliability, and that’s where 5G works very well.  We can definitely see a situation where you have the technologies coexist, but for very different use cases.”

Enterprise networks are a flourishing part of Nokia’s business, at a time when it has been under intense pressure in other areas. In its second quarter, the enterprise unit reported an 18% year-on-year increase in revenues to €376m ($445m). A partnership with Verizon will help bolster this further. Last year, Verizon Business took about $31.4bn in revenue, about 24% of the operator’s total, and 60% of its customers are multinational.

In the same week, Nokia announced its tie-up with AT&T to support private cellular solutions for US enterprises. AT&T already provides an on-premise edge platform including 5G-capable MEC, but will now also support Nokia DAC, particularly targeting Industry 4.0 use cases enabled by the CBRS spectrum.