The road to fully cloud-native mobile cores, let alone RANs, is a slow and painful one for most operators. It involves significant changes in culture, skills, processes and technology. It entails leaping into a relatively immature and unproven platform after years of intimately understanding how a physical, integrated core or RAN operated. And it will bring a new set of suppliers and partners, including the webscale giants themselves.
The cloud-based 5G network is an obvious opportunity for Amazon AWS, Microsoft Azure, Google Cloud and Alibaba to add telcos to their growing lists of critical systems hosted for enterprise customers. Yet it is a double-edged sword for operators.
On the one hand, it could reduce their costs, and also help achieve one of their key 5G-era goals, to become less reliant on the big equipment vendors, who dominate not just on-premises network deployments, but managed services.
On the other, it could make them dependent on even more powerful suppliers, and for most telcos, trusting the core or RAN to a public cloud still appears fraught with risk of loss of control over optimization, quality of experience and security.
Hosting networks in their clouds is not the only way the webscalers hope to take a piece of the 5G value chain. Some are investing in connectivity itself, not as a core business model per se, but to enable them to offer full cloud+connectivity platforms to customers, and to control the experience and the cost when they deploy connected services directly.
Rakuten’s 4G/5G roll-out in Japan will extend the mobile services it offers consumers from its cloud; Google and AWS have conducted trials in shared spectrum and are both rumored to be interested in buying Sprint’s Boost Mobile subsidiary to get into the mobile market directly.
Sometimes investing in mobile networks is to extend the reach of high speed Internet and therefore of their content and services, in areas where telcos are moving slowly such as rural or remote regions. This is not just about mobile networks, but the satellites, drones and balloons to enable connectivity to ‘the next billion’.
Sometimes, it may be to remove the telcos’ main power advantage over the webscalers – while most large enterprises adopt a multi-cloud approach, the telecoms network is probably the common link to all of them, which threatens to commoditize the cloud.
In many ways, though, telcos and cloud providers are learning to work together rather than compete. Many operators have backed away from offering their own cloud services, and are instead partnering with AWS or others to combine the strengths of both parties (AT&T’s extensive alliance with AWS is a good example, with the operator focusing on connectivity, device management and security and leaving storage and analytics to its partner.)
These partnerships are important in the emerging market of edge computing, where operators and webscalers alike are still uncertain of their role in the value chain. Working together may help kickstart the market rather than slowing it down with mutually destructive competition, and again, AT&T is taking this approach, claiming that a cooperation with Microsoft Azure has enabled it to show a powerful edge-focused proof of its 5G network business case.
All in all, the cloud giants will be an important part of the 5G value chain, in a way they were not in past networks. This will create challenges for the large vendors, which are hoping to build their own business in supplying and hosting 5G cloud networks. Operators have more opportunity to work with the cloud companies for mutual advantage, but they will need to tread carefully, because they lack the global reach and scalability – or the cloud skills and culture – of the new players.