Dr. Nguyen Van Yen
The rapid rise of Big- Tech companies as hyperscalers in the Cloud computing service industry is one of the challenges facing the traditional telecommunications industry, among many others . In fact, telcos are facing the difficult and costly task of building, maintaining and expanding their own cloud infrastructure as traffic increases, especially in the context of declining ARPU and connectivity infrastructure revenue .
The challenge from Big-Tech hyperscalers entering the telecommunications market thanks to the low cost, flexibility and scalability of hyperscale cloud infrastructure is creating a trend of customers shifting their approach to using cloud services. Synergy Research Group said that as of Q3 2022: "Amazon, Microsoft and Google together accounted for 66% of the global cloud market share, up from 61% a year earlier, while the market share of all other players combined has dropped sharply from 50% to 34% since 2017."
Hyperscale clouds are slowly making inroads into the telecom industry as a certain percentage of telecom operators’ network functions will run on some form of cloud. Google Cloud, Microsoft, and Amazon Web Services (AWS) are making strong inroads into the telecom industry with their potential for cost savings and scalability, delivering services to thousands of different enterprise customers simultaneously. In a discussion with RCR Wireless, Ishwar Parulkar, director of edge and telecom technologies at AWS, confirmed that AWS will offer 5G private network services as the CBRS model (a model that allows businesses to build and operate 5G private networks in the US) provides businesses with the opportunity to own and even manage private mobile networks in the cloud.
In addition, the AWS representative also emphasized that AWS is on a two-way journey. On the one hand: Helping the cloud technology community understand telecom operators with different protocols, ecosystems and approaches to providing services to the market. And on the other hand: Helping telecom operators know how to approach and narrow the gap to move towards cloud technology. AWS has built functions to operate and solve telecom operator use cases on the cloud on the basis of cooperation with suppliers and telecom operators to build and deploy network components and functions operating on the cloud.
The MWC 2023 trade show that took place a few weeks ago in Barcelona – the first international telecom gathering since the COVID-19 pandemic – also saw the debut of giant cloud providers, with one example to highlight the presence of hyperscale clouds in the telecom industry: MWC 2023 was the first time Google Cloud attended the annual conference.
The Hyperscale Cloud Approach
Dennis Hoffman, head of Dell's Telecommunication Systems (TBS) business unit, explains that hyperscale BigTech is approaching the telecom cloud market with its own advantages in terms of enterprise power.
With Google's reputation as a company based on mining and analyzing digital data from Internet searches or targeted advertising, Google made an announcement at MWC 2023 about its "Telecom Subscriber Insights" product. According to Google Cloud, the product "helps traditional telecommunications service providers extract insights using their own existing data sources in a secure way." Gabriele Di Piazza, a Google Cloud executive, explained that the company's new Insights product essentially combines all of Google's customer analytics data from Internet searches, phones, etc. with a telecommunications carrier's customer information repository to pave the way for carriers to deliver "contextual and hyper-personalized offers" to their customers.
As for AWS and Microsoft, Dell’s Hoffman said they are leveraging their own business strengths to pursue the telecom cloud. In the case of AWS – the cloud computing service of e-commerce giant Amazon – it is looking to reduce the cost to operators for each cloud computing transaction. Meanwhile, Microsoft, with its strengths in the world of platforms and applications – offers its Azure cloud service to operators as a complete platform with core networking functions that Microsoft acquired from Affirmed Networks and Metaswitch Networks.
The encroachment of hyperscale BigTech into the telecom cloud is not new, as carriers and vendors have been working together for over a decade to replace proprietary hardware with virtualized software that can run on standardized, commodity computers. This shift has paved the way for telecom operators to consider the possibility of bringing virtualized network functions into the cloud. However, the question is: Which cloud solution should telecom operators use?
Solutions for telecom operators
- Own your cloud infrastructure
It’s clear that Google, Microsoft, and AWS aren’t the only options for telecom operators. The rise of hyperscale Big Tech has created existential concerns about a future where telecom operators will increasingly lose ground as they move more and more of their operations to the cloud from hyperscale enterprises. To meet that challenge, owning the telecom cloud infrastructure is one option for some telecom operators.
Verizon is an example of a carrier that plans to keep its network functions inside its own cloud environment: "I strongly believe that large telcos should own their own destiny — so we will never put our network in a hyperscale cloud," said Sowmyanarayan Sampath, CEO of Verizon's consumer unit. Neville Ray, an executive at T-Mobile, said at MWC 2023 that he had a similar view.
Tom Craig, an executive at computing vendor HPE, highlighted the advantages of telecom operators and the importance of the edge: Operators must maintain control over the edge to ensure that telecom operators will have a leading role in the future of the telecom industry. Dell's Hoffman agrees: Such control is primarily to ensure that traffic generated in one location is routed correctly by the carrier to the nearest computing resource and that the cloud is available to receive that traffic.
Some telecom operators have built their own cloud infrastructures as a way to take advantage of the cost savings and flexibility associated with moving to network function virtualization, while also being able to respond quickly and easily to the wants and needs of their enterprise customers. However, with network traffic growing rapidly while connectivity infrastructure revenues are flat: Telecom operators are and will continue to face the difficult and costly task of maintaining and expanding their cloud.
- Using a cloud intermediary platform
On the other end of the spectrum, a middle ground option was mentioned by Matt Beal, senior vice president of software development at Oracle Communications, as an example of a solution to operators’ fears of being locked into a single cloud provider’s cloud environment: Oracle doesn’t charge extra fees when carriers move their data outside of Oracle’s cloud. Furthermore, Oracle manages cloud operations in dozens of regions around the world, which is important for telecom operators looking for edge cloud options that are geographically close to their coverage areas, with AT&T in Mexico moving its OSS/BSS database to Oracle’s cloud as an example.
- Cooperation to develop and build an ecosystem based on an open API standardization platform
In the context of declining revenue from connectivity services and fragmentation of the global mobile industry, transforming into an open platform, collaborating with businesses and start-ups in the digital ecosystem is considered the key to allowing operators to promote innovation and open up opportunities, exploiting the power of connectivity infrastructure in the era of Industry 4.0.
As part of the trend of cooperation to provide innovative solutions, digital transformation towards digital society, digital government, digital economy : At MWC 2023, Korean carrier SK Telecom introduced digital transformation and innovation ideas in cooperation with 14 startups on AI products designed to help the elderly/weak in society such as AI Care - AI-based care service for seniors living alone, G-EYE PLUS with VLAM - navigation service for the visually impaired (a collaborative product of SKT & LBStech & SAPEON), Sullivan Plus - AI-based visual assistance service (a collaborative product of SKT & Tuat) and Goyohan M - an ICT-based mobile platform for hearing-impaired taxi drivers (a collaborative product of SKT & Coactus).
Also in the trend of cooperation between operators and creative industry enterprises, Telefonica is one of the pioneers in the open network platform trend, with the view that telecommunications companies, industry, big tech companies and developers together create a digital future. This new digital era will require an open platform to bring simplicity to the complex nature of businesses. Telefonica cooperates with Microsoft, AWS and Google Cloud, bringing to MWC 2023 products in the digital transformation ecosystem such as smart agriculture (smart Agro), smart industry (smart industry), virtual authentication and presence (holographic telepresence), ...
In addition, major telecommunications equipment vendors in the world such as Nokia and Ericsson have also had notable collaborations with the world's leading cloud platform provider - Amazon AWS - allowing Nokia and Ericsson to leverage AWS services and other related services to automate network functions or deploy, scale and manage end-customer applications. This collaboration will enable traditional service providers and 5G-enabled enterprises to use AWS services across the entire mobile network topology, simplifying platforms and network virtualization for core and radio network functions by leveraging the agility and scalability of the cloud, while driving the desired business outcomes with 5G use cases.
The transformation from a traditional operator to a telco-as-a-platform operator is not a new concept with previous examples from operators such as India's Jio with its Jio Platforms model to connect service providers (Connectivity, Chat, Cloud, Phone, Security, Money, Media, etc.) with customers using the service; or China Mobile implementing its "Big Connection" strategy through building a CM IoT Platform connecting solutions in vertical industries: smart cities, transportation, energy, etc. In that platform model, open API is an important component, opening up flexible cooperation opportunities from which operators can use customer data as an asset to co-create with startups, innovate to expand the scope and scale of the digital ecosystem.
Dish Network’s US president Charlie Ergen also said that their network is designed for the enterprise, and much of the company’s growth depends on providing flexible 5G connectivity to business customers. To pursue that enterprise goal, Dish has introduced a number of application programming interfaces (APIs) in its network to give developers control over their wireless connections. Dish Network is not the only 5G provider looking to do so. At the recent MWC 2023 trade show, operators around the world – led by the GSMA and 21 major carriers around the world – committed to open APIs for similar services.
To move towards solutions to solve problems from super-scale BigTechs, the approach of telecommunications operators to cloud technology and services also needs to change and be flexible. Cloud infrastructure, in which the core is database infrastructure, IDC infrastructure, new products and services, needs to follow the trend of startups, mergers and acquisitions or cooperation and linking ecosystems to quickly have new technology - infrastructure, products and services, as a basis to anticipate the needs of businesses and individual customers. Cloud infrastructure and data infrastructure need to go ahead to create competitive advantages for telcos: Quickly deploy highly customizable enterprise solutions; easily cooperate and co-create with business partners and startups; quickly adjust business models to test innovations such as new products, services and pricing plans; Centralize customer databases, analyze 360-degree customer insights, and deliver engaging multi-channel customer experiences…/.
Reference:
https://wire19.com/amazon-microsoft-and-google-cloud-infrastructure-market/
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