Telcos have been adopting cloud for a number of years, primarily to replace IT systems with Software-as-a-Service (SaaS) solutions and also to host services for different applications. Furthermore, they are becoming increasingly reliant on the capabilities of Hyperscalers like Amazon, Google and Microsoft to facilitate agile development of their digital, AI and data services.
As telcos continue to transition towards 5G and fibre deployments, their focus is shifting in terms of what they can achieve with cloud on the service side. There’s huge demand for telcos to start developing and delivering services that capitalise on new capabilities like network slicing, and Network-as-a-Service (NaaS) offerings that address enterprise business needs through subscription models.
There is also huge potential for IoT and Edge services across vertical industries as well, with distributed cloud architectures touted as key enablers of these use cases. Telcos are also now starting to use the cloud in the RAN, 5G core and they are increasingly focused on virtualizing network functions through technologies like Kubernetes. While this is all very promising for telcos, their greater dependency on the Hyperscalers across networks, services and IT creates the challenge of a deeper lock-in.
Creating the cloud fabric
Cloud adoption isn’t just a foregone conclusion for telcos. Vertical industries that deploy operational technologies previously implemented as hardware solutions are exploring cloud to achieve greater flexibility and cost efficiencies. In turn, this is shifting expectations amongst industry players in sectors such as healthcare, transport, manufacturing and financial services, for how solutions are delivered.
Telcos are eager to capitalise on this, expanding their solution portfolios with the aforementioned 5G and Edge-enabled services to target new revenue streams. But with this comes a need for service providers to adopt long overdue open architectures and open software models. This is where initiatives on Open RAN and Open BNG start to receive attention and focus from the major telcos.
And yet, to maximise the potential of cloud (the delivery of interoperability, flexibility, automation and innovation) it must be seen as more than the traditional technology transformation. To achieve this, telcos can either look at cloud from a tactical or strategic perspective. Employing it tactically explores what capabilities and services can be moved to the cloud to improve operations and IT, but that leaves the telcos in the laps of the Hyperscalers. What telcos should instead consider is developing an overarching strategy that leverages the cloud and considers how it can deliver both business and technological transformation.
Cloud for business transformation allows business units to improve customer experience and rapidly develop new digital services and channels. Ultimately creating a cloud fabric that enables providers to innovate, launch digital operational improvements and facilitate the evolution of the network to meet new, elastic demand for connectivity and technology solutions.
Partnership vs competition
As part of that journey, it’s important to consider a multi-cloud approach to mitigate against cloud provider lock-in. There has been increased competition in the telecoms vertical from alternative service providers including Hyperscalers. There are, however, opportunities for partnerships between telcos and the cloud providers in areas such as 5G, Edge and IoT, therefore striking this balance should be a key priority for telecoms businesses.
The risk is that some of the large integrated telcos will end up purely playing the role of infrastructure provider - the typical dump pipe scenario - with Hyperscalers orchestrating the ecosystem. To establish a strong position in the value proposition, telcos have to take NaaS further to capitalise on the variable consumption of connectivity. The telco needs to act as a marketplace, aggregating a variety of offerings: security, cloud connect features, connecting data centres to several cloud providers as well as core connectivity complemented by IoT and Edge services. Finding that balance in collaboration and competition will be critical.
All this leads to the next stage for the market - the new battlefield of multi-cloud and distributed cloud. It’s prime real estate for telcos to orchestrate an ecosystem for businesses that connects them to a variety of cloud providers with technology solutions and services that are built to address very specific business needs. They can play a transparent and neutral role, shifting workloads between public, private and distributed cloud environments with flexibility and scalability to meet enterprise objectives. That flexibility in network services is not there today, so telcos must build a cloud fabric within their businesses that adopts a cloud strategy for both technology and business transformation.
By supporting a multi-cloud proposition in this way, telcos can establish real value in the ecosystem.
