5G and Cloud are changing how businesses must run their telecoms

The cloud has slowly eaten many industries, and now it is the turn of telecoms, with profound impacts for business customers.

One of the lesser-known changes in 5G is the breakdown of the network boundary between the telecommunications network and the IT network.

Beyond the physical radio towers, 5G networks are effectively Software-Defined Networks. This has serious implications for how network elements are implemented, and which companies stand to be the big winners and big losers from this new world. A key ingredient in this revolution is NFV.

Network Function Virtualisation (NFV) is the idea of implementing networking elements in software, based on top of general purpose operating systems. NFV is not new, and is a fundamental principle in IT of how SDNs are implemented.

But what is new is the extension of the NFV concept into the heart of the mobile telecoms network, made possible by 5G. In the integrated world of 5G, even core network and access network elements, right down to low-level edge controllers, can be purely software-defined.

And if it is “just software”, then it can be put in the cloud.

Figure 1. In 2G/3G networks (as shown here), clear implementation boundaries existed between the radio network (in dark grey, on left), the mobile core elements (shown in blue) and the public networks (light grey, on right). All elements were implemented on specialised hardware, according to telecoms-specific standards and interface specifications, usually by large telecoms equipment vendors. In 5G, different elements mean that the boundaries between radio function and mobile core function are blurred, while at the same time most elements can be deployed on virtualised telecoms platforms built on top of standard computing hardware.

Figure 2. Network Function Virtualization (NFV) involves replacing the traditional “network appliance” approach to telecoms element implementation (usually owned by the telco and deployed in the telco’s own exchange premises) with telecoms-enabled virtual machines running on standard computing hardware and often deployed in the cloud. This is possible because of the integrated nature of 5G architecture, and advances in software containerization and orchestration.  

Carrier Cloud

The cloud has slowly eaten many industries, and now it is the turn of telecoms. 5G and NFV have opened the possibility of implementing the entire telecoms world in the cloud, and the three leading cloud services providers – Amazon, Microsoft and Google – are all sensing a gold rush.

All three now have “carrier cloud” offerings, where they provide all the core 5G network functions on an As-A-Service basis, right down to edge elements.

Dish, soon to be the 4th largest mobile operator in the US, won’t have any 5G systems or infrastructure at all. Instead, it’s all in the cloud, on Amazon’s AWS. A few years ago, a progressive telco might decide to not own their own radio towers. Today, a progressive telco doesn’t own any network at all.

Figure 3. An example of 5G fully in the cloud: Dish (USA) has implemented its national 5G network fully on Amazon’s AWS, using AWS carrier cloud platforms and Network Function Virtualization of all key network elements.

Google has similar initiatives in play, as part of its Google Global Mobile Edge Cloud offering.

But perhaps the most interesting carrier cloud story belongs to Microsoft. Microsoft was first to recognise the possibilities of carrier cloud, and has spent the past two years acquiring virtual 5G network element vendors. This has now led to the biggest carrier cloud project so far.

AT&T’s entire 5G core network, one of the world’s largest, will run on Microsoft Azure. That is revolutionary by itself, but the other half of the deal is equally significant. Microsoft will gain access to AT&T’s own network cloud software infrastructure layer, and will make this part of its offering. Called Azure for Operators, this “telco in a box” aims to offer cloud-based end-to-end 5G (and telco-grade SDN generally) to anyone who wants it, anywhere.

The implications are significant. For telecoms operators, the economics of building and owning a 5G network (or indeed any SDN, even SD-WAN) look less and less appealing.

What’s left is an operator that owns some radio spectrum and has some billing relationships – but no network. Every operator becomes an MVNO, while the real network sits on Azure, AWS or Google.

If you’re thinking this is all just an American peculiarity, think again. Other announced Azure for Operators customers include Deutsche Telekom, Telefonica and others.

Cloud computing ate IT departments (and their budgets) and moved the revenue to Silicon Valley. Likewise, Carrier Cloud may cause a vast shrinking of Telcos’ payrolls and expenditures as the action and the money flows to Big Tech. As a side-effect, telcos are likely to atrophy technical expertise as they move more into a utility marketing role.

What about customers?

Perhaps the biggest implications are for enterprise customers: the businesses and governments who use the services of telecoms operators.

The old days of taking telecoms technical advice from the telecom operator vendor, or waiting for the operator to suggest new services and technologies, are over. As operators shrink down their engineering expertise pool, it is likely that business and government clients will need to look to specialist telecoms consultants and services companies for the advice and assistance they need.

Carrier cloud enables easy turning up of new services and endless flexibility, but this also runs the risk of putting more work on the business customers. Often the planning, set-up, activation, security and governance of telecoms services is more work, and more specialised work, than businesses are equipped for. It can cost just as much as the corporate telecom bill in hidden admin and internal labour, as well as being a business distraction. In the old world, they could rely on their telecoms operator to help them in these areas. In the new world, specialist telecoms management services providers will be relied upon to fill this gap.

Figure 4. Many enterprises and governments assume that their telecom provider will have the technical and operational expertise to propose the right telecoms products for them, and to recommend how to manage them. However, as the move to cloud-outsourced 5G/NFV architecture causes telecoms providers to shrink payrolls and jettison technical experts, enterprises and governments must look further afield for their telecoms expert support. Specialist telecoms professional services consultancies are experts in planning and running corporate telecoms operations in order to maximise productivity and contain cost. Over 80% of Fortune 500 companies use these specialists to advise on, run and manage their telecoms.

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