I have oftentimes criticized network operators’ naivety when it comes to their capacity to convince members of the ecosystem to adopt their telco idiosyncrasies.
I still have doubts that they will successfully create a profitable marketplace for open APIs, for instance, but today I want to turn towards the cloud providers' poor track record in telco.
On the heels of Microsoft’s abandonment of their telco software ambitions, one has to wonder whether all the perceived threats of cloud providers competing with telcos was warranted.
Between the rush from network operators to become cloud providers, to their precipitous exit, or the first iterations of AWS outpost and wavelength or Google Anthos or Microsoft Azure for operators, there has been multiple attempts for cloud and network operators to find coopetitive model.
While it would be easy to generalize, there are a few similarities between the approach of the webscalers even if the tactics have been different.
AWS has been the first to look at the telco market and try to monetize it. The initial idea was to try and convince the operators to deploy their cloud infrastructure in the data centers and central offices in the form of outposts. As its name suggests, AWS was looking at these as beachheads of managed infrastructure in the telco networks, with a view that more and more telco functions would run there.While the economic model was attractive, the operating model was incompatible with most operators ambitions.
Google, as the challenger in the public cloud space, took the approach of providing open source and do it yourself tools for telco cloud creation and operation. This model offered the most flexibility and cost efficiency but supposed skills and resource that were not immediately available for operators.
Microsoft adopted an intermediate approach, allowing operators to deploy their COTS Azure approved infrastructure and run a specific version of Azure integrated with the public cloud. Unfortunately, the company wasn't really quick to execute and the frequent changes in strategy, naming and services offering became very confusing for operators.
In my opinion, the cloud vendors neglected several things in their calculations:
- While operators at the time were still convinced that most telco functions weren’t suitable for a cloud grade environment, Cloud providers were convinced it was only a question of mindset and failed to understand the legitimate telco specific requirements for specialized compute or network synchronization for instance.
- The regulatory landscape might vary from market to market, but in most cases, data sovereignty, privacy, and security concerns weren’t properly factored in.
- Operators usually need to be convinced that their vendors are committed to delivering and supporting their products products for at least 10 years (typical duration between the start of the sale cycle and the end of amortization).
- Very few network operators accept to be commoditized to a simple connectivity provider. They aim to provide ranges of products and services and saw the entrance of cloud providers in their networks as an existential threat.
- While over time, most operators came to accept that their network needed to evolve to be more like a cloud than a traditional telco network, they did not have the necessary skills and resources for a rapid evolution.
- Between cloud providers who envisioned that every telco functions could / should live in the public cloud and traditional operators who believed that all telco functions should be hosted on a private cloud or on premises, the reality is somewhere in between. Each operator has to arbitrate which function should be instantiated where, not only from a technological standpoint but more importantly from an economical perspective. These techno-economic models take time to evaluate.
On the positive side, vendors have been diligent in porting their software to the cloud, starting with BSS, OSS, Core and lately RAN functions. Most traditional and emerging vendors have been able to develop or port a large part of their offering into public / hybrid / private clouds environments.
This has benefited greenfield operators who have been able to leapfrog brownfield by adopting a cloud native operation from the start. This adaptation is still ongoing, though, and cloud providers are learning that there is more than elasticity to provide a telco grade cloud network.
Microsoft’s exit from the telco cloud software to focus on the infrastructure is understandable but reinforces the belief that cloud providers can be poor telco vendors.
It also highlights the need for telco operators to provide better cloud capabilities if they desire to capture the enterprise market. Enterprises use cloud providers for a variety of services and telco networks for the most basic utility connectivity. If operators want to stand a chance in that market, the need to evolve is more urgent than ever. Beyond offering APIs, operators need to build a platform to allow those enterprise customers who want to customize their connectivity to discover, reserve and consume network resources on demand.
