How The Cloud Lowers Barriers to Entry into the Mobile Telco Space

The announcement by Nokia that it is partnering with Google Cloud, Microsoft Azure and Amazon Web Services (AWS) to develop cloud-native 5G services was a significant and inevitable step that all communication equipment manufacturers have to take to remain in the game and meet the ever increasing demand for modern telecommunication systems.

With the rapid drop in cost of compute and storage power due to the economies of scale that cloud services provide, and the inherent ability to dynamically shift workloads across geographical regions and scale both vertically and horizontally with a single mouse click, services that previously required dedicated hardware that took time and money to set-up can now be spun and consumed in a matter of seconds. The shift from traditional DevOps to cloud-first DevOps also means that new and more efficient system architectures that take advantage of the cloud to offer ‘serverless’ and highly scalable computing, which significantly lower the cost of running a service on the cloud while at the same time improving service availability and user experience.

Having worked in the telecom sector for sometime, I have noted the below to be a growing problem:

  1. Telecommunication systems are highly vertically integrated and often deploy proprietary technologies, leaving very little room for interoperability of various vendor systems in one network.
  2. There is a very hard coupling between software and hardware used in telecommunication systems, system upgrades often involve hardware upgrades, making the upgrade complex, time consuming and expensive to carry out

The move by equipment manufacturers such as Nokia and others to develop their systems for the cloud will solve the above problems by them adopting Open-Radio Access Networks (O-RAN) approach on the cloud to create Cloud RAN. This cloudification of the RAN using O-RAN doesn’t necessarily mean that all Cloud-RAN is based on O-RAN but that O-RAN on the cloud can simultaneously solve the two problems I mentioned above in one swoop. Cloud-RAN decouples hardware from software, enabling the adoption of different lifecycles for hardware and software. This will accelerate the pace of innovation in that space and also enable the mixing and matching of various vendors on the same network easily than before. It will also shorten time to market for new technologies and services.

Other than the technical efficiencies that the cloud introduces into the telecom network, adopting the cloud on the telco network also lowers the Total Cost of Ownership (TCO) as it leads to lowered Capex and Opex spend through:

  1. Fast deployment of services: A fully virtualized base station enables both the virtualized distributed unit (DU) and centralized unit (CU) to run on a general purpose processor platform (servers on the cloud). New software and services can be introduced more quickly and more easily because the software code doesn’t need adapting for proprietary hardware. Time savings mean cost savings.
  2. High hardware utilization: Pooled software running centrally on the cloud enables more traffic to be processed on the same data center servers. This more efficient use of processing power allows hardware to be dimensioned according to average traffic loads. The cost of over-dimensioning to meet peak load is simply eliminated, lowering network rollout costs and idle capacity costs.
  3. Multi-tenancy resources.: The same physical servers can host different applications and services. Cost savings are achieved by using spare general-purpose compute resources for applications other than RAN.
  4. Lower operational costs: Centralizing baseband functions in the cloud data center reduces the need for radio site visits, cuts the number of hardware platforms needed, consolidates installation and maintenance processes, and lowers radio site leasing costs.
  5. Greater automation: Open interfaces due to O-RAN allows for integration of artificial intelligence (AI) and machine learning (ML) algorithms, enabling the network to automatically optimize itself to meet unpredictable demand in mere minutes or even seconds.

The biggest and yet unseen benefit however for this cloudification of the base station and mobile network is how equipment manufacturers can now offer mobile networks as a service. The Nokia partnership with Microsoft Azure aims to do exactly that. In this approach, Nokia runs a fully fledged mobile network service on the Azure cloud edge to offer 4G and 5G connectivity to enterprises. The current situation is that large enterprises often depend on a network operator to meet their external connectivity needs while using different technologies for their internal needs. Most enterprises today for example depend on a mobile carriers 4G network to make calls, connect to enterprise resources when outside the office and has to switch to a local Wi-Fi or use the office LAN when in the office. The move by Nokia and Microsoft will enable an enterprise to run 5G in the office (possibly replacing Wi-Fi) and avail the same private mobile network anywhere in the world where their staff find themselves seamlessly. This as you can imagine will significantly lower the time and cost of setting up a mobile network by avoiding high capex initial investment in hardware and paying for this capability as a service on a per-use model. This lowered barrier to entry, means that the running of 4G and 5G networks will no longer be the preserve of deep pocketed telecommunication companies but also enterprises, investors and innovators.

Another benefit is that this move opens up the previously closely guarded and highly proprietary telco equipment innovation ecosystem to everyone and not just the limited R&D teams in those companies. This open architecture and cloud approach is bound to spur new innovations in service and value delivery to consumers. I believe this will also have the effect giving more power to the telco in determining the pace and direction of technology adoption, something that is currently heavily vendor driven. With close to 6/10 of network changes being vendor suggested/initiated, more often than not, the operator is at the mercy of vendors. The move of the mobile network ecosystem to the cloud on an open architecture will change this, to the benefit of the operator and subscribers.

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