With the evolution of 5G and its associated use cases (IoT, connected vehicles, reliable real-time communication in industrial scenarios, AR/VR, ultra-low latency cloud gaming, game streaming, etc.), are cloud service providers like Microsoft, Amazon, and Google transforming into telcos/ TSPs?
Let’s see how the journey of both the CSPs (cloud providers and communication service providers) evolved over the last few decades, resulting in strategic partnerships:
This is the TSP’s journey to telco clouds– with huge investments in backend infrastructure like towers, data centers, etc. (critical characteristics in bold):
- 1G (Analog and less secure- No compatibility between systems; calls not encrypted)
- 2G (Digital wave with focus on security- calls are encrypted and investments in cell infrastructure take place)
- 3G (Standardization of network protocols– Access data from anywhere, Video conferencing, VoIP)
- 4G (LTE- high-quality video streaming for millions of consumers up to 1gbps, 4G-ready handsets, the latency of 40ms to 60ms deemed too slow for real-time communication)
- 5G [Telco clouds (software-defined networks, network function virtualization)– Shift in infra investments from private clouds to hybrid cloud; IoT is a reality]
- Also, opening doors to unlicensed spectrums such as CBRS
Cloud service providers’ journey - Cloud to network to edge
Owing to the skepticism of the success of cloud since 2008 to the private, public, and multi-cloud world, innovation and speed to drive efficiencies for better use cases led to the intelligent edge and intelligent cloud technologies. Significant investments toward the partnerships in areas of privately managed networks such as AWS Outposts, AWS Wavelength, Verizon 5G Edge, MS Azure Stack Edge, and Telco-specific clouds for AT&T to leverage the above-mentioned use cases (IoT, Connected vehicles, reliable real-time communication in industrial scenarios, AR/VR, ultra-low latency cloud gaming, intelligent Edge devices, etc.) were made.
Need for partnerships
TSPs invested in infrastructure; cloud providers invested in data centers. Codifications such as Telco clouds are leading to an inflection point as well as partnerships.
Cloud service providers have a unique advantage in integrating connectivity and data management solutions. Hence, telcos are focusing on partnerships with cloud service providers, some prominent examples of which are listed below:
- Google and Orange networks collaboration
- AWS and Verizon collaboration
- Microsoft and AT&T partnership
Challenges for cloud service providers
As there is an inflection point and huge dependencies on communication service providers to provide their services, they are liable for the service-level agreements (SLAs). For example, it must be determined who will be responsible for the call drops for unified communications such as Skype, Teams, or Zoom due to backend telecom infra issues.
Also, with evolving 5G, how can the characteristics mentioned above— such as security, standardization, or shift in cloudification with dependency on Telcos— be addressed?
Would it be a good idea for cloud service providers to enable their user base for a few specific scenarios, if not all, with their own end-to-end infrastructure?
Will privately managed networks for enterprises enable end-to-end with connectivity to the cloud, without any dependency on telcos, and will this result in better efficiencies?
Are cloud service providers entering in to the communication service provider’s space?
Will they acquire fiber infra companies or small cell infra companies in a few years?
Will they acquire Tier-2/Tier-3 operators?
Will they jump into the consumer segment with an initial focus on tapping the enterprise market?
Will they become an operator without boundaries?
Talks are in, like Amazon trying to buying Boost.
Microsoft's Affirmed Networks and Metaswitch acquisitions are part of a strategy to deliver private networking (especially for IoT) for enterprises.