The telco cloud is the cornerstone to telecoms transformation. In fact, the nature of cloudification has undergone its own transformation as telecom operators who initially explored virtualized network functions (VNFs) now confidently embrace cloud-native network functions (CNFs).
In this blog, we look at why the telco cloud is an important venture, how it has developed over time and how organizations can get the most from their cloud.
The significance of the telco cloud
Embracing the cloud is an essential step in future-proofing the telecoms industry. By enabling accessible digital transformation, businesses can access a wide range of benefits, including scalable service delivery, improved network performance, and redundancies to reduce risk.
Using the telco cloud allows telecom operators to deploy network capabilities, functions, and services in software-defined spaces, on demand.
They can quickly scale capacity up or down where this has immediate benefits for customer performance, ensuring quality services even during peak times, and providing a centralized way to manage resources.
There are also long-term benefits for business growth, as telecom operators can more readily take advantage of the latest software and capabilities, adapt to the market, and save significant costs in the process by virtualizing their network infrastructure in the cloud.
The state of telco cloud today
Early definitions of telco cloud essentially meant applying some network function virtualization (NFV). As of March 2022, whereas 50% of telcos had virtualized parts of their network, only 16% had deployed cloud-native network services, and this approach made it difficult for telcos to completely decouple hardware from software, which as a result, made it difficult to configure and scale.
Now, this definition has grown into something more vast and connected. Telco clouds use newer and more cloud-native technologies, from microservices to containers, to create purpose-built architectures for the cloud. These environments can be private, public, or hybrid.
A hybrid telco cloud approach goes beyond an operator’s own private cloud, giving them access to public capabilities as well as a more open vendor approach. In addition, it connects to multiple network locations, from datacenters to the edge. This means network functions or workloads can run wherever offers the best efficiency or performance or cost. For example, running something at the edge may offer a better latency for the end user.
5G, in particular, has helped accelerate the use of the telco cloud as the entire core network is well-suited for cloud-based virtualization and containerized workloads. This has encouraged telcos to go completely cloud-native for 5G core.
The benefits of using telco cloud
- Deliver reliable carrier-grade availability and service quality
- Reduce time to deploy new services that support new revenue streams and differentiation
- Create custom solutions for enterprises
- Leverage new core and edge capabilities to monetize the 5G network
- Retain competitive pricing with reduced capex and opex
- Quickly adapt to markets, innovate on business models, and respond to demand changes
- Use best-in-class analytics to predict issues, tailor to customer preferences, and deliver connected customer experiences across communication channels
- Continuously improve, integrate, and deploy (CI/CD)
Barriers to the cloud, and how to overcome them
Despite the benefits of telco cloud, The New Stack noted that “of those organizations that have ‘gone cloud native,’ 95% reported that challenges are preventing them from seeing the full benefits of cloud native development”. This proves that, while organizations have ramped up their cloud transformation, they are still unsure how to effectively make the transition.
Adapting legacy processes: Most telecom operators will need to build their telco cloud environment to work alongside their legacy VNFs. Managing these co-existing environments and migrating functions with minimal disruption will be complex and likely require more resources in the short term. A strategic partner like Odine can support seamless integration and manage your migration to ensure every capability is transferred without any quality degradation.
Operational restructuring: Most telcos will need to reevaluate their operations to align to a cloud approach. The agility of cloud requires a different way of working internally, including new skills to manage it and the services it employs, processes that align with the cloud lifecycle, and a potential increase in complexity in terms of the vendor ecosystem.
It’s important that telcos look at their cloud journey as a holistic one alongside the rest of the organization. They need to create a strategy for operations, resources, talent and more that will support native functions and help to achieve the most ROI from telco cloud.
Public, private, or hybrid: What kind of cloud environment telcos choose depends on the cost of running the network, data regulation, cloud maturity and more. Odine as a strategic partner can assist you in comprehensively understanding your requirements and use cases, thereby identifying the optimal solution for your needs, while also providing holistic support in building and managing your telco cloud infrastructure.
Maximizing Return on Investment (ROI) in the telco cloud
Numerous organizations are not realizing the anticipated ROI from their telco cloud investments. Despite significant investment efforts to reach current stages, stakeholders expect tangible returns. In certain instances, the outcome contrasts this expectation. Instead of experiencing reductions, organizations encounter escalating costs, particularly in capital expenditure (capex) evaluations.
However, STL has noticed that this isn’t painting an accurate picture. In fact, costs have gone up in other areas such as 5G rollout, and the savings virtualization has brought are being overshadowed by capex spending in network functions like RAN.
The moral of the story is that the benefits of virtualization may not be easily financially quantifiable, but the quantitative benefits are becoming increasingly evident. This should encourage telcos to continue their cloudification journey and work towards fully cloud-native architectures. This is when the tangible financial and operational benefits will become clear.
More importantly, telco must continue with cloudification because it is essential to their survival – not just from a financial perspective, but from a business one. It is the key to achieving digital transformation in response to changing market dynamics (and declining competitive advantage). If telcos avoid this transition, they will only fall further behind and become increasingly unable to meet societal and customer demands.
The telco cloud is a cornerstone of telecoms evolution. It changes how networks are built, how operations are managed and how services are delivered, allowing telecom operators to act in tune with the markets they serve. It won’t be a quick transition, but it will unlock countless innovative business models – from intelligence and analytics to open, best-in-class ecosystems – that will help telcos redefine and revamp their value propositions.
