One of the truths about carrier cloud is that it might be more cloud than carrier. I noted in THIS blog the possibility that some network operators might prefer to have their carrier cloud hosted by one of the public cloud providers (IBM specifically in the referenced blog), and according to Light Reading, there’s a sign that Amazon might be interested in being a carrier-cloud host too, but perhaps aiming at a different target application.
I’ve used the term “carrier cloud” to refer to the infrastructure operators would need in order to supply hosted features as part or all of current and future services. My model says that carrier cloud would be, if fully realized, the largest single source of new data center deployments globally. Services created from that infrastructure, again referring to my model, would approach an incremental trillion dollars per year in revenue. But realizing carrier cloud has been a problem for operators for two reasons. First, they don’t have the faintest idea of how to do cloud infrastructure. Second, the “first cost” (cost of initial deployments needed to create even a basic service framework) is frighteningly high. Thus, more and more operators are quietly looking at the idea of outsourcing at least the early phase of their carrier cloud. Amazon’s interest could be both credible and timely.
Tetsuya Nakamura has been a fixture in the NFV ISG from the first, though he wasn’t one of the creators of the original “Call for Action” paper published in 2012. As a former vice-chair of the ISG he’s familiar with the people and politics of the NFV initiative, and as an NTT DoCoMo thought leader, he knows the network operator space and its unique problems and challenges. His role is to represent the telecom space in Amazon’s partner solutions team, and his switch from CableLabs to Amazon raises some important questions.
First, questions about NFV in the cable industry. Nakamura and Don Clarke, another NFV pioneer, were both hired by CableLabs for their own NFV program, and both appear to have departed at about the same time, Nakamura to Amazon and Clarke to take a breather in the industry. It’s hard not to read that as an indicator that CableLabs wants to cut back on NFV. I don’t have any specific comments on the CableLabs implications from either of the two, but I do have some views shared in non-attributable form from a cable company executive.
It’s no secret that many in the network operator space feel that NFV hasn’t paid off, and certainly hasn’t brought a return on the enormous effort that’s been devoted to it. My cable company friend tells me that this is the general view of companies in the cable side of the network operator space. According to him, most execs in his own company think NFV is unlikely to help them either reduce costs or improve profits. If that’s the case broadly, which he says he believes it is, then CableLabs as an industry technology body would be under pressure to reduce its efforts in the NFV space.
Another problem that my cable company contact cites is the “telco-centricity” of the NFV work. Most of the operators in the NFV ISG are telcos, most of the vendors are chasing telco opportunities, and most of the initiatives are arguably more valuable to telcos than to cable companies. Not only that, telcos are former public utilities with low internal rates of return and modest ROI expectations, while cable companies tend to have higher IRRs and thus want better ROIs. That fundamental difference in financial policy makes it hard to align technical programs between the two constituencies within the ISG. That’s a good reason for CableLabs to look hard at its NFV commitment.
The second question is what this might mean for Amazon initiatives in the carrier cloud space. IBM’s deal with Vodafone Business seemed directed at providing operators with a way to offer enterprises public cloud services, a move that would presume that Vodafone Business would have a preferential marketing relationship with business customers and could serve as a “virtual cloud provider” using IBM’s infrastructure instead of building out its own. Amazon hardly needs another party to take over some or all of its enterprise marketing, and in fact would probably fear a collision in sales strategy and messaging between that virtual-cloud partner and its own AWS. Might Amazon be instead looking at the “internal” use of carrier cloud, a mission that’s obviously inclusive of hosting NFV?
The obvious question is how an NFV focus would do Amazon much good given that NFV is widely viewed as having fallen short of expectations. My carrier cloud opportunity model says that even in 2019, when most other carrier cloud drivers are still only shaping up, NFV doesn’t command a lot of incremental hosting opportunity. Why, given both these points, would Amazon even consider taking an NFV position, which hiring a former NFV ISG co-chair seems to suggest it is in fact taking? Two possibilities come to mind, the first that Amazon has been deluded by the market hype, and the second that there’s another dimension to NFV to be considered here. It’s hard for me to see how Amazon is deluded about much of anything, so I favor the latter. NFV has credibility, or at least mindshare, in two applications—virtual CPE and mobile infrastructure. Both these have potential value to a public cloud provider like Amazon.
One of the ongoing challenges operators have faced, both telco and cable, is that of pan-provider services. Nearly all operators of both types have a physical infrastructure footprint that’s short of their target market area. Why would AT&T buy DirecTV, if not to extend TV service beyond its wireline footprint? Why has wireless, which doesn’t rely as much on fixed infrastructure, be so competitive when few operators are trying to deploy copper or cable in the ground? Back a decade or more ago, the IPsphere Forum tackled the issue of pan-provider services at the request of operators, and it was tough going because operators interested in pan-provider services all want to be the master player in the pan-provider game. It’s thus an attempt to federate competitive players.
Amazon and other public cloud providers have hosting presence in a fairly wide geography. Suppose that a network operator wanted to offer virtual CPE on another continent? Rather than build out a data center, they could either try to cut a federation deal with a competing carrier on that continent, or they could go to someone like Amazon to host there. The former could fall apart on competitive fear (why not, the “partner” might think, have me be the primary and the other guy the wholesale partner?) or on the more obvious problem that the prospective partner carrier doesn’t even have cloud infrastructure to host in. Thus, Amazon. vCPE might be an on-ramp for telcos looking for carrier cloud hosting instead of carrier cloud deployment. Not big, but timely.
Mobile infrastructure is the other side. This is the application that operators told me was their top priority way back in 2013 (which is one reason why the first NFV PoC I worked on was with Metaswitch on hosted IMS). It has more than double the potential for driving carrier cloud as other NFV applications have, and it’s an application that could be hosted in public cloud infrastructure fairly easily if you can resolve the issue of data plane traffic.
NFV in the form of vCPE isn’t a compelling opportunity, but it might be a gateway to the mobile infrastructure opportunity that’s a pretty good launch point for carrier cloud. That’s particularly true once we get past 2021 into the 5G Core deployment period. And if carrier cloud and 5G are connected to IoT, then Amazon’s position with NFV might lead to a carrier cloud IoT coup.
Nakamura is a credible resource, a credible leader, in this kind of quest, providing that he can quickly absorb the obvious and necessary software-centricity of Amazon. Standards processes are about as far from cloud processes as glaciers are from wildfires. Amazon, in turn, is going to have to gain enough understanding of the carrier cloud opportunity to frame their strategies reasonably. Given the total lack of insight that’s being offered in the media on the topic of NFV and carrier cloud, that’s not going to be easy either.