More Carrier Cloud Action, with No Outsourcing

The latest in the carrier-cloud 5G story could be big, but not for the mainstream network infrastructure vendors.  Dish announced it had picked VMware’s Telco Cloud solution for its 5G network, a platform that will be hosting the Mavenir open RAN software and almost certainly their 5G Core elements as well.  VMware will serve as a prime integrator for other components of 5G and carrier cloud.  The operative question is whether the story just “could be big” or “will be”.

This deal is important for both VMware and Dish.  VMware needs to establish itself as a credible carrier cloud infrastructure vendor, a vendor who can build and integrate a 5G and carrier cloud ecosystem.  Dish needs something to save it from the continued decline of the cable-and-satellite TV business.

Dish is suffering from major losses in its satellite TV business, and has been struggling to figure out what it could do for its next act.  They had a satellite IoT strategy that, predictably, went nowhere because the initiative seemed to be driven more by IoT hype than any respectable business planning.  5G mobile is its next attempt, and obviously you have to take the prior IoT flop into account when judging the credibility of its initiatives there.

Still, Dish has made some sensible moves.  They acquired Boost Mobile from T-Mobile, which gave them access to T-Mobile’s network for seven years, and they’ve purchased over $20 billion in spectrum over the last ten years or so.  The Boost deal (T-Mobile had to sell Boost as a part of the Sprint/T-Mobile merger approvals process) gives Dish time to frame a logical 5G strategy free from the pressure that’s impacting other 5G players and hopefuls.

From the start, it’s appeared that Dish intended to use that time to formulate a 5G infrastructure plan based (as much as possible) on the cloud, on software, and on open-model networking principles.  Mavenir is one of the few companies who offer a 5G software solution from RAN to core, and they inked that deal in April of this year.  The decision to use VMware’s Telco Cloud software as the infrastructure platform gives credence to what I’ve heard, which is that Dish intends to implement the full 5G stack, including 5G Core software.  However, neither Dish’s nor VMware’s PR have made that point explicitly.

The first question this all raises is whether Dish is serious this time, and I think it is.  They’ve got no real options, other than to simply fade into the sunset.  While their satellite TV business is still supporting millions of customers, the business is deteriorating, along with margins and profits.  The deal for Boost and the spectrum acquisitions would seem to commit Dish to 5G mobile.

The second question is whether Dish can make this work, serious or not.  Are they still perhaps hopeful that 5G IoT will ride up to save them?  I think there’s an element of that thinking that still prevails, but it’s more a kicker on other drivers, or an attempt to redeem a costly blunder.  I think that the strategy of Boost plus spectrum plus Mavenir plus VMware suggests that they realize two important truths about their opportunity.

Truth One is that if they’re going to succeed in 5G, they’re going to have to manage infrastructure and operations costs relentlessly.  In the near term, there is little or no chance that any meaningful 5G technical differentiation will be possible, and little chance that any “killer app” will emerge that they could latch onto.  That means that profitable service offerings will have to be profitable because they have lower costs.  Buying the same technology as current 5G mobile competitors to achieve cost primacy would be a fairly foolish approach.

Truth Two, though, is that cost management vanishes to a point, along with those who hope to survive on that alone.  There will have to be something available as a service revenue kicker, and that something will almost surely have to be a form of over-the-top service set that leverages the agility of cloud-native technology.  The same drivers that dominate the future of “carrier cloud” in general are the opportunities that Dish has to try to exploit.  Thus, they need to be thinking “carrier cloud” from the first.

Realizing truth is a necessary condition for successfully exploiting it, but not a sufficient condition.  Network operators have, for literally decades, ignored reality in their strategies for “transformation”.  The biggest advantage that Dish may have over those operators is the lack of history, the lack of a culture that’s bounded the operators into “connection-think” with respect to services.  But even with a lack of negative bias, Dish will need positive skills to make this work, and from what I hear, they do not have them internally.  That means they’ll be dependent on Mavenir and VMware to supply them.

Both these companies have strong credentials in the specific areas where Dish has engaged them.  Mavenir knows 5G virtualization and infrastructure, including open RAN.  VMware knows cloud-native infrastructure and hosting.  That’s enough for Dish to realize the implications of Truth One, as I’ve outlined it above.

Who knows the rest of carrier cloud?  Truth Two says that Truth One is a transitional strategy, which implies that there has to be a transition to something else.  Carrier cloud depends, in the long term, on the successful exploitation of IoT-related services, personalization, and contextualization.  I’ve blogged about all of these in the past so I won’t bore you with more of it here.  The point is that there are enormous service opportunities associated with each of these things, opportunities the operators could realize with their own retail OTT offerings (subject to regulatory approval) or via wholesale features that they’d let OTTs compose at the retail level.

I don’t have any reason to believe that either VMware or Mavenir have any capabilities in these new areas.  They might, but given the fact that very few operators or vendors have demonstrated any vision beyond connectivity, it’s safer to presume that they don’t have the skills yet either.  That means that they’d have to develop them, and quickly.

The challenge this sort of thing creates for Dish is pretty obvious.  If they raise a banner but fail to raise an army, they signal their intentions to a host of others who may not make the same mistake.  Of particular concern to Dish’s hopes, and the hopes of Mavenir and VMware, are the public cloud providers Google, IBM, and Microsoft.  All of these players have clear carrier-cloud engagement hopes, and plans to exploit those hopes.

Google has had recent success in promoting relationships with telcos to outsource some carrier cloud applications relating to 5G.  Microsoft acquired Metaswitch, who like Mavenir is a pioneer in virtualized mobile infrastructure.  IBM has Red Hat, who can muster similar tools and capabilities to those of VMware.

VMware might benefit from Amazon’s inclusion of them in what appears to be an emerging telco and carrier cloud strategy, but Amazon is the cloud partner the operators seem to fear the most.  Still, Amazon hosts more OTT services in the cloud than any other cloud provider, perhaps as many as all the others combined.

One potentially ominous sign, IMHO, is the comment carried in Light Reading that “The companies explained that they will work together to test and certify vendors’ network functions as they are installed in Dish’s network, such as those from other Dish vendors like Mavenir and Altiostar.”  This could be interpreted as a dependence on NFV for the service functions.  NFV isn’t useful in 5G infrastructure, though it could be cobbled together to work.  It’s totally useless as a framework for other future carrier cloud services, which have no connection with devices and thus don’t fit the NFV mold of transforming devices into virtual devices.

VMware has this slant in its own Telco Cloud material, and I think it represents their biggest risk overall, and as far as the success of the Dish initiative is concerned.  At the least, an NFV story tends to submerge the benefits of asserting cloud-native hosting and service creation, since NFV has yet to define any meaningful cloud-native initiative.  Ericsson, the leading “traditional” 5G vendor, is already buffing up its’ own 5G cloud-native story.  Thus, coming up with a real strategy for carrier-cloud function hosting that works for connection service elements and OTT service elements should be VMware’s, Dish’s and even Mavenir’s top priority.