What might actually drive telcos to host 5G on public cloud services? That’s another issue that we’re starting to see some clarity on, as operators get the range on 2021 budgets and which of their tech plans might be fulfilled. Clarity doesn’t mean firm conviction, though, as we’ll see.
Operators list three reasons for their interest in 5G-on-public-cloud. First, they have some service sites where they have no current physical footprint. Out-of-region is particularly an issue for operators who have long had a wireline service footprint, and whose available real estate is associated with it. Second, they are not confident about the state of an open solution to 5G, but want to avoid a proprietary one. The cloud, in this case, is a kind of placeholder. Finally, they lack confidence in their ability to deploy their own “carrier cloud”. This is the group that intends to stay with public cloud services for considerable time, at least until that confidence is built.
An issue that cuts across all these motivations is that of the relationship between Open RAN, which is well understood, and evolving 5G services, which are not. As I noted in my blog yesterday, it’s hard to see a lot of new 5G applications evolving with features like slicing confined to the RAN. But for them to get out of a local RAN domain, we need an understanding of how to extend slicing and the standards and implementations needed to facilitate the extension.
Another cross-motivational issue is that of hosting OSS/BSS in the public cloud. Most operators are at least interested in this, and many are already dabbling in the ways it could be done. Some OSS/BSS systems have evolved away from the monolithic-and-batch model of the old era, but not all of them. In addition, effective use of the public cloud to support any application will also involve at least some revision to the business practices being supported, and likely the extension of more autonomy to customers in service buys, changes, and support.
The operators who have the most immediate interest in hosting 5G on public cloud seem to be those with a lot of competition and limited in-house cloud skills. Most operators agree that whether 5G is hosted in the public cloud or not, it’s still a cloud application. If an operator without much cloud expertise is competing for an aggressive and early 5G positioning, they need a short-term option. Even larger operators who have substantial out-of-region wireless business has a similar problem, because 5G hosting alone (even Open RAN) doesn’t justify deploying private cloud data centers everywhere you want to license spectrum.
Where this particular influence isn’t present, there’s an almost-even split among operators with immediate interest, based on whether they think they need more time to get a self-hosted 5G solution, or simply don’t have the skill. A big part of this may be due to operator concerns about the state of “Open 5G” as opposed to Open RAN. Another concern of this segment of the market is the credibility of 5G applications beyond those that have driven 4G. The theory is that if there are credible new 5G revenue sources, it would be better to wait until operators know what they are, before they commit to any new 5G hosting in house. Thus, use public cloud till the situation is clarified.
Operators in this second two-motivation group are also concerned about just who will provide a credible strategy for open 5G. A part of that is uncertainty about the scope needed (RAN versus end-to-end) and a part because operators are seeing a major integration story associated with Open RAN, and think that a full open 5G would require even more.
From this you might believe that operators are really committing in growing numbers to hosting 5G control plane in the public cloud. That’s sort-of-true, but not decisively so, and the reasons relate to the flip side of the motivational story behind public cloud.
One operator says that “lock-in is bad no matter who’s doing the locking.” Public cloud players are seen, by some operators, as less trustworthy than traditional network equipment vendors. They’re almost universally seen as being just as predatory, and they’re an unknown quantity to boot. Then there’s the conviction that once operators decide not to host their own 5G elements, they may be destroying the best justification for starting their own carrier cloud. You don’t need an external force to lock you in with traditional predatory tactics when you’ve surrendered all your other choices anyway.
Carrier cloud, which if fully realized could generate a hundred thousand incremental data center deployments by 2030 according to my model, is the brass ring (nay, the gold ring) to many forward-thinking operator planners. These people think that bit-pushing has been a profit sink for decades, and there’s no reason to think that changing the technology is going to change that economic reality. Thus, operators have to stop relying on pure connectivity and transport for profit, which means they have to rely on something that’s hosted. For which, of course, you need hosts. Do operators want to surrender a big cut of the kind of revenue streams that could justify a hundred thousand data centers? For that kind of money, you could put up with some feelings of personal ignorance, or get educated.
This is another place where we have a balance of forces. Some operators do believe they could run their own carrier clouds. More think that if they gained some cloud experience, they could be effective, but most still have their doubts. The lock-in risk balances against simple fear of screwing things up.
Public cloud providers have generally been careful not to accidentally trigger more lock-in fear. Even those who offer hosted 5G as SaaS aren’t advocating the operator stay with public cloud perpetually. But for OSS/BSS modernization, it’s a different story, and that may be the deciding factor here.
Operators have most of their IT expertise in the CIO organization, running OSS/BSS systems. If those organizations transform to the public cloud, then “cloud knowledge” will come to mean “public cloud knowledge” not “carrier cloud knowledge”, which would mean that the operations part of the carriers would have to develop IT and cloud skills almost from scratch.
In the end, though, the real issue that will drive, or fail to drive, a transformation of 5G hosting to public cloud platforms, is the integration and responsibility issue. Media stories on Dish have listed a dozen different players involved, and operators cringe at jumping into 5G RAN with a cast of thousands trying to sing without a conductor. Who is that conductor? Open strategies in IT have succeeded largely because a vendor took responsibility for creating and sustaining an ecosystem, bring order from the chaos of best-of-breed. I think that unless some major players step up on 5G Open RAN and carrier cloud, operators may take the expedient public-cloud step as what they believe is a transitioning strategy, and then hunker down for the long term.