Edge and cloud-native telecom are two sides of the same coin – but to realize revenues, telcos must also reset their architectural compass.
“It’s not a matter of if hyper-scale cloud providers can deploy telco networks, it’s a matter of when.”
The distributed cloud and network edge remain important opportunities for CSPs globally. However, this opportunity is already under threat from nimbler, globally scaled players like the public cloud providers. In under a decade, we have moved to a position where the public cloud providers have global networks of equivalent or larger scale to CSPs, have datacenter deployments at the regional scale of many operators, and can deploy edge infrastructure with an agility that is rarely managed by CSPs.
Today CSPs are investing massively in new technologies like 5G, but to date, there has been little or no change in the market from this. 5G has become just another allocation of spectrum to satisfy the insatiable demand for video traffic from the consumer to the internet. All of these are not translating into any ARPU increase. CSPs will continue to need to provide end-user with internet (North to South) connectivity. However, the value-add of these services will mostly remain outside the CSP, with the added threat of the increasing disaggregation of parts of this connectivity closer to the end user.
“Being closer to the end customer is not enough”
Edge has always been seen as a key differentiator for telco, but that differentiation needs to be more than physical ownership of central offices and cell sites. Being closer to the customer is only of use where that edge presence is truly used to the full.
Appledore believes the future for CSP revenue growth is at the edge, but to achieve this telcos must rapidly enable dynamic, high-quality, edge-to-edge application connectivity (East to West) connectivity. Central to achieving this is a distributed cloud-native network that can support these high-value services. High-value services where there are no pre-known “killer use cases”. High-value services that may only last minutes.
“Network as Boxes needs to become Network as Software”
This is no longer the traditional telco network of physical boxes and pre-planned connectivity between them. Only truly cloud-native networks, based on software, can support this highly diverse, distributed, ephemeral set of services. Only cloud-native networks can support services that need to both scale down to enable new innovative services, whilst scaling up when or if these services become successful. Only cloud-native networks can “sustainably” scale up/down to meet this service demand.
Achieving cloud-native network success where the edge is everywhere
I explore these themes and issues with my colleague Francis Haysom in a new Research Note. In this, we explore what the new telco edge looks like and what the future cloud network needs to look like to drive revenue for telcos.
As a follow-up, we will be looking at how this Telco Cloud opportunity can be adopted by CSPs and the characteristics and personas of different CSPs globally that will dictate the approach and ultimate success in adopting Telco Cloud. We will also look at the key characteristics that vendors must deliver for successful Telco Cloud in all types of CSP.
Rahul Atri is a Consulting Analyst with Appledore Research.