How Can Operators Differentiate with the Private Telecom Cloud?

5G has created many new business opportunities for Communication Service Providers (CSPs). One of the main value propositions of 5G is its ability to provide performance connectivity, which makes it suitable to enable enterprise use cases that require mobility as well as low-latency and high bandwidths. As such, there have been many new value creations in the 5G enterprise space where CSPs are innovating and providing new services.

In the center of these enterprise 5G deployments lies a unique interplay between the telecom private cloud and public cloud. This is because as CSPs enter the enterprise space, the private telecom cloud which is engineered to support critical telecom network functions such as the core network and Radio Access Network (RAN) to deliver the Quality of Service (QoS) and Service-Level Agreements (SLAs), will meet the public cloud, which usually hosts enterprise applications such as Manufacturing Execution Systems (MES) and Warehouse Management Systems (WMS). Furthermore, there is an increasing convergence between the public and private cloud for CSPs, as more and more telecom network functions, such as BSS and even the core network in some early deployments, are being moved to the public cloud.

As public cloud adoption becomes more relevant for CSPs, and not just for less real time network functions such as BSS, but also for critical telecom ones like the core network (e.g., AT&T deploying their core on Azure for Operators and DISH deploying their core on Amazon Web Services (AWS)) and OSS, the private telecom cloud will begin to jostle for supremacy in this area. For the CSP, the private telecom cloud is a strategic asset that allows the CSP to achieve a few business outcomes, namely:

1. Monopolize value brought to enterprises. This refers to selling services that are uniquely telecom, rather than sharing the market with public cloud vendors. For example, when a CSP enters the enterprise space, there is an opportunity for CSPs to bundle services beyond connectivity, such as cybersecurity solutions, IoT platforms, big data solutions, etc., with their brand. However, public cloud vendors also compete in this space to sell these solutions on their own public cloud, which will directly compete and claim market share from telecom offerings in this area.
2. Differentiate services. The private telecom cloud is an asset optimized by CSPs to run critical telecom operations. While it is technically possible for public clouds to provide telecom-grade performance, troubleshooting network issues in the fastest time and allocating liability would be a challenge. A private telecom cloud maintained by CSPs allows them to have full ownership over service delivery and deliver differentiated end-to-end services on demand.
3. Optimize application performance. Owning private telecom clouds allow CSPs to develop data center footprint leadership and utilize their own telecom engineers to optimize applications in their own cloud, which is a competitive advantage as the private telecom cloud would often host applications that require telecom-grade supporting features such as low-latency and deterministic networking. Leveraging footprint leadership also drives value creation for CSPs by providing end-to-end solutions which requires telecom-grade connectivity at scale. This is especially true for use cases which will require public roaming or interworking with multiple networks, such as tracking deliveries beyond the warehouse and inter-hospital networking for use cases such as remote consultation and transferring high-bandwidth X-ray images.

CSPs that have an extensive private telecom cloud asset base should leverage it as one of the key value propositions to 5G enterprise customers when selling end-to-end IoT solutions, as the private telecom cloud should be treated as a CSP asset which is optimized for real-time and heavy data usage telecom network functions. If a CSP has a large private telecom cloud footprint, it will enable their core competencies in connectivity and support the needed SLAs for low-latency applications and even deterministic use cases, such as 5G-enabled motion control in robotic arms.

The private telecom cloud can also help CSPs maintain brand leadership and solidify market share for ancillary services such as enterprise solutions. For example, with the private telecom cloud, CSPs can enter the 5G enterprise market offering end-to-end solutions, including performance connectivity, IoT platforms, and data solutions, all with the CSP’s branding. One such example is the deployment of an end-to-end logistics solution in Sichuan by China Telecom and ZTE. In this use case China Telecom connects three billion RMB (468 million USD) worth of end device terminals across the supply chain (i.e., warehouse, supplier factory, last-mile delivery, etc.) and manages it directly in their telecom private cloud. In this end-to-end solution, the China Telecom private cloud with ZTE’s telecom cloud management solution is responsible for enabling many 5G use cases such as material tracking, Customer Relationship Management (CRM), scheduling and routing of freight vehicles, 5G enabled Autonomous Guided Vehicles (AGVs), IoT management of devices, and more for the logistics company.

As enterprises are moving towards consolidating software systems onto the cloud, CSPs can enter this market and provide performance connectivity, SLAs, as well as features such as Ultra-Reliable Low-Latency and Time Sensitive Networking (TSN), and provide digital transformation for enterprises through 5G. Furthermore, many enterprises might opt for a more private cloud solution to ensure that data does not leave the campus or is fully secure in a private cloud. However, this is not to say that public cloud is something that CSPs should avoid. Many vendors, enterprises, and CSPs that ABI Research interviewed did mention that multi-cloud capability is as an increasingly important component of the telecom cloud. While CSPs must leverage on their own private telecom cloud to gain foothold in the enterprise market, they cannot neglect the demands of their customers and the increasing number of applications being built and deployed on the public cloud. Eventually, CSPs must ensure that they have multi-cloud capabilities to better serve the enterprise market while maintaining their competitive advantage in being able to deliver the 5G suite of capabilities to enable next generation enterprise use cases.