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5G Core and Edge Networks Benefit from Public Cloud

Public cloud computing platforms serve as the foundation for enterprise digital business. Increasingly, telecom service providers seek to partner with hyperscale cloud providers to use their scalable compute capacity and flexible object storage.

Affordable compute capacity is the primary reason a growing number of network equipment vendors and telecom service providers are now exploring global public clouds as a complement to telco 5G core and cloud-edge infrastructure.

According to the latest worldwide market study by ABI Research, the public cloud is set to spur new growth for the telco cloud market, which is forecasted to grow to $29.3 billion by 2025, at a Compound Annual Growth Rate (CAGR) of 27 percent.

Telco Cloud Infrastructure Market Development

The perceived low cost of ownership, little or no implementation risk, plus increased business agility and innovation are some of the key drivers that are propelling the advance of cloud computing capacity in the telecom sector.

"Adoption of public cloud constitutes an evolutionary path on three fronts; technology evolution, operational changes, and service evolution," said Don Alusha, senior analyst at ABI Research. "Technology evolution of the public cloud, and broader cloudification efforts, is a key enabler for a more digital telco ecosystem."

Operational changes in cloud computing efficiencies enable telcos to propel service convergence by intelligently fusing siloed internal processes. And, service evolution is the quest to enhance existing business models, which also stands to be a key reason behind the adoption of the public cloud.

Communication services remain at the heart of telco business, but with the public cloud as a foundation, many large Tier-1 telecom service providers are increasingly diversifying into information and communication technology (ICT) services.

AT&T, Telefonica Tech, Verizon, and Vodafone are embracing the public cloud for new value creation outside of their historical consumer markets. Furthermore, platforms are going to be at the center of new commercial forays, particularly enterprise 5G, which inherently constitutes a horizontal value creation.

Telcos will capture growth if they drive the intelligent connectivity to combine dispersed cloud platforms; the human capital to innovate on clouds; tap into the cloud ecosystem of independent software vendors, and apply their governance to get the best out of this ecosystem.

"Naturally, this change will not happen overnight, even in the most progressive of the telcos. But it is vital that, in close collaboration with network equipment providers and hyperscalers, telcos plant the seeds of cloud and software platforms today to create new value tomorrow," Alusha adds.

With public cloud platforms, hyperscalers typically develop and control a homogeneous tech ecosystem. In contrast, telcos procure their solutions from many different infrastructure suppliers that compete and move sometimes slightly, sometimes substantially, in different directions.

So, what does a proliferation of cloud platforms in telecoms mean for traditional network equipment vendors? According to the ABI assessment, it means that the successful vendor of the future will need to shoulder much more of the financial risk of a telco adopting their new products and services.

They need to invest in telco success by going beyond merely installing and integrating capabilities. They need to guide telecom service providers -- and their enterprise customer prospects -- to consume capabilities they have at their disposal. Sometimes doing everything for them, as-a-service.

Outlook for Public Cloud with Telecom Service Providers

The exact role that public clouds will play in how they help to shape the telco system going forward remains to be seen. The industry at large must have the willingness to stake future growth and success on the ability to make commitments today that may not pay off until well into the future.

"In other words, new-growth strategies should begin with a high tolerance for risk and what we do not know over the cloud and associated economic models rather than what we do, for successful strategies must be built upon a degree of unpredictability, not in spite of it," Alusha concludes.

Going forward, I believe that traditional network equipment vendors will also be judged on their ability to embrace open hardware and software models which enable telecom service providers to architect and deploy infrastructure from a mix of purpose-built platforms. This is the evolving telco market reality.

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