Telecom operators and hyperscalers continue to quantify the level of exposure and risk they are willing to assume in order to operate and presumably profit from next-generation networks. This has resulted in the establishment of dividing lines between their respective operating parcels. However, work in this area with services such as private 5G networks demonstrates flexibility.

Currently, operators dominate the majority of telecommunications-based interactions with consumer and business end users. This is largely attributable to the historical relationships between these consumers and their communication service provider.

However, operators are acutely aware of the effect hyperscalers have on their 5G network design.

“I think they already have,” Amy Zwarico, director for cybersecurity in AT&T’s Chief Security Office, said during the recent Telco Cloud and Edge Forum 2023 virtual event. “I mean, just to be blunt about that. I think it will change the way – certainly from an operator perspective – it’s going to change the way we do deployments.”

Zwarico remarked that this effect is also being felt by the traditional vendor community.

“They’re no longer delivering, take for example, 5G core,” she added. “I get the 5G core delivered as microservices, as containers. I’m no longer getting hardware from my traditional vendor who shipped me something to the loading dock that was hardware and software together. It’s definitely happened already. … It’s the norm … we’re gonna see more and more of it.”

However, hyperscalers have limitations when it comes to commercial wireless services. They are avoiding the financial obligations of purchasing licensed spectrum, on which telecom operators have spent tens of billions of dollars, and the costs associated with operating the day-to-day operations. Instead, they are leveraging the scalability of their cloud infrastructure.

“Our goal is, I want to make AWS the best place to run 5G networks,” Jan Hofmeyr, VP for Amazon Web Services (AWS) EC2 said during an interview at that hyperscaler’s re:Invent show late last year. “That is the overarching objective. How can I make AWS, whether we are running it in the region, in a Local Zone, on an Outposts, on a Snow device, how do we make it the best place to run a 5G network, and then provide that infrastructure.”

This sentiment was reiterated by Microsoft Vice President of Product Management Shawn Hakl.

“We are trying to make sure that we have an optimum customer experience, so we’ll be constantly pushing for whatever makes the most sense from a customer access perspective,” Hakl said during the Telco Cloud and Edge Forum. “I don’t think that there’s a scenario in which, and when Microsoft does this in many industries where we want to run the network on behalf of an operator, I think … it’s your customers, it’s your network, it’s your products. We just like to see it powered by a hybrid carrier-grade cloud.”

Hakl added that ideally, this situation would benefit both parties.

“I think we have an opportunity to grow the pie together,” Hakl said. “I think this is where the excitement comes in. I will tell you this does involve deploying a lot of technology and securing a lot of data in an extended infrastructure. And that’s really where I see the value of the hyperscale platforms come into play.”

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One area where growth is anticipated is private networks, where operators and hyperscalers are investing to entice deployment and managed service contracts from enterprises.

The operators are addressing this issue by leveraging their already established connectivity relationships with these businesses and their extensive licensed spectrum holdings. While many have observed sluggish adoption thus far, they anticipate this market to be financially lucrative.

AT&T’s COO Jeff McElfresh stated at a conference for investors last month that the company expects its sluggish roll into the private 5G network and mobile edge compute (MEC) space will begin to pay dividends in the near future, but it remains cautious about the immediate impact.

“As we start to see more 5G chipsets getting embedded in edge equipment – not just devices that we use with our hands – I think you’re gonna begin to see a larger, growing revenue stream from the 5G spectrum deployed in the enterprise space with those basic services,” McElfresh said. “[It] doesn’t require a lot of really high science and private networking, for example, to achieve that monetization. I’m encouraged because that’s the trend that I am seeing in the discussions with our largest enterprise accounts.”

The hyperscalers are also beginning to enter this market, aided by their long-standing cloud relationships and the expanding influence of the Citizens Broadband Radio Service (CBRS) spectrum band.

Amazon Web Services (AWS), for example, offers a Private 5G Platform that combines small cell radio units, AWS Outposts servers, a 5G core, and radio access network (RAN) software operating on AWS-managed hardware.

However, AWS also provides services that are more operator-centric. AWS has recently introduced the Telco Network Builder service, which is geared toward telecom operators and businesses that wish to deploy private wireless networks with minimal network administration requirements. It also introduced its Integrated Private Wireless on AWS platform, which functions as an infrastructure bridge for operators who wish to provide end users with a private network service that taps into AWS’ infrastructure.

Dan Hays, a partner at PwC, stated during an interview at the MWC Barcelona 2023 conference that hyperscalers are likely to maintain a certain level of separation from operators in the near future.

“They’ve shown a willingness to go end-to-end, but even then, they’re not doing it on their own. They all have partners that are providing help,” Hays said, noting they are “more of a threat” in the private network space. “I don’t think anybody sees a hyperscaler as being interested in taking on a true operator role. They would love to be the black box that everything runs on and they’d love to provide as much of the software for it as we move toward more of an open RAN, more of an open architecture for the network.”

Source: SDX Central