Sean Furey

Telcos will invest $1bn (USD) on average in telco cloud transformation over the next 3-5 years

6 minutes

Telco cloud as described by VMWare “is network architecture that combines software-defined n...

By Sean Furey

Head of Marketing

Telco cloud as described by VMWare “is network architecture that combines software-defined networking, network functions virtualization, and cloud native technology into a distributed computing network.” 

With the ability to improve the flexibility, scalability, and efficiency of telecoms networks, it’s no surprise that it’s poised for 50% growth in the next five years according to a recent report by Capgemini. In a recent article by telecoms.com, almost half of telecom network capacity will be totally cloud-native in the next three to five years, and operators will spend $200 million each year on that cloud transformation as explained in the aforementioned Capgemini report. If the projected investment made into telco cloud goes ahead, nearly 60% of it will be made in just three areas: technology infrastructure, R&D and workforce. 

One benefit of telco cloud that is driving its growth is the fact that deploying a new core network could become a matter of days or weeks (depending on the size and complexity), compared with the current timeframes which can be up to nine months. 

“Edge sees the most preference for private cloud offered by hyperscalers – 58% in Europe, 50% in the US, and 44% in APAC – compared to all other cloud deployments models.” 

Big investment & revenue improvement to come 

Big telcos will spend on average US$1 billion each on network cloud transformation in the next few years, according to new forecasting from Capgemini. Potential top-line improvement could be $110-210m per year, per operator. And potential bottom-line improvement could range between 260-380m per year, per operator. The financial benefits won’t just come from investment, it’s estimated that telco cloud will also have an impact on the business models of telecoms operators. By moving towards a more software-centric approach, operators can reduce their capital and operational expenditures, as well as streamline their operations. Telco cloud can also enable operators to offer new services and features to their customers, such as network slicing and virtual private networks. 

“Cloud transformation is a fundamental change in the evolution of the network that has been dominated by physical devices and infrastructure,” and “represents a significant change of mindset for telcos,” Capgemini Global Head of Telco Industry Jacques Assaraf noted. 

Telco cloud’s effect on recruitment 

The boost in collaboration between hyperscalers and telco's is resulting in First Point Group seeing an increase in clients recruiting for the following positions: Cloud Engineer jobs, Cloud infrastructure Engineer jobs, Cloud Development Engineer jobs, Cloud Architect jobs, Open Shift Engineer jobs, Systems Administrator jobs, DevOps Engineer jobs, as well as various other management and support roles within cloud and DevOps. 

We expect to see more of these roles in the near future, especially given the amount of collaborations that are being announced at Mobile World Congress 2023 (MWC23). 

“Potential top-line improvement could be $110-210m per year, per operator. And potential bottom-line improvement could range between 260-380m per year, per operator” 

Hyperscalers in telecommunications 

At MWC23, there have been plenty of announcements from hyperscalers such as Amazon Web Services (AWS), Microsoft Azure, and Google Cloud and discussions on day one of MWC was dominated by these hyperscalers showing their capabilities and plans for the future. In recent months, there have been many collaborations between hyperscalers and telecommunications companies, here are just a few examples: 

  • BT, for example, announced that it’s partnering with Kyndryl to move several applications servicing its legacy copper business and consumer broadband products from mainframe computers to the cloud. 
  • Ericsson ran cloud RAN trials with Telstra in Australia, and deployed its first cloud RAN site with US-based Verizon 
  • O2 Telefónica recently announced that it is working with Google Cloud and Ericsson to transition its 5G core network in Germany to cloud 
  • AT&T announced that it will move its 5G mobile network to Microsoft cloud 

How can telcos harness the full potential of telco cloud? 

The Capgemini report highlights five ways in which telcos can unlock the potential of telco cloud. 

1. Devise a comprehensive telco cloud strategy 

- Accelerate service monetization 

- Leverage talent to power innovation 

- Seek to forge strategic partnerships within your ecosystem 

- Manage Cultural transformation 

2. Aim to achieve rapid and efficient monetization of new services 

3. Leverage new talent and automation to foster innovation and agility

4. Seek to forge strategic partnership within your ecosystem

5. Manage a cultural transformation alongside the technological one 

Telco cloud is clearly one of the biggest growth areas and we look forward to seeing if the predictions and potential of telco cloud come to fruition. Exciting times lie ahead for sure. 


 

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