Cloud Business for Telecom Operators

By Ruben Barrera, Engagement Development Manager, Ericsson Latin America

Telecom operator situation
Thanks to Ericsson’s global presence, we see that most telecom operators are seeing a clear decline in PSTN business. At the same time, PLMN is a mature market in which SMS and voice services are declining, but compensating with the growth in users and data services to the extent that numbers are still in the black. The question is, for how long?

The action is clear: new income flows and a reduction in opex and capex are needed. The mass market service evolution trend is oriented toward an extensive use of broadband and mobility. Enterprise segment evolution is focused on economic aspects, changing communications, mobility, data centers and cloud/SDN (with security as top priority).

In order to attract new customers and enterprise segments, the implementation of new services is needed, with a significant reduction in time-to-market (TTM) and lower capital and operational expenditures.
Some operators have stated that their goal is to be more flexible, efficient and innovative. A new way to evolve telecommunication networks must be defined in order to meet these challenges, and this is done by defining Network Functions Virtualization (NFV). Now, for the first time, telecom operators are defining the evolution.

Making money from the cloud: Enterprise IT/data center market
Most large companies’ IT departments are already running cloud environments for their internal IT systems, and starting to enjoy the benefits of the cloud. This is a good way to employ hardware capabilities for different applications and to cope with hardware and software lifecycle management, which is often the main problem in IT areas.

Some medium-sized enterprises are in the process of evaluating cloud systems, as they are costly for initial deployments, as not all IT applications are able to run in the cloud today. Smaller businesses are considering if they should dedicate money creating IT Data Centers, especially when there are cloud solutions at hand.

Enterprises are willing to expend in the data center to improve security, management, scalability, and application performance. What if operators could deliver these drivers for them and be perceived as IT cloud providers? What would this imply for their networks? How can operators make a better cloud offering than OTTs?

Different types of cloud
Some operators’ IT departments already have some clouds and applications virtualized, for services that require a handful of queries per service and are deployed to only few sites. This is what is called the “private cloud,” and in the domain of the Chief Information Officer.

Can this “private cloud” be exposed to mass and enterprise segments? Does it provide needed security, capacity, manageability and service-level agreement (SLA) fulfillment? Surely not. More complex capabilities in the IT cloud are required in order to deliver Platform-as-a-Service (PaaS) or Infrastructure-as-a-Service (IaaS). At this point, the consideration is in terms of what are known as the “public cloud” and “enterprise cloud.”

Telecommunication nodes are evolving into NFV and require flexibility, performance and security from the cloud environment, issues that the Chief Technology Officer is quite well aware of. Thus the question is: Are the public or private clouds good enough to secure telco nodes? Especially considering, for example, that telco applications demand hundreds of queries for a basic call set up. It becomes clear that telecom nodes require their own cloud: the “telco cloud”.

ffigure 1

 

Major benefits of the cloud
When we talk about the major benefits of the cloud, we are not talking only about reducing costs and having cheap computing, network and storage capabilities. Rather, the cloud’s major benefit is related to the ability to disrupt markets by accelerating the speed of business, without losing control.

The cloud provides tools to the enterprise so that they can create and provision the network with SLAs that they are willing to pay for—SLAs that only telco operators are able to meet due to the proximity they have today with their existing network sites (less than 500 meters). This is the major competitive advantage over niche IT/data center cloud providers.

The cloud environment enables movement of applications from one site, city or country to another, all in just a few minutes. Most process are already automated and in systems with high performance and efficiency. All this is secured thanks to interoperability, as well as different standards and forums related to the cloud.

All telecom networks are built on dedicated nodes per application. Recently, with the introduction of IMS, decomposition of functional entities has started, but each node still in its own hardware.

Cloud principles, names and architectures are completely new and quite different from current telecom deployments. Even so, most of the key principles of redundancy, resilience, isolation and management are kept, but now make use of the new cloud environment capabilities .

Building the cloud ecosystem
Taking the cloud into reality has not been the same path for all operators, and goes far beyond installing industry processors, database and networking equipment with hypervisor and virtualization software; its own ecosystem must be created.

There are some areas that can be taken into consideration. In Figure 2, for example, the lower layer refers to telecom next generation/evolved infrastructure with data centers (with HyperScale technologies) that are seen as exposed computing, database and networking components.

ffigure 2
Hardware is virtualized by a cloud infrastructure and management layer that considers cloud execution environment and cloud manager functions. The intention is to provide to the cloud security, governance and compliance capabilities, so that the cloud could then be used for telecom, IT or enterprise.

One important component that is normally taken aside is the required professional services involved, from consulting to implementation, so few companies can take full responsibility to turn the cloud into reality.

Conclusion
The telecom operator’s business has changed and disruptive opportunity is ahead, so operators are in the best position to ride into the cloud market.

Enterprises are willing to invest in cloud services, as long as they have security, availability and better prices. These can be secured by enabling telecom cloud elements with cloud capabilities, so that telecom operators can sell PaaS/IaaS with a true commitment to enterprise. As a leading global ICT company, Ericsson provides a wide range of services and infrastructure necessary to create cloud environments.