by Danielle Royston, Founder, TelcoDR
A telco will figure out how to really use the public cloud and save 50% on its IT costs – or more
How will it happen? It'll move a ton of software to the cloud and prove: 1) it works; 2) it’ll save a ton of money (the company that embraces the software of the public cloud will see a 50% savings on IT costs); 3) life is sweet! (And way sweeter than it ever was before. I’m talking about taking the oldest, suckiest, super unsexy legacy applications and refactoring them for 90% savings.)
Who’ll be the bold telco? Definitely not a company in the US. Sorry America. It’ll likely be based in Asia, which has moved on from dumb private cloud, and we’ve already seen examples of successful moves to public cloud in this region (take a bow, M1).
In 2021 we might be going back to 1981-style boldness, but it’ll be a huge move forward for modernizing the telco industry. A bold telco will successfully transition to the public cloud and show everyone else how it’s done. Note to everyone else: be prepared, this change will require all hands on deck.
Telcos will take the wrong approach – and fail
Alongside public cloud success, we’ll also witness public cloud failure in 2021. Without a proper understanding of the cloud ecosystem – and what ‘cloud native’ means: see my 2020 round-up above – telcos will foot some spectacular fuck-ups. On that note: if you want to avoid being that telco, look for my blog in January where I’ll clarify cloud language and explain how each part of the telco business can benefit.
Back to those failures though. It’s common sense to move to the public cloud, but there are still so many misconceptions that telcos will get bound in. It’s not just about infrastructure and IT, for instance. It requires a top-down, organization-wide cultural change. It requires clear communication.
Wrong moves will result in failure. Or, if not complete failure, then a load of back-tracking, additional costs and tails between legs. No one wants to hear ‘I told you so.’ Bank of America probably didn’t. For almost a decade, the institution was adamant that ignoring public cloud and obsessing about its vanity project (aka, building its own private cloud) was the way to go. It wasn’t. In 2019, Brian Moynihan, BofA chairman of the board and CEO, admitted that although it had been pursuing private cloud – and spending on private cloud – third-party cloud providers are 25-30% "cheaper.” It then teamed with IBM to develop a public-cloud computing service for banks.
There’s also the cautionary tale of Verizon, a company that thought it was a great idea to spend $1.4 billion on data center provider Terremark. It later realized it couldn’t compete with the might of the hyperscalers and dumped the business on Equinix.
People will fall for IBM’s #fakecloud
You thought the claws of Oracle were bad? In 2021, you’ll see it’s IBM that has the real talons.
In November IBM launched its cloud-for-telco play. Unfortunately for telco – and bad luck for buyers – Big Blue launched a big crock of shit. This is not cloud. It was fake news. It’s #fakecloud. In 2021 we’ll see the results from the poor suckers who’ve invested and we’ll hopefully see a greater realization that a hybrid strategy and a half-assed move to the cloud will never work.
At launch, IBM tried to persuade telco to keep things on-premise. If you do move to the BFCs, then IBM can manage it all for you. What they didn’t mention was that this would happen at a cost, and it’d be a massive waste of time. Telcos that fell for this trap last year will be adding five more years to their public cloud journey, by which time they’ll be way behind competitors that saved time and money, and whose customers love the service they offer.
Be wary of IBM, my telco children. Do not fall for the trap!
OpenRAN will explode
The tail end of 2020 saw OpenRAN start to bubble rapidly to the surface of telco conversations. In 2021, it’s gonna explode. Vendors: be afraid, be very afraid. Ericsson’s revenue will slip even further through its fingers – something it already admitted last year, when CEO Börje Ekholm said he expected OpenRAN market developments to “impact revenues” from 2023 onwards.
Other vendors will hemorrhage revenue as telcos realize that there is (finally!) an alternative to overpriced infrastructure and vendor lock-in. They’ll get choice, at last, picking and choosing best-of-breed elements from whomever the hell they want! More features will be driven into software. Networks will be easier and cheaper to maintain, easier and cheaper to upgrade. Spend on RAN will go from historic levels of around 90% of total spend to 50XX%. It might not be next year, but the development and industry excitement around disaggregated network components will certainly define the trajectory of telcos’ decision making next year.
Pioneers like Rakuten will gain column inches and market share next year. It’s no wonder: Rakuten claims operators can reduce capex CAPEX by 40% with its telco-in-a-box network. Vodafone has also been staking its claim in the OpenRAN space: last November it announced it would be deploying OpenRAN technology at 2,600 mobile sites across Wales and the South West of England.
Experimentation is the name of the game here. There might be failures along the way, but telcos will be less afraid of dipping their toe in the OpenRAN water. This will gear them up for taking a plunge in the public cloud ocean down the line.
There’ll always be another G
You can’t move nowadays without being bombarded with something about a ‘G.’ Clearly people believe the hype – 5G networks will cover an estimated one billion people by the end of the year, attracting 220 million subscriptions, according to Ericsson. And it’s not all about faster speeds and greater capacity … research suggests 5G is 90% more energy efficient than legacy mobile infrastructure.
Telcos are set to ramp-up 5G investment in 2021, according to Fitch Ratings, which has warned there will be increased pressure on credit metrics for most worldwide. Free cash flow, it says, will be constrained over the next three years. But if telcos believe they can monetize all 5G capex by simply boosting customer experience, that’s just not possible. Instead, they should focus on bringing new forms of life into reality with the help of 5G – I’m thinking best-in-class remote work, e-learning and virtual services.
That capex pressure will only increase with demands for more connections, higher speeds, greater capacity. Telcos simply can’t afford NOT to move to the public cloud, helping them to further enrich their offerings, as well as cut time and costs with reduced latency. Only the foolish would add to that capex pressure by building their own cloud – remove that headache by using the BFCs!
