What will happen when 5G network falls in love with public cloud?

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Recently, AT&T, the second largest mobile communications operator in the United States, announced a partnership with public cloud giant Microsoft to migrate its 5G mobile network to the Azure public cloud, which once again caused a stir in the communications industry. Previously, AT&T's competitor DISH also announced a partnership with Amazon, the world's number one public cloud market, to build its 5G network on the AWS public cloud to provide users with 5G public and private network services.

At the same time, public cloud giants have also flexed their muscles at communications exhibitions. At the just-concluded 2021 MWC, Amazon AWS announced a complete 5G development strategy, pushing communications operators to transfer 5G services to AWS public cloud and promising to provide value to them more quickly. Google, another giant in the public cloud market, has also announced cooperation with communications equipment manufacturers such as Nokia, Intel and Ericsson to develop 5G and edge cloud solutions to provide innovative services for operators.

Light Reading, a well-known communications industry media, commented that as more and more communications operators cooperate with public cloud giants to deeply integrate 5G networks with third-party public clouds, the global 5G industry will usher in a groundbreaking transformation. Specifically, the deepening of cooperation between communications operators, especially US operators and public cloud giants in the 5G era has its own special background:

First, this is determined by the competitive situation in the US cloud computing market.

After nearly a decade of expansion, the public and private cloud markets in the United States have become a situation where Internet and IT giants such as Amazon, Microsoft, Google, IBM and Oracle compete with each other. Telecommunications operators such as Verizon and AT&T, which entered the battle group by investing heavily in IDC data centers, eventually failed. They not only withdrew from the competition for the public cloud market, but also adopted the strategy of purchasing cloud services from outside rather than building cloud platforms in the deployment of private clouds within the company, and indeed obtained financial benefits from saving fixed capital investment in the process. Entering the 5G era, 5G networks need to meet the network development needs of a thousand-fold increase in traffic, ultra-low latency and massive device connections. Therefore, cloud-based architecture and service-oriented design have become the architectural guarantee of 5G core networks. Therefore, it has become a natural choice for American telecommunications operators to save construction and operation costs by carrying 5G networks through public clouds.

Second, this is determined by the different functional positioning of "cloud" and "network" in the new information infrastructure architecture.

Traditional enterprises around the world are pursuing digital transformation. The new information infrastructure that supports traditional enterprises to achieve digital transformation includes new technologies, computing power and communication networks. Among them, cloud computing occupies a core position in connecting to communication networks and new technology applications, and plays a core role in integrating the technical capabilities of "network" and "computing" to provide a deployment environment for new technology applications. The so-called "network follows the cloud" refers to the leading ability of cloud computing to accelerate network changes and promote the optimization and upgrading of communication network infrastructure to meet different business needs. Reflected in the ability positioning of communication operators and cloud service providers, in terms of serving the digital transformation of traditional enterprises, cloud service providers are closest to users and understand their needs best. They are also the final integrators who directly provide users with a package of solutions including network capabilities. Therefore, in the business model of serving enterprise users' digital transformation, cloud service providers have more say than communication operators who only provide network connection capabilities.

Finally, this is determined by the urgent need for 5G networks to realize commercial value through industry applications.

5G networks have the characteristics of high bandwidth, low latency, and massive connections. They will accelerate the development of various industry applications such as the Industrial Internet, the Internet of Things, AR/VR, and autonomous driving, which is also where the value of 5G technology is maximized. However, in the process of commercial deployment, how to realize the technical value of 5G networks on the user side is not the core advantage of communications operators who focus on building connectivity capabilities. Therefore, it is necessary to integrate the core modules of these industry applications into the cloud computing platform, and accelerate the innovation and implementation of 5G industry applications through the opening of cloud service providers' IT capabilities such as AI, cloud orchestration, and machine learning, so as to realize the commercialization of 5G technology by providing service capabilities for traditional enterprises to carry out digital transformation in the fields of design, R&D, production, operation, management, and business. The profit model of 5G business will change from traffic monetization to service monetization. Communications operators can only accelerate this monetization process through in-depth cooperation with cloud service providers.

There are two main business models for the integration of 5G networks and public clouds of communication operators. One is to integrate public cloud services into the operator's 5G network in the form of edge cloud, and the communication operator and cloud service provider form a joint force to jointly develop 5G industry applications; the second is to directly deploy the 5G network on the public cloud, and the communication operator uses the architecture and computing power of the cloud service provider to reduce the cost of network construction and operation and maintenance. At present, AT&T adopts a strategy of running two models in parallel. On the one hand, it deploys 5G networks through Azure public cloud through cooperation with Microsoft, and on the other hand, it cooperates with Google Cloud to integrate Google Maps, Android applications, AR/VR and other applications into 5G edge cloud to provide services to users, thus becoming one of the communication operators in the industry that is most open and thoroughly embraces public cloud service providers.

On the other hand, the domestic 5G and public cloud markets in my country present a different picture. As traditional enterprises in my country are still in the early stages of digital transformation, although the rate of enterprises going to the cloud has increased significantly, IaaS, which aims to reduce IT expenditures, is still the main public cloud service model currently adopted by enterprises, while the SaaS model that can maximize the value of cloud services is still in a state of preparation. Therefore, the current domestic public cloud market is still in the stage of IaaS melee among giants such as Alibaba Cloud, Tencent Cloud, Huawei Cloud and Tianyi Cloud. Operators including China Telecom and China Mobile are still working hard to build their own clouds, and still hope to compete for the dominant position in the public cloud by using the advantages of network coverage, access speed and transmission quality that directly affect the user experience of using cloud services. Therefore, cloud-network integration in the Chinese market is mainly a concept advocated by communication operators, with the aim of building a strong position through self-built networks and self-built clouds, and integrating the applications of other cloud service providers to enhance the value of 5G technology.

However, as the pace of digital transformation of Chinese enterprises accelerates, cloud demand will inevitably shift from IaaS to SaaS. Enterprise users will no longer be satisfied with using only infrastructure layer services (IaaS) to complete resource cloudification, but expect to achieve comprehensive cloudification of enterprise management and business systems through application software layer services (SaaS). Therefore, the future public cloud market will focus on the competition of SaaS services, and the software technology capabilities and accumulation of Internet companies and IT companies will become the key to victory, while the importance and voice of network connection capabilities will gradually decline with the improvement of network neutrality principles and universal service capabilities. Therefore, for my country's communication operators, it is a good idea to find suitable cloud service providers and partners at this stage to start in-depth cooperation to form innovative synergies in the competition of SaaS services. In this regard, AT&T's current experience is worth reference and study.