I must confess to major FOMO in the days leading up to and during to Mobile World Congress in Barcelona. I knew I was not going to be able to attend and I had made my peace with it. Or so I thought. However, I came across an article penned by Sean Kinney at the start of the show, a thoughtful and honest piece on the new work reality for those of us in the telecom and tech worlds and the discomfiting adjustments that have had to be made. In an industry where the news cycle can be measured in hours at times, networking is currency and the inability to do that is a highly disruptive event. One can only hope that 2022 delivers on the promise of a return to pre-pandemic normalcy.
MWC 2021 did not have the blizzard of announcements that one would normally associate with the show. However, against a backdrop of accelerating 5G deployments around the world, and increasing attention being given by telcos to network transformation, there were several announcements related to network infrastructure that are worth exploring further.
Is Telecom rapidly becoming just another vertical?
For those in the know, one of my childhood obsessions was the masterful series of comics about “Asterix”, the indomitable Gaul holding out against the mighty Roman Empire. Created by Rene Goscinny and Albert Uderzo, the Asterix stories captured my imagination despite only being able to read the translated versions. The first page of every comic had a standard boilerplate introduction and included a line about how “One small village of indomitable Gauls still holds out against the invaders.” It was epic!
Admittedly, this will be a flawed analogy, but I will persist, nonetheless. In recent years, the “cloud” has revolutionized the way industries consume IT and one by one, the dominos have continued to fall. Laggard industries are feeling the pinch with lost productivity and an increasing difficulty to find new levers for growth. But one industry vertical, Telecom, has held out against the rampaging storm troopers of the Cloud. Telecom was always different, heavily regulated, with extravagant five nines performance benchmarks, privacy requirements and a litany of other reasons served up to justify why the public cloud just did not make sense for the sector.
No more! In the runup to MWC 2021, there were several announcements of communications service providers (CSPs) deepening their “partnerships” with public cloud vendors like AWS, Google Cloud, Microsoft Azure, IBM, and others. These partnerships go way past moving the IT workloads of telcos to the public cloud. The second wave, as it were, is focused on 5G mobile network cores running on public cloud platforms. Clearly, this is the point where the Asterix analogy starts to break down for telecoms but there is still one major difference to other verticals in that the telcos have a lot to offer the hyperscalers and are changing them as much as the reverse is true. Three such announcements stood out for me.
AT&T and Microsoft Azure. This announcement was in many respects the most significant at this year’s show. Not because AT&T and Microsoft have not already been partners for several years, but the significance lies in AT&T, a heavyweight telco that had made significant investments in building out its Telco Cloud platforms and maintaining its autonomy, is now farming out its core network to be hosted on the Azure for Operators platform. This is a great deal for Microsoft and gives a lot of teeth to its ambitions in the telecom vertical.
AWS was also super busy at the show. Their incoming CEO, Adam Selipsky, touted AWS’ conversations with “virtually every operator in the world”. He also had DISH and Swisscom join his keynote. DISH is a greenfield operator but grabbed attention by becoming the first telco to go “all-in” on AWS. Brownfields like Swisscom will follow a different path, starting with migration of IT workloads before moving onto mobile cores.
Ericsson and Google Cloud announced that they will work together to enable the Ericsson 5G portfolio on Google Cloud’s Anthos platform. This looks like yet another win-win deal for both parties but an important admission by Ericsson that it will not be able to offer the on-ramp for enterprises to deploy new edge use cases and it would be better to partner. For its part, Google Cloud also needs deals like this because they lack the connectivity chops those enterprises increasingly need for their respective digital transformation initiatives.
The Rise of the Rest – O-RAN with INTEL as the common thread
Fareed Zakaria wrote an important book, published over a decade ago, titled “The Post-American World and the Rise of the Rest”. One of the key premises of this book was his positing of the “rise of the rest”, where he referred to the economic and geopolitical rise of new countries and blocs which would replace the unipolar world with the USA at the centre. The “rest” included China, the EU, India, and other emerging powers. A decade later, the central premise of the book seems to have come true, though can quibble about the relative significance of these emerging powers.
The analogy can be extended in some ways to the rise of the new telecom infrastructure vendors who are rushing in to fill in the void left by Huawei getting “cancelled” by former President Trump, as well as responding to renewed momentum for ORAN. Huawei’s difficulties have been well documented, but it bears repeating that their troubles have opened significant opportunities for new vendors to step up and fill the breach. Telcos faced with difficult choices for replacing Huawei in their networks are looking to established vendors like Ericsson and Nokia but are also accelerating their plans for ORAN. We see the following groups of players making up the “rest” in the next few years.
“Tier 2” equipment vendors – the biggest of the rest is Samsung Networks, which has been around for several years already and has scored some major accounts, with Verizon being the largest to date. However, the biggest beneficiary of the ORAN movement appears to be NEC at this stage. NEC is amongst the largest of the Japanese vendors, but it has traditionally had little success outside Japan. In recent years, NEC is best known for its work to enable Rakuten’s mobile network in Japan. However, NEC is now getting a lot of traction outside Japan as well, with recent announcements with Vodafone UK and Deutsche Telekom for Open RAN compliant massive MIMO RAN. NEC has also made a significant announcement with NTT DoCoMo to develop a RAN Intelligent Controller (RIC).
The OpenRAN specialists – one of the companies generating tons of news flow around MWC 2021 was Mavenir, the US-based vendor, including deals with Orange in France, NTT DATA, and Axiata. Mavenir is one of a new breed of vendor I would dub as “ORAN specialists”. Not in the sense that they only make products for ORAN, but they represent the New Kids on the Block (apologies for the dated cultural reference), including companies like Parallel Wireless, Altiostar and a host of others, who have been busily evangelizing the ORAN message and are now moving beyond POCs and trials to bigger commercial deployments.
Systems Integrators/IT specialists – there are two main groups emerging in this category.
Legacy SI’s – for lack of a better term, we are referring to these player as legacy SIs if only to indicate that they have been around for many years and are major players in their respective segments. A good example of this is the ecosystem of SIs in India, with a large base of companies from Infosys, TCS, Wipro and others. Traditionally, these players have relatively limited exposure to the telecom vertical, other than Tech Mahindra. However, this is beginning to change as they build up capabilities for this space and ORAN is an opportunity for them. Recently, TATA Consultancy Services (TCS) has signed an agreement with Bharti Airtel for deployment of their O-RAN 5G radio and core products. Airtel is a huge logo for TCS and with 5G trials starting in India, the ability to prove their credentials in a demanding and cost-conscious market like in India will help TCS expand into international markets. Another example is companies like CapGemini who have become very active in the emerging market for 5G private networks and industrial IOT. Capgemini had a big announcement with Qualcomm for a joint go-to-market partnership to tap into opportunities in private 5G networks for verticals.
Telcos as SI’s – Rakuten in Japan is the poster child for the new network architectures that ORAN promises but their core competency is fundamentally different. Rakuten’s core competency is not just about identifying and procuring a new network. Rather, they have proven that a telco can become a systems integrator. Because ORAN will require exactly this set of capabilities as the very flexibility and openness of the technology means multiple configurations in the RAN, which is complicated enough on its own. However, new RAN architectures do not happen in a vacuum. They must fit into an end-to-end network architecture story that combines a new, disaggregated RAN with a cloud native core. Rakuten has not only do not the hard yards in specifying, procuring, and integrating its network, it has taken this experience and packaged it to offer the Rakuten Communications Platform (RCP), which it will offer to other telcos. In a similar vein, Reliance Jio Platforms (JPL) in India has announced that it has developed a completely “Made in India” ORAN-compliant stack that it will use for its 5G deployment in India. JPL is following a similar trajectory to Rakuten and will eventually offer its own version of the RCP. AT&T recent deal with Microsoft will also become a similar story, with a combined “network cloud” and Azure (including the Metaswitch and Affirmed Networks IP) combining to offer a new network solution to operators.
ORAN has momentum, but it is worth highlighting the role of INTEL in the ORAN momentum. Virtually all the solutions being brought to market are based on INTEL technologies. In fact, INTEL has, somewhat quietly, been building a large ecosystem with its FlexRAN architecture and the fruits of these labours are now beginning to show. Not only are the new payers building on INTEL architectures, but Ericsson and Nokia have also partnered with INTEL to bring their baseband software onto x86 processors. There are other semiconductor firms who could potentially create a market for ORAN gear, including Qualcomm, Marvell, and Xilinx but they are all playing catch up and are far more likely to get traction in the distributed unit (DU) piece of the equation. Indeed, one of the Qualcomm announcements at MWC 2021 was for a new DU accelerator card, designed to “offload” processing from the CPUs for several baseband functions.