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Microsoft pushes ahead adapting Azure for 5G telecoms after swallowing AT&T's Network Cloud

But is the telco backing itself into a corner?

Analysis Microsoft has given more info on its efforts to draw telcos to its Azure cloud platform, building on intellectual property and skills gained from last year's partnership with AT&T, under which the telco opted to move its core 5G network operations to Azure.

Microsoft announced Azure for Operators in 2020, saying it was adding capabilities to its cloud to support carrier-grade network operations such as low-latency connectivity and network slicing. The idea was that telcos would be able to take advantage of the elastic capabilities of the cloud and reduce the need to invest so much capital expenditure in new infrastructure for their 5G rollouts, in much the same way that enterprise customers have adopted the technology.

This clearly appealed to AT&T, because in June last year it announced it was not only moving its 5G mobile network to Azure, but also providing Microsoft access to its IP and technical expertise. This included handing over the Network Cloud platform it had developed to operate its 5G services to the Windows giant, along with any of the engineering team willing to transfer to Redmond.

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On the surface, this was quite a volte-face from AT&T, which was one of the big-name adopters of OpenStack just a few years ago, back when the Open Infrastructure Foundation was pushing the open-source platform as the ideal solution for telcos to build out their next-generation mobile networks. Just last year, AT&T donated its specifications for an open networking design for a router chassis – dubbed the Distributed Disaggregated Chassis (DDC) – to the Open Compute Project.

But rather than a rejection of open source, the move to Azure by AT&T may simply be a reflection of the telco's financial position: AT&T was saddled with nearly $190bn in debt last year and is making every effort to reduce this. It had already offloaded some of its data center operations, and presumably calculated that moving its 5G network operations to a public cloud would make more sense than having to build and maintain more of its own infrastructure. It didn't help that OpenStack failed to live up to the hype.

Also, it's worth noting that modern software-defined network services are commonly delivered as Linux-based virtual network functions (VNFs) or Cloud-Native Network Functions (CNFs), which can be deployed in a public cloud.

Meanwhile, the Network Cloud technology originally developed by AT&T is set to be made available to other carriers in future, thanks to the partnership with Microsoft. Redmond says it is evolving Azure for Operators to cover hybrid infrastructure and support scalable carrier-grade network services, but also aiming to use machine-learning techniques to operate self-optimizing networks that should be capable of provisioning extra resources as well as defending themselves against threats.

In an update this week, Microsoft vice president for 5G strategy Shawn Hakl said that the firm's efforts are aimed at getting network workloads to function on a carrier-grade cloud, which he describes as a hybrid cloud, spanning both public and dedicated on-premises cloud infrastructure.

"Telecommunication services are highly distributed and will likely become more so over time," Hakl said. "As a result, the value of creating a carrier-grade hybrid cloud model lives in its ability to meet customers where they are – at the edge of the cloud, the edge of the network, or the edge of the enterprise."

You can't go back – or can you?

But has AT&T backed itself into a corner through this partnership with Microsoft? It would almost certainly be difficult and costly for the telco to revert to running its 5G network operations entirely using its own infrastructure, especially as it has effectively given up control over its own internally developed network cloud technology. However, as Microsoft points out, AT&T retains the ability to select and manage the network applications that it operates on Azure, delivered as VNFs or CNFs, to deliver mobile network services to AT&T customers.

In return, Microsoft claims that the partnership puts AT&T in a position to deliver new services faster and more flexibly using Azure, which already has a global footprint. This could give it a competitive advantage against rival telcos rolling out 5G infrastructure, but how long it would retain that advantage when Microsoft intends to offer Azure for Operators to all-comers remains to be seen.

Perhaps the take-home from all this is that even mighty telecoms firms are doing the sums of own-it-yourself versus running services in the public cloud, just as enterprises are. And just like enterprises, some are deciding they simply cannot compete against the economy of scale enjoyed by the hyperscalers.

According to Paolo Pescatore, founder and telecoms analyst at PP Foresight, this move is inevitable as telecoms operators are increasingly finding their margins being squeezed.

“Ultimately, all roads lead to working more closely with the hyperscalers which represents a double edged sword for telcos. The role of tech giants in this ever changing landscape continues to proliferate and it is unlikely to change in the foreseeable future,” he says.

Telecoms operators will need to tread carefully when choosing which partners to work closely with, he warned. ®

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