Making Sense of the Telco Cloud

In recent years the cloudification of communication networks, or “telco cloud” has become a byword for telecom modernisation. This Telecoms.com Intelligence Monthly Briefing aims to analyse what telcos’ transition to cloud means to the stakeholders in the telecom and cloud ecosystems. Before exploring the nooks and crannies of telco cloud, however, it is worthwhile first taking an elevated view of cloud native in general. On one hand, telco cloud is a subset of the overall cloud native landscape, on the other, telco cloud almost sounds an oxymoron. Telecom operator’s monolithic networks and cloud architecture are often seen as two different species, but such impressions are wrong.

(Here we are sharing the opening section of this Telecoms.com Intelligence special briefing to look into how telco cloud has changing both the industry landscape and operator strategies.

The full version of the report is available for free to download here.)

What cloud native is, and why we need it

“Cloud native” have been buzz words for a couple of years though often, like with many other buzz words, different people mean many different things when they use the same term. As the authors of a recently published Microsoft ebook quipped, ask ten colleagues to define cloud native, and there’s good chance you’ll get eight different answers. (Rob Vettor, Steve “ardalis” Smith: Architecting Cloud Native .NET Applications for Azure, preview edition, April 2020)

Here are a couple of “cloud native” definitions that more or less agree with each other, though with different stresses.

The Cloud Native Computing Foundation (CNCF), an industry organisation with over 500 member organisations from different sectors of the industry, defines cloud native as “computing (that) uses an open source software stack to deploy applications as microservices, packaging each part into its own container, and dynamically orchestrating those containers to optimize resource utilization.”

Gabriel Brown, an analyst from Heavy Reading, has a largely similar definition for cloud native, though he puts it more succinctly. For him, cloud native means “containerized micro-services deployed on bare metal and managed by Kubernetes”, the de facto standard of container management.

Although cloud native has a strong inclination towards containers, or containerised services, it is not just about containers. An important element of cloud native computing is in its deployment mode using DevOps. This is duly stressed by Omdia, a research firm, which prescribes cloud native as “the first foundation is to use agile methodologies in development, building on this with DevOps adoption across IT and, ideally, in the organization as well, and using microservices software architecture, with deployment on the cloud (wherever it is, on-premises or public).”

Some would argue the continuous nature of DevOps is as important to cloud native as the infrastructure and containerised services. Red Hat, an IBM subsidiary and one of the leading cloud native vendors and champions for DevOps practices, sees cloud native in a number of common themes including “heavily virtualized, software-defined, highly resilient infrastructure, allowing telcos to add services more quickly and centrally manage their resources.”

These themes are aligned with the understanding of cloud native by Telecoms.com Intelligence, and this report will discuss cloud native and telco cloud along this line. (A full Q&A with Azhar Sayeed, Chief Architect, Service Provider at Red Hat can be found at the end of this report).

The main benefits of cloud native computing are speed, agility, and scalability. As CNCF spells it out, “cloud native technologies empower organizations to build and run scalable applications in modern, dynamic environments such as public, private, and hybrid clouds. Containers, service meshes, microservices, immutable infrastructure, and declarative APIs exemplify this approach. These techniques enable loosely coupled systems that are resilient, manageable, and observable. Combined with robust automation, they allow engineers to make high-impact changes frequently and predictably with minimal toil.”

To adapt such thinking to the telecom industry, the gains from migrating to cloud native are primarily a reflection of, and driven by, the increasing convergence between network and IT domains. The first candidate domain that cloud technology can vastly improve on, and to a certain degree replace the heavy infrastructure, is the support for the telcos’ own IT systems, including the network facing Operational Support Systems and customer facing Business Support System (OSS and BSS).

But IT cloud alone is far from what telcos can benefit from the migration to cloud native. The rest of this report will discuss how telcos can and do embark on the journey to cloud native, as a means to deliver true business benefits through improved speed, agility, and scalability to their own networks and their customers.

The rest of the report include these sections:

  • The many stratifications of telco cloud
  • Clouds gathering on telcos
  • What we can expect to see on the telco cloud skyline
  • Telco cloud openness leads to agility and savings — Q&A with Azhar Sayeed, Chief Architect, Service Provider, Red Hat
  • Additional Resources

The full version of the report is available for free to download here.

KDDI and Softbank join the network sharing craze as Rakuten risk rises

Japanese telcos KDDI and Softbank have inked a network sharing partnership to ease the commercial pressures of connectivity in the rural regions.

Network sharing agreements are becoming increasingly common, perhaps one of the more prominent trends of 2020, owing to the financial pressures being placed on the telcos. With 5G and full-fibre projects on the books for many telcos, deploying connectivity infrastructure in the more sparsely populated regions, were ROI is significantly lower, is a tricky spreadsheet to balance. Telcos are increasingly looking to network sharing partnerships, to ease the financial burdens of building the foundations of the digital economy.

The new company, which will be known as 5G Japan Co, will be managed by co-CEOs Noriaki Terao (seconded from KDDI) and Eiji Otaki (seconded from SoftBank). With each telco owning 50% of the company, the network will reach out into the rural regions to provide suitable densification of 5G base stations for the 28 GHz and 3.7 GHz airwaves.

While network sharing agreements to create a more attractive ROI are not uncommon, perhaps there is more demand in Japan than many other nations. These are telcos who may have to deal with a very significant disruption in the shape of Rakuten.

As the poster boy for the open movement, Rakuten is building a network as many telcos would love to; a greenfield project, completely disassociated from the concept of legacy technologies and systems. This sort of network deployment is a dream come true for any telco and has the potential to offer significant benefits.

Firstly, it has been claimed the network can be run with only 350 employees, a fraction of the workforce running competitors’ networks. Secondly, it could be significantly cheaper to construct, thanks to Rakuten’s embrace of the OpenRAN movement. And thirdly, due to the acceptance of openness, upgrades should be faster and cheaper. This is the sort of network which everyone would build if they could start from scratch tomorrow.

There is still plenty which could go wrong with Rakuten’s business. The network could fail, or it might not be as successful as hoped in teasing subscriptions away from rivals, but the threat is very real for the Japanese telco industry. With investments substantially reduced for network construction, maintenance and upgrades, the demands on ROI are lessened. Rakuten is suddenly afforded a lot more flexibility when it comes to pricing.

At the beginning of March, Rakuten unveiled its ‘UN-LIMIT’ 5G data tariff costing 2,980 Yen per month, roughly half of what rivals have been offering. What is worth noting is that when customers are out of range of a Rakuten owned base station, a 2 GB download limit will be introduced as well as data throttling. This will be a disadvantage for the telco as it is rolling out its network, though the risk of pricing disruption is very clear.

Reliance Jio in India has already demonstrated how a market can be turned upside-down if a disruptor is allowed to gather too much momentum. This is a lesson which the likes of KDDI, Softbank and NTT Docomo should be learning as Rakuten comes online; new initiatives will have to be introduced across operations to realise efficiencies.

Without these initiatives, network sharing partnerships being one, the traditional Japanese telcos will not be able to sustainably compete with the Rakuten tariffs.

Nokia gets Rakuten Mobile optical transport gig

It’s all about the photonic mesh in the backhaul for Rakuten’s brand new mobile network, and Nokia’s switches are going to help make it work.

Rakuten Mobile is the talk of the telecoms town these days, not only because it’s disrupting the Japanese mobile market with some aggressive pricing, but because it has built its entire network from scratch, using the latest whizzy technologies. Everything is virtualized and cloud-native, just as we’ve been talking about for years, so Rakuten is essentially showing the world how it should be done.

It’s not much good having all that cloudy agility, however, if you’re still constrained by your physical backhaul network, which is where optical mesh networks come in. Now, we’re not going to pretend to be experts on the topic, but the underlying point of them seems to be to provide much more redundancy and flexibility than traditional fixed networks.

The word ‘photonic’ seems to be interchangeable with ‘optical’, at least in this context, and Rakuten has only gone an built its own photonic mesh mobile backhaul network, hasn’t it. Everyone knows you can’t just whack regular optical switches into such a cutting-edge thing, which is where Nokia comes in. Rakuten will use the Nokia 1830 Photonic Service Switch, which is a handy deal win considering it was competing with a bunch of US companies for whom switches are their main event.

“The introduction of 5G will require a network that can support dramatic increases in bandwidth in a dynamic fashion,” said Sam Bucci, Head of Optical Networking at Nokia. “Nokia is proud and excited to partner with Rakuten Mobile to build a fully reconfigurable photonic mesh network to meet the 5G networking challenge at the lowest total cost of ownership.”

“Rakuten Mobile is creating the world’s first end-to-end fully virtualized cloud-native mobile network, delivering unprecedented network agility and disruptive economics to end users,” said Tareq Amin, CTO, Rakuten Mobile. “Nokia’s Photonic Service Engine 3 coherent chipset and integrated ROADM technology enables us to achieve unprecedented levels of integration and performance building the mobile network for 4G and 5G.”

Apparently this is also the first time ever a photonic mesh has been created for a mobile backhaul network. If even half of the boasts Rakuten is making about its network are true then NTT Docomo, Softbank and KDDI are in all sorts of bother. The theory is that all this extreme efficiency will make Rakuten’s opex much lower than its rivals, meaning they will either have to spend big on network modernization or kill their margins to compete.

Rakuten Mobile unveils disruptive tariff to shake up Japanese market

Ahead of a hard launch next month, new Japanese MNO Rakuten has announced an ‘unlimited’ tariff that massively undercuts the incumbents.

The ‘Rakuten UN-LIMIT’ tariff seems to borrow its marketing from T-Mobile US, but its core inspiration from Reliance Jio. Not only does it come in at 2,980 Yen per month, apparently less than half of what’s currently on offer, but Rakuten is also offering the first year of service for free to the first three million punters who sign up.

“For around two years, the Rakuten Group and Rakuten Mobile have been building a new network unlike anything the world has ever seen,” said Rakuten CEO Mickey Mikitani (pictured). “Everyone at Rakuten is working together to democratize the mobile industry. Rakuten will become the only major carrier in the world to offer a single pricing plan. Currently, we aren’t looking to launch any other plans.”

The unlimited side of things does come with a few caveats, however. You can see the full tariff table below, with its various qualifiers. A key thing for prospective Japanese punters to bear in mind is that as soon as they’re out of range of a Rakuten base station a 2 GB per month limit kicks in and data speeds are significantly throttled.

*1 Unlimited when connected to Rakuten Mobile’s base stations. Subscribers can confirm which area the data they are using is from via the My Rakuten Mobile home screen.
*2 If data usage in the partner area (domestic) exceeds the data allocation, data speeds in the partner area (domestic) will be limited to a maximum of 128kbps. Unused data will not be carried over to the next month.
*3 The partner area (overseas) refers to the 66 countries and regions where international roaming (data) can be used. If data usage in the partner area (overseas) exceeds the data allocation, data speeds in the partner area (overseas) will be limited to a maximum of 128kbps. Unused data will not be carried over to the next month. Usage from outside the 66 countries and regions will incur charges depending on the country/region.
*4 Additional data purchased can be used for 31 days. Additional data for partner areas in Japan and overseas must be purchased separately.
*5 Please check “2. Voice calling and SMS fees” below.
*6 From overseas, standard calls cannot be made or received, and standard SMS cannot be sent or received.

The party line is that Rakuten can offer all this lovely cheapness because its network, which it built from scratch, is just so damn efficient. “We are extremely delighted with what we have accomplished in Japan,” said Rakuten CTO Tareq Amin. “We have deployed the world’s first Open RAN platform, not because the phrase ‘Open RAN’ sounds like good technology, but because there are cost reductions that we feel an obligation to pass on to consumers in Japan.

“We are one of the only telecommunications networks that can claim to have standardized, 100% open interfaces, and full control of our software and network framework. This is something that we are so extremely proud of. Thank you to all of the employees and partners that made this vision.”

Right now Rakuten seems to only be covering a few major cities in Japan. While it has aggressive roll-out targets, subscribers outside of Tokyo, Nagoya and Osaka may be disappointed by how infrequently their connections are either free or unlimited. But this aggressive positioning is still bound to win over a lot of Japanese punters and put heavy price pressure on the incumbent MNOs.

Vodafone and Rakuten join the low-orbit space race

Satellites are back in fashion and soon enough tens of thousands of devices will be swirling above our heads, now Vodafone and Rakuten are teaming up to join the trend.

The race to the skies is quickly becoming one of the more interesting trends in the telco industry, as more operators search for ways to expand coverage in a cost-effective manner. Telefonica and Softbank are two of the founding members of the High-Altitude Platform stations (HAPS) Alliance, Google’s Project Loon is making headway in proving the commercial viability of balloons as a means of delivery, and low Earth orbit satellites are appearing everywhere.

The new joint venture from Vodafone Group and Rakuten, SpaceMobile, will aim to launch a constellation of low Earth orbit assets to fill in the coverage holes, addressing rural environments in developed nations and tackling the difficulties in commercially justifying network deployment in developing regions.

“At Vodafone we want to ensure everyone benefits from a digital society – that no-one is left behind,” said Nick Read, CEO of the Vodafone Group. “We believe SpaceMobile is uniquely placed to provide universal mobile coverage, further enhancing our leading network across Europe and Africa – especially in rural areas and during a natural or humanitarian disaster – for customers on their existing smartphones.”

Perhaps the most interesting element to this project is the proprietary technology which is being incorporated by AST & Science. The start-up, which has recently completed a Series B funding round to which Vodafone contributed, is developing technology which theoretically allows any 4G and 5G compatible phone to connect to the low Earth orbit satellites.

According to Vodafone, this is somewhat of a gamechanger. Satellite connectivity was only useful for specialist satellite phones traditionally, but in democratising connectivity, the usecases begin to add up. Whether this is to fill in ‘not spots’ in the UK or to deliver connectivity in regions where the environment makes traditional deployment unfeasible, this is a supplementary layer of connectivity for everywhere and anywhere.

“AST & Science’s SpaceMobile venture is a perfect fit for us,” said Mickey Mikitani, chairman and CEO of Rakuten. “Our investment is part of our broader strategy to become a leading mobile network operator in Japan and a global solution provider to markets around the world.

“Rakuten’s strategic investment with AST & Science has the potential to support our efforts to connect users across Japan through mobile innovation, expanding national coverage from metropolitan to remote areas and bolstering the network in times of natural disaster.”

For Vodafone, the first deployments will be in Africa, where the topography and local economies have made traditional network deployment difficult. However, these are the early days of the project and it will take years to see any material impact on the connectivity landscape. But it is an interesting project.

The question which remains is why satellites are coming back into fashion? The answer is really quite simply; the technology has improved.

Not only are traditional satellites only able to connect to specific satellite devices, these were massive assets with poor performance associated. This is why satellite broadband has largely only been discussed in the developing markets over the last decade or so, the technology was too expensive and not good enough to be considered elsewhere.

With the introduction of companies like SpaceX and the introduction of reusable launch system, the cost of delivering assets into the skies is dropping every day. And with the invention of low-orbit satellites, performance has increased.

The simplest way of looking at it is that it is a question of physics; the further away the satellite is, the higher the latency, the weaker the signal and the slower the download speeds. Vodafone was not able to give any estimates on what speeds they expect from this low Earth orbit constellation, but it should be acceptable performance.

The important point to remember about these satellite connectivity layers is that it is just that; an additional layer to add to the connectivity mesh to improve coverage and reliability. It fills ‘not spots’ and builds options in the rural environments. This is not a technology which will replace traditional means of delivering connectivity.

Rakuten delays network launch to work out the bugs

Japan’s fourth mobile operator has said it will delay its launch, originally set for October 1, in favour of a limited trial for 5,000 users.

The announcement will put a dampener on the spirits of those who are closely watching developments in Japan. With the barriers set so high on entering the mobile connectivity game for new-comers, cash-rich technology companies will be looking for tips and tricks to develop their own game-plans, though this was not supposed to be part of the story.

“In order to ensure the stability and quality of its service for customers and continue to improve the network based on customer feedback and requests, the company will initially open applications to 5,000 subscribers free of charge through the Free Supporter Program,” the firm said in a statement.

The official launch of the service will now be at some point before 31 March 2020, with the Free Support Program set to conclude at that point. Those subscribers who are assisting with the network trial will continue to get free services through to 31 March however.

The trial will focus on Tokyo, Osaka, Nagoya City and Kobe City, with KDDI and Okinawa Cellular to provide roaming services outside of these regions. Those on the trial will receive unlimited calls and data services through the period, in exchange for providing regular feedback to the telco.

The launch of Rakuten has caught the attention of many inside and outside of Japan for several reasons. In the country, consumers have had to deal with three providers to date and the introduction of a fourth player will provide additional competition, as well as a potential disruption to create a new status-quo when it comes to pricing. Just look at the impact Reliance Jio had on India to see the potential a new player can inspire.

Outside of Japan, there will of course be vendors rubbing their hands together in anticipation of a genuine greenfield project, though those who have an interest in muscling in on the connectivity game.

Starting with the vendors, this is a potential gold mine. If Rakuten is going to be competitive, it will have to get its network up-and-running very quickly. Aggressive network deployment and expansion to reduce the reliance on roaming requires some serious investment. The more success Rakuten can generate in the early days, the more quickly it will be able to mobilise investment to fuel further expansion.

And now for the disruptors. There will be several companies which will be keeping an eye on developments here, hoping to understand what works and what doesn’t when deploying a new network.

Dish is one company which falls into this category. Should the T-Mobile US and Sprint merger survive the legal challenges it is facing, Dish will become the fourth MNO in the US through acquiring the Boost prepaid brand from Sprint. It will then have to try and build its own network as quickly as possible.

There are of course other companies who have already declared their interest in the mobile connectivity game, 1&1 Drillisch in Germany for example, however internet companies have also been rumoured to be getting involved.

Amazon is the company which immediately comes to mind, a rumour about Amazon mobile is never too far away, however this is applicable to any internet firm which has a lot of money. Owning and managing a network is one way to make money, another opportunity to collect valuable data on consumers and a chance to own the relationship with the consumer end-to-end.

If Rakuten can prove an internet company can deploy an end-to-end fully virtualized, cloud-native network cost-effectively and in a timely manner, as well as attract the right people to manage the network to meet customer expectations, why wouldn’t others believe they can do the same.

Amazon has buckets of cash, as does Google, Facebook, Alibaba, Baidu or Microsoft. If Rakuten can do it, why couldn’t they? Or how about investment companies and venture capitalists who are always looking for a way to make money?

All four operators are awarded 5G licences in Japan, with security conditions attached

NTT DoCoMo, KDDI, Softbank, and Rakuten have all received the 5G licences they applied for, but they come with coverage obligations and security commitment.

The Ministry of Internal Affairs and Communications announced on 10 April (in Japanese) that all the four applicants have been awarded radio frequencies and licences to rollout 5G services. Each licensee is awarded 400MHz spectrum on the 28GHz frequency, while three of them are awarded 200MHz on 3.7GHz except Rakuten, which has requested 100MHz.

All the operators are going to roll out 5G services starting in 2020. NTT DoCoMo, KDDI and Softbank will launch the service in spring time, with Rakuten planning to open its service in June. The total investment planned by the operators to the end of 2024 amounted to Yen 1.6 trillion ($14.4 billion).

While both NTT DoCoMo and KDDI have pledged to cover over 90% of the country within five years, Softbank only plans to cover 64% of the country and Rakuten 56%. The minimum requirement from the government is serving every prefecture within two years, and at least 50% of the whole country within five years, calculated by the number of geographical blocks the networks will cover out of the total 4,500 blocks the Ministry divides the country into.

In addition to coverage requirement, the Ministry has also attached a dozen granting conditions (pp.16-17 of the summary, in Japanese), including commitments to expand optical fibre networks (#2), to improve safety measures to minimise outage during natural disasters (#3), to prevent interference of existing radio licensees (#7) etc.

The item that may raise eyebrows is Item 4 on the list, which requires the operators to “take appropriate cyber security measures including measures to respond to supply chain risks” (unofficial translation). It refers to earlier regulations including the “”Information and telecommunications network safety and reliability standards” published by the Ministry of Post and Telecommunications in 1987, “Common Standards Group for Information Security Measures for Government Agencies and Related Agencies” issued by the National Information Security Center (NISC) in 2018, and the cross-departmental “Agreement on IT procurement policy and procedures for goods and services” published on 10 December 2018.

The last two documents, though neither of them names any particular countries or brands to be excluded, have been broadly recognised as the Japanese government’s decision to ban companies like Huawei and ZTE from public sector procurements. By invoking these regulations, it may not be too much of a stretch to read it as a message to the operators to stop using equipment supplied by the Chinese vendors. This may not cause serious disruptions to the operators’ business though, as Softbank, the only operator that has Huawei equipment on its network, is already planning to swap for Ericsson and Nokia, Nikkei reported earlier.

Japanese 5G licensees