Unleashing 5G Potential With Cloud BSS

The Telecom Industry is going through an exciting phase where, unlike in the past, technological advancements have not just triggered the change but have accelerated the transformation process.

Fifth-generation standards for broadband cellular networks (5G) have unlocked cross-industry revenue streams for telcos and brought in a fundamental shift in the market from competition to collaborations or partnerships and disruption to differentiation. But there is something more than just 5G that CSPs are cheerful about. It’s through the applications of Cloud Computing that CSPs are now convinced of generating better ROI and (finally) being able to offer a unique real-time experience to their customers that has been anticipated for quite some time.

There exists a strong coalition between 5G and cloud computing and their combined applications in IoT, Edge Computing and other industry-agnostic solutions for Industry 4.0 using contemporary technologies like AI/ML and AR/VR, which are collectively referred to as “Digital Transformation.”

A Covalent Bond: 5G & Cloud Computing

In a fully matured “all cloud” model, Business Functions (BSS) and Network Functions are fully virtualized (VNFs) in a unified cloud environment (public or private; single or distributed). This will lead to resource sharing and a significant reduction in operational complexities for a CSP, resulting in improved efficiency and reduced operating costs.

While the network will be reduced to a bunch of independent Virtualized Network Functions (VNFs) and managed as a Software Function with the use of Software-Defined Networking (SDN). BSS over the cloud will virtualize the business functions and be managed as an integral function of cloud infrastructure. So, both will be governed by the same principles for IT functions like Scalability, Security, Speed, etc., and not those specific to telecom.

Embracing Cloud Is No Longer a Choice

AT&T was among the first few Tier-1 operators to adopt the “public cloud first” policy, as they signed an agreement with Microsoft Azure in July 2019 to “migrate most of their non-network workloads to public cloud by 2024.”

Managing complexity both at the business and network levels and high operating costs have always remained the primary concerns for telcos as their rivalries with content providers continue. In line with economic principles, telcos were trying to differentiate on factors that would remain hard for competitors to replicate in the short term, and cloud migration can serve the purpose. Cloud BSS would eventually help CSPs on multiple fronts, such as reduced costs due to shared resources, improved operational efficiency, and increased monetization capabilities.

Gradually, it became evident to telcos that to survive 5G, as well as competition, and to satisfy the growing appetite of their customers, they needed to find a quick and reliable solution that could address their primary asks: agility, speed and scalability. This sets the clear groundwork for CSPs and their IT/ICT partners to gradually move to cloud-native OSS/BSS architecture.

5G and BSS Over Cloud Are Complementary

Telcos have already been partially transformed into platforms that enable and deliver services from adjacent industries. To unleash the true potential of 5G, telcos must invest in cloud-native OSS/BSS. The following attributes explain why these two go hand in hand:

• Data (Big Data): 5G will generate a huge amount of heterogeneous data through different applications, and for real-time processing, BSS functions should be able to manage a high volume of data.
• Events: BSS systems should be able to process (and respond to) the variety of industry-agnostic events generated in real time.
• Speed: With 5G and its applications in IoT, events will be real-time and critical. For edge computing use cases (as an example), cloud becomes a critical component (and an enabler) to ensure faster processing with a low response time by hosting applications within the proximity of end users.
• Revenue: Different events from heterogeneous sources will be generated and collected by charging and billing systems, which should be able to rate and bill every single usage without any revenue leakage/loss.

A few other use cases that would require cloud-native architecture and centralized cloud deployment of business and network functions include network orchestration, omnichannel experience, deployment automation, critical/low latency services (high availability) and multi-tenancy.

Market Dynamics and Business Models

With 5G unlocking new partnerships, monetization and business models for MNOs and Communication Service Providers (CSPs), along with Cloud BSS, they can further leverage their assets to generate more revenue and better position themselves among the competition.

• MVNOs

  5G can revolutionize the MVNO business where the fundamental definition of MVNO business gets changed.

  A virtual OSS/BSS comprised of a specific 5G slice or a private 5G network (with Virtualized Network Functions or VNF) and Virtual Business Functions (with BSS over the cloud as MVNE platform) will make MVNOs as partner/resellers or more appropriately wholesale customers of CSPs, which may do business only in, let's say, the IOT/M2M market with the mMTC slice of 5G, barring the other two (emBB & uRLLC) or vice versa.

  Put simply, each 5G slice, existing or newly created (application-based, policy-based or subscription-based slicing), can have its own market of MVNOs.

• Lease

  Leasing (Operating Lease) 5G service to smaller operators/MVNOs can emerge as a new potential monetization use case for Tier-1 CSPs/MNOs. Now, enterprise customers can privately own a part of the network, which was never possible before 5G. Therefore, leasing private 5G networks to enterprises can change the connectivity business forever.

Due Consideration

The Telecom Industry benefits from economies of scale, but due to high setup/fixed costs involved in 5G licenses and upgrading network infrastructure to drive organizational change (transformation), there’s a risk of having fewer competitors in the 5G service provider’s segment, giving more power to CSPs in pricing. However, it may still take them longer to break even considering asset amortization (5G spectrum in this case) runs against time for a typical 15–20-year license.

With cloud, a lot of manual jobs like HW maintenance, backups, security, etc. will be outsourced to cloud vendors. However, CSPs must keep a clear distinction between their telecom engineers and their cloud engineers.

Since cloud service providers can host both networks (e.g., 5G core) and Business & IT Functions (Cloud BSS), cloud Service Providers (cSPs) have already become a competitor of Communication Service Providers (CSPs) in terms of revenue sharing. But, in the longer run, this might evolve into a rivalry where cSPs will become CSPs.

In an interview with Telecoms TV, aired on July 7, 2021, “George Glass” (CTO, TMForum) highlighted one of the major and common concerns of CSPs, which is that they have more than one hyperscaler, i.e., multiple cloud vendors, to cater to different functions, which in turn creates more complexity and increases integration efforts.

While creating a differentiator, CSPs should ask themselves, “Does it increase the customer’s willingness to pay or decrease the supplier’s willingness to sell?” If the net value created is negative or zero, then the differentiator is not serving its intended purpose.