The Telco cloud journey for communication service providers
Market insights and actions for a successful and efficient telco cloud strategy
Telco cloud is a key objective of telecom network disaggregation and cloudification, enabling the deployment of network functions on private or public cloud infrastructure. NTT DATA empowers communication service providers (CSPs) in this transformation.
Our approach leverages the strengths of hyperscalers and solution providers to deliver optimized telco cloud solutions tailored to each operator's unique needs.
1. Introduction
The telecommunications industry is undergoing a rapid transformation, driven by the need for agility, scalability, and cost-efficiency in delivering next-generation services. Hybrid cloud has emerged as a critical enabler of this transformation, allowing telcos to modernize their infrastructure while maintaining the performance and security required for mission-critical applications.
Telecom cloud is one of the goals of the disaggregation or cloudification of telecom networks.
It aims to realize telecom network functions on private or public clouds, and it is an area where NTT DATA can support cloud service providers.
Hyperscalers such as Microsoft Azure, Amazon Web Services (AWS) and Google Cloud Platform, as well as solution providers such as VMware and Red Hat, are increasing their presence in this space. NTT DATA believes leveraging our partnerships with Hyperscalers and solution providers will be key element for successful telco cloud implementation.
2. Current market situation
5G technology continues to grow. The roughly 600 million new subscriptions added globally during 2023 (Ericsson Mobility Report, November 2023) shows that demand for high-performance connectivity remains resilient in the face of ongoing economic challenges and geopolitical unrest in some markets.
The technology supports new and more demanding use cases for both consumers and enterprises, but 5G use cases depending on time-bound latency, higher speeds, capacity and the benefits of network slicing can only be achieved with a standalone architecture. To date, more than 40 service providers have deployed or launched 5G standalone in public networks.
Also, 5G deployment is far from complete. Further densification of 5G mid-band sites is needed for the full 5G experience.
It was previously estimated that, by the end of 2023, 5G mid-band would be deployed at about 30% of existing 4G sites globally. (Ericsson Mobility Report, November 2023)
Figure 1: Mobile subscriptions by technology
3. What we mean by telco cloud
The telco cloud represents a modernization of traditional wireless networks infrastructure, moving functions like radio access networks (RAN), core infrastructure, and transport technologies to a cloud-based architecture.
This publication explores the impact of this shift on mobile networks, services, and applications..
Figure 2: Telco cloud structure
The telco cloud concept has matured considerably. Initially, it primarily supported virtual machines, but now it fully embraces cloud-native network functions within a cloud-native framework.
However, many early adopters still rely on single-vendor stacks or architectures heavily dependent on virtual network functions.
Figure 3: Setup pathways
Telcos require a flexible infrastructure strategy to meet the growing demands for service delivery and connectivity, characterized by ever-increasing capacity and quality requirements. A mid- to long-term multi-cloud strategy at the network level is crucial for supporting both fixed-line connectivity and full mobility. This strategy should encompass three key elements:
Hybrid Multi-Cloud: Workloads should be deployed across diverse computing environments, including public and private clouds. Private clouds typically leverage existing on-premises data centers. This hybrid approach enables telcos to optimize for cost, performance, and security based on workload requirements.
Edge Computing: Deploying infrastructure at the edge, closer to customer data or internet-connected devices, is essential for ultra-low-latency applications. Edge computing complements the hybrid cloud by enabling real-time processing and reducing latency-sensitive traffic across the network.
Strategic Partnerships: Collaborating with multiple hyperscalers (e.g., AWS, Microsoft, Google), solution providers such as VMware and Red Hat and IT service providers are critical. These partnerships provide access to specialized expertise, scalable resources, and innovative technologies, accelerating telco cloud transformation.
Furthermore, ongoing core and RAN evolution is essential to support the transition to telco cloud architecture. These advancements enable the virtualization and cloud-native implementation of network functions, paving the way for a more agile and scalable network infrastructure.
Core evolution impacts
The shift to the 3GPP 5G Core architecture, enabling 5G New Radio standalone operation, has a profound impact on telco cloud technology. Its service-based design, aligned with IT network principles, and cloud-native implementation, based on microservices and fully software-defined network functions, allows for greater deployment agility and flexibility. This is achieved through platform neutrality, as the core network functions are independent of the specific cloud infrastructure.
RAN evolution impacts
As the telecom industry transitions from hardware-centric to virtualized and software-defined networks, Open RAN emerges as the next evolutionary step. Traditional RAN solutions often bundle hardware and software from a single vendor to ensure performance, security, and efficiency. In contrast, Open RAN fosters an ecosystem-based approach, enabling network functions to be sourced from multiple vendors adhering to open standards. This disaggregated architecture promotes innovation, reduces total cost of ownership, unlocks new revenue opportunities, and drives demand for increased telco cloud capacity.5G is poised to be a key catalyst for the adoption of open networking solutions, including Open RAN, within telco networks. While current Open RAN deployments represent a small fraction of overall mobile infrastructure, surveys indicate 5G's potential to significantly accelerate its integration.
4. The benefits of telco cloud
At NTT DATA, we identify several key drivers for telco cloud adoption, focusing on both business and operational benefits:
Business benefits
- Optimized total cost of ownership – capital expenditure (capex) and operational expenditure (opex)
- Increase in average revenue per user
- Improved customer experience
- Faster time to market for new applications
Operational benefits
- Greater scalability
- Increased operational efficiency
- Greater flexibility in working with different vendors (reduced vendor lock-in)
- Improved network security.
Cloudification offers distinct advantages for both greenfield and brownfield telcos
Greenfield telcos will benefit more quickly from the technology as they experiment with a lower upfront capex requirement and low opex on the latest and up-to-date network architecture.
For brownfield telcos, significant savings will come with network transformations that use 5G standalone installations on a new stack and involve the migration of existing subscribers from old to new technology.
5. Multi-cloud strategies in the market
Telcos have traditionally imposed complex requirements around quality of service and network security, which has reduced the use of external cloud providers as these requirements take time to adopt. This is why most telecom providers choose a more conservative multi-cloud strategy, starting with a private cloud for critical applications.
Market moves and trends
- For network core, telcos across geographies prefer proprietary, private-cloud deployments.
- For RAN, the virtualization strategy is lagging more than core in adoption, but the market is starting major projects.
- New largely nonlegacy functions, such as 5G standalone core, will be deployed on private cloud.
- Small applications have started deploying directly on public cloud.
- Telcos need to be sure they can put critical applications on public cloud.
- Important points to be addressed include sovereignty and security.
The importance of the compatibility test for the strategy
One of the deciding factors in cloud deployment is the availability of the latest software releases. The latest versions of containerized network functions provided by equipment vendors are usually available on their proprietary cloud platforms or for private blueprints.
Current reality and future status
The first implementations of telco cloud still have weak points in terms of scalability, resilience, speed of deployment and testing, and security.
Figure 4: Transforming infrastructure and network functions for true agility and automation in large-scale deployments
6. The importance of telco cloud in relation to sustainability
Sustainability should be a foundational element of cloud infrastructure design from day one, not an afterthought. This requires integrating environmental, social, and economic considerations into operational design. The growing demand for data, fueling the expansion and modernization of telecom networks, makes this crucial. Traditional infrastructure, with its inherent energy inefficiencies, can have a substantial environmental footprint.
Cloud-based solutions offer the potential for a more sustainable approach, but only if sustainability is deliberately designed in.
Telco clouds must promote sustainability through:
- Lower emissions from facilities (such as a smaller physical hardware footprint and less office-based power usage)
- Auto-scaling of cloud applications and network functions for more efficient, demand-triggered resource use
- Improved use of storage and computing power through the bundling of these resources on the cloud
Managing power consumption by using AI and machine learning to optimize network traffic and energy usage in cell towers and CPU and GPU resources
7. NTT DATA's Telco cloud services
NTT DATA is the trusted partner for CSPs seeking to transform their networks for the cloud era. Our telco cloud service delivers a comprehensive solution, from initial consultation to ongoing support, enabling a seamless transition to a cloud-native ecosystem.
We help CSPs achieve significant cost efficiencies and drive sustainable growth while fostering innovation through the disaggregation and decoupling of network functions.
Our tailored approach ensures that each client receives the optimal telco cloud solution to meet their specific business needs.
Our services:
- Network Functions Virtualization infrastructure (NFVi):
Capacity planning, design, implementation, support and maintenance on virtualization infrastructure for telco cloud (public and private) edge computing and central office POD. - Network Functions Virtualization and Orchestration (NFVO):
Consulting, development, deployment and integration for open-source management and orchestration including the use of third-party orchestrator providers. - Continuous integration, delivery and testing pipelines:
Assets and professional services to design and automate the deployment of network functions. Keep track of versions and update lifecycle management in a zero-touch base. - Testing and automation:
Design, execute, automate and emulate functional / nonfunctional NFVi, NFVO and network-function testing, as well as traffic emulation for virtualized networks certification. - Telco cloud inventory:
Assets and professional services to adopt a future-proof data model, based on Linux Foundation Networking Open Network Automation Platform (ONAP), for a unique source of truth on infrastructure availability and occupancy to support autonomous network-function fulfilment and assurance-related processes. - End-to-end slicing and orchestration:
Assets and professional services to ensure multi-domain orchestration and slice management based on Linux Foundation Networking ONAP architecture.
Our Telco Cloud services have already been implemented by various CSPs globally and the numbers are still rising. Below are just a few customer cases NTT DATA has implemented:
1. NFVi Data Center Design and Delivery (Tier-1 CSP: Brazil)
Figure 5: Customer Case #1
2. NFVi Testing and Data Center certification (Tier-1 CSP: UK)
Figure 6: Customer Case #2
3. NF Automation Deployment Pipelines (4 Tier-1CSPs: Spain, Brazil, Germany Brazil)
Figure 7: Customer Case #3
Alejandro Javier Fernandez Diaz
NTT DATA Telecom Infrastructure Center of Excellence Director
