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Building the cloud based telco

July 8, 2020 - Martin Morgan

Martin Morgan, VP Marketing at Openet, talks about operators making the move to cloud and how new business models are shaking up the industry.

Last week I sat in on a press interview with Openet, the Group CTO of Lebara, Torsten Minkwitz, and TelecomTV. In this Lebara discussed how they are moving all IT systems out of their datacentre to AWS public cloud.

When you look at the benefits you can see why Lebara, and many others, are going down this path.

The main benefits that Lebara will see is they will save half of their capital spend. To be able to cut an IT CapEx bill by 50% is significant. One of the main systems that Lebara is moving to the cloud is their charging system. Openet is supplying their ECS (evolved charging suite) to Lebara which will support charging for Lebara’s operations in 5 European countries.

Legacy charging systems, or indeed any BSS component, always needed software upgrades. Which, for most folks working in IT, is a pain. Major upgrades impacted operational systems, which impacts the day to day running of a business. With cloud based BSS, built on microservices, the need to do large scale upgrades goes away. As Torsten Minkwitz pointed out, “Every five years you need to replace your hardware and then your software is out of support and you need to upgrade.” Now the upgrades are much smaller and less disruptive. Torsten describes them as “micro-upgrades that can be done on the fly”.

The result is that by moving to more agile, cloud-based BSS service providers will reduce capex and become more efficient. Which in turn means that service providers can look to pass on savings to their customers and invest to deliver a better experience and have capital to develop new business models. You can read the full Lebara, Openet interview with TelecomTV here.

As we’re seeing in the case of Lebara, the cloud based telco is starting to come of age very quickly.

In the last year the highest profile cloud based telco to emerge has been Rakuten. Last month Rakuten ran a press event to launch their Rakuten Communications Platform and discuss their 5G strategy. By building a cloud based telco Rakuten are building the platform that can shake up the industry – and others are quickly adopting the cloud first strategy. According to Rakuten they see their 5G as being cost disruptive, built using open technology innovation and giving customers the ability to ‘click, purchase and deploy’ new services on the Rakuten Communications Platform. As to what these services are: Rakuten are building an ecosystem that will provide Rakuten services ranging from banking, medical, logistics, energy to TV and sports to name a few. When you consider that Rakuten Mobile’s prices for 4G connectivity are 50% cheaper than their competitors (achieved through savings by using open and cloud-native technology), I think that it’s fair to assume that their goal is to make money from all the services provided (banking, TV, sports, etc) via their ecoystem and connectivity will be a means to enable and deliver these services.

Lebara and Rakuten are just two examples of service providers moving everything to the cloud. They are leveraging the savings to enable new business models and disrupt the market.

Rakuten is a greenfield site with no legacy kit. Lebara has been around for 15 years and had a range of systems running in their data centre. Many service providers, like Lebara, are using the move to cloud as an opportunity to replace systems. Many are moving away from the system that they got from a network equipment provider to open and agile systems from more specialist vendors.

There are others who are now in the process of building new cloud based telcos. They are replacing full IT stacks for cloud based, open, agile systems. Some are building digital second brands as test beds for these new models. Most of these companies started out these programs before the Covid pandemic started. However, in recent months the level of interest in moving to the cloud and accelerating digital transformation has increased.

Until fairly recently the cloud based telco was viewed as an experiment. Very quickly this will soon become mainstream.

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