It all makes a new deal with Etisalat of the United Arab
Emirates very important, according to Yousef Khalidi, the corporate vice
president of Microsoft's Azure for Operators unit. Following the example of
AT&T, the Emirati operator will take 5G packet core technology from
Microsoft and run it on the Nexus platform. "This is not just a small
network on the side, an IoT or backup network," Khalidi told Light
Reading. "This is real production going on."
As in the case of AT&T, however, and contrary to some
earlier reporting, this does not mean Etisalat is putting its core in the
public cloud. "Azure Operator Nexus is a hybrid cloud, and so the actual
user plane, control plane of the network runs on-premises," explained
Khalidi. "But Nexus is connected to the public cloud and so the management
plane data, as the customer wants, can flow to the cloud." Microsoft,
moreover, set up UAE public cloud facilities in 2019. That is likely to have
addressed sovereignty concerns about the storage of sensitive data in other
jurisdictions.
What's clear is that the 5G packet core is an evolution of
the Affirmed technology Microsoft picked up in 2020 when it bought Affirmed
Networks in a deal reportedly valued at $1.35 billion. That was the first of
two significant telecom takeovers by Microsoft that year, followed just a few
weeks later by its acquisition of Metaswitch. The contract with Etisalat now
firmly establishes Microsoft as a 5G core vendor outside the US and new rival
there to established telecom equipment suppliers like Ericsson and Nokia.
Out with the old
Less clear is which existing core vendor Etisalat will be
replacing, and there are still third parties in the mix. "Even with
AT&T, we run many of the brand name vendors you know of," said
Khalidi. "In Etisalat's case, they chose our packet core plus some other
peripheral NFs [network functions]." He declined to speak about the vendor
that has lost out, and Light Reading had not been able to confirm its identity
at the time of publication. But Ericsson previously named Etisalat as a 5G
cloud core customer during a presentation in 2020.
Will similar deals for Microsoft follow? Several of Europe's
big telcos seem determined to build their own platforms and not take one from a
hyperscaler. In the UK, BT has been doing that in partnership with Canonical.
Germany's Deutsche Telekom has an equivalent internally developed platform
called TCaaS. Both Vodafone and France's Orange have also sounded wary about
entrusting their telco clouds to third parties. Yet Microsoft is in the running
for a cloud core deal with Three, the smallest of the UK's four mobile network
operators, which currently uses Nokia in this part of its network but has put
the work up for tender.
"My message to all of them is that they need to look at
the option of moving up the stack and using more AI apps in their system, to
look at adding value as opposed to doing plumbing," said Khalidi.
"Leave the plumbing the plumbers. I have to admit not all of them are
there yet, but there is movement."
He has previously been disparaging about what he refers to
as DIY clouds. And last year, in collaboration with market-research and
consulting firm Analysys Mason, Microsoft published a paper on the cost case
for working with a hyperscaler versus the DIY model. "Basically, the opex
savings are around 58% or so in that model," said Khalidi. "It's the
same study we applied when talking to Etisalat, and we're talking to others as
well."
Operators see benefits in being able to host all network
functions, and not just the core, on the same horizontal platform. Khalidi
declined to speculate on Etisalat's plans here but said this would align with
Microsoft's "vision" for Nexus as a platform supporting multiple
workloads, ultimately including the radio access network.
Telcos, however, have continued to complain that network
functions are still too "siloed," designed in many cases to run on
the vendor's own platform instead of third-party alternatives. "The nature
of cloud-native is that it can run on any stack," said Gabriela Styf
Sjöman, BT's managing director of research and networks strategy, at a recent
press briefing. "I think the challenge for the legacy network equipment
providers is that they can't afford to rewrite the code. It has been a long
journey for them to first virtualize. To then make it cloud-native is a massive
investment."