AT&T 5G SA Core Network to run on Microsoft Azure cloud platform

AT&T will run its 5G SA Core network on Microsoft’s Azure public cloud computing platform.  Microsoft AZURE, which is the second largest cloud computing provider by revenue behind rival Amazon Web Services, has been building out specific cloud computing offering to attract carriers.  AT&T is Microsoft’s first major deal in the 5G SA Core network space.

The two giant companies said that Microsoft will purchase software and intellectual property developed by AT&T to help build out its offerings for carriers. The companies did not disclose the terms of the deals, but said that Microsoft will make job offers to several hundred AT&T Network Cloud engineers.

Microsoft will use AT&T’s software and IP to grow its telecom flagship offering, Azure for Operators. Microsoft is acquiring AT&T’s carrier-grade Network Cloud platform technology, which AT&T’s 5G core network (when completed) will run on.

The companies disclosed a few key details about their new deal, but did not provide any firm numbers or any financial arrangements/guidance:

  • Microsoft will “assume responsibility for both software development and deployment of AT&T’s Network Cloud immediately,” according to the companies, and will transition AT&T’s existing network cloud operations into Azure over the next three years. Eventually, all of AT&T’s mobile network traffic will run over Microsoft’s Azure.
  • The effort will start with AT&T’s 5G core, but will eventually include virtually all of the company’s network operations, including its 4G core.
  • Microsoft will be the company to certify all of AT&T’s software-powered network operations for inclusion in the AT&T network. That will include software from other vendors. AT&T has not yet named its 5G core network vendors.
  • Microsoft will acquire AT&T’s Network Cloud technology – including its AT&T engineering and lifecycle management software – and its cloud-network operations team. The companies did not disclose exactly how many AT&T employees that transaction might cover, but an AT&T official suggested it will be in the “low hundreds.” Microsoft will then incorporate AT&T’s intellectual property into its Azure for Operators offering, which is for sale to other 5G network operators.
  • Microsoft and AT&T did not provide the logistics of their deal, including exactly how many Azure computing locations might be necessary to power AT&T’s network. It’s an important issue considering AT&T’s cellular network spans an estimated 70,000 cell towers across the country, and the operation of the radios on top of those towers might eventually be handled by programs running inside of Microsoft’s cloud. A top Microsoft executive involved in the deal told Light Reading that Microsoft’s Azure software will be installed into some of AT&T’s existing computing locations. Several of those compute server locations are staffed by AT&T technicians.
  • AT&T said the company plans to continue to run its network workloads inside of its own data centers and facilities. However, AT&T added that the deal today is focused on AT&T’s 5G core network and that the companies might explore additional elements of the network such as Open Radio Access Network (O-RAN) technology over the course of the agreement.

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Sidebar5G SA Core networks to run on cloud service provider platforms:

  • In late April, Dish Network made a similar deal to have Amazon run its 5G core network on AWS.
  • In late May, Telefónica said it had validated AWS Outposts as option for 5G SA core deployment in Brazil.
  • Earlier this week, TIM said it was building its 5G SA Core network on “Google’s cloud solutions” (whatever that means?)

Do you think the cloud service providers will essentially take over the implementation, operations, and maintenance of 5G SA Core networks, especially since they will likely all be “cloud native.”  Please post a comment in the box below this article to express your opinion and why.  Thanks!

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“This deal is not exclusive, so I fully expect Azure will try to assert itself as the telecom cloud provider for many carriers around the world,” said Roger Entner of Recon Analytics LLC.

“It’s the first time a Tier One operator has trusted their existing consumer subscriber base to hyper-scaler technology,” Microsoft’s Shawn Hakl, VP of the company’s 5G strategy, told Light Reading. Before joining Microsoft in 2020, Hakl was a longtime Verizon executive.

The deal follows a $2 billion agreement in 2019 in which AT&T said it would start using Microsoft’s cloud for software development and other tasks. At that time, AT&T said it would continue to run its core networking functions in its own private data centers.

Andre Fuetsch, AT&T’s chief technology officer, said that shifting to a public cloud vendor will let AT&T take advantage of a larger ecosystem of software developers who are working on technologies such as wringing more use out of pricey 5G spectrum or creating new features for users.  “That’s what we at AT&T want to do, and we think working with Microsoft gives us that advantage,” Fuetsch told Reuters in an interview.

“AT&T has one of the world’s most powerful global backbone networks serving hundreds of millions of subscribers. Our Network Cloud team has proved that running a network in the cloud drives speed, security, cost improvements and innovation. Microsoft’s decision to acquire these assets is a testament to AT&T’s leadership in network virtualization, culture of innovation, and realization of a telco-grade cloud stack,” said Andre Fuetsch, executive vice president and chief technology officer, AT&T. “The next step is making this capability accessible to operators around the world and ensuring it has the resources behind it to continue to evolve and improve. And do it securely. Microsoft’s cloud expertise and global reach make them the perfect fit for this next phase.”

Microsoft intends to use the newly acquired technology – plus the experience gained helping AT&T run the network – to build out a product it calls Azure for Operators, which it will use to pursue 5G core network business from telecommunications companies in the 60 regions of the world where it operates.

“I think we’re going to have operators around the planet that are quite interested in that,” Jason Zander, executive vice president of Microsoft Azure, said in an interview.  On the AT&T website, Zander said: “With Azure, operators can provide a more flexible and scalable service model, save infrastructure cost, and use AI to automate operations and differentiate customer offerings.  Through our collaboration with AT&T, Microsoft will expand its telecom portfolio to support operators with a carrier-grade cloud that provides seamless experiences across Microsoft’s cloud and the operator’s network.”
According to the GSMA, operators are expected to spend $900 billion worldwide between 2021 and 2025 in mobile capital expenditures (CapEx), roughly 80% of which will be in 5G and much of it could run on cloud infrastructure. Operators moving to the cloud can save on hardware and development, benefit from cloud-enabled automation and data analytics, and manage real-time responses and peak traffic on demand. The delivery of new services can be accelerated through cloud-driven AI and IoT.
Post MWC comment by Iain Morris of Light Reading:
“AWS, Microsoft Azure and Google Cloud muscled into the sector, promising innovation and cost savings for their debt-ridden (telco) clients.”
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AT&T’s Cost Cutting Continues:
In 2020, AT&T announced a cost-cutting program aimed at trimming $6 billion from its budget by 2023. Part of that effort includes an “IT rationalization” that involves eliminating unneeded applications and moving other applications into the cloud.  With its new Microsoft Azure deal, AT&T said it hopes to “substantially reduce engineering and development costs.” However, the companies haven’t provided a firm cost-savings estimate for AT&T’s 5G SA Core network running on Microsoft’s Azure cloud platform.  One would think that would have financial implications for both companies.
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Addendum —  Cloud Service Providers led by Amazon and Microsoft:
John Dinsdale, a Chief Analyst at Synergy Research Group, said: “Amazon and Microsoft tend to overshadow the market, with Amazon share staying at well over 30% and Microsoft growing its share from 10% to 20% over 16 quarters. However, after excluding those two, the rest of the market is still growing by over 30% per year, pointing to growth opportunities for many of the smaller cloud providers.”
“We’ve seen a dramatic increase in computer capabilities, increasingly sophisticated enterprise applications and an explosion in the amount of data being generated and processed,” he added.
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References:

https://news.microsoft.com/2021/06/30/att-to-run-its-mobility-network-on-microsofts-azure-for-operators-cloud-delivering-cost-efficient-5g-services-at-scale/

https://azure.microsoft.com/en-us/industries/telecommunications/

https://about.att.com/story/2021/att_microsoft_azure.html

https://www.reuters.com/business/media-telecom/att-run-core-5g-network-microsofts-cloud-2021-06-30/

https://www.lightreading.com/the-core/atandt-to-offload-5g-into-microsofts-cloud/d/d-id/770600?

https://www.lightreading.com/service-provider-cloud/atandt-has-locked-itself-into-risky-affair-with-microsoft/a/d-id/770608?

https://www.bloomberg.com/news/articles/2021-06-30/at-t-agrees-to-outsource-its-5g-network-to-microsoft-s-azure

8 thoughts on “AT&T 5G SA Core Network to run on Microsoft Azure cloud platform

  1. June 30, 2021 Update from Light Reading:
    AWS and other cloud players will need “many years” to catch up with Japan’s Rakuten in building and running cloud mobile networks, Rakuten CTO Tareq Amin has warned.

    Amin said reports that AWS could deliver costs below Rakuten for the Dish network were “completely wrong.”

    “Let me just tell you a secret today,” he told a recent press briefing. “There is no magic that AWS have that could make a telco workload elastic by itself. It just doesn’t exist.”

    It would require “a far more cloud-native architecture” to enable elasticity, he said.

    He added that while he would “love to compare” Rakuten’s costs with those of the AWS Dish platform, the cloud giant’s partnership with the US startup was good for the industry.

    “Competition is a good thing, so we want to see a lot more public cloud entering this space.”

    But cloud players would be on a learning curve, he cautioned.

    Rakuten’s communications platform had some “unique attributes” and it would take AWS and others “many, many years to learn how to manage and run large-scale networks.”

    Amin said their strength was in running huge enterprise IT workloads and they lacked the expertise in handling the “uniqueness in the radio domain that has never existed in a typical IT workload.”

    For example, a radio domain required predictable 1 microsecond latency, which required enhancements of the real-time kernel and the virtualization environment.

    “These are not trivial workloads. They are going to discover is that radio is not simple to do.”

    https://www.lightreading.com/service-provider-cloud/aws-many-years-behind-in-cloud-mobile-says-rakuten-cto/d/d-id/770579?

  2. Wow, in many ways this is probably a smart thing to do for AT&T, given that software is a core element of Microsoft and probably not AT&T.

    Still, one has to wonder if long-term this represents a hollowing out of AT&T, at least from a core technology standpoint? It sounds like AT&T will be effectively outsourcing much of their switching and routing network. Granted, they will still own the fiber and some of the radio towers, but it just seems like it is becoming more and more like an airline that leases its planes and uses someone elses’ reservation system.

    At the same time, is Microsoft with its earlier purchases of Metaswitch and other telecom players, now poised to takeover the telecom mantle from AT&T?

    One also has to wonder if this move is partly due to the enormous debt from AT&T’s non-telecom activities (e.g. DirecTV, Warner, etc.)?

  3. Light Reading Opinion- July 1, 2021:

    AT&T’s latest deal entails a transfer of its engineering and lifecycle management software, along with hundreds of employees, to Microsoft, which will package them into the Azure for Operators service it sells to other telcos. It is a download of expertise into the world’s second most valuable company (behind Apple), stripping AT&T of IP it must once have considered important.

    The widespread view is that operators can save money by shifting IT workloads and network functions into AWS, Microsoft Azure or Google Cloud, the power brokers of today’s Internet. They can also cruise in the supercar of public cloud innovation and forget about their own sputtering engines.

    James Crawshaw, a principal analyst with Omdia (a sister company to Light Reading) said: “It is a bold but pragmatic move. There are still plenty of mobile network engineering activities that AT&T will retain and these still give it plenty of scope to differentiate from its competitors. They seem to be taking a view that running a telco cloud is not a source of differentiation and best left to someone with greater scale, like Microsoft.”

    But a fitter company that had ceded less ground to big tech would probably not have countenanced a deal. AT&T’s share price has lost a third of its value in the last five years after a disastrous foray into media, marked by its $85 billion splurge on Time Warner.

    Its overall debts stood at $157 billion last year, up from just $66 billion a decade earlier. In 2020, it recorded a $3.8 billion loss. Its workforce has shrunk by 50,000 employees since 2015. It has been overtaken by T-Mobile, a seemingly unstoppable competitor. Dish threatens a price war.

    No doubt, the undisclosed commercial arrangements with Microsoft will be economically favorable, but they seem to completely ignore the dangers of single-supplier deals.

    What happens if AT&T simply decides it would like to switch vendor, or even take systems back in-house? Others’ experience of using the public cloud suggests it would be tricky. In 2019, Snap, the provider of the Snapchat messaging service, warned in a regulatory filing that moving systems between AWS and Google Cloud would be “difficult to implement” and cause it to incur “significant time and expense.”

    US authorities have also raised the alarm. In its October antitrust investigation, the House of Representatives said customers trying to move between public clouds had encountered “high switching costs” and “technical design challenges.”

    Not everyone is persuaded by the economic arguments in favor of the public cloud, either. Andreesen Horowitz, a venture capital firm, thinks cost savings are usually ephemeral. In a recent report about the public cloud, it said “the pressure it puts on margins can start to outweigh the benefits as a company scales and growth slows.”

    It also drew attention to the difficulty of repatriating systems. Most companies, it said, “find it hard to justify moving workloads off the cloud given the magnitude of such efforts.”

    The latest, telecom-specific snub has come from Tareq Amin, the high-profile technology executive in charge of building a mobile network for Rakuten in Japan. AWS and other public clouds are “years behind” his own company in running cloud mobile networks, and any notion they can do it at lower cost is “completely wrong,” he recently told reporters.

    Self-serving as those comments are – Rakuten, after all, aims to sell its cloud services to other telcos – they should make operators think twice about following AT&T.

    As the US communications company settles into its new Microsoft surroundings, it needs to hope for a couple of things: that more attractive alternatives to Microsoft do not materialize; and that its new long-term partner does not turn abusive.

    https://www.lightreading.com/service-provider-cloud/atandt-has-locked-itself-into-risky-affair-with-microsoft/a/d-id/770608?

  4. SDX Central:

    The shift marks a significant expansion of a deal AT&T inked with Microsoft almost two years ago that called for Microsoft to provide AT&T with cloud services supporting non-network applications and internal IT infrastructure. Now AT&T is moving the crown jewels of its network into Microsoft’s cloud and giving up control of its internally developed network cloud technology.

    “This is a significant move but not unexpected,” Chris Antlitz, principal analyst at Technology Business Research, told SDxCentral. AT&T said a 5G standalone (SA) core, something the operator has yet to deploy, will be the first order of business and it plans to move its existing network cloud to Azure by mid 2024.

    Igal Elbaz, AT&T’s SVP of engineering and operations, declined to say when AT&T’s 5G SA core will be deployed or name other vendors involved.

    AT&T CTO Andre Fuetsch, in a statement, framed the sale to Microsoft as a “testament to AT&T’s leadership in network virtualization, culture of innovation, and realization of telco-grade cloud stack.”

    The operator did not, however, realize the full value of those efforts. It also suggests that AT&T’s insistence on internal and open source development delayed its deployment of a 5G SA core.

    “Most likely this will speed up AT&T’s migration to cloud native and will cost it less compared to the DIY (do-it-yourself) approach,” Antlitz said. “These are likely key reasons why AT&T opted to take this approach versus doing it itself via its own private cloud.”

    AT&T loses some critical engineering talent, roughly 100 engineers, as a result of this deal as well. Ryan van Wyk, AT&T’s VP of network cloud that played an integral role in the development of the operator’s containerized core, has agreed to join Microsoft, according to Elbaz. “The AT&T Network Cloud team is receiving offers to join Microsoft’s Azure team,” he wrote in response to questions.

    https://www.sdxcentral.com/articles/news/att-abandons-5g-cloud-stack-microsoft-picks-up-pieces/2021/06/

  5. In what is undoubtedly one of the most significant decisions made to date in relation to telco cloud and 5G strategies, AT&T has handed over the management and development of its 5G core system, the intelligent heart of its next-generation mobile network architecture, to public cloud giant Microsoft Azure.

    This is massive news for the industry and another example of the ever-closer relationship between traditional telcos and the public cloud giants. And while AT&T isn’t the first operator to entrust its 5G core to a cloud partner – Telefónica Deutschland (O2 Germany), for example, struck a deal with AWS last year – the scale and transfer of in-house assets make this a landmark move.

    In order to do this effectively, AT&T is transferring its Network Cloud platform – which the operator has developed for more than three years – and an unspecified number of technical staff to Azure, which will run, and further develop, the tech on its Azure for Operators platform.

    The agreement is massive for both parties, and could be the start of an even bigger relationship if all goes well: AT&T says the alliance ‘provides a path for all of AT&T’s mobile network traffic to be managed using Microsoft Azure technologies,” which surely hints at the potential migration of the operator’s 4G core to the hyperscaler’s platform too. And who knows where it could go after that: It’s a bigger step again, but virtual RAN functionality has to run somewhere, right?

    So what exactly does AT&T get out of it?

    Well, supporters of the public cloud have long touted reduced costs and accelerated R&D as significant benefits for telcos, and AT&T states that this move will “increase productivity” and substantially reduce its engineering and development costs, while “early access to Microsoft’s cloud, AI and edge technology” will give it the “flexibility it needs to rapidly innovate and launch new services and customer experiences enabled by 5G.”

    (This is all great and good but, ultimately it would be good to know exactly how much it might save… the main area of detail not being shared by the partners is the money side of things… just how lucrative this is for either side is unknown.)

    For Azure, it gets the experience of running what AT&T describes as “real-world production 5G workloads,” as well as a great deal of cloud-native telco-ready applications. And this is where the relationship gets even more interesting… because, using the AT&T technology plus the capabilities it already has from its acquisitions of Metaswitch and Affirmed Networks, this deal enables Azure to “help operators across the world deliver highly reliable, cost-effective and secure 5G services to consumer and enterprise customers.”

    So Azure will be taking AT&T’s capabilities and offering it to other operators: Following its Metaswitch and Affirmed acquisitions, Azure was basically a supplier of telecoms networking applications to operators, but now it has really upped the ante by adopting AT&T expertise and very telco-oriented capabilities.

    AT&T’s CTO Andre Fuetsch spells this out very clearly: “The next step is making this capability accessible to operators around the world and ensuring it has the resources behind it to continue to evolve and improve. And do it securely. Microsoft’s cloud expertise and global reach make them the perfect fit for this next phase.” (For the full AT&T announcement, see AT&T to run its mobility network on Microsoft’s Azure for Operators cloud, delivering cost-efficient 5G services at scale.)

    This, then, looks like yet another pitch to the global operator community to use an existing cloud-oriented mobile network platform, in much the same was as Rakuten Mobile is pitching its wares via its Rakuten Communications Platform, NTT DOCOMO is doing with its 5G Open RAN Ecosystem, and India’s Jio Platforms aims to do too.

    And this can only be bad news for the vendors seeking to land 5G core contracts with the world’s mobile operators – now the likes of Ericsson, Huawei, Nokia, ZTE, Mavenir, Samsung, HPE, Casa Systems have an even stronger global rival with massive resources.

    If this works out, this could be a real telco cloud and 5G gamechanger for the industry, Azure and AT&T.

    – Ray Le Maistre, Editorial Director, TelecomTV

    https://www.telecomtv.com/content/cloud-native/at-t-takes-a-giant-5g-leap-to-the-public-cloud-with-azure-41867/

  6. Google Cloud announced new solutions across 5G and edge computing portfolio, including on-premises Multi-access Edge Compute solution, and Network Edge abilities through LTE, 5G, and wireline.

    AT&T and Google Cloud have been developing edge solutions for the enterprise for over a year.

    Now, the companies aim to deliver transformative capabilities to help businesses drive real value and build industry-changing experiences in retail, healthcare, manufacturing, entertainment. It also includes using Google Maps, Android, Pixel, augmented reality (AR) and virtual reality (VR), and other solutions across Google for more immersive customer experiences.

    The companies are also collaborating to evaluate how network APIs could optimize applications, using near-real-time network information at the Google Cloud edge.

    https://www.prnewswire.com/news-releases/att-and-google-cloud-expand-5g-and-edge-collaboration-to-deliver-next-generation-business-outcomes-301325329.html

  7. SDxCentral OpEd:

    Telecom operators now realize that they have no business trying to be in the cloud business.

    William Ho, principal analyst at 556 Ventures, likened the move to what AT&T and Verizon did several years ago when they sold off their public cloud businesses.

    “It’s the whole scale thing,” Ho explained. “They realized that they were not Amazon, Google, or Microsoft and so they really had no way to scale that effectively without dumping a lot of money in, so they got rid of those businesses. With this, they are realizing that they are going to do open RAN and other software moves, but they just don’t have the full expertise and the capex to make it work.”

    Outside of the carrier moves, traditional telecom vendors also migrated more of their future to the cloud giants. Ericsson, for instance, tapped Google Cloud to assist network operators’ shift to cloud-native infrastructure. That move echoed one by its Nordic rival Nokia from earlier this year.

    These efforts have all been built on the backs of the cloud ecosystem turning its full attention to the lucrative telecom market that has floundered in dealing with this need. And these recent moves have shown that those traditional telecom players are ready to make the final push in order to deliver on their 5G promise.

    While financial terms of the AT&T deal with Microsoft were not announced, it’s obvious that there is a substantial return available for the vendors and cloud providers that can bridge this gap.

    https://www.sdxcentral.com/articles/news/op-ed-mwc-barcelona-shows-the-cloud-has-eaten-telecom/2021/07/

  8. “It’s the first time a Tier One operator has trusted their existing consumer subscriber base to hyperscaler technology,” Microsoft’s Shawn Hakl, VP of the company’s 5G strategy, told Light Reading.

    “It is a bold but pragmatic move,” observed James Crawshaw, a principal analyst with Light Reading sister company Omdia. “There are still plenty of mobile network engineering activities that AT&T will retain and these still give it plenty of scope to differentiate from its competitors,” he said. “They seem to be taking a view that running a telco cloud is not a source of differentiation and best left to someone with greater scale, like Microsoft.”

    https://www.lightreading.com/5g/nec-sends-5g-to-cloud-with-microsoft/d/d-id/770831?

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