The survey, titled Pursuing Hyperscale Economics: What, Why and How Telcos Can Do It, was conducted by STL Partners and sponsored by DriveNets. According to the report, telecom operators categorize hyperscale cloud providers in three ways:
- As business partners that can drive new areas of demand, in addition to providing infrastructure as a service for operators' IT and operational payloads
- As threats that reduce the value of operators through over-the-top (OTT) and under-network services, commoditizing operators' core businesses
- As models from which operators can learn and adopt business and operating models and technological innovations
According to Yesmean Luk, Telco Cloud Practice Lead at STL Partners and author of the report, the best opportunity for operators lies in focusing on the latter point and the impact of hyperscale economies on operator costs and capabilities.
"The value of networks has shifted from the networks themselves to the services that operate them," she commented. "We're seeing that through the incredible business growth of cloud providers and the huge variety of cloud-based services and applications being deployed. As operators evolve toward more advanced data connectivity services, such as 5G and fiber to the home, they will benefit from the increasing demand for capacity and performance, but as their capabilities grow, they will need to manage costs in a more sustainable and optimal way. A cloud-like architecture has proven to support this and enable new revenue streams from expanded service offerings and the agility to address them. Hyperscale providers serve as a model."
Disaggregation:
The report has found a consensus among operators that disaggregation and the shift to cloud-native network architectures are inevitable.
In a recent webinar and panel discussion hosted by STL Partners, Bryce Mitchell, vice president of core network engineering at Rogers Communications, agreed that hyperscale economies could have a positive impact on network operators' bottom line.
"There's a lot of value in these concepts," he said. "Subscriber numbers are growing relatively flat, ARPU is pretty much stagnant, but usage is increasing. We need to look at our cost structures and reduce them."
Despite this, not all operators believe hyperscale economies are applicable or achievable for them. There is even a risk of complacency among some established operators who may remain passive while others seize the opportunity to innovate early.
The report identified three key drivers for pursuing hyperscale economies: optimal scalability, faster innovation and time to market, and flexibility and resilience to change.
"When we meet with customers, their primary concern is reducing costs," noted Inbar Lasser-Raab, marketing director at DriveNets. "Hyperscale economies and disaggregation give service providers the ability to run multiple networks and services and perform work more efficiently by utilizing their network capacity and resources, ultimately reducing their costs."
Look for the network core.
The report suggests that the network core presents a significant opportunity for hyperscale economies due to continued growth in network traffic volumes, ecosystem maturity, lessons learned from previous network function virtualization (NFV) implementations, and the deployment of standalone (SA) 5G technologies. This holds true for both small and large operators.
"Success in achieving hyperscale economies isn't just about size," Luk explained. "The right architecture and operating models are key ingredients for success, regardless of the organization's size. Network operators need to learn from what hyperscalers have done, apply it to their business and network, and focus on the key milestones ahead to accelerate that momentum. Many of these milestones are already underway.".
