Cloudification of networks
Networks on cloud: a clear advantage.
“A mobile-telecoms revolution is under way – one reminiscent of the way personal computers replaced mainframes in the 1980s, and cloud-based apps are replacing traditional software today.” Tareq Amin, CEO of Rakuten Mobile, wrote this in 2021 as part of his outlook on the future of mobile telecoms. The revolution he was referring to – “telco cloud transformation” – is the transition from physical network functions to a software form, running on the cloud. Telcos are increasingly moving their networks to the cloud, recognizing the significant advantages this can provide – 31% of global network capacity is being serviced by cloud today, and this is expected to increase to 46% in the next 3 to 5 years.
In our newest Capgemini Research Institute report, Networks on cloud: A clear advantage, we take an in-depth look at the telco cloud transformation process. While the “virtualization” of network functions, which serves as a starting point for telco cloud transformation, has been ongoing for several years, we see cloud-native deployment of network functions – which can take virtualization’s benefits to the next level and offers additional ones as well – rapidly taking off among telco organizations. Our analysis shows that by transforming to cloud, a typical telco from our survey can improve its network total cost of ownership by $260 to $380 million and can gain an early-mover advantage to the tune of $110 to $210 million in additional revenue.
However, we also found there to be significant challenges that organizations embarking on transformations must overcome. These include issues related to cultural challenges, controlling cloud costs, and regulatory hurdles, among others. To navigate these obstacles successfully, telcos will need to be prepared to skillfully implement both technical and cultural changes within their organizations.
Still, the decision to transform looks to be a given based on the numerous and significant benefits that it can provide. With this in mind, we aim to answer four of the most significant questions for organizations surrounding the move toward telco cloud – including why the move is taking place, its cost-benefit analysis, examples of successful transformations, and how organizations can harness the full potential that telco cloud offers.
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