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Benefits and Nuances of Adopting Cloud Computing for Telecom Organizations

To keep up with competition from alternative communication channels provided by big-scale digital companies, telecommunication organizations have to both improve their current services and offer new ones.

Therefore, they strive for advanced agility while keeping operational spending affordable. To achieve that, telecom companies have started adopting cloud-based instead of traditional network architectures. However, configuring and managing cloud-based infrastructure is challenging, especially in complex industries such as telecommunications.

In this article, we explore how cloud computing can help telecom companies improve their services. We also list the benefits of cloud computing in the telecom industry and tackle the key cloud implementation and management challenges that businesses should keep in mind.

Does the telecom industry need the cloud?

The telecommunications (or telecom) industry includes cable companies, internet service providers, satellite communications providers, and telephone companies. As modern telecom companies often go beyond providing the traditional set of telecommunications services, they are sometimes also referred to as communications service providers (CSPs). In this article, we’ll use these terms interchangeably.

The 2020 pandemic made people rely on telecoms more than ever. The majority of communications that usually happened in person were suddenly conducted through telecommunications channels. To be able to cope with such a load and expand services on demand, telecom companies have transformed parts of their infrastructure into cloud-based applications. Thus, they can store and process data remotely instead of purchasing and maintaining their own physical data processing centers.

For example, Google Cloud offers the Anthos solution to manage cloud networks, promising to modernize security with a zero trust security model‎, simplified patching and compliance, and centralized management.

Let’s break down some of the key benefits of cloud computing for telecom companies:

6 reasons why telecom companies move to the cloud

1. Convenient scalability. Clouds allow telecom businesses to make their network infrastructure more agile and quickly adjust their services for seasonal spikes in demand: scale up when consumer activity rises and down when it decreases.

2. Strong network security. Cloud adoption can help CSPs combine security best practices to make sure that all processes run efficiently and are protected. Such security measures include L4-L7 connections, VPNs, and web application firewalls.

3. Standby infrastructure. Data backups offered by cloud services help telecom companies keep services alive during accidents like power outages, as well as make systems resilient during extreme peaks in demand or system failure.

4. New service opportunities. With cloud computing services, CSPs can broaden their set of offered services and transform into digital service providers (DSPs). Being able to connect any user to any internet-connected device via messaging, video calls, and online conferences, telecom companies can significantly improve their customer experience compared to traditional telecommunications companies.

5. Reduced operating costs. Migrating to the cloud and reworking infrastructure require effort and funds. But by paying only for the cloud services they actually use, telecom organizations can significantly cut their operating costs in the long run. This pay-as-you-go model saves money that can be used for an organization’s development.

6. Network automation. With convenient cloud management systems, telecom companies can save lots of time and effort by automating various processes. For instance, they can leverage the CI/CD process to design and test new network components, deploy and orchestrate complex solutions, and monitor networks within the corporate infrastructure.

To better understand the impact of cloud computing on the telecom industry, let’s explore the key cloud-based technologies CPSs can adopt.

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Technologies powering cloud-based telecom infrastructure

Shifting towards cloud-based infrastructure is a complex process that requires businesses to carefully choose a deployment approach and technologies. There are four key technologies that telecom organizations can leverage when adopting cloud computing.

key technologies for cloud adoption in the telecom industry

When it comes to the adoption method, telecom organizations prefer to go with a multi-cloud or hybrid cloud approach instead of choosing between private and public clouds. Telecom companies can run their most crucial applications in a private cloud, still leveraging vast sets of tools and services provided by public clouds. A combination of private and public clouds helps companies have more security and control their data in a cost-effective way. With hybrid clouds, data and applications are interoperable and horizontally portable.

Another technology that the telecommunication industry can benefit from when adopting clouds is edge computing. It helps CSPs store and process data in real time and accommodate a wider selection of devices. Cloud services based on edge computing bring lots of benefits like network performance improvements, low latency, high bandwidth, and data offload. For instance, companies like Verizon and SingTel have leveraged edge computing to launch commercial 5G mobile networks.

A beneficial architectural approach for cloud computing is using microservices and containers. The microservices architecture allows you to quickly develop, test, deploy, and manage new features without any impact on other network components. And containers significantly simplify the process of moving applications between environments without affecting network performance. Thus, telecom organizations can expand their services and networks efficiently and securely.

Last but not least, telecom organizations can greatly benefit from cloud-native network functions (CNFS). According to IDC, the network functions virtualized infrastructure (NFVi) resources currently used by CSPs should be transformed into CNFs. A CNF is a cloud native application that implements network functionality and consists of microservices. CNFs were developed to address limitations of Virtual Network Functions (VNFs) like slow upgrades, little elasticity, and poor scaling. With CNFs, telecom companies can be more flexible, scalable, and dynamic. Using containers, CNFs provide top-notch network functionality, which makes this technology a decent solution in the transition to 5G.

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New opportunities for cloud-based telecommunications

Applied in the telecom industry, cloud computing opens lots of opportunities in terms of adopting new technologies. Particularly, moving their infrastructure to the cloud makes it much easier for telecom organizations to employ innovations like 5G, the Internet of Things, and artificial intelligence.

3 telecom trends

5G. Fifth-generation cellular networks are a must-have technology for every CSP, since 5G unlocks numerous possibilities for businesses, working almost up to ten times faster than 4G. Many cloud vendors already tailor their services to telecom organizations’ needs with a view towards 5G implementation.

Internet of Things. Technologies like LTE-M and narrowband IoT (NB-IoT) protocols make it possible to connect IoT devices to a cellular network. Enhancing the cloud infrastructure with an IoT ecosystem is a promising investment idea, since mass consumption of IoT technologies is continuously accelerating. And with the growing number of SIM-based smart devices, the telecom industry expects to go beyond traditional telecommunications services and have lots of IoT business use cases in the near future.

Telecom organizations can leverage IoT for various purposes. For instance, some companies like Vodafone provide roaming capabilities, allowing users to connect to a cellular network in areas where the primary telecom has no infrastructure. AT&T leverages IoT capabilities to improve internal processes like optimizing vehicle fleets and supply chain operations. The Singapore-based telecom SingTel has even become a provider of IoT and cloud services.

Artificial intelligence. With the rapid growth of services offered by modern CSPs and adoption of cutting-edge technologies like IoT and 5G, organizations have to regularly handle tons of data. AI-powered technologies can help organizations quickly and efficiently process all that data collected from customer activities and smart devices.

Although the merging of cloud computing and AI isn’t necessary, some use cases benefit from the concept of cloud-based artificial intelligence. For example, some cloud-based database servers keep the information required by AI always available, whether for access or use in decision-making and learning.

The global AI in telecommunication market is estimated to reach $6.3 billion by 2026. And the main applications, according to Market Research Future, are traffic classification, network optimization, anomaly detection, predictive maintenance, and network orchestration.

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Major telecom challenges and how the cloud can help overcome them

In this section, we discuss in detail which challenges of CSPs can be addressed using cloud computing in telecommunications — and how.

telecom challenges

Demand for enhanced service personalization

Right now, telecom companies face competition with web scale cloud-based companies like WhatsApp, Skype, Telegram, and Facebook Messenger. Such apps became popular by providing fast and convenient communication channels for messaging as well as voice and video calls.

To maintain a competitive edge and open new growth opportunities, telecom operators have to meet high customization standards set by their cloud-based competitors. And to do that, the telecommunication industry should:

1. Focus on customer needs and provide top-notch services. To do this, telecoms can continuously improve the user experience for existing services as well as build additional products and services to engage their audiences.

2. Partner with large cloud providers instead of competing with them. Using the infrastructure of leading cloud providers, telecommunication organizations can offer high-quality services in various regions, including those located quite far away. Thus, telecom companies can leverage a cloud provider’s presence in or near the target region and offer their services with high-quality connections and budget-friendly regional traffic.

3. Leverage 5G technology to create new value-added services and enhance IoT services. 5G can be used not only to improve connectivity but to create new services. For instance, some mobile operators predict that cloud gaming could represent 25% to 50% of 5G data traffic by 2022. Vodafone has already launched a 5G cloud gaming platform called GameNow in Italy.

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Expenses for implementing new technologies

Complex telecom infrastructure already requires lots of funds and effort for its development and maintenance. And with upgrading it and implementing new technologies, more expenses arise.

For instance, a 5G wireless network can cost CSPs from $250,000 to $1.2 million, depending on the vendor. And the software license fee for a 4G IoT system could cost between $0.02 and $1.04 per customer.

The three main things that bring additional costs are:

3 drivers of additional expenses for telecom infrastructure

Using cloud computing can help telecom companies lower expenses for maintaining infrastructure and developing new services in the long run. For instance, with clouds, you can better plan for shorter upgrade cycles and meet customer demand for the latest technologies. Also, due to their nature, clouds provide scalability so that cellular infrastructure can expand its capacity and handle more traffic.

Combined with a microservices architecture, clouds allow telecom providers to develop, test, and deploy new services securely and conveniently. Thus, they can deliver additional services and improve current ones to meet high consumer expectations without any impact on other network components.

Network and data security issues

With adoption of new technologies, the security of networks and data becomes a top concern for telecommunications companies.

For instance, 5G and IoT expand the surface area for cloud computing attacks. According to the Securing private networks in the 5G era report by GSMA Intelligence, the top concerns telecom operators face when offering 5G-based services are:

telecom security concerns when offering 5G based services

To address such security challenges, telecom companies can leverage clouds for network security, again treating cloud vendors not only as their competitors, but as partners as well. Out-of-the-box solutions from cloud providers already offer various mechanisms for infrastructure security. AWS, for example, offers security groups and identity and access management roles as part of their cloud security offering.

Note that different providers (of both private and public clouds) can use different terms for similar or even the same functionalities and offer different sets of features. CSPs should keep such nuances in mind, especially when working with hybrid clouds.

It’s also worth saying that security is a shared responsibility, so telecom companies should carefully examine cybersecurity opportunities of different cloud providers and think of additional security measures if needed.

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Increasing complexity of operations

Since the number of telecom consumers and the number of services offered by telecom companies keep rising, internal processes become more complex. Handling customer service along with service configuration, invoicing, payments, and other operations requires resources and efficient tools. And such tools have to work not only efficiently but also fast, because consumers won’t tolerate any delays in processes.

Using cloud computing to overcome this challenge will help telecom businesses significantly improve operations management. For instance, Ericsson has already partnered with AWS to bring their business support systems to the cloud. Automatic scaling and managed cloud services can help telecom organizations react faster to customer demands and simplify activities for operations and development teams.

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Challenges of implementing and managing clouds

Although cloud adoption is an ongoing trend for CSPs that brings various benefits, the implementation and management of cloud-based telecommunication services and systems are tricky. Let’s explore some of the pitfalls to expect when adopting cloud infrastructure.

challenges of cloud adoption

Choosing a cloud strategy. Complex infrastructures like those in telecom organizations usually require hybrid clouds or multi-clouds. Both options aim to minimize dependence on a single provider, often cutting costs and improving flexibility. The hybrid scheme always includes the use of private and public clouds, with all components of a hybrid cloud typically working together. Multi-clouds, on the contrary, use multiple public cloud services. Although multi-clouds are used for different tasks, they usually operate in combination with on-premises physical, virtual, and private cloud infrastructure.

You should also carefully choose your cloud providers. Some clouds can be better than others, depending on your organization’s goals. They can provide different capabilities and terms for computing specifics, storage, and prices. Sometimes, differences lie in unobvious but important details. For instance, you expect Kubernetes to be managed in the same manner across all clouds. However, not all cloud providers manage Kubernetes in the same way.

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Migration. Moving to a new cloud infrastructure can be time-consuming and require lots of effort. You have to take into consideration numerous details like specific cloud providers, as well as features and components they provide like databases, native monitoring systems, and various tools.

Here’s a short list of the crucial things you should analyze before starting the migration:

  • Operational requirements and performance characteristics
  • Container and microservices platforms for application development
  • Capacity planning and eliminating unused services
  • Provisioning of data, storage, network, and security
  • Financial details like metering, reporting, and charges

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Orchestration. True elasticity within cloud environments requires the orchestration of multiple components within the data center. And service orchestration is tricky, since the lifecycle of distributed services is typically more complex compared to individual containers.

The major challenges related to cloud orchestration are:

  • Complex lifecycle management
  • Resource allocation and use
  • Handling multiple tenants, each with their own requirements and all isolated with security controls
  • Choosing the most suitable cloud orchestration software

Inter-cloud architecture. Whether you choose to design a private cloud with the intention of transitioning to a hybrid architecture or you want to build a multi-cloud infrastructure, the process can be complicated and time-consuming.

With hybrid architectures, you might need to make significant changes to the data center architecture to meet specific inter-cloud needs and requirements. These could be:

  • Secure interconnectivity between private and public cloud environments
  • Automatic migration of in-house applications to the cloud
  • Replicating specific infrastructure components in the public cloud part of a hybrid model
  • Support for new technologies that will be added later

Cost management. Over time, it becomes harder to understand and manage cloud pricing. The reason is that charges differ depending on computing, storage, networking, memory type, region or zone, number of requests, and other details. Some providers charge not only for the size of the load balancer instance but also for the type of instance and the number of requests an instance will handle per server per second.

To manage and forecast expenses for cloud services, it’s best to use specific management and projection tools if they are offered by your provider.

Ensuring data protection. Security is a shared responsibility. Even though providers of public cloud services have data protection measures in place, organizations should put efforts into data security. In enterprise environments, the most critical data is mostly secured when stored in a private cloud, whether it’s in a physical on-premises cloud, co-located servers, or a VPN.

When data moves to and from public clouds, it can lead to different security challenges. For instance, data can be vulnerable to DDoS and MitM attacks. To protect data, you should incorporate software encryption and hardware security modules into your cloud architecture, as well as apply efficient DDoS prevention methods.

Other risks can be posed by employees’ devices while they access sensitive data from the private cloud or on-premises data centers. Since employee devices can be connected to other networks beyond the organization and not fully secured, it’s vital to identify threats at all access points of such devices and enforce tough security protocols to prevent data leaks.

Despite the mentioned challenges, clouds have the potential to significantly transform CSP infrastructures in a beneficial way. You shouldn’t consider cloud computing as only a set of virtual servers and a network that connects them. Leveraging cloud providers’ offerings, telecom companies can dramatically change their approach to accomplishing routine tasks and delivering new products.

One of the most popular examples of using clouds to optimize resources, increase agility, and respond to customer demands is the Jazz Serverless Development Platform. This platform was created by wireless network operator T-Mobile using AWS serverless technologies. Now, Jazz allows developers to build secure and efficient services, saving significant amounts of time thanks to automated operations and other benefits of serverless computing.

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Cloud computing promises to help various industries improve their business efficiency and meet high consumer expectations. With telecom organizations expanding the number of their services and gradually transforming from CSPs into DSPs, cloud adoption becomes a must.

However, choosing the right strategy and vendors, configuring the cloud infrastructure, and managing cloud-based architecture are challenging processes. To make your cloud adoption smooth and efficient, it’s crucial to bring in experienced specialists.

At Apriorit, we’ve gathered a dedicated team of specialists in cloud development and management services who can help you with a number of tasks, including:

  • Working with cloud computing structures
  • Implementing IoT services
  • Optimizing cloud workloads with DevOps services
  • Configuring virtual machines
  • Enabling services for access levels, messaging, scalability, performance, and encryption
  • Configuring services for secrets exchange with the blockchain technology
  • Implementing AI mechanisms for analyzing and structuring gathered data (for example, data gathered from IoT devices)

Contact us for a personal consultation regarding cloud implementation and management!

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