There’s a subtle transformation that is occurring among some wireless operators. As I listen to earnings calls and virtual conference panels, I hear wireless operator executives sprinkle terms that I once associated primarily with IT companies into their discussions about their networks. Terms such as "operational agility," "automation," and "as-a-service." And 5G seems to be accelerating this trend as many wireless networks are transitioning to a cloud-native network architecture.
Verizon, in particular, has embraced the concept of network-as-a-service, or NaaS. The company often uses this term to describe how it can customize its network offering to specific market segments. For example, an enterprise might need Verizon’s network to deliver a low latency service and want superior security. To accommodate this, Verizon would carve out a slice of its network and tailer its services to fit that particular company.
But Verizon also referred to NaaS to described its $7 billion acquisition of MVNO Tracfone, noting that it already is providing underlying wireless network connectivity for Comcast’s Xfinity Mobile and Charter’s Spectrum Mobile wireless services and that this latest play fits the NaaS model.
As John Byrne, service director, global telecom technology and software at GlobalData, noted, “everything is ‘as-a-service’ now because many wireless networks are becoming virtualized. We have much better visibility into the network. We have upgraded the networks from the access to the core so they can offer whatever level of experience you need without making you buy physical boxes,” Byrne said.
Analysts at Appledore Research define NaaS as when a wireless network’s resources are easily exposed to third parties, making it possible for new services to be created with minimal effort. In a white paper, called “Beyond OSS,” Appledore calls the move of wireless operators to a NaaS model as a “game-changer” because it includes a dynamic and reconfigurable transport network and overlays different services such as 5G cloud RAN and cloud-native NFV.
However, Appledore also notes that while NaaS sounds simple and delivers a lot of benefits, it does require architectural changes in the network so that technology can be swapped out with minimal impact on the back office.
But Byrne said that while everything can now be considered “as a service,” the real intent of the term is to mimic what enterprises have been doing with hyperscale companies for quite some time. In particular, he said that enterprises are accustomed to having service level agreements and guaranteed quality of service with workflows that they put on Microsoft’s Azure cloud platform or Amazon Web Services. “This resonates with them,” he said.
But Verizon’s description of tailoring slices of its network to accommodate a customer by offering certain features such as reliability or speed, sounds very similar to the wholesale model that wireless operators have been pursuing for some time. Sprint, in particular, was a big proponent of MVNOs. Back in the mid-2000s, the company had deals with several and used those partnerships to attract different segments of the market. In some cases, Sprint just provided its MVNOs with network access but in many cases it did more – such as provide billing, logistics and marketing support.
Byrne said that he believes that Verizon is taking its enterprise strategy and stretching it to fit the wholesale model. “Verizon is the premium brand and they like that their most important customers are on the Verizon brand because they bring higher ARPU,” Bryne said.
And Verizon isn’t the only one talking about wholesale partnerships and the NaaS model. Dish Network, which has not yet launched its 5G network, has often hinted about potentially having numerous wholesale partners. During the company’s second quarter earnings call in August, Dish CEO Tom Cullen talked about the wholesale opportunity, anticipating that the company will have so much capacity it will be able to court many new new wholesale opportunities. To support this effort, the company recently hired Steve Becker, who used to work in Sprint’s wholesale business division, as VP of Dish’s wholesale business.
When Dish completes its 5G network, which will be a virtualized 5G network built from ground up, it may have advantages over existing wireless operators because it doesn’t have to deal with old infrastructure and outdated business models. Instead, it might be able to more quickly embrace the NaaS model.
It’s too soon to say whether Verizon and Dish and their NaaS aspirations will necessarily result in a more lucrative wireless business. Byrne says that the goal of having a virtualized network is so that you can use open standards and open APIs and expose network functions in a way that is more efficient and automated. But getting operators, even greenfield operators like Dish, to embrace this model that originated in the enterprise space and carry it through the entire organization is probably going to be a tough transition.
As Appledore notes in its white paper: “Get it right and you get operations right. Get it wrong and cloud-native is only a dream.”