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Cloud-Native Network Transformation and The 5G Edge: Kerem Arsal Roberto Kompany

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37 views37 pages

Cloud-Native Network Transformation and The 5G Edge: Kerem Arsal Roberto Kompany

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hinesslaga
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© © All Rights Reserved
We take content rights seriously. If you suspect this is your content, claim it here.
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2024

Cloud-native network
transformation and the
5G edge

Kerem Arsal Roberto Kompany Pablo Tomasi


Senior Principal Analyst, Principal Analyst, Principal Analyst,
Networked Edge Mobile Infrastructure Private Networks
— Omdia — Omdia — Omdia
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Contents

Executive summary.............................................. 3 SECTION 04

Challenges in the journey to


cloud native networking..................................20
SECTION 01
Managing complexity and interoperability are the main
5G slow to reach full potential so far............ 5 challenges to 5G cloud core deployments; business case
This is tied to slow and delayed deployments of 5G SA, clarity is not a concern.................................................................................... 20
which enables new services that can translate into Integration challenges are the primary obstacles to the
new revenue streams........................................................................................6 adoption of open vRAN.................................................................................. 21
Without ‘true’ 5G networks, edge computing on
telecom networks has also struggled to flourish.....................................6
SECTION 05
CSPs count many challenges in their edge deployments.....................7
Keys to success and the role of
CSPs acknowledge their lack of infrastructure readiness
and technical challenges in IT and network domains as their open source...........................................................23
biggest hurdles….................................................................................................8 A common cloud layer can act as a platform of
…and view Opex and Capex as the two trailing obstacles....................8 interoperability to reduce vendor fragmentation................................ 23
Kubernetes is a powerful approach to container
orchestration, especially when supported by services
SECTION 02
that offer visibility, control and management of clusters.................. 24
5G edge computing now set for Telco clouds may run in confined environments due to strict
strong growth.......................................................10 requirements, but CaaS platforms will be agnostic to network
and third-party workloads............................................................................ 25
CSPs value the versatility of edge computing, which
brings both internal and external benefits............................................. 11 CSPs will receive very frequent updates to their applications
through CI/CD principles............................................................................... 25
Confidence in presence of demand breeds confidence
in the future….................................................................................................... 11 Platforms that can support the co-existence of virtualized
and containerized network functions will be critical in
…with applications and premium connectivity at the
managing the transition period.................................................................. 26
edge viewed as key revenue streams in the future............................. 12
Analytics will create network awareness ensuring new
To capture demand, edge infrastructures are set to
differentiated and guaranteed service delivery
expand toward highly distributed computing....................................... 13
and monetization............................................................................................. 27
Omdia expects networked edge uptake to grow over the
next several years, leading to an opportunity of more
than $26bn of IaaS and SaaS by 2032....................................................... 13 SECTION 06

Private 5G networks and


SECTION 03 edge computing...................................................29
Essential role of network Selected examples of spectrum liberalization initiatives................... 30
cloudification for CSPs......................................15 Different private 5G deployment options meet different
enterprise needs............................................................................................... 31
Becoming cloud native is not only to pursue the edge
computing opportunity; it ranks among the highest overall Private 5G and edge computing align well to serve
priorities for CSPs…......................................................................................... 16 the enterprise.................................................................................................... 32
… because it offers many benefits and suggests a paradigm Examples of enterprises leveraging private 5G and
shift for them..................................................................................................... 16 edge computing................................................................................................ 32
In the core, cloudification will bring benefits of agility,
efficiency and scalability................................................................................ 17
RAN is the largest capex spend for mobile operators; its
Conclusion..............................................................33
virtualization will enable both software and geolocation
disaggregation................................................................................................... 17
RAN disaggregation will then lead to centralized computing, Appendix.................................................................34
facilitate CUPS and drive new edge services’ business models....... 18 5G core network functions and definitions............................................ 35
Omdia................................................................................................................... 36
Canonical............................................................................................................. 36

2 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Executive summary

Realizing the full potential of 5G To truly flourish, edge computing on telecom To tackle these challenges and help CSPs in
networks, whether to enable new networks ideally needs connectivity and their journeys toward cloud native networks
computing domains to meet at and build upon and 5G edge, there are six key elements of
services and revenue streams or to
a common denominator of containerization success:
achieve operational efficiencies and and cloud native principles. CIRCLE-1 A common cloud layer to cut across
scalability of applications, remains CSPs recognize this, and view vendor siloes and take advantage of a
one of the biggest challenges for cloudification of both the core and RAN to broad ecosystem
communication service providers (CSPs) be among the biggest technological drivers CIRCLE-2 Automation and orchestration
around the world. According to a recent of edge computing. that leverages Kubernetes as the
global analysis by Omdia, there has been no With 5G SA (standalone) core, CSPs can underlying force
statistical relationship between mobile ARPU localize and scale user plane function CIRCLE-3 Workload-agnostic cloud platforms /
changes and 5G uptake between 2020 and (UPF) instances according to demand, CaaS for network functions and IT
2023. Arguably, this is largely because most and efficiently steer and break traffic CIRCLE-4 Carrier-grade support for continuous
5G deployments have been non-standalone out where needed and depending on integration and deployment (CI/CD)
(NSA), which means the networks continue applications. CIRCLE-5 Transition management between
to leverage the 4G core. Further they are not In the RAN, developments around virtualization and containerization
built using cloud native cores, limiting the network disaggregation, cloudification, CIRCLE-6 Network awareness and intelligence
network’s agility, resiliency and scalability and open RAN boost the possibility of for better customer experience and
and therefore cannot natively support key using shared hardware and software for new services
capabilities, such as 5G edge computing, both network functions and IT workloads
which can stimulate innovative use cases on the same infrastructure. Open-source technologies can play a major role
and drive revenue growth. Private 5G networks are also ranked in achieving these elements.
highly by CSPs as a driver of edge By acting as vendor-neutral cloud layers,
Despite a slow initial uptake, CSPs report open source platforms can bridge different
great optimism about the potential of 5G
computing; these networks also rely on
edge computing and plan to expand their cloud cores and local UPFs in enterprise hardware environments and network
edge infrastructures toward highly distributed environments. applications. They can simplify automation
computing fabrics suitable for the era of and orchestration built on Kubernetes,
artificial intelligence. Moving to cloud native networks is a top which is inherently open source anyway.
When computing comes closer to end transformational priority for CSPs but there are With support for both virtualized and
users and devices, and it is integrated challenges to resolve. containerized workloads, they can provide
with network functions, workloads can be According to Omdia surveys, managing unified platforms to host and orchestrate
optimized for low latency and bandwidth multiple clouds and hybrid environments, legacy and cloud native applications. With a
savings (e.g., relative to public cloud) clashes between cloud and legacy vast ecosystem of developers and already
while applications can run near or within systems, and interoperability across strong adoption, open source can become
customer premises to satisfy privacy, vendors are key concerns both in the core a true engine of innovation for CSPs in their
control and performance requirements. and RAN domains. journeys to cloud native networking.

96% x12
CSPs* that will
Projected growth of
have launched
installed edge servers
fully commercial
on public telecom
edge computing
networks between
deployments within
2023 and 2032
the next two years

99% #2
Priority ranking of
CSPs* that expect
‘becoming a cloud
some or substantial
native organization’
revenue growth from
among CSPs (out of
edge computing
nine priorities asked)

* In the US, the UK and Germany

3 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 01

“5G monetization has been poor


due to a lack of 5G SA deployments,
which in turn limited the uptake of
edge computing and the arrival of
new revenue-generating use cases
and services”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

5G slow to reach full


potential so far
There has been no clear relationship between growth in 5G
uptake and changes in mobile ARPU.

FIGURE 1
Relationship between % of change in 5G penetration and % of change in ARPU, 2020-23

25%

Countries with
ARPU growth India
20%

15% Bulgaria

Israel
Qatar
10% Bahrain

Philippines

Kuwait
5% Croatia Australia

Hong Kong
New Zealand Taiwan
% of change in mobile ARPU

Canada
0%
Denmark
Portugal Singapore
Slovakia US Finland R2=0.022
Czech Republic Switzerland
-5% Hungary Greece Oman
UAE
UK

France Chile Austria


-10% Spain

Romania
South Korea Saudi Arabia
-15% Belgium Sweden
China

Poland Italy Norway


Germany
-20% Thailand
Countries with
ARPU drop Netherlands

-25%

-30% Ireland Japan

R2 denotes statistical significance of


relationship between variables;
between 0.5 and 0.99 is acceptable
-35%
0ppt 5ppt 10ppt 15ppt 20ppt 25ppt 30ppt 35ppt 40ppt 45ppt

Ppt increase in 5G penetration

SOURCE: OMDIA, WORLD CELLULAR INFORMATION SERIES DATABASE 2023

5 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

This is tied to slow and delayed deployments of 5G SA, which


enables new services that can translate into new revenue streams
Since 2019, the number of 5G deployments 15% of all 5G deployments worldwide. use cases that 5G SA can, such as those
has grown around the world. Of the 700+ Surprisingly, this ratio has remained requiring ultrareliable low-latency or those
mobile operators covered in Omdia’s unchanged between 2022 and 2023. In powered by multi-access edge computing
database, those with commercial 5G 2023, more than 40 5G NSA networks were or network slicing.
offerings have increased from 75 to nearly launched vs. 12 5G SA additions. In short, 5G NSA, while a differentiating
300 by the end of 2023. Most of these While this approach has allowed CSPs label to market, only has limited actual
deployments have been non-standalone to pace their investments and to introduce end user appeal, and therefore limited
(NSA) versions of 5G, i.e., they continue to a new network generation into their potential for sustained ARPU uplift. In fact,
rely on 4G core (EPC) and are largely radio markets (even if by name), 5G NSA brings according to Omdia’s data, there has been
overlays on 4G infrastructures. only modest performance improvements no clear relationship between the rise of
According to Omdia’s Mobile Core over 4G, relative to what an end-to-end 5G 5G penetration and changes in mobile
Market Tracker, by the end of 2023, there network with a 5G core (SA) can achieve. ARPU around the world (see Figure 1).
were only 47 5G SA rollouts, comprising Moreover, 5G NSA does not enable many

FIGURE 2
Mobile operators and 5G deployments worldwide, 2019-2023

2019 75 631

2020 128 571

2021 178 506

2022 38 205 463

2023 47 247 412

0 100 200 300 400 500 600 700 800

No. of mobile operators

 Standalone (SA)  Non-standalone (NSA)  No 5G

SOURCE: OMDIA, MOBILE CORE MARKET TRACKER 2H 2023, GSA

Without ‘true’ 5G networks, edge computing on telecom


networks has also struggled to flourish
‘True’ 5G standalone (SA) networks telecom networks. This, in turn, limits the Omdia estimated only around 100K
should combine cloud native cores with new revenue opportunities for CSPs. networked edge / MEC servers installed
virtualized / containerized RAN (NR), Not surprisingly, without sufficient on public telecom networks by the end
enabling a digital fabric of applications and cloudification of mobile networks, of 2023.
services on highly distributed computing neither at the core nor the RAN, edge Only a negligible number of vRAN units
nodes at the network edge, supported by computing uptake on these networks has been used for anything but RAN
capabilities, such as slicing. has also been limited. Many CSPs have workloads in the same period. vRAN
With only 5G NSA, some performance launched commercial edge products, and Open RAN are both journeys to
improvements are achieved, but the but these are often served only on a few cloudification, but they are still too
paradigm does not shift to the “fusion centralized nodes. nascent to expand to edge computing
of connectivity and computing” that true For the last few years, networked edge for third parties.
5G networks can bring. Without this step / MEC has been a highlight expectation of Demand from enterprises has stayed
change, third-party cloud infrastructures the type of infrastructure and computing limited, with only 4% of large enterprises
and innovative applications have no architecture that 5G would enable. claiming some adoption for 5G edge
incentive to benefit from and flourish on However: computing / MEC.

6 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

FIGURE 3
Adoption of 5G networked edge / MEC has been very slow, still comprising only a miniscule portion of the global IT infrastructure

0.4% 3.6% 4.0%


% of networked edge / MEC servers in all % of networked edge / MEC in CU-DU % of large enterprises reported using 5G
servers shipped globally, 2023 server shipments for vRAN, 2023 MEC, incl. private and public networks, 2023
c.50K networked edge / MEC servers Of the c.150K units of CU-DU servers Only 4% of large enterprise (1000+
shipped in 2023, as opposed to 11m total shipped in 2023, only c.5K used for / linked employees) respondents of Omdia’s
server shipments. to networked edge applications Enterprise 5G IT survey report having
adopted MEC

SOURCE: OMDIA, WORLDWIDE CSP NETWORKED EDGE TAM AND FORECAST, 5G ENTERPRISE IT SURVEY (ALL 2023)

CSPs count many challenges in their edge deployments

FIGURE 4
What are the top barriers to depolying edge applications?

Technical issues beyond the network (e.g., IT


37%
systems, cloud computing)

Network not ready for edge computing (e.g., not


34%
enough progress on vRAN, 5G core, containerization)

Opex after deployment (e.g., lifecycle management,


30%
maintenance, power, software fees)

Capex of deployment (e.g., servers, facility upgrades) 29%

Challenges in sales (e.g., sales team, undefined


29%
go-to-market)

Lack of clarity on application roadmap 24%

Lack of internal technical skills 22%

Lack of developer ecosystem 22%

Competition too strong (e.g., public cloud,


21%
on-premise IT / OT)

Lack of business partnerships in the ecosystem 21%

No standard edge software stack, APIs, etc. 20%

Lack of use cases 10%

0% 5% 10% 15% 20% 25% 30% 35% 40%

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

7 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

CSPs acknowledge their lack of infrastructure readiness


and technical challenges in IT and network domains as their
biggest hurdles…
To truly flourish, edge computing on of containerization and cloud native
telecom networks require connectivity principles. Without these foundations in
and computing domains to meet at and place, solutions are likely to remain clunky
build upon a common denominator and limited in their ability to scale.

CHALLENGE:
CHALLENGE:
Network not ready for
edge computing Technical issues beyond
the network
(e.g., not enough progress in vRAN,
5G core, containerization) (e.g., IT systems, cloud computing)

Q Edge computing on telecom networks ideally requires cloud native Q Edge computing requires internal IT systems and end user
architectures with containerized core and RAN functions. applications to work in tandem with network functions and resources.
Q While core cloudification and 5G SA enable the effective and Q On one hand, the OSS and BSS functionalities should be able
scalable distribution of User Plane Functions (UPFs) for local to support intelligent automation and orchestration of a highly
breakouts, traffic steering, and application proximity to end users, distributed computing topology, while also enabling service
virtualized RAN can contribute to the dissemination of cloud provisioning, assurance and charging for edge computing
computing at far edge nodes. capabilities specifically.
Q For both domains, network disaggregation and purpose- Q On the other hand, applications for external customers should
agnostic usage of hardware and software across telco- and seamlessly work with and adapt to changes in network conditions
non-telco workloads are strong enablers of a highly-distributed by working with CNFs, such as network exposure, slicing, and edge
computing topology. node selection.

…and view Opex and Capex as the two trailing obstacles


It is not cheap to create the “data center” spend. Running edge computing cost-
or the “server room” infrastructures of effectively across many nodes ideally
varying sizes needed for highly distributed requires centralized remote management
computing on telecom networks and capabilities with cloud automation and
the ongoing management of many edge orchestration tools.
nodes can amount to considerable

CHALLENGE:
CHALLENGE:
Capex of deployment Opex after deployment
(e.g., lifecycle management, maintenance,
(e.g., servers, facility upgrades)
power, software fees)

Q Upgrading edge nodes for computing can involve costly site Q Edge nodes require care after deployment. They come with
upgrades for capabilities, such as power, space, servers and energy consumption due to the usage of computing resources,
networking equipment, including switches and cabling. as well as ongoing spend related to maintenance and security –
like the opex items of data centers.
Q Most far edge nodes would not host more than a few server units
and require no more than tens of kWs of power, but at more Q Virtualization / containerization software used for edge computing
centralized nodes like exchange offices, upgrades can lead to also creates recurring costs (e.g., license fees – often priced at a
significant costs. ‘per socket’ basis).
Q Hardware spend depends greatly on the desired number and Q The goal of cloud native edge computing on telco networks is
configuration of servers; these could range from a few units to reduce truck rolls, not increase them. However, deploying,
of general-purpose servers at far edge nodes to full racks scaling, and orchestrating applications and network functions,
of application servers, equipped with GPUs, at more central in accordance to demand and the underlying hardware at many
locations. These servers also need replenishing once in every edge nodes can be overwhelming, if not supported by cloud native
few years. tools and methods for automation and workload orchestration.

8 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 02

“Despite early challenges, there is a


lot of optimism around networked
edge and expectations of growth;
CSPs are planning to expand their
infrastructures toward highly-
distributed computing”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

5G edge computing now


set for strong growth
Despite all the challenges, many CSPs have deployed
commercial offers that leverage edge computing on their
networks, and more are planning to do so.

The challenges that CSPs face do not put Germany reported having full commercial initial hype around the topic has been
them off from commercial deployments rollouts, across private and / or public replaced by realism, edge computing
and bringing edge products to market. network environments. The remaining stopped being a “thing” to sell but became
Since 2020, there have been 140 edge respondents are also keen to add a valid position in the cloud continuum
announcements on 5G networks by CSPs networked edge into their portfolio within that is activated as part of a larger solution
around the world (more when CSPs’ edge the next two years at most – 90% of this for customer requirements, such as low
data center initiatives are added into the group will have completed their commercial latency, reliability, or security and privacy.
mix without necessarily relating it to 5G). launches within the next two years.
More than half of CSP survey In short, edge computing plays an
respondents in the US, the UK and essential role in CSPs’ activities. As the

FIGURE 5 FIGURE 6
What is the current state of your organization’s edge When will your organization complete its commercial
computing deployment? deployment of edge computing?

 Full commercial deployment (56%)  Within 12 months (44%)


 Early-stage commercial deployment (27%)  Within 24 months (46%)
 Pilot deployments and testing (6%)  Beyond 24 months (8%)
 Planning deployment and trials (5%)  Don’t know (2%)
 Exploring use cases, technical requirements, and / or vendors (5%)

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135 SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=59

10 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

CSPs value the versatility of edge computing, which brings


both internal and external benefits
The appeal of edge computing comes streams stand out as more external- customer experience by linking networks
primarily from its versatility. As a topology oriented incentives. to applications where they are closest to
driven by cloud native principles for both A key aspect of edge computing is to end users. Whether for ultralow latency or
network functions (NF) and IT workloads, it manage traffic with local breakouts and for data privacy, sovereignty or control, this
offers both significant internal and external effective routing with distributed UPFs. opens door to new revenue streams.
benefits to CSPs. According to Omdia’s This can create significant cost savings by Cloud-native and Kubernetes-supported
2024 survey, the internal and external relieving unnecessary data traffic journeys edge computing also allows for enhanced
motivations to deploy edge are almost on transport networks. This is a motivation automation, orchestration, and self-healing
evenly split. enterprises would also share as they also capabilities, as well as the ability to scale
While network cost savings, operational want to control their data transfer costs. resources up and down at nodes when
efficiencies and scalability are more Local UPF instances enabled by 5G they are (not) needed.
internal-focused, better customer cloud core are also key to enabling and
experience, new use cases and revenue supporting new use cases and improving

FIGURE 7
What are the biggest incentives for your organization to deploy edge computing?

Network cost savings (e.g., backhaul,


34%
transport)

Improved customer experience /


34%
satisfaction

Operational efficiences (e.g., through


30%
better automation, orchestration)
Support for new use cases that require
29%
applications to run at the edge

New revenue streams 27%

Scalability for future needs 24%

Relevance in the new digital economy 21%

0% 5% 10% 15% 20% 25% 30% 35%

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

Confidence in presence of demand breeds confidence


in the future…
Unlike a few years ago, when there were This optimism comes both from Premium connectivity relates to edge-
serious concerns about the absence of expectations of internal efficiencies and enabled quality of experience, such as
a ‘killer app’ to drive the growth of edge those of new revenue streams. Almost latency, jitter, or reliability, with application-
computing, CSPs no longer see “lack of all respondents reported expecting some specific policies and network slicing.
use cases”, and therefore demand, as a (60%) or substantial (39%) new revenue to CSPs also anticipate the modernization
big barrier to their edge deployments. In come from edge computing in the future. of their edge infrastructures to create
Omdia’s survey, it was the bottom-ranked CSPs see revenue to be generated most revenue opportunities for hosting and
challenge by a long distance. both by end user applications (57%) and selling their own and third-parties’
Confidence in the presence of demand premium connectivity features (53%). computing resources and platforms.
breeds confidence in future success. End user applications include both
86% of respondents in Omdia’s CSP vertical-specific solutions and horizontal
Edge Computing survey reported being technologies that enable edge use cases,
“optimistic” or “very optimistic” about the such as AI/ML processing, computer vision,
future of edge computing*. new media and XR, drones, etc.

* The question included options for ‘pessimistic’ and ‘very pessimistic’

11 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

FIGURE 8 FIGURE 9
How optimistic are you regarding the future of edge computing Which best characterizes the size of the new revenue opportunity
on telco networks? that edge computing can create in your organization?

 Very optimistic (42%)  Substantial new revenue (39%)


 Optimistic (44%)  Some new revenue (60%)
 Neutral (15%)  Limited new revenue (1%)

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135 SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

…with applications and premium connectivity at the edge


viewed as key revenue streams in the future

FIGURE 10
Which areas of edge computing have the greatest likelihood of driving revenue growth for your organization?

End user applications 57%

Premium connectivity features


(guaranteed latency, jitter 53%
performance, network slices)

Facilities / data centers (rentals of


43%
space for compute facilities)

IaaS and PaaS hosting 43%

Systems integration (developing and


owning the edge compute-based 22%
solution)

0% 10% 20% 30% 40% 50% 60%

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

12 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

To capture demand, edge infrastructures are set to expand


toward highly distributed computing
Currently, most CSPs have preferred to of the respondents in the US, the UK and environment. More than a quarter of CSP
launch edge computing at the near edge of Germany have reported having less than 30 survey respondents believe that in five
their networks (often with partnerships with nodes made available for edge applications, years, they will have more than a hundred
public cloud providers), such as metro data excluding private networks. edge nodes – half of which expect more
centers and transport aggregation nodes. This, however, is set to change toward than five hundred.
Due to this initial focus, more than 60% a much more distributed computing

FIGURE 11
How many locations is your organization’s edge deployment currently in, and how many do you expect within five years
(excluding private neworks)?

CURRENTLY

28% 33% 21% 15%

5% 29% 40% 13% 13%

WITHIN 5 YEARS

 Less than 10  10-29  30-99  100-500  More than 500

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

Omdia expects networked edge uptake to grow over the next


several years, leading to an opportunity of more than $26bn
of IaaS and SaaS by 2032
All the optimism, confidence in demand, markets, where 5G SA is being rolled out grow by around 270% between 2023 and
and growth expectations, along with at scale and cloud native architectures are 2028, from $3.4bn to $9.3bn. According
expansion plans of edge infrastructures starting to be adopted. to Omdia’s enterprise survey, one in
will translate to an overall market growth. These forecasts would be even higher three enterprises that buy private mobile
Despite a slow initial start, Omdia when edge computing on private mobile networks also purchase edge computing
projects the installed base of edge servers networks are also included. Omdia expects alongside it as part of a larger solution.
on public networks worldwide to grow the market for private mobile networks to
from around 100K in 2023 to around 1.2m
units in 2032, with the expectation that, by
this time, 5G core and vRAN will have truly
FIGURE 12
scaled as key enablers of uptake of new
Networked edge servers (installed base) and related IaaS + SaaS revenue, 2022-2032
edge services and applications.
The computing resources and the 1,400 30
applications that run on them will grow
Number of networked edge servers (000s)

$26.2bn
to an annualized revenue potential of 1,200
25
more than $26bn (IaaS and SaaS) within
IaaS + SaaS revenue ($bn)

the same period. While this corresponds 1,000


to a relatively small portion of the larger 20
public cloud market as it is today, it is still
800
a sizable opportunity that all players in the
15
digital value chain will want to capture.
600
These projections are informed by, and
already provide hints at, the direction of 10
travel. Currently, the strongest region in 400
terms of adoption is China and the advanced
5
markets of Asia-Pacific, where 5G core has 200
been deployed extensively and applications
run on thousands of UPF nodes. 0 0
This fundamental driver of edge 2022 2023 2024 2025 2026 2027 2028 2029 2030 2031 2032
computing will gradually expand to other
SOURCE: OMDIA, WORLDWIDE NETWORKED EDGE FORECAST, 2023

13 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 03

“CSPs recognize network cloudification


as key to capturing edge computing
opportunities and see becoming cloud
native as a big priority due to its many
benefits – both from technical and
operational perspectives”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Essential role of network


cloudification for CSPs
Network cloudification across all domains, and
disaggregation, is the biggest expected driver of edge
computing for telcos.

The expected growth in networked edge 5G standalone, CSPs gain the ability to around network disaggregation and
and the highly distributed computing localize and scale UPF instances according Open RAN boost the possibility of using
that it will create will be driven first and to demand, and to efficiently steer and shared hardware and software for both
foremost by cloudification of telecom break traffic out where needed. These network functions and IT workloads on the
networks. According to Omdia’s survey, capabilities play the biggest role in bringing same infrastructure – a major enabler of
CSPs expect cloudification across all applications closer to end users, and CSPs distributed computing, especially at the far
network domains, core, RAN, and transport, recognize this. edge of networks.
to be the biggest enablers of edge. The separation of control and user Private 5G networks, ranked #2 with 45%
Network cloudification also precedes plane functions (CUPS) is the underlying of responses, are also related to the journey
other technological developments as an principle that allows the management of cloudification. They rely heavily on the
underlying enabler for other capabilities. of control planes in centralized cloud availability of cloud core and the consequent
For instance, network APIs and exposure, environments and the distribution and UPF placement for success of edge
slicing and computing for AI/ML all work scaling of UPFs as and when needed. computing with enterprise environments.
best with cloud native principles. In the RAN domain, virtualization
CSPs rightly rank mobile cloud core and containerization has been slower to
clearly at the top (51% of responses). With progress (vs. the core), but developments

FIGURE 13
Which of the following will be the strongest drivers of growth in edge computing on telecom networks?

Mobile cloud core (e.g., 5G SA) 51%

Private 5G networks 45%

Virtual / cloud RAN (incl. open RAN,


disaggregation) 44%

Cloud transport networks 40%

Network APIs and exposure 35%

Growth of IoT and sensors 35%

Computing for AI/ML 31%

Network slicing 19%

0% 10% 20% 30% 40% 50% 60%

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

15 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Becoming cloud native is not only to pursue the edge


computing opportunity; it ranks among the highest overall
priorities for CSPs…

FIGURE 14
CSP organizational priorities over the next 24 months CSPs’ expected benefits from migrating to cloud native technologies

Adopt a more efficient


operating model 33%

Become a cloud-native
organization 29%
Faster response to any
competitive activity 43%
Meet 5G deployment 27%
deadlines Improved customer
experience 40%
Diversify / grow revenues
with new enterprise / 25%
vertical services
New revenue streams 36%
Diversify / grow revenues
with new consumer / 23%
content services More successful
conversion of ideas to 33%
Reskill our workforce to revenue
be more agile 21%
Better security and
data protection 27%
Recoup our 5G network 17%
investment
Cost efficiencies 21%
Make acquisitions to
build skills and 13%
competitive scale
Become a
customer-centric 12%
organization

0% 10% 20% 30% 40% 0% 10% 20% 30% 40% 50%

SOURCE: OMDIA NOTE: N=135

… because it offers many benefits and suggests a paradigm


shift for the CSPs
CSPs see becoming a cloud native deployments (CI/CT/CD). CSPs will use Further, CSPs have told Omdia that the
organization as a top priority in the next two these tools to increase the rate of new 5G networks are becoming more and more
years (29% of responses), above and beyond software rollouts and necessary upgrades. complex so they must leverage new tools,
the context of edge computing– with positive These upgrades include timely security such as automation, to not only reduce
externalities on almost all other objectives. fixes and patches, critical to telecom their costs (21% of responses), but also
Becoming cloud native does not only networks, and upgrades to introduce new orchestrate new network slices and deliver
apply to networks and IT systems, but revenue generating services to the market the right key performance indicators (KPIs)
also to ways of working. For networks quickly and meet deployment timelines. to address new revenue streams.
and IT, cloud nativeness brings a technical Omdia believes that the objective of Ideally, cloud nativeness should also
common denominator of working with becoming cloud native aligns well with the bring some cost efficiencies. In the long run,
containers and microservice architectures, other top priorities of CSPs: Cloud nativeness a modular, scalable and flexible architecture
both on bare metal and agnostic to paves the way toward a more efficient built on containers and microservices can take
operating systems, and on virtual machines. operating model (33% of respondents), it advantage of commercial off the shelf (COTS)
As such a lightweight and modular enables efficient 5G rollouts, and helps the servers to reduce hardware expenditure and
approach to application deployment comes launch of new services quickly. decrease software license fees, especially
with speed and flexibility, it also creates a CSPs expect many customer-facing when open source technologies are adopted.
need to manage the complexity of many benefits from being cloud native. While To facilitate a new era of opportunities,
moving pieces and lifecycles. Thus, to obtain agility in relation to competitive dynamics 5G networks (and beyond) will be built
the full benefits of their 5G investments, CSPs ranks at the top (43% of responses), better using cloud native technologies, which for
must embrace new and more efficient ways customer experience and new revenue the first time will equip CSPs with the ability
of working, such as adopting automation streams are also mentioned by many to behave more like the hyperscalers.
tools and relying more on software skills to respondents. For CSPs to be able to compete This is a paradigm shift for CSPs and a
manage their cloud infrastructures. in the marketplace and get return on their step change from operating physical
Another key feature of being cloud huge 5G infrastructure investments, they infrastructure or even the virtualized
native is continuous integration, must be able to respond quickly to changing deployments used for 4G networks.
continuous testing, and continuous customer needs and requirements.

16 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

In the core, cloudification will bring benefits of agility,


efficiency and scalability
Many CSPs started their 5G upgrade Unlike the 4G evolved packet core (EPC), enabling modular function designs,
journeys in the last four to five years, where the NFs were implemented in a which in turn are more efficient than
but most of these have only upgraded peer-to-peer (P2P) architecture, the 5G core virtual machines (VMs) used in the EPC.
to deliver 5G in the NSA mode. CSPs that utilizes service-based architecture (SBA), In addition, cloud native enables agility,
want to successfully deliver new revenue which adopts service-oriented software efficiency and scalability, which means that
generating use cases, such as AR/VR, design principles. The NFs are linked when a new services is instantiated, for
low altitude economy for example drone together on the service-based interface example using network slicing capabilities,
services, must embark on deploying (SBI), a common bus, creating a service the relevant resources can be spun up and
the 5G SA core using cloud native mesh as shown below. This approach scaled up for the required time and torn
technologies. This will ensure they can aligns well with cloud native principles. down, releasing the resources, when no
utilize new toolsets, such as automation to A 5G core built using cloud native longer needed.
operate the core with simplicity, openness, principles will facilitate the use of
and confidence. microservices that run-in containers

FIGURE 15
The 5G core service-based architecture

Policy and charging Subscriber data management Automation, orchestration, and analytics

PCF CHF AUSF UDM UDR UDSF NWDAF NSSMF MDAF NSMF

NRF NSSF SCP NEF SEPP AMF SMF

Routing and selection

RAN UPF

For the 5G NF definitions, please see appendix Packet core

SOURCE: OMDIA, ADAPTED FROM 3GPP R17 TS23.501

RAN is the largest capex spend for mobile operators; its virtualization
will enable both software and geolocation disaggregation
The telecom industry has been on the interface that facilitates multivendor Mobile and Dish, there have been very
virtualization journey for over a decade, integration, one of the principal drivers few brownfield deployments. Verizon and
yet achieving full RAN virtualization has for open vRAN as sought by many CSPs, Vodafone are two examples of CSPs that
proven more challenging than that with that want to get out of vendor lock-ins by are deploying open vRAN at a large scale.
other network domain components, such the incumbent players. Single-vendor open RAN has now been
as the core. The performance of the vDU in open presented as a new industry trend, with
Open vRAN combines the principles vRAN has struggled to match that of several cases where the same vendor
of open RAN and vRAN, i.e., the traditional purpose-built equipment. vDU is provides the RU and the DU/CU. However,
disaggregation of the RAN into subsystems the most compute-intensive component of if a deployment is open vRAN (and not
that interoperate via open interfaces and the RAN and the solutions, including chipsets just open RAN), even if the same vendor
the virtualization of the baseband software necessary have so far been less efficient, provides both the RU and the baseband
functions: central unit (CU) and distributed however, this is beginning to change. software, the system is still considered
unit (DU), or CU only. Open vRAN continues to mature, multi-vendor as it introduces new servers
It is this disaggregation of subsystems which is one of the reasons, why beyond and cloud infrastructure vendors in the
together with the open fronthaul the greenfield CSPs, such as Rakuten RAN domain.

17 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

FIGURE 16
RAN evolution to open vRAN

Traditional RAN Semi-virtualized vRAN Open virtualized RAN

Core Core CU Core CU

Open midhaul
Backhaul Open midhaul

BBU DU DU Central office

Fronthaul Fronthaul Open fronthaul

RU RU RU

 Physical network function  Virtualized network function

SOURCE: OMDIA

RAN disaggregation will lead to centralized computing,


facilitate CUPS and drive new edge services’ business models
The disaggregation of RAN into its hardware accelerators for the DU function. the combination of hardware, edge
components enables centralization of these The near edge location is also ideal (in applications and cloud native technologies
functions, for example by placing the CU terms of distance to end user and hence will turn near edge locations into powerful
at the near edge location. In the near- latency delivered) for edge applications. revenue generating assets for CSPs.
term (see Figure 17), when sufficient fibre Examples of these are image processing For this architecture to be performant
network is available in the fronthaul (such for AR/VR or cloud gaming use cases. and secure in the near to mid-term, CSPs’
is the case in Japan and S. Korea), mobile Instantiating the UPF function, a 5G vRAN software and third-party hardware
operators will also be able to move the DU core network function, at the near edge, must be fully tested together. CSPs will also
to a near edge location, creating not just will further facilitate CUPS and enable benefit from a horizontal cloud platform
cost efficiencies at the RAN sites, but also a local breakout of data traffic, reducing across the three domains, core, edge
centralized compute platform, an enabler to transport costs. and RAN, utilizing the power of a single
run use cases, beyond just RAN functions. The dawn of network slicing will automation and orchestration toolset to
To do this, however, will require the also drive new business models to be run use cases.
near edge servers to be adequately created by delivering specific network
equipped, for example with the necessary key performance indicators (KPIs) as

FIGURE 17
Network architecture will evolve to support new use cases

Far edge Near edge Central DC


Centralized vRAN refers to the pooling of baseband
Distributed vRAN Fronthaul Backhaul processing resources at hub points on the nearer edges
RU DU CU 5G core
– Today of mobile networks versus having the RAN compute
resources at individual mobile sites. Connected with
fronthaul links, these hub points can be located as far
Centralized vRAN Fronthaul Backhaul as 20km away from the antennas and act as access
RU CU/DU & edge apps 5G core aggregation points for mobile networks. Therefore,
– Near term
centralization of RAN is only relative to the distributed
mobile architectures of today; it does not suggest that
all baseband processing will concentrate in a few core
Centralized vRAN Fronthaul CU/DU & edge apps Backhaul
RU 5G core network locations.
– Near to mid-term & UPF

SOURCE: OMDIA

18 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 04

“However, network cloudification has


not been without its challenges neither
in the core nor in the RAN; multi-vendor
interoperability, complexities of multiple
cloud environments, and management
of co-existing legacy and cloud native
applications and systems stand out as
problems that need tackling”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Challenges in the journey


to cloud native networking
Despite nuances, cloudification challenges are highly similar
across core and RAN domains.

Managing complexity and interoperability are the main


challenges to 5G cloud core deployments; business case
clarity is not a concern
The delay in 5G cloud native core 5G core deployments, beyond the macro resources to deploy and manage complex
investments is partly related to the conditions. platforms.
persistently adverse global economic CSPs largely agreed that 5G core The co-existence of 5G cloud native
conditions and higher-than-usual deployments were complex due to the core functions with legacy networks has
interest rates, which make large scale need to manage and interoperate multiple been mentioned as another top challenge.
investments challenging. With high environments, whether they are multi- Strikingly, ‘business case clarity’ was
cost of debt, in many markets, integrated cloud, multi-vendor, or a combination of the least of their concerns. This implies
operators had to juggle resources across cloud and legacy components. a belief that (a) 5G cloud native core
their 5G and fiber investments. Main challenges noted by the CSPs is necessary, and that (b) the demand
In 2023, Omdia surveyed 109 CSPs were complexity of integrating multi- for the use cases that 5G core enables
in North America, Europe, and Asia & cloud hybrid networking environments is largely there. In other words, had
Oceania on core networks (respondents and multi-vendor interoperability strategic and technical hurdles not been
from both advanced and emerging challenges across NFs. The latter is there, investments in 5G cloud native core
markets). This survey revealed some a bigger headache for smaller CSPs, would pay off with benefits surpassing
specific challenges that CSPs faced in their who lack more the in-house skills and the costs.

FIGURE 18
CSPs’ main challenges in deploying 5G cloud native core network

Integration with complex multi-cloud hybrid 61%


networking environment 52%

Multi-vendor interoperability is not smooth across 39%


network functions 55%

55%
Managing both cloud-native and legacy components
42%

Vendors not compliant with current 3GPP 50%


specifications or not compatible with previous
specifications 41%

37%
Maturity of ecosystem
44%

34%
Lack of in-house skills
39%

24%
Business case is unclear
27%

0% 10% 20% 30% 40% 50% 60% 70%

  Large   Small

SOURCE: OMDIA, SERVICE PROVIDERS CORE NETWORKS SURVEY - 2023 EXTENDED VERSION​(SEPTEMBER 2023)

20 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Integration challenges are the primary obstacles to the


adoption of open vRAN
In 2023, Omdia also conducted a separate Due to the potentially high diversity of vendors, uptake will depend mostly on
survey of 106 CSP respondents about vendors in open vRAN scenarios, in 2023, when legacy contracts expire. The recent
open vRAN and RAN, covering deployment most Omdia conversations with vendors Ericsson and AT&T deal shows intent by a
motivations and challenges. and CSPs circled around who should lead large incumbent vendor, and this will likely
It is no surprise that the top and champion implementations. incentivize the open vRAN ecosystem to
challenges mentioned by the ‘Limited vendor choice’ and ‘vendors’ push forward and compete.
respondents are the complexity and unproven track record’ are other important In 2023, respondents that selected ‘TCO
costs associated with integration of challenges (35% and 34% of respondents, uncertainty’ as a main barrier doubled
multi-vendor solutions and integration respectively). CSPs should, however, (32%). In stubbornly tough industry and
with legacy networks. These two understand that open vRAN ecosystem is macroeconomic contexts, CSPs prioritize cost
concerns were also at the top in the 2022 still emerging. control and appear hesitant toward large
survey, representing persistent obstacles In the case of proprietary vRAN scale investments unless they really must.
to adoption. products from the large incumbent

FIGURE 19
What are the main barriers to multi-vendor open vRAN adoption? (Select up to three)

43%
Integration of different vendors too complex
44%

43%
Integration with legacy networks too complex
40%

30%
Vendor choice is too limited
35%

39%
New vendors not yet proven
34%

34%
Performance parity not yet achieved
32%

16%
TCO is uncertain
32%

*
Security is not guaranteed
31%

27%
Features parity not yet achieved
30%

27%
Specifications not yet mature
21%

5%
There are no significant barriers
1%

0% 5% 10% 15% 20% 25% 30% 35% 40% 45% 50%

  2022   2023

SOURCE: OMDIA SERVICE PROVIDERS RAN SURVEY 2023 NOTE: 2022 N=103 | 2023 N=106 | * “SECURITY IS NOT GUARANTEED” WAS NOT INCLUDED IN THE 2022 SURVEY.

21 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 05

“What can CSPs do to tackle


challenges of cloudification and what
are the elements of success in their
journeys to cloud native networks and
edge computing?”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Keys to success and the


role of open source
So, what can CSPs do to tackle these challenges effectively
and prepare better for their journey toward cloud native
networks and edge computing?

A common cloud that can cut Automation and orchestration,


across telecom vendor siloes leveraging Kubernetes as the
and take advantage of a broad underlying force
ecosystem

Workload-agnostic cloud Carrier-grade support for


platforms / CaaS for NFs and IT continuous integration and
workloads deployment

Network awareness and


Transition management: from intelligence for better customer
virtualization to containerization experience and new services

A common cloud layer can act as a platform of interoperability


to reduce vendor fragmentation
Multi-vendor architecture also creates CSPs place on operational simplicity and
challenges for the vendors, as they the need for NF providers to operate
must certify their network functions on outside walled gardens to be truly helpful
multiple cloud platforms, including those to network operators.
of CSPs, other vendors’, and public cloud While some vendors can highlight the
providers (PCPs). benefits of vertically-integrated cloud
As edge computing on telecom layers and NFs, such benefits should
A common cloud that can cut networks becomes more widespread, NF erode with the growing adoption of cloud
across telecom vendor siloes deployments and orchestration across native networking, where containerization
and take advantage of a broad many different telco clouds on many nodes and microservices are the common
ecosystem will also become extremely challenging. denominators for all NFs.
To tackle this fragmentation and Open-source cloud platforms can be
operational complexity, CSPs can deploy a an important enabler here. By acting as
CSPs that pursue a multi-vendor single ‘common’ cloud platform between neutral middle layers, they can help CSPs
architecture for their core, edge, and diverse compute and NF environments, take advantage of a vibrant ecosystem that
RAN deployments face integration and eliminating the need to manage is fed with the certification of NFs by many
management challenges, thus higher costs. multiple vertical stacks and offering a vendors and best-of-breed applications,
This issue is exacerbated when each vendor vendor-agnostic layer of modularity and while also reducing the sense of vendor
delivers its network functions together interoperability layer in the middle. lock-in at the cloud layer.
with its own cloud and infrastructure layer, The concept of the ‘common’ cloud
adding to the operational complexity. should serve to highlight the value that

23 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Cloud and network function multi-vendor fragmentation

Vendor A Vendor B Vendor C Vendor D


Network functions Network functions Network functions Network functions

Vendor B
CSP cloud
Cloud
Vendor C
PCP cloud and compute
Cloud and compute
Vendor B
Compute
Compute

Common cloud layer

Vendor A Vendor B Vendor C Vendor D


Network functions Network functions Network functions Network functions

Common Cloud

Compute 1 Compute 2 Compute 3 Compute 4

Kubernetes is a powerful approach to container orchestration,


especially when supported by services that offer visibility,
control and management of clusters
Kubernetes is the leading approach to in large and highly distributed topologies
container orchestration and management. with many nodes, different service
As network functions are being requirements, and heterogeneous
containerized, CSPs are also seeing and hardware environments.
appreciating the raw power of Kubernetes Therefore, to gain better visibility,
despite its relatively late entry into control, and customization over
telecoms. performance, resource utilization, and
Automation and The fundamental logic of Kubernetes applications, operators should consider
orchestration, leveraging to coordinate application delivery and the use of commercial distributions or
Kubernetes as the underlying resources between master and many managed Kubernetes services.
force worker nodes is also highly suitable for In fact, CSPs already have a wide
edge computing. Again, ideal for edge spectrum of usage of open source
devices, there are lightweight, single-node for edge computing, often with some
As an open source system with inherent versions of Kubernetes. customization or combination with
capabilities of automated rollouts, load While extremely powerful, managing proprietary technologies.
balancing, self-healing and scalability, Kubernetes clusters can become difficult

FIGURE 20
Which best describes your approach to using open source technologies in edge computing?

Utilizing / contributing to open-source


29%
software projects for edge infrastructure
Hybrid approach combining propretary
27%
technologies with open-source components
Implementing open-source solutions
24%
without customization
Building proprietary solutions using
19%
in-house developed technology
Not relying on open-source software 1%

0% 10% 20% 30%

SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

24 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Telco clouds may run in confined environments due to strict


requirements, but CaaS platforms will be agnostic to network
and third-party workloads
FIGURE 21
What is your long-term view on using ‘shared hardware and software infrastructures’
to run both telco workloads (e.g., network functions) and IT workloads (e.g., enterprise
workloads) on telco cloud?

Workload-agnostic cloud
platforms / CaaS for NFs and  Telco cloud software and hardware will
IT workloads probably remain isolated from other IT clouds
and hardware (25%)
 Servers may be used as shared hardware for
both telco- and non-telco workloads, but telco
While the separation of the telco and IT clouds will probably remain isolated (44%)
clouds is currently needed due to specific  Both servers and cloud platforms will probably
requirements of telecom networks, a be increasingly shared across telco and IT
shared cloud platform / CaaS adept at workloads (31%)
both workloads is a valid long-term vision
for operators.
Dependencies between network and IT
workloads (key for edge computing) can
be created and managed much simpler in SOURCE: OMDIA, CSP EDGE COMPUTING SURVEY, APRIL 2024 NOTE: N=135

such a shared infrastructure. According to


a recent Omdia survey, nearly one in three
respondents believe that the convergence applications, in addition to their core Given the need for control over
of hardware and software infrastructures duty of orchestrating virtualized and performance, compliance and security,
for network functions and IT workloads is containerized network functions. it is possible, and probably preferable,
more than a remote possibility. Cloud platforms that are already equally to run the telco workloads in confined
Also, almost all CaaS platforms credible in and familiar with both telco and environments, but containerization is
offered by network vendors are capable enterprise domains carry a particularly certainly leading to convergence.
of hosting and running third party strong potential to realize this vision.

CSPs will receive very frequent updates to their applications


through CI/CD principles
compliance, and many mission-critical NF FIGURE 22
updates by multiple vendors. How frequently do you expect upgrades
The move to containerized network to network functions?
functions opens up the possibility for
much more frequent software updates
because each microservice can be
patched separately rather than the entire
Carrier-grade support for application at once.
continuous integration and By adopting CI/CD and DevOps
deployment principles, CSPs expect a much more
frequent flow of updates than before.
While in today’s ‘outdated’ world, it
can take many months to upgrade a
Cloud-native ways of working involve network function, by adopting cloud
continuous integration and development native operating principles, 93% of CSP
(CI/CD) methodologies for applications respondents anticipate updates within a
development and upgrades. Also, the month, at the latest. In fact, more than half
underlying tools, such as Git repositories, expect weekly updates.
provide a single source of truth for the code
and configuration infrastructures of operators.
Having access to a strong carrier-grade
 Daily (21%)  Monthly (28%)
support mechanisms can help operators
automate the pipeline of integration,  Weekly (34%)  Quartly (15%)
testing, and deployment of applications. In
telecoms, this will be especially important
SOURCE: OMDIA, SERVICE PROVIDERS CORE NETWORKS SURVEY -
given the need for security fixes, regulatory 2023 EXTENDED VERSION​(SEPTEMBER 2023) NOTE: N=109

25 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Platforms that can support the co-existence of virtualized and


containerized network functions will be critical in managing
the transition period
Except for rare cases of greenfield but by 2029, containerization will truly
deployments, most CSPs do not start their take over.
journey to cloud nativeness from scratch. As this transition happens, CaaS
While running 4G core functions in platforms that support both VNFs and
virtual machines is relatively mature, CSPs CNFs through a common framework
are now coming to grips with running 5G and tooling can ease the transition from
core functions as containerized workloads. existing VM environments to containers.
Transition management: This period of co-existence is captured Unified automation for the provisioning
from virtualization to in Omdia’s telco cloud revenue forecasts. and management of both VNFs and
containerization According to the projections, there is CNFs can hold the key to a realistic and
already a significant movement to CNFs, successful migration.

FIGURE 23
Global telco network cloud infrastructure management – Virtual machines and containers, 2023–29

7,000
6,000 6,709

5,000 5,715
Revenue ($m)

4,801
4,000
4,117 4,142 4,057 4,060
3,770
3,000 3,501
3,258 3,157
2,000 2,527

1,000
0
2024 2025 2026 2027 2028 2029

 Virtualized network functions (VNFs)  Containerized network functions (CNFs)

SOURCE: OMDIA TELCO NETWORK CLOUD TRACKER – 2024 ANNUAL FORECAST REPORT NOTE: N=135

FIGURE 24
The ability to run containerized network functions both on hypervisors and on bare metal will also help CSPs in their
journey to cloud nativeness

Scenario 1: Scenario 2: Scenario 3:


Only virtualized deployment Cloud-native NFs on virtualized platform Upgrade to bare-metal deployment

VNF 1 VNF 2 VNF 3 VNF 4 VNF 5 VNF 6 VNF 1 VNF 2 VNF 3 CNF 1 CNF 2 CNF 3 CNF 1 CNF 2 CNF 3 CNF 4 CNF 5 CNF 6

OS OS OS OS OS OS OS OS OS CaaS CaaS

Hypervisor Hypervisor

Hardware infrastructure Hardware infrastructure Hardware infrastructure

Network Computing Storage Network Computing Storage Network Computing Storage

SOURCE: OMDIA

26 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Analytics will create network awareness ensuring


new differentiated and guaranteed service delivery
and monetization
As CSPs migrate their networks to suggestions to other networks functions,
5G SA and beyond, they will have such as the policy function and the edge
the opportunity to provide not just computing nodes that house NFs, such as
higher QoS, but also differentiated the UPF.
and guaranteed capabilities based on Closed-loop management between the
awareness and intelligence, especially to core network functions and other network
the higher premium customers. domains will ensure specific customers
Network awareness and The 5G cloud native core will introduce get the relevant KPIs, for example an
intelligence for better new network functions, such as network improved uplink resource, delivered for
customer experience and new slicing function and the network data the duration required through allocating
services analytics function (NWDAF). The latter will a network slice and release of those
benefit from network wide data sources resources, when it is detected that the
available and utilize analytics to deliver capability is no longer required.

FIGURE 25
NWDAF uses of live network data to allocate new resources to end users

5G core

NWDAF Policy Slicing function

Network data

UPF

Radio access network Edge computing

SOURCE: OMDIA

27 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

SECTION 06

“Network cloudification does not


only benefit operational efficiencies
and enable new services on public
networks; it is also a critical element of
the growing market for private mobile
networks and edge computing”
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Private 5G networks and


edge computing
Private 5G networks, enabled by cloudified core functions,
emerge as new opportunities driven by multiple trends.

The development of the private 5G Demand side drivers: Supply side drivers:
market is underpinned by multiple Security and control are essential for an 5G networks’ expansion to deliver
trends from both the demand and enterprise digital transformation. new revenues and RoI is a key driver.
supply sides. While 5G has started as a New use cases such as machine vision Particularly, cloud native 5G-SA can
new technology in many vertical markets or drones require higher network enable more flexibility in the network to
including factories, ports, and hospitals, performance alongside a more efficient serve the enterprise by deploying UPFs
enterprises are showing increased computing environment. locally and near the customer premises
commitment to it, as evident in the clear Existing technologies are not evolving on to cater for their specific connectivity and
shift from trials and tests to actual network par with the new use cases. computing needs.
rollouts in the last few years. Flexibility is becoming central to Spectrum liberalization is underpinning
Overall, the private networks’ market enterprises to adapt to fast-paced the market with most major economies
will grow from $3.4 billion in 2023 to international changes in demand, providing a spectrum regulatory
$9.3 billion in 2028, representing a key production, and regulations. framework allowing enterprises to
opportunity for the cellular and IoT access spectrum.
ecosystem to gain new customers’ logos Multiple providers and vendors from
in previously untapped markets. both the ICT and OT ecosystems have
launched private 5G products serving
different verticals.

FIGURE 26
Publicly announced trials and network rollouts show a market moving from test to real deployments

250
23% 41% 52% 57% 69%

200 162
117

54
81 71
150

123
100
96
88
81

50
49

0
2019 2020 2021 2022 2023

 Network rollout  Trial/test  % of private network deployments that are actual ‘network rollouts’

SOURCE: OMDIA, LTE AND 5G PRIVATE NETWORKS TRACKER – 1Q24 DATABASE

29 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Selected examples of spectrum liberalization initiatives

In the US, since 2019 the Citizen


Broadband Radio Services (CBRS)
initiative created a shared tiered
spectrum framework in the 3.5 GHz band.

In Germany, since 2019 the government


made the 3.7 GHz and the 26 GH range
available for campus networks.

In Bahrain, in 2022 the country


started to make spectrum in the
3.8 to 4.2GHz band available for
private network.

In Brazil, since 2023 the In Japan, in 2019 the country started to


government made the 3.7 GHz make the 28.2–28.3GHz, 2575–2595MHz,
spectrum available for enterprises. 4.6–4.9GHz, and 28.3–29.1GHz bands
available for local networks.

30 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Different private 5G deployment options meet different


enterprise needs
Fully dedicated private network Hybrid private network Public network-based network slicing

Fully dedicated RAN and core Dedicated RAN and public network core No dedicated infrastructure

Enterprise campus Enterprise campus Public network 5G core Enterprise Public network
5G core campus

Control Slice 1
Control plane
plane RAN
RAN 5G
core
UPF
UPF
Slice 2

Enterprise
campus

Shared core only for the enterprise

Enterprise campus Public network 5G core

Control
plane
RAN

UPF UPF

Cloud native 5G SA core is critical for the automation and networking capabilities needed to deliver these options at scale

Q In this scenario, all the infrastructure Q In this scenario part of the Q All the infrastructure used to deliver
(RAN and core) is deployed for the infrastructure is shared between the the private network belongs to the
sole use of the enterprise. This is private and the public network. public network.
currently the most common type of
Q This architecture provides the greatest Q Assuming the enterprise is in a country
private 5G.
flexibility for the provider and for with advanced public 5G network
Q The main benefit from this the enterprise. This is because the coverage (including 5G-SA), this will
architecture is in the fact that enterprise can choose to leverage and be the fastest option as no additional
the enterprise is in full control of share the RAN or part of the core from infrastructure needs to be deployed by
the network. They can oversee the public network. the enterprise.
the network’s operation and
Q Having dedicated RAN but with the Q The main benefit of network slicing will
maintenance, or they may choose to
core from the public network helps be about cost, as the infrastructure
have a partner doing that.
with reducing overall costs while capex is already borne by the telecom
Q All data generated by the network ensuring good coverage of the facility. operator rather than the enterprise.
remain within the enterprise control
Q With part of the core network Q More than any other option, network
as none of it touches the public
potentially being deployed on site for slicing could be used to support
network, which also helps with data
the enterprise, hybrid networks can temporary networks which may require
regulations and compliance.
still provide strong performances. to be active only for limited amount of
Q The network can be tailored to all time as one offs or for a limited time
Q This solution is ideal for enterprises that
the specific needs of the enterprise during the year.
may have workers or assets moving in
from coverage and radio design
and out of the private network such as Q This solution is ideal for enterprises
to throughput, latency, and uplink
in transport and logistics. with very large coverage needs or with
requirements.
limited budgets.
Q This solution is ideal for enterprises
with critical needs such as mines
and factories.

To steer traffic and terminate or break out locally, cloud-enabled UPF instantiations are key. This can deliver on the stringent
requirements of fully dedicated deployments (performance and data) and leverage the scale of public networks when preferred.

Processing data closer to the point of origin will remain critical across all architectural choices

31 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Private 5G and edge computing align well to serve


the enterprise
Private 5G networks are becoming a key FIGURE 27
enabler of an enterprises’ broader digital Top 3 technologies acquired by the enterprise with their private network
transformation journeys. The technology
is not purchased in a vacuum and in fact,
enterprises are keen to combine it with
security, edge computing, and cloud Managed security 38%
storage, often as part of the same deal.
This underlines the need to provide a
Edge computing (including MEC) 34%
secure connectivity and computing solution
to serve the enterprise.
Edge computing, including MEC, is Cloud storage / computing 31%
becoming one of the most requested add-
ons to private networks, based on Omdia’s
survey data of enterprises that currently 0% 10% 20% 30% 40%
have live private networks. This is due to
several reasons: SOURCE: OMDIA, PRIVATE 4G LTE AND 5G NETWORK ENTERPRISE SURVEY INSIGHTS 2023 – PROVIDERS, SOLUTIONS, AND BUSINESS MODELS
Having a single network/compute (ENTERPRISES WITH AN ACTIVE DEPLOYMENT) NOTE: N=271

platform enables better performance


compared to separate solutions.
Combining the solutions offers better
data security across connectivity and There are many applications that require in tandem with an edge computing
computing domains. stringent performance both in terms platform or solution. Examples of
There are cost savings by combining of connectivity, but also in terms of high requirement applications include
the solutions, compared to purchasing data processing and analysis. To serve machine vision and drones.
connectivity and computing separately. these the private network must work

Examples of enterprises leveraging private 5G


and edge computing

Vertical: Healthcare Geography: Americas Vertical: Manufacturing Geography: Americas


A private 5G network and private 5G MEC were deployed at a A private 5G network and 5G MEC were deployed for a large car
hospital. The solution supports AR-assisted presurgical guidance OEM. The solution is used to enable digital workers (smartphone
with virtual 3D X-ray vision of CT and MRI scans as well as virtual and tablets but also for the automation of robotics and machinery
supported-assisted medical learning. and for wireless vehicle software updates.

Vertical: Transport Geography: EMEA Vertical: Energy Geography: APAC


A private 5G network and MEC were deployed at a car testing A private 5G and MEC were deployed at a mining site. The network
facility. The solution supports real-time video and data supports audio and video communications as well as smart mining
transmission technology, C-V2X communication, and mobile/ lamps, smartwatches, and other terminals.
automotive of voice and data.

32 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Conclusion

While the early uptake of edge connectivity and computing based upon applications and systems are considerable
computing on telecom networks has cloud native principles. Containerization challenges to address. Open-source
been relatively slow due to a lack of 5G and microservice architectures and technologies will have a key role to play in
SA and cloudification across multiple Kubernetes-powered orchestration are overcoming these obstacles, as they have
network domains, this is set to change. not only critical for scalability, flexibility, the potential to (a) fuel the innovation
Driven partly by the recent boom of and efficiency of application deployment, engines of operators with constant input
interest in artificial intelligence, CSPs have but also essential for rapid innovation and from a vast ecosystem, (b) act as neutral
renewed optimism and strong revenue significantly reduced time-to-market for cloud layers between heterogeneous
expectations from edge computing on new services and revenue streams. hardware environments and network
public and private networks. They are For CSPs, the journey to become a functions from different providers and
planning to increase the number of cloud native organization is a strategic (c) natively run and orchestrate telecom
their edge nodes significantly in the next priority but not trivial due to the complexity and third-party workloads alike on shared
few years to weave highly distributed of their operations: managing multiple software infrastructures.
computing fabrics on their networks. vendor interoperability, multiple cloud
Realizing the full potential of 5G and and virtualization environments, and the
edge computing requires the fusion of co-existence of legacy and cloud native

33 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Appendix
Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

5G core network
functions and definitions

NETWORK DEFINITION DESCRIPTION


FUNCTION

AMF Access and mobility Supports the termination of control plane signaling and carries out registration and authentication of devices based on predefined
management function policies, preventing unauthorized access. It also carries out mobility management, facilitating handover procedures as the device
moves between antenna masts, to ensure an uninterrupted service.

SMF Session management Handles session management and interacts with the decoupled data plane by creating, updating, and removing protocol data unit
function (PDU) sessions and managing IP session context within the UPF. Policy and charging control rules from the PCF are also fed as
templates into the UPF, for it to deliver quality of service (QoS).

UPF User plane function It processes user packet data, facilitating forwarding, routing and packet inspection as well as QoS handling. It interacts with the SMF
and PCF and it is an evolution of the 4G control and user plane separation (CUPS).

AUSF Authentication server The AUSF performs the authentication of user equipment (UE) as it connects, at switch-on, or during a handover procedure from a
function 4G network to a 5G network. It does so by ensuring the subscriber information is transmitted and stored securely. The AUSF stores
authentication keys and provides the AMF with the necessary authentication services.

UDM Unified data The UDM is a central repository of subscriber data including the subscriber profile, authentication data, and other service-related
management information. It ensures that user data sessions are set up and torn down correctly. A stateful UDM stores this data locally, while a
stateless version stores it in the UDR. It interacts with other NFs, such as the AUSF and NRF.

UDR Unified data repository This is the database and repository of user-related data, including user profiles and application data. It stores the stateless information
of the UE. It interacts with the policy control function (PCF) to ensure the correct subscriber quality of service (QoS) and charging policy
information is obtained and enforced.

UDSF Unstructured data The UDSF supports the storage and retrieval of unstructured data from other NFs.
storage function

NEF Network exposure This NF exposes the 5G network’s capabilities and services through established application programming interfaces (APIs), facilitating
function interaction with third parties, such as application developers.

NRF Network repository The NRF provides a record of all NFs available on the platform, together with a profile of each and the services they support. When a
function new NF is brought up, it registers its IP address and capabilities with the NRF. A consumer NF will request the NRF to identify which
NFs are registered with it and have the required capabilities and can act as a producer of services. It interacts with the SCP.

NSSF Network slice selection The NSSF analyzes the requirements of a UE and matches those requirements with a network slice. In today’s network slicing, the
function slices are predefined rather than autonomously orchestrated and for this, this NF must find the best match. The NSSF interacts with
AMF, SMF, and PCF.

SCP Service A critical function to create signaling efficiencies when a consumer NF requests a service from a producer NF. The SCP acts as
communications proxy intermediary between the two, shielding some of the complexities of the infrastructure. The SCP also communicates with the NRF.

SEPP Security edge A security NF used for roaming and securing the network at the extremities ahead of interfacing with another network. Compared to
protection proxy previous generation networks, 5G networks use enhanced authentication procedures, such as mutual authentication to secure the
communication between the device as it roams, and the SEPP plays a role in this with external networks.

CHF Charging function The CHF provides online and offline charging features for multiple services. Other measurable qualities beyond throughput will
become key with 5G networks, such as latency, slice bandwidth, reliability, availability, security, and APIs, so the CSPs must be able to
measure and charge for these.

PCF Policy control function The PCF considers device profile, subscription information, and real-time information to enforce rules for traffic steering, QoS, and
charging. It also relies on information from other NFs, such as the network exposure function (NEF) and SMF.

NWDAF Network data analytics This function provides data analytics of the operations and services of the network by processing and analyzing the network
function performance, user traffic patterns, and network load to deliver actionable intelligence to optimize QoS and overall user experience.

NSSMF Network slice subnet This function takes the slice requirements from the NSMF and ensures the necessary NF resources are made available and are
management function instantiated.

NSMF Network slice This NF will keep the necessary information for several popular network slice templates for known use cases for fast provisioning.
management function

MDAF Management and data The MDAF provides analytics information from network slices to ensure optimization of resources.
analytics function

35 Cloud-native network transformation and the 5G edge


Executive 5G slow to reach 5G edge computing now Essential role of network Challenges in the journey Keys to success and the Private 5G networks Conclusion Appendix
summary full potential so far set for strong growth cloudification for CSPs to cloud native networking role of open source and edge computing

Omdia
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36 Cloud-native network transformation and the 5G edge


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