Communication service providers' experience of using public and private clouds is leading them to adopt a hybrid approach.
The economics of public vs. private cloud push CSPs to go hybrid
TM Forum’s new report, Managing the economics of hybrid cloud: striking a balance to optimise operations features the results of a survey of 79 executives working within telcos worldwide about their use of public and private cloud hosting. The chief finding from the research is that communications service providers’ (CSPs’) increasing experience using public and private clouds is leading them to adopt a hybrid approach to harness the benefits of both.
Over the past seven years, communication service providers (CSPs) have initiated public cloud transformations to increase customer lifetime value and enhance customer experience. They have formed new relationships with hyperscale and other cloud providers to gain access not only to the public cloud and cutting-edge technologies such as machine learning and AI, but also to draw on the cloud providers’ significant experience creating a cloud-native organization. Hyperscalers also support broader ecosystems of vendors, collaborators and customers, which give CSPs new opportunities to co-create and exchange value with them.
Public cloud has the potential to be more expensive on a like-for-like basis than an efficient private cloud run by a CSP with strong experience in such deployments, because scaling down resources has proven to be quite difficult. This has led CSPs to repatriate some workloads as cloud maturity has increased.
But there is a continued general acknowledgement that the public cloud provides significant benefits and will deliver cost savings in particular scenarios going forward, such as when capacity is needed in geographic areas where CSPs do not have private cloud facilities. Public cloud also provides opportunities for greenfield operators to cut the time it takes to deploy new networks and can help them avoid large capital expenditures that would be disruptive to their business model.
When it comes to private cloud deployments, CSPs have a mix of old and new data center infrastructure. In the short-to-medium term private cloud deployments allow for data centers that are newer or more strategic and meet sustainability standards. This delivers financial benefit from depreciating equipment while older data centers are retired.
A private cloud is also necessary to conform to a series of regulatory requirements around sovereignty and security, avoiding fines for data breaches which can run into the tens of millions of dollars. This will continue to be a driver of CSPs’ private cloud usage.
In addition, large-volume network workloads with predictable capacity are better suited for the private cloud. Theoretically, the public cloud with its inherent scalability, should provide cost efficiency. However, certain high-volume network functions like the packet gateway will create unsustainable additional costs when deployed in the public cloud due to cloud-egress fees. For this reason, most CSPs will deploy control plane functions in the public cloud while leaving data plane functions on private cloud.
Given the pros and cons of public and private clouds, most CSPs are taking a hybrid cloud approach. CSPs with substantial in-house engineering capabilities potentially will adopt a do-it-yourself approach to building private clouds, while others will choose to work with hyperscalers and cloud platform providers to deploy their platforms.
CSPs will use private clouds for data-heavy network functions, latency-sensitive applications such as radio access network (RAN) functions, high-throughput services, and workloads that have restrictions around sovereignty and privacy. But the public cloud will be the first choice for customer-facing workloads and those requiring connectivity and collaboration with customers and partners. CSPs will also use public clouds for services that require short-term scalability.
Download the report