In what can only be described as a bold move, Microsoft is to buy the network core AT&T has been using for its 5G network services. In return, AT&T will make a similarly bold move with the decision to run its 5G mobile network on the Microsoft cloud.
As part of the deal, about a hundred engineers will transfer to Microsoft, including AT&T’s VP of Network Cloud, who played a major role in the development of the microservices-based software. The effort will start with AT&T’s 5G core but will eventually include 5G standalone services. It will reportedly take several years to move all of AT&T’s network operations over, including its 4G core.
This does not mean the end of the road for AT&T’s Network Cloud: Microsoft says it will use the IP and expertise to improve its telecom offering Azure for Operators.
The two companies have a long history together, and Microsoft and AT&T signed a $2 billion cloud deal two years ago, whereby AT&T shifted its internal IT to Azure. But it’s a big win for Microsoft’s Azure for Operators which launched only last autumn on the back of two major acquisitions, Affirmed Networks and Metaswitch Networks.
Many commentators have observed that AT&T’s decision to ‘throw in the towel’ with Network Cloud shows the difficulty of competing against the resources and energy of hyperscalers when it comes to cloud services. This may be so, but perhaps there is another way of looking at this deal: given there are hyperscalers out there desperate for mobile operator business and prepared to spend a small fortune building and operating a cloud-native platform for 5G networks, why not take advantage?
This transaction is also a significant moment in the evolution of the public cloud business model. Under this multi-year agreement, whole teams are being transferred over, and significant experience and IP are acquired, which hopefully can be packaged and sold to mobile operators. As with AWS Outposts, it’s an arrangement that is starting to sound like good old fashioned outsourcing. The days of public cloud as freewheeling, no-vendor lock-in, contract-free, only pay for what you use, seem a long time ago now.
Daniel Beazer, Senior Contributing Analyst, Structure Research
5G | AT&T | cloud | Microsoft | standalone | Structure Research | wireless networks