Produced in partnership with How leading operators are

developing ecosystem, cloud,

and AI strategies for winning
in 5G

5G and the
enterprise
opportunity

AI
2  MIT Technology Review Insights

AI Preface
“5G and the enterprise opportunity: How leading operators are developing
ecosystem, cloud, and AI strategies for winning in 5G” is an MIT Technology
Review Insights report sponsored by Ericsson. The report was produced
through interviews with heads of IT, 5G business solutions, and platform
innovation at telecommunications operators worldwide, conducted in July and
August 2020. It examines how operators are transforming their business and
technology environments to deliver 5G enterprise services, particularly
focusing on cloud, automation, and the ecosystems that are emerging to drive
digital transformation across industries. Ross O’Brien authored this report,
Claire Beatty edited it, and Nicola Crepaldi was the publisher. The research is
editorially independent, and the views expressed are those of MIT Technology
Review Insights.

We would like to thank the following individuals for their time and insights:

Alexander Brock, Senior Vice President Technology Strategy, Innovation, and

Partnerships, Rogers Communications, Canada

Stephen Chau, Chief Technology Officer, SmarTone, Hong Kong

Andre Fuetsch, President AT&T Labs and Chief Technology Officer, AT&T,
United States

Yoon Kim, Chief Technology Officer, SK Telecom, South Korea

Lars Klasson, 5G Program Manager, Telia Company, Sweden

Abdurazak (Abdu) Mudesir, Senior Vice President of Service and Platform,

Deutsche Telekom, Germany

Sorabh Saxena, Executive Vice President, Customer Service and Operations,

AT&T Business, United States

Justin Shields, Chief Technology Officer Platforms and Solutions, Vodafone

Business, United Kingdom

Ryan van den Bergh, Head of Technology Architecture, Vodacom, South Africa

Byoung-Hyu Yoon, Vice President of Mobile Enterprise Business, Korea

Telecom (KT), South Korea
 MIT Technology Review Insights 3

Foreword
Welcome to this MIT Technology Review Insights report.

It is well established that 5G, IoT, cloud, and the new enterprise services they deliver are
an incredible opportunity for telecommunications operators. Capturing these new revenues
requires operators to build new service capabilities and transform their technology
environments.

This report showcases real initiatives, strategies, and case studies of how operators are
delivering 5G and innovative enterprise solutions, working with a broad ecosystem of
partners, and leveraging OSS, BSS, cloud technology, and AI.

This is a time of exciting change and transformation, but the case studies also provide a
glimpse into the new world of operational complexity that lies ahead. A world where
operators have hundreds of APIs interacting with partners to deliver critical use cases in
areas such as health care, manufacturing, and mining; where the variety of services,
partners, and devices make AI and automation non-negotiable; where a microservices-
based architecture is the only way to efficiently deliver stringent service-level agreements
across large numbers of enterprise customers, each with differing demands.

Operators cannot compromise on operational efficiency, customer experience, or agility

in this new era. As this report points out, while much work to meet these challenging
objectives has already been done, there are still many unknowns. The need for an intelligent
way to operate the network, IT, and multiple clouds, while managing partner relationships
effectively, will be key.

At Ericsson, we have a proud history as a trusted partner to operators in managing

large-scale IT and cloud operations intelligently and efficiently. As we step into the 5G
arena, we are leading the way, driving the ecosystem and service innovations that are
critical to monetizing 5G.

We sincerely thank the executives who contributed their insights and hope that you
enjoy reading this report.

Peter Michelson
Head of Service Area Managed Services IT & ADM

Ericsson
ericsson.com/itms
4  MIT Technology Review Insights

0
CONTENTS

1. Executive summary....................................................................5

2. Enterprise services: the new revenue opportunity...........6

Not just another G................................................................................................. 7
Heading deeper into customer value chains............................................ 7

From homogeneity to heterogeneity............................................................8

Rightsizing enterprise opportunities............................................................9

3. Partnerships and the 5G ecosystem....................................10

It takes a village................................................................................................... 10

APIs and the path to monetization............................................................... 11

Ecosystem investments, choices, and trade-offs.................................12

4. 5G provides a new impetus for the cloud............................14

Cloud first, but not necessarily native?.................................................... 14

Private and public clouds.................................................................................15

Determining cloud priorities.......................................................................... 16

Managing cloud complexity........................................................................... 16

5. Getting ahead of operational complexity

in enterprise services.............................................................. 17
Automation, AI, and enterprise SLAs......................................................... 17

6. Conclusion: 5G’s simply complex future.............................19

 MIT Technology Review Insights 5

01U Executive
summary

nlike previous generations of network

technology that paved the way for
innovations like smartphones and wireless
broadband, 5G’s tremendous improvements
in terms of lower latency, faster transmission
speeds, and vastly increased network capacity are
so that, in future, the majority of enterprise services will
become “off-the-shelf” rather than customized.

• Ecosystems are critical for enterprise 5G success.

Collaboration and co-creation with ecosystem partners
have become table stakes for operators in delivering
enterprise services, and they are building strategic
alliances with systems integrators, cloud service providers,
network technology players, and many more. This requires
a technological and cultural transformation for operators,
shifting from a closed monolithic network to one with open
platforms, architecture, and application programming
interfaces (APIs). The journey is still in its early days, and
operators are finding several strategic decisions need to be
made. These include how to be open and collaborative
throwing open the doors to large-scale enterprise digital while maintaining prominence in customer value chains,
transformation. For operators, 5G represents yet another monetizing effectively, and which partnerships to prioritize.
investment cycle—one where monetization requires
making strategic bets on technology, platforms, business • 5G creates a new strategic imperative for cloud. In the
models, and partners. Leading operators are playing to past, the key benefit of migrating network and IT functions
their strengths and understand that delivering to the cloud was for cost savings. With 5G, cloud
transformational enterprise solutions involves working in technologies are taking center stage for different reasons.
ecosystems of complementary capabilities. Cloud is critical to the working of ecosystem partnerships,
to deliver enterprise services such as MEC and SD-WAN,
Against this backdrop there are several imperatives for and to support the platforms that allow developers to
operators in the way they are developing industry verticals, scale services up and down through API-exposed
approaching ecosystem development, and driving the network functions. The cloud facilitates automation and
major accelerations in cloud computing, automation, and AI AI, advances that help manage network performance and
that will enable them to scale 5G. There are also many generate the data that comprise much of 5G’s intrinsic
unknowns and future challenges for the cloud and IT, as value. Leading 5G operators report having more than half
ecosystem and enterprise service complexity grows of network and IT workloads in the cloud, but that
exponentially. The key findings of the report are as follows: systems migration is always subject to cost-benefit
scrutiny. Operators are prioritizing the applications and
• Operators are transforming from connectivity provider functions that are most essential for delivering 5G.
to enterprise service creator. Delivering 5G enterprise
services requires in-depth knowledge of customers’ • Enterprise service complexity is a leading driver for
physical and digital environments in a way that far automation and AI. The explosion of enterprise services
exceeds what was needed in the 3G and 4G eras. Across is ushering in a new era of complexity for operators, both
smart factories, autonomous vehicles, automated mines, in the network and IT operations. This stems from the
and smart cities, operators are delivering much more number of customers, devices, partners, service-level
than connectivity; IoT, software-defined wide area agreements (SLAs), APIs, cloud configurations, security
networks (SD-WAN), cloud, automation, and multi- requirements, and other factors—many of which are still
access edge computing (MEC) are playing critical roles emerging. Operators view automation, real-time data,
in customer value chains. This creates a huge (and and AI as essential tools for managing this complexity,
complex) playing field. Leading 5G operators are now and in the future, to remove manual processes and
developing standardized solutions and open platforms develop increasingly predictive capabilities.
6  MIT Technology Review Insights

02 Enterprise services:
the new revenue
opportunity
While much of this connectivity commodification relates
to saturated consumer markets, traditional enterprise
connectivity is also growing slowly. Research by Ericsson
and Arthur D. Little forecasts revenue from basic
connectivity to grow at 0.75% annually through 2030.
The same research finds that the bright spot, the source of
new revenue, will be value-added digital services—
expected to grow 11% annually over the next decade

T
(See Figure 1).1 It is these more broadly defined digital
he rise of 5G networks represents a new services that operators aim to capture with 5G, amounting
generation of mobile technology and a door to to an additional revenue opportunity of $700 billion.2
real enterprise digital transformation through a
host of new services, technologies, and Executives interviewed for this report argue that the most
ecosystems. This massive technological shift compelling market opportunities for 5G are in enterprise
requires infrastructure investments as significant and public sector digitalization programs. These involve
as in previous generations, yet newly minted 5G networks drawing on 5G’s powerful capabilities around throughput,
are being launched into markets where the traditional mobility, reliability, latency, and data volume to host
connectivity business is stagnating. and manage a rich set of applications and technology

Figure 1: The service provider growth opportunity from industry digitalization

3,500

3,000

2,500 +11%
CAGR 2020-30 (%)
USD Billions

2,000
+0.75%
1,500

1,000 Industry digitalization revenues

for ICT players

500 Current service revenues for

service providers

0
2020 2022 2024 2026 2028 2030

Source: Ericsson and Arthur D. Little, 2020

 MIT Technology Review Insights 7

Building a winning 5G ecosystem requires

operators to undergo a holistic digital
transformation, with fully digital, increasingly
virtual IT and network capabilities with
cloud-based, software-defined, and
process-automated service platforms.

functions across an exploding set of potential uses in Communications in Canada. “For the first time there are
sectors such as health care, manufacturing, construction new capabilities in wireless that are truly transformational,
and engineering, mining, agriculture, retail, events and such as variable bit rate capabilities, differential latency on
public spaces, transportation, smart cities, and resource demand, the ability to push transactions to the edge, and
management. Yet delivering these capabilities, particularly to spin up customized services through capabilities like
at scale, requires an enormous shift for operators in network slicing. These are more likely to see the light of
terms of culture and skills, business model, architecture, day in the enterprise market than they are in the
and technical capabilities. consumer market, at least initially.” The challenges in this
migration, says Brock, are technical as well as
Not just another G operational—taking networks and IT systems that were
“5G is not just another G. It’s definitely not ‘4G plus one.’ largely homogenous to ones that are fully customizable.
It’s the foundation for the new real-time economy,” says
Alexander Brock, senior vice president of technology “5G-based enterprise services are probably going to be
strategy, innovation, and partnerships at Rogers the biggest new revenue stream, because they’re the
most disruptive,” says Ryan van den Bergh, head of
technology architecture at Vodacom in South Africa. “The
value of 5G,” he says, “is in assisting companies in their
“The value of 5G is in digital transformation, helping enterprises create digital

assisting companies in representations of their real-world operations, and in turn

helping them better understand their own customers,
their digital transformation, especially in industrial environments.”

helping enterprises create Heading deeper into customer

digital representations of value chains
Like many of the operators interviewed for this report,
their real-world operations, Vodacom’s enterprise business development teams are

and in turn helping them structured in industry verticals to provide standard

offerings such as virtual private networks, hosted private
better understand their branch exchange, and SD-WAN, as well as customized

own customers, especially solutions for specific industrial use cases. Vodacom has
also acquired a majority stake in IoT.nxt, a South African
in industrial environments.” IoT company that develops edge gateways for mining,
agriculture, retail, and oil and gas verticals.
Ryan van der Bergh
Head of Technology Architecture Becoming a digital transformation partner is taking
Vodacom operators deeper than ever before into their customers’
8  MIT Technology Review Insights

businesses—the digital and the physical. Customer be limiting, says Yoon Kim, chief technology officer at SK
solutioning involves exploring customer requirements Telecom. “There are strategic verticals that we want to
and use cases, then learning what the actual operating focus more on,” such as health care and manufacturing,
environment looks like. “Funnily enough, the second one “but we don’t want to be constrained by a ‘vertical-by-
is actually often harder than the first,” says van den vertical’ approach.” The risk, he says, is missing out on 5G
Bergh, particularly in mining environments that might be applications with broader industry appeal and potential.
underground and have various physical or technological
obstacles. From homogeneity to heterogeneity
Abdurazak (Abdu) Mudesir, senior vice president of
SmarTone in Hong Kong developed a number of industry service and platform at Deutsche Telekom, notes the
verticals when it launched 5G in May of this year, focusing difficulty of providing customized offers to numerous
on the construction, hospitality, and property sectors— different vertical industries. “The heterogeneity of client
Hong Kong’s largest industry opportunities. “Over the requirements is a challenge: you have completely different
last two years, we’ve spent quite a bit of time with verticals, and while there are some commonalities, there
construction site managers, having them walk us through are also huge differences. For a service industry like ours
their journey and having them identify needs, such as that tries to develop mass-market offerings, this much
enhancing workplace safety, or their particular technology customization is not easy. To offer dedicated enterprise
interests,” says Chief Technology Officer Stephen Chau. networks in a cost-effective way, you need to work with
He emphasizes the importance of discussing value over many different and specialized partners.”
products in enterprise solution design. “We may be selling
smart helmets or water sensors, but we don’t talk (to Rogers Communications in Canada is building specific
customers) about IoT. We talk about their user experience expertise around IoT applications such as automotive,
or their operational climate. At the end of the day, natural resources, fleet management, smart cities, and
customers are not looking for a sensor here and there— asset management, but generally the strategy is also to
they’re looking for a solution that can help them with their build a solution-neutral enterprise service delivery
pain points.” organization, based on servicing multi-cloud requirements
and through open APIs. Focusing too much on specific
While some level of industry alignment is emerging use cases could become a distraction, particularly
organically within operators’ enterprise business divisions, an over-emphasis on individual use cases, says Brock.
becoming too deeply focused on verticals at this time can Rather, he says, “We are making the investments in

SK Telecom’s 5G and AI vision

For SK Telecom, 5G is key to repositioning the mediator between the two worlds.” This blurring,
company as a digital platform player with business says Kim, will create boundless opportunities for
lines spanning the media, security, e-commerce enterprise as well as consumer sectors.
(its 11th Street business is one of Korea’s largest
e-commerce destinations), mobility, music, and To bolster its capabilities, SK Telecom has made
e-sports. several big bets, including the acquisition of security
firm ADT Caps, making SK Telecom South Korea’s
“There are two big technology pillars that this second-largest enterprise security player and
company is betting on,” says the company’s chief providing solutions that can be integrated with
technology officer, Yoon Kim. “One is 5G, and the 5G industrial applications. The operator has also
hyper-connectivity it enables, and the other is AI. recently made a $25m investment in Israeli health-
5G will change the world because it will blur the care company Nanox to launch affordable AI-
boundaries between the physical world that we live powered medical imaging and diagnostics in South
in, and the digital world. And AI will serve as the Korea and Vietnam.
 MIT Technology Review Insights 9

platforms and IT systems to create the ‘network as a

platform.’” This means having most customer requests as “It’s not about 4G or 5G,
ready-to-go, off-the-shelf solutions, he says, and helping
customers plug in and innovate. “It’s about building a
it's more a question about
series of foundational capabilities and allowing what type of value do we
applications to flourish on the network. We are not going
to be the experts in every vertical—what we need is to be
enable to the customer in
experts in having an exposed set of capabilities to allow their digital journey.”
those verticals to plug into us.”
Lars Klasson
Operators aim to deliver about 80% of enterprise 5G Program Manager
requests through off-the-shelf solutions, leaving just 20% Telia Company
in need of a customized response.

Rightsizing enterprise opportunities

The hype around 5G has opened the door to
unprecedented collaboration and solutioning, which is a “It’s not about 4G or 5G, it’s more a question about what
cultural transformation for many operators. Customers type of value do we enable to the customer in their digital
ask for an explanation of 5G and proof-of-concepts journey,” says Lars Klasson, 5G program manager at Telia,
around what could be achieved. Navigating these the largest fixed-line, mobile, and broadband operator in
expectations is challenging, says van den Bergh, because Scandinavia and the Nordic countries.
they fall into two extremes: “You either have enterprise
customers who think you can do everything including Over the coming decade, 5G, IoT, MEC, and real-time AI will
flying cars, or you get the customers who are not quite offer many avenues for profitable growth for operators.
sure whether anything can be done at all.” Focusing on However, the exact scale and pace of enterprise demand is
value is where operators are coming into their own, still emerging. To avoid being stretched too thin or
showing customers what can be achieved even with 4G distracted with niche use cases, operators must determine
technology for increasing the connectivity of their the right mix between standardized, plug-and-play services,
operations. This then becomes a gateway for “moving and more customized solutioning. They will also need to
them up the stack,” into capabilities that allow them to work within a robust ecosystem of partners to fully
better understand their operating environments. monetize their 5G armory.

Key takeaways

1
5G is the gateway to digital transformation: 5G is opening the doors, encouraging
enterprises to ask operators to show them what is possible. Whether the required value
comes from 4G or 5G capabilities, operators are becoming key partners in enterprise
digital transformation.

2
Enterprise 5G requires a skills and culture transformation: Becoming more deeply
integrated in customers’ value chains, existing infrastructure, applications, and ecosystems is
a big shift for operators. Building a flexible startup-style culture is vital to succeed. Operators
also need to make strategic choices about where to focus and how deeply to specialize.

3
Leading operators are building for scale: Although industry expertise is essential for working
with enterprise customers, leading 5G operators are also looking ahead at how to achieve
scale. This involves building IT platforms and systems with open architecture and APIs that
industry verticals can plug into. In future, up to 80% of enterprise solutions will be off-the-shelf.
10 MIT Technology Review Insights

03
“In effect we are a project
manager, doing systems
integration work—
Partnerships coordinating the inputs of
and the 5G different partners around us
ecosystem to serve specific domains
in-depth, and integrate as
end-to-end applications.

A
ddressing the seemingly infinite number of This is quite different from
enterprise opportunities, with all of their
hardware and software complexities, means
what a telco used to be.”
that operators cannot go it alone. A central Stephen Chau
feature of the shift to 5G is the partnerships Chief Technology Officer
and ecosystems that are evolving to meet customers’
SmarTone
unique and complex goals for digital transformation
(see box).

It takes a village
Operators need to be aware of their own strengths, The 5G universe
assets, and skills and bring in partners where necessary.
Chau at SmarTone says that if they don’t have a
technology solution, or it is not considered a real strength,
they invite third parties to help identify the best way to
address customer interests. “Through this process,” he
says, “we integrate all different pieces together to offer a
single point of contact with the customer. So, in effect we Reflecting the complexity of 5G and the degree
are a project manager, doing systems integration work— to which those services extend deeply into the
coordinating the inputs of different partners around us to value chains of enterprise customers, there are
serve specific domains in-depth, and integrate as end-to- a large number of players participating in 5G
end applications.” ecosystems.

This is a significant shift in roles for most operators. In days These participants span infrastructure, data,
gone by, enterprise sales teams sold subscriptions to software, and devices, and can include systems
connectivity services. Now, says Chau, “They need to integrators, applications developers, network
understand the entire customer journey, and how to meet technology providers, public cloud service
all their IT and communication network requirements. This players (including hyperscalers such as Amazon
is quite different from what a telco used to be.” Doing it Web Services, Microsoft Azure and Google
alone is no longer an option, and success for operators in Cloud that offer servers, storage, databases,
the 5G era increasingly depends on the strength and range software, and analytics), MEC platform and
of their ecosystem partners that they are working with. integration service companies, IoT solutions and
device manufacturers, data center providers,
Justin Shields, chief technology officer, platforms and cybersecurity companies, industry associations,
solutions at Vodafone Business, whose team is currently and the enterprise’s own technology partners.
working on hundreds of enterprise opportunities, notes
 MIT Technology Review Insights 11

that the sheer breadth of components within 5G

enterprise services requires operators to work within in an
ecosystem. “Managing this ecosystem is probably the
thing which requires the most thought and management.
One of the biggest challenges is the huge number and
variety of customer requests that are coming through. It is
exciting, but it also stretches any single carrier’s ability to
manage the volume.” The complexity of the requests
comes from the fact that they cut across devices (with
security implications), applications that are often running
at the edge, business processes, and on top of that, many
require change management on the customer’s side. “One of the biggest challenges
5G operators globally are pursuing multiple ecosystem
is the huge number and
development strategies, just as they have in building up variety of customer requests
their vertical industry expertise. One way has been to find
fellow travelers on the road to 5G: “We maintain and that are coming through.
expand partnerships with technology firms that
themselves specialize in 5G networks, devices, and
It is exciting, but it also
applied services,” says Byoung-Hyu Yoon, vice president stretches any single carrier’s
of Mobile Enterprise Business at Korea Telecom (KT).
These include a partnership with Neuromeka, a provider
ability to manage the volume.”
of smart factory “cobots,” and Cognex, a US-based Justin Shields
producer of machine-vision systems used in automated
CTO Platforms and Solutions
manufacturing to detect defects.
Vodafone Business
KT has two sandbox innovation programs, one at the
Institute of Convergence Technology in Seoul, the other at of new 5G capabilities, the question becomes “How do we
the 5G Open Lab in Pangyo, a tech cluster outside Seoul, expose them best, in order to monetize the network?
that leverage its KT Cloud platform for working with MEC Standardized APIs, external API gateways, making sure
developers. Rogers has a number of 5G innovation that the architecture is completely open—these are
partnerships with universities and municipalities, including fundamental requirements.”
smart campus programs at the University of British
Columbia (UBC), that includes a focus on edge computing, At Rogers this has led to a “services factory” approach
and the University of Waterloo, Ontario, as well as a for developing standardized services and API interfaces
C$30m (US$ 22.7m) Cybersecurity Catalyst innovation exposed through common platforms to enable easy
center at Ryerson University in Toronto. Together with consumption for enterprise customers, allowing them to
UBC, Rogers launched a 5G pilot program that uses plug into the network. IT systems must also be as simple
wireless sensors to collect anonymous data on vehicle as possible, with a playbook, as opposed to everything
and foot traffic patterns to improve road and pedestrian being custom.
safety in the city of Kelowna, British Columbia—Canada’s
first smart city solution. The clarity of the platform, the specifications, and access
to the APIs is critical, says Shields at Vodafone Business,
APIs and the path to monetization “Otherwise, you end up spending huge amounts of time
Telecommunications operators have traditionally had trying to educate them [ecosystem partners] on what they
“mostly closed, monolithic architectures,” says Abdu need to do to take advantage of the technology.”
Mudesir at Deutsche Telekom, while 5G ecosystems—and
indeed monetizing 5G—can only be accomplished with a Operators interviewed for this report say that monetization
disaggregated architecture and open interfaces. Van den and the division of value between partners are still agreed
Bergh at Vodacom agrees, adding that with a whole suite on a case-by-case basis.
12 MIT Technology Review Insights

Ecosystem investments, “There are not too many

choices, and trade-offs
As 5G ecosystems evolve and mature, there are a number operators that have
of choices and trade-offs that operators need to make.
A key learning at Telia, says Klasson, is the importance of all the ingredients—the
working within customers’ own ecosystems. “What
system integrators do they already use? What type of
connectivity, the edge
application providers or hardware providers do they use? offering, and also the IT
You can try to speculate what type of ecosystem or
partnership you need, but then when you are hands-on in
services. It is actually quite
the deal with the customer, they come to the table with unique to have these three
their preferred partners already.”
capabilities, and that's one
When Telia began its 5G journey two or three years ago, it
started building up a large network to show companies
of the challenges for the
what was possible with 5G. This strategy bore less fruit industry.”
than was anticipated. Now, says Klasson, Telia has
partnerships with a few application companies and Abdu Mudesir
systems integrators, “but that’s it. The smaller companies Senior Vice President of Service
developing application or hardware based on four or five and Platform
years of experience probably learned more from us than Deutsche Telekom
we learned from them in hands-on customer cases.”

Another choice is in how much to rely on the technical or Telecom has invested in a joint venture with HP Enterprise
platform capabilities of partners versus building them to develop its own MEC platform with software and
in-house. In addition to cultivating mutually beneficial hardware that can be offered to operators in Southeast
relationships with public cloud hyperscalers, says Kim, SK Asia that are just starting out on their 5G journeys.

Figure 2: MEC market size and growth rate, 2017-2022

Latin America
APAC
CAGR, 2017-2022

MEA

Europe
North America

Market size in 2022

Source: Marketsandmarkets, 2017
 MIT Technology Review Insights 13

“We see this as an interesting mobile operator play where, Having all of these capabilities is what can make an
in addition to partnering with hyperscalers, which we are operator really unique, says Abdu Mudesir. “There are not
doing actively, we can also build an ecosystem of our own, too many operators that have all the ingredients—the
based on our 5G network, partnerships with third-party connectivity, the edge offering, and also the IT services.”
solution providers, robot makers, smart factories, Deutsche Telekom is also developing all three. This
and other device players to make a valid and viable new allows customers to run their networks in isolation if
ecosystem,” says Kim. Indeed, the MEC market is necessary and enables Deutsche Telkom to layer on
estimated to be growing at 35.2% annually according to managed IT services. Automotive is a leading industry
Markets and Markets, with Asia growing the fastest. segment, and Deutsche Telekom has partners with deep
expertise—particularly EK Automation, InSystems
With MEC being a key market opportunity, Vodafone Automation, and ASTI Mobile Robotics, companies with
Business is also building up both its own platform and specialist technology for automated guided vehicles.
ecosystem partnerships. Through a strategic alliance with Smaller, more niche ecosystem players can access and
AWS Wavelength (the 5G service arm of Amazon Web test the platform through the operator’s hub:raum tech
Services), Vodafone Business can offer sub-10 millisecond incubator program.
latency for edge services. This, says Shields, creates
“the same developer environment as if you were Managing these complex ecosystems, creating platforms
developing on a native public cloud, enabling developers that enable them to flourish, and developing the technical
to build low-latency applications that run on the edge.” capabilities and infrastructure that will give operators
The partnership radically expands both companies’ a competitive edge within them will continue to be key
developer ecosystems. To expand its universe even priorities for the telecoms industry as enterprise 5G
further, Vodafone Business is building dedicated, private begins to scale.
MEC edge zones that work with mobile private networks
using Microsoft Azure.

Key takeaways

1
Innovation happens within 5G ecosystems: Complex solutioning for enterprise services
requires operators to collaborate and co-create with partners. Leading operators are setting up
5G innovation zones with strategic customers and sandboxes for collaboration with smaller
developers. These efforts are critical for having a seat at the top table with enterprise customers
and really understanding the applications and services they require.

2
Open APIs are the path to monetization: Operators are best able to expose, and therefore
monetize, their 5G capabilities through open platforms and external APIs gateways. These are
also essential for fueling the innovation ecosystem. The challenge is in ensuring these gateways
and APIs are easy to use, accessible, and relevant.

3
Navigating ecosystem strategy requires choices and trade-offs: There are many challenges for
operators in developing a clear ecosystem strategy. These include how to create a culture of
openness and collaboration while maintaining prominence in the customer value chain, monetizing
effectively, and choosing which partnerships to prioritize. As well as joining forces with ecosystem
participants, leading operators are making big bets with regard to cloud, MEC, IoT, and high-value
verticals to grow their technical capabilities and build ecosystems of their own.
14 MIT Technology Review Insights

04 5G provides a
new impetus
for the cloud
cloud as possible. However, there are different streams,
priorities within those, and a fully 100% cloud-native
environment may not be achievable or desirable.

Cloud first, but not necessarily native?

“Cloud native consists of three dimensions,” says Kim at SK
Telecom. “The first is internal: using cloud-based
capabilities for the ‘operating systems’ of your company—
development processes, decision-making, or training.”
The second is “to use the cloud, either as a platform or as
an infrastructure, to build products and services to provide
directly to your customers.” The third dimension is using

O
cloud as an innovation space with ecosystem partners,
ver the past few years, operators have essentially using cloud as “a tool for extremely close
been reducing cost and simplifying legacy strategic collaboration for business value creation,” he says.
network infrastructure and operational
processes by moving applications into the In this third dimension, SK Telecom has achieved a
cloud. With 5G opening the door to closer cloud-native environment, says Kim. All new enterprise
collaboration with enterprise customers and broader services developed by SK Telecom or its partners begin
ecosystem innovation, cloud takes on a whole new level of in the cloud. But on the first dimension—internal
importance. Indeed, cloud is at the center of operator
strategy for enterprise 5G.

Cloud-based resources are critical to the working of

ecosystem partnerships, for delivering enterprise services “A customized, scalable,
such as MEC and SD-WAN, and for supporting the platforms
that allow developers to scale services up and down through
and secure network,
API-exposed network functions. The speed, flexibility, and which is also lean to
openness of cloud architecture enable operators to more
simply manage their IT operations and network services. operate, must be cloudified.
Cloud also facilitates access to automation and AI tools,
advances that drive performance in IT operations and
We have shaped our
network management and generate the data that entire network strategy
comprise much of 5G’s intrinsic enterprise value.
around disaggregated,
“A customized, scalable, and secure network, which is microservices-type
also lean to operate, must be cloudified,” says Abdu
Mudesir. “We have shaped our entire network strategy offerings, with automated
around disaggregated, microservices-type offerings, with
automated and cloudified network architecture.”
and cloudified network
architecture.”
Operators interviewed for this report state that their
“cloud-first” strategies cover the network, IT operations, Abdu Mudesir
and also internal IT systems, although these are at Senior Vice President of Service
different stages of migration. They agree that the end goal and Platform
is to move as many network and IT functions to the Deutsche Telekom
 MIT Technology Review Insights 15

operations—the company is still on a journey. The natively in the public cloud.” Over the past five years,
company’s CEO has set a goal for 100% of internal IT Vodafone has migrated 50% of its EU network and 65%
to be public cloud-based by 2025. of IT applications into the cloud. The migration path has
been to move applications that are least risky first, and
“We rely on the cloud to deliver all of our technologies—we with cloud technology rapidly maturing they have been
absolutely need cloud technology to give us the scale and able to accelerate these efforts.
the flexibility we need to deal with these solutions,” says
Shields at Vodafone Business, pointing out that access to Private and public clouds
the cloud is also an increasingly pervasive requirement for IT and network workloads have different requirements,
their enterprise customers. Yet selecting a particular cloud and to meet them operators are adopting multi-cloud
service should be a function of the cost, performance, or strategies. “Telco cloud” network capabilities, particularly
footprint required for each application. “Whether it’s on a network function virtualization, increasingly require low
public cloud or our own private cloud, it’s just a question latency and high network availability. IT workloads, by
of ‘Is it running right?’ The application doesn’t care contrast, have higher computer storage requirements,
whether it’s running on an AWS cloud, a Google Cloud and cost-effectiveness is an even more important driver.
Platform cloud, an Azure cloud, or our own extensive
cloud resources.” “The core has become a lot more complex because of the
capabilities inherent in the new currencies that 5G
Getting to cloud native may not be possible given specific brings,” says Brock. “We have 10 million customers today
technical parameters, says Shields. “We operate in a and hopefully hundreds of millions of devices connected
hybrid world: sometimes using physical, on-premise, to the network in the future. This means we need to make
traditional infrastructure, and sometimes cloud native network investments to provision and manage them all
running in our private cloud, and then other times running efficiently, whatever their requirements, whether it be

Private and public clouds at AT&T

Cloud computing offers a solution for rationalizing

and simplifying operators’ legacy infrastructure. “You
acquire a lot of different systems and assets over
the years, which builds up quite a bit of technology
PRIVATE
‘debt,’” says Andre Fuetsch, chief technology officer
and president of AT&T Labs. AT&T has “cloud-first”
strategies for IT and network workloads to reduce
PUBLIC
costs and maximize performance. “We want to
take advantage of the most cost-efficient, effective,
and flexible technology solutions out there—
most of which are typically found in cloud-native
architectures,” says Fuetsch. “The goal is to move
as many as possible; there are going to be some
that we don’t move to the cloud, but those will be in AT&T’s private cloud. “We have very robust and
few and far between.” stringent performance requirements and frankly, the
public cloud is not quite up to those requirements
On the IT side, AT&T is rapidly moving workloads to yet.” This is likely to change over the coming years,
the public cloud—mainly for cost, but also to have says Fuetsch. “Public cloud players will be in a unique
much more efficient technology life cycles, allowing position to run some of these workloads for us, and
the company to decommission 22 of its 28 data we’re very encouraged of that, because we look to get
centers. Network workloads are predominately hosted the best economics for cloud wherever possible.”
16 MIT Technology Review Insights

0
low-latency services, variable bit-rate services, or can be moved to one of the operator’s six remaining data
low-power devices,” and on the IT side, an open playbook centers. The third and fourth categories are applications
of APIs and services to facilitate working with third that can be virtualized and containerized, respectively. The
parties. The two sets of operator requirements—a fifth category is applications that can be moved to a fully
plug-and-play network, and ultra-simple IT systems— cloud-native state: microservice-based, data-driven, and
means they must have access to “both a common cloud fully automated.
and a hybrid cloud,” adding that this multi-cloud
environment engenders many other operational benefits: When evaluating these categories, says Sorabh Saxena,
“We can also drive network and IT cost optimization, executive vice president, customer service and operations
enable network agility, and minimize our real estate at AT&T Business, “First and foremost, everything has to
footprint.” have a business rationale. The decision to take a function
to cloud native has to be based on what’s most important
Telia’s telco cloud journey started several years ago, says for the business.” This requires close collaboration
Klasson, with moving all of its information management between the relevant business unit and technology
system functions to the cloud, followed with the migration leaders. Among the more challenging are “chatty
of its packet core two years later. “We decided then we applications” (with high intersystem dependency) that
should have a separate telco cloud, run in its own data produce and exchange persistent data across multiple
center, and not mix it with our internal IT cloud: we want to cloud zones or geographic nodes. These can consume
have control, security, and the option to operate by more cloud resources and drive up expenditure on public
ourselves—we think that’s important.” Looking ahead, cloud services.
operations support systems (OSS) is an area that Klasson
has in his sights, he says, which will be resolved as more Managing cloud complexity
standardized applications emerge; Telia will adopt a mix of The current challenges around cloud migration focus on
services and take a country-by-country approach to application readiness, risk of destabilizing the legacy
migrating the legacy OSS. environment, cost implications, and security implications of
different cloud technologies. As a result, operators are
Determining cloud priorities being pragmatic, developing hybrid-cloud environments and
AT&T’s cloud migration plan has categories for all network managing multiple clouds. It is possible that in the future
and IT functions that help determine the speed at which delivering enterprise services across this cloud environment
they will be moved to the cloud. The first category will become a source of complexity for operators, and they
includes enterprise functions that need to be retired. The may look to further best practices in how to manage cloud
second includes non-latency-dependent applications that resources and optimize their operations.

Key takeaways

1
Cloud first, but not quite native: The term “cloud native” is applicable for specific tranches of
network and IT infrastructure, but not for operators’ technology environments overall. Some
technologies will remain hosted on-premises for reasons including cost, stability, and security.
The imperative for operators, then, is to develop a clear cloud strategy and push the most
important capabilities for ecosystem partnerships and enterprise service delivery first. Given the
importance of cloud for monetizing 5G, a lag in cloud could become a barrier to growth.

2
Managing parallel clouds: Contrary to conventional wisdom, 5G operators interviewed for this
report do not argue that telco clouds and IT clouds must converge in order to reduce operational
complexity. These goals can actually be achieved by developing telco cloud and IT clouds
separately in a multi-cloud environment. In the long term, operators may find that parallel clouds
become a source of complexity, requiring them to seek additional best-practice for optimizing
operations.
 MIT Technology Review Insights 17

05 Getting ahead of operational

complexity in enterprise services

E
ven prior to the 5G era, complexity
management was a key driver for trends such
“Automation is everywhere;
as automation and outsourcing. 5G and the coupled with AI, it is critical
accompanying surge in enterprise connectivity
is rapidly accelerating this trend. Neither the
to everything that we
network nor the IT operations can be managed without do, given the scale and
almost full automation, say leading operators.
complexity of our network
“Automation is everywhere; coupled with AI, it is critical to
everything that we do, given the scale and complexity of
and operations.”
our network and operations,” says Fuetsch at AT&T. “The Andre Fuetsch
industry is developing far more distributed computing Chief Technology Officer and President
environments—the mobile packet core becomes far more
of AT&T Labs
distributed than in previous generations. And when you’re
AT&T
dealing with so many different functions that you have to
manage on a higher and more-distributed scale, you have
to have automation built in.” “This is a giant optimization problem we solve—every
minute that you can be more efficient leads to
Automation provided the agility for AT&T to scale significant productivity improvements.” The speed and
effectively during the coronavirus pandemic. In March responsiveness that operators are developing through AI
2020, the huge shift to remote working led to a 25% spike and automation will also stand them in good stead for the
in enterprise call volumes over home WiFi networks. A future growth of enterprise services and 5G.
traffic management crisis was averted because
automated network functions and components were able Automation, AI, and enterprise SLAs
to spin up in a matter of hours. SLA requirements around reliability and latency will
require operators to have a high degree of control over
AI also plays a critical part in AT&T’s operational efficiency. service quality to resolve issues in close to real time. This
Examples include energy management, where AI is critical because, as Abdu Mudesir at Deutsche Telekom
dynamically powers down parts of the network not in points out, smart factories and other Industry 4.0
use, and an AI-driven scheduling system that dispatches enterprise services are reliant on high-performance
AT&T’s 35,000-strong team of repair technicians, computing and analytics that drive up customer service
factoring in variables such as road and weather expectations. “Availability KPIs [key performance
conditions, inventory levels, and human resource policies. indicators] for 5G are really much higher than our network
18 MIT Technology Review Insights

0
SLA management, meaning the detection and
AI as a service prevention of anomalies before they happen.

Saxena at AT&T describes how their AI analytics platform

capabilities are used for the enterprise customer
experience. The AI platform has been in development
over the past year and seeks to track performance
against the “top moments that matter” for enterprises and
even extends to industrial IoT. By understanding the
customer’s experience and satisfaction with service
elements such as ordering, contracting, and pricing, says
Saxena, “we can analyze when a customer’s SLA is
For SK Telecom, AI is a source of competitive
potentially not being met.” The system then proactively
advantage, says Kim. The operator is developing
recommends next-best actions for resuming SLA
“AI as a service” with use cases such as
compliance, as well as “preventing the slide of the
predictive maintenance, big data analytics, and
customer from a promoter to a detractor.”
anomaly detection for smart factories through its
Metatron Grandview product. “Customers can go
Another way to manage complexity at AT&T has been to
to our cloud and get all of the technical elements
increase internal collaboration through a way of working
they need, upload their own data, and make
that is known there as “OpsDev,” which breaks down the
sure that their virtual world—their digital twin—
layers between operations, IT, and the customer. With IT
coincides with their physical world.” Particular
looking over the operations team’s shoulder, solving
applications, such as smart factories, will run in
problems and developing solutions together, AT&T has
the cloud with customers being able to access
been able to build platforms with much greater efficacy
services and solutions along whichever service
than before. More importantly, says Saxena, this allows
metrics they require, says Kim.
everyone to see the customer’s point of view.

Efforts to understand what is happening within the

KPIs today, and those or other SLAs cannot be enterprise experience—not just whether the overall
managed manually. You need to fully automate incident service level is being met, but how the different
management and root-cause analysis,” as it would be components are performing—are where AI can provide
unworkable to do these tasks by going through real value for operators, allowing them to build additional
incidents log-by-log. Automated root-cause analysis credibility and demonstrate a genuine partnership with
allows operators to shift toward predictive, proactive enterprise customers.

Key takeaways

1
Complexity, meet automation: The explosion of enterprise service volume is ushering in a new
era of complexity for operators both in the network and IT operations. This stems from the
number of customers, devices, ecosystem partners, stringent SLAs, APIs, cloud configurations,
security requirements, and many other factors. Operators view automation, real-time data, and AI
as essential tools for managing this complexity, now and in the future, to remove manual
processes and develop increasingly predictive capabilities.

2
Many challenges are still unknown: As a partner to enterprises on a path toward digital
transformation, there are still many areas that operators are learning about, and new challenges
to manage. Building a customer mindset across operations and IT teams and aligning them
around common goals will help with anticipating new challenges and proactively solving them.
 MIT Technology Review Insights 19

06 Conclusion:
5G’s simply
complex future

Just a year after it was first introduced (and much of that

dominated by a global pandemic), the
telecommunications industry’s hesitation around the
• Cloud is the platform for 5G. Operators with serious
ambitions for 5G have a cloud-first strategy for their
network and IT. Indeed, the ease of working in operators’
potential use cases and monetization strategy for 5G is cloud environments is a key differentiator for enterpris-
fading away. Whether or not enterprise customers es, developers, and other ecosystem participants. Yet
actually need all of 5G’s advanced capabilities right now, the mix of cloud technologies is continually evolving as
the hype around it is opening the door to deeper operators look to optimize the balance of public and
collaboration with customers, a strategic seat at the table private clouds, taking advantage of the best available
with ecosystem partners, and an avenue for deriving value technology while also carefully evaluating the cost
from innovation. The findings of the report are as follows: and risk factors. For some of these reasons, a fully
cloud-native environment may remain out of reach. An
• Enterprise service strategy will occupy the greatest emerging challenge will be to manage all of the different
amount of CIO mindshare. The questions of “where to cloud components and ensure a seamless experience
play” and “how to play” will remain critical for operator across different clouds, to avoid silos building up again.
CIOs and enterprise business heads. These questions
will shape many decisions about which partnerships to • Reach for simplicity, prepare for complexity. While
form, which technical capabilities to build or acquire, and some challenges in the 5G journey are known, others
how to capture the most value from enterprise services. are yet to emerge. The full impact on operations is not
Operators must decide how much they want to focus on known yet—the real challenge of delivering “five-nines”
standard versus customized solutions, and how much SLAs or the complexity that will emerge from having
vertical expertise or application development expertise hundreds of APIs. Leading operators view automation
they want to build up, as opposed to relying on partners. and AI as central to managing operations efficiently, cost
Being an innovation partner as well as a connectivity effectively, and at scale. DevOps principles can also
partner is a fundamental requirement to stay prominent allow for faster solution-development and can build a
in 5G ecosystems. mindset around customer service. Operators must give
thought to the types of challenges that they will face
once 5G enterprise services really scale and prepare
their environment for that future.
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Footnotes

1,2 “Capturing business opportunities beyond mobile broadband,” Ericsson, May 2020 (pdf, p.4)

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