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AT&T-Azure 5G Deal: 'End of the Service Provider World as We Know It?'

The carrier is cutting costs, and the software giant is bolstering its telco ambitions.

James Anderson

July 1, 2021

4 Min Read
cloud
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AT&T will move core parts of its mobile network to Microsoft Azure in a move that signals the growing marriage between telcos and public cloud.

Microsoft this week announced plans to acquire AT&T’s Network Cloud platform, which contains AT&T’s 5G core network. The companies state that the migration will take place over the next three years. AT&T has run its 5G network via Network Cloud since 2018.

In addition, Microsoft will offer jobs to AT&T’s Network Cloud platform engineering team. Microsoft will also handle software development and deployment of Network Cloud.

“The next step is making this capability accessible to operators around the world and ensuring it has the resources behind it to continue to evolve and improve,” said Andre Fuetsch, AT&T’s executive vice president and chief technology officer. “And do it securely. Microsoft’s cloud expertise and global reach make them the perfect fit for this next phase.”

The companies did not disclose the financial terms of the deal.

Microsoft’s Telco Ambitions

On one hand, the deal allows AT&T to “substantially reduce engineering and development costs.” On the other, the deal bolsters Microsoft’s telecom ambitions.

Microsoft will acquire AT&T engineering and life cycle management software that will allow it to deploy a carrier-grade cloud. According to the companies, Microsoft will make the platform “applicable to other carriers.”

“This deal is not exclusive, so I fully expect Azure will try to assert itself as the telecom cloud provider for many carriers around the world,” said Recon Analytics‘ Roger Entner.

Jason Zander, Microsoft’s executive vice president, said Azure can help operators run a “more flexible and scalable service model.” They also can cut down on costs and automate with AI.

zander_0-e1625178169209.png

Microsoft’s Jason Zander

“Through our collaboration with AT&T, Microsoft will expand its telecom portfolio to support operators with a carrier-grade cloud that provides seamless experiences across Microsoft’s cloud and the operator’s network,” Zander said.

Background

Microsoft is bringing AT&T intellectual property and staff into its Azure for Operators telecom offering. Microsoft launched Azure for Operators last fall after buying Metaswitch Networks and Affirmed Networks.

Longtime Verizon executive Shawn Hakl is Microsoft’s vice president of 5G. Hakl told Light Reading‘s Mike Dano that no other Tier 1 operator has given its entire consumer subscriber base to a public cloud provider.

However, Dish Network in April announced plans to deploy its 5G Open Radio Access Network (O-RAN) on AWS. Dish similarly declared that no other mobile operator had run a 5G network in the public cloud. Verizon recently teamed up with both Microsoft and AWS around enabling private multi-access edge compute (MEC).

“But AT&T’s announcement with Microsoft represents a landmark in the overall trend considering AT&T is a massive, established network operator with a long history in the telecom business,” Dano wrote.

AT&T last month sold its media division for $43 billion and vowed to put full emphasis on 5G wireless and fiber broadband offerings.

Reactions

Redditors on the r/Networking forum expressed their uncertainty and criticism over the transaction.

Some commentators noted that …

… other mobile operators have already been teaming up with public cloud providers.

Comment from discussion SpecialistLayer’s comment from discussion "AT&T moving their mobile assets to Azure".

For one commenter, the “cloud takeover of service providers” started a long time ago.

Comment from discussion imhowlin’s comment from discussion "AT&T moving their mobile assets to Azure".

Another commenter wrote that hyperscalers are continuing to grow their internet footprint. Some observers seem convinced that Microsoft, AWS and Google Cloud will take over the market.

Comment from discussion fsec8’s comment from discussion "AT&T moving their mobile assets to Azure".

“Is there an alternative? Perhaps regulation? They have massive economies of scale,” weaverlabs responded. You can check out the entire Reddit thread.

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About the Author(s)

James Anderson

Senior News Editor, Channel Futures

James Anderson is a news editor for Channel Futures. He interned with Informa while working toward his degree in journalism from Arizona State University, then joined the company after graduating. He writes about SD-WAN, telecom and cablecos, technology services distributors and carriers. He has served as a moderator for multiple panels at Channel Partners events.

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