Telco cloud: Where are we at in 2024?

This article explores the status of telco cloud, using insights from our latest Telco Cloud Deployment Tracker and the evolving dynamics of 5G SA cores and the virtualised RAN.

Telco cloud deployments in Q1 2024

According to our Q1 24 Telco Cloud Deployment Tracker update, as of 30 March 2024, 72 telco deployments had taken place or were due to take place in 2024, vs. 90 deployments for the entirety of 2023. This covers 39 types of virtualised or cloud-native functions (VNFs or CNFs), or cloud platform components. The most popular deployments concern various flavours of 5G core (non-standalone (NSA) and standalone (SA)) and virtualised RAN (vRAN and open RAN), plus the cloud platforms to support them. Meanwhile, the ‘Other’ telco cloud deployments include the remaining VNFs, CNFs, or cloud platform component types, none of which are as numerous as 5G core or RAN individually. It is worth noting that many of the SA core and RAN projects planned for 2024 were initially scheduled for earlier completion and are only now coming to fruition.

Global telco cloud deployments, 2016-2024

Source: STL Partners

5G SA rollouts trickling in

All but four of the 38 5G core deployments logged for 2024 were still outstanding as of March 2024, and their completion dates remain uncertain. Operators have two options to choose from for 5G deployment: NSA and SA. When 5G connectivity began to be launched in 2019, it was deployed in NSA mode. This involves deploying 5G radios on top of existing 4G/LTE core network infrastructure. 5G NSA served as an effective interim solution, offering the advantage of rapid deployment, whilst to unlock 5G’s most advanced features and use cases, a complete migration to SA networks is essential, with 5G radios operating on a fully 5G core network infrastructure.

The journey towards 5G SA cores has been marked by delays and uncertainties. The slower rollout of 5G SA, compared with initial expectations, has been attributed to the lack of clear applications for key 5G SA features. Additionally, 5G SA represents the first major cloud-native deployment, requiring significant organisational changes and financial investment for telcos, and more integration challenges due to the open and disaggregated network architecture involved.

However, two use cases are now gaining traction.The first is fixed wireless access (FWA), as illustrated by  Elisa’s recent 5G SA launch, which introduced new 5G SA-based broadband subscriptions for both corporate and consumer customers. Secondly, telcos are beginning to find commercial applications for network slicing (which is part of the SA toolset). For example, Orange has launched 5G SA in Spain and Belgium (focused on B2B) and plans to launch it soon in France and has taken a proactive approach to network slicing where 5G SA has been available. The growing emphasis on network slicing is gradually shifting the industry sentiment towards a more positive outlook on the monetisation potential of the 5G SA core within the industry.

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RAN: virtualised first, multi-vendor later

In our previous Tracker update, we explored the distinction between vRAN and open RAN. Essentially, vRAN uses O-RAN-compliant, open interfaces but is usually deployed as a pre-integrated solution optimised around the main vendor’s central unit (CU) and distributed unit (DU) software. In contrast, open RAN not only incorporates these open interfaces but is also deployed as an open system, where different layers of the stack are ideally fully interchangeable. The outlook for vRAN and open RAN is starting to look more promising: we recorded 11 deployments of vRAN/open RAN planned for 2024. While ten of these are still pending, it is likely that these will go live during 2024, even if only in small sections of the network, indicating a trend towards more open, interoperable RAN infrastructures.

For RAN virtualisation and open RAN, one of the main barriers has been the need for extensive testing, and the complexity of integrating and managing multi-vendor environments, which has required operators to take on the role of systems integration lead, or outsource this responsibility to partners. Additionally, running RAN workloads on COTS servers requires additional hardware acceleration, particularly in the case of massive MIMO (mMIMO) radios. Newer, open RAN-focused vendors have struggled to demonstrate that they can deliver large-scale roll-outs as reliably and cost-efficiently as the established vendors. Furthermore, cloud-native deployments require telcos to acquire new software and operational skills, adding to the challenges.

However, in the case of open RAN, these deployments will ultimately enable more programmable networks, facilitating automation and RAN optimisation around different use cases. The RAN Intelligent Controller (RIC) is a key component of the open RAN stack in this regard, as it will allow the introduction of third party-developed applications (so-called xApps and rApps) to optimise and adapt RAN performance and operations in near-real time and non-real time respectively.

Notably, there is a trend for vRAN deployments to increase (see graph below), while open RAN deployments have waned, which we believe is an interim phase towards ‘purer’ open RAN. The growing prominence of vRAN, coupled with the relative decline (for now) of open RAN, as highlighted in our Tracker, supports the perspective that vRAN represents the path through which open RAN architectures will achieve large-scale deployment in the short-to-medium term. This view is particularly reinforced by recent announcements of vRAN deployments, such as those of Ericsson at Telefonica Germany and Samsung at Telus Canada, along with the list of telcos that are already underway with vRAN rollouts, including AT&T, Deutsche Telekom, Vodafone, and more. However, this trend does not signal the end of the full vision of open RAN, in our view. The industry is increasingly moving towards more open, multi-vendor platforms, and vRAN serves as a crucial step in this evolution.

Global deployments of C-RAN, vRAN and open RAN 2016-2024

Source: STL Partners

Telco’s transition toward scalability and adaptability

As the telecoms industry continues its transformation, the emphasis remains on developing scalable, open, cloud-native and elastic network infrastructures. The continued activity in 5G SA and RAN virtualisation indicates that, despite difficult economic conditions, telcos continue to invest in the evolution of their networks.

The journey ahead for telco cloud, particularly in the domains of SA core and vRAN/open RAN, is not just about overcoming technical and operational hurdles. It is about fostering a mindset that values flexibility, rapid iteration, and the creation of services that meet emerging market needs. The industry’s progression will be marked not just by the deployment of innovative technologies but by the evolution of these technologies to deliver meaningful, agile, and customer-centric solutions.

Kerina Naran

Kerina Naran

Kerina Naran

Research Analyst

Kerina is a research analyst at STL Partners and is now applying her advanced research and analytical skills from an extensive background in biomedical sciences to the dynamic telecoms and technology market. Kerina joined STL Partners after obtaining a PhD in Virology and Immunology from Imperial College London.

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