What’s up with… Cloud-native telco investments, Nokia, Verizon on AI

TelecomTV Staff
By TelecomTV Staff

Jan 17, 2024

  • Telco cloud-native investments are on the up, according to IDC
  • Nokia to pump €360m into 5G/6G R&D at two German facilities
  • Verizon’s CEO discusses the impact of AI

In today’s industry news roundup: IDC expects telcos to more than double the value of their cloud infrastructure software investments by 2027 compared with 2022; Nokia is to invest heavily in radio access network and optical digital twin platform developments in Germany to fuel its next-generation 5G and 6G product R&D programmes; Verizon chief Hans Vestberg discusses the impact that AI is having on the US operator and its customers; and much more! 

Research house IDC expects the worldwide value of telco cloud infrastructure software sales to more than double to $27.3bn by 2027, up from the $12.9bn generated in 2022, driven by the an acceleration in the cloud-native deployment of telco network workloads by digital service providers (DSPs) starting this year. The telco cloud infrastructure software sector, which comprises virtual network functions (VNFs), cloud-native network functions (CNFs) and network functions virtualisation infrastructure (NFVI), is set to grow as network operators “turn their attention to cloud-native workloads,” leading to the “growing initiative to deploy cloud-native, container-based telco workloads across the telco cloud,” according to the IDC team. “Adoption of cloud-native network functions is gaining momentum, with CNFs being deployed alongside virtual network functions across comms service providers’ cloud-based digital infrastructure for service agility, lower cost of ownership, and elastic scaling of the network,” stated Ajeet Das, research director for telecom network infrastructure at IDC. “However, these operators face a range of daunting challenges, including lack of in-house expertise in cloud-native orchestration and infrastructure, difficulty defining and implementing comprehensive security, and operational complexity of managing on-premises, cloud, and multi-cloud networks,” he added. Read more

Another growth market is fixed wireless access (FWA) technology, driven by the increasing use of 5G network infrastructure and spectrum by mobile operators to offer fixed broadband services. According to research house Dell’Oro Group, the market for FWA technology – comprising radio access network equipment, residential customer premises equipment (CPE) and enterprise routers and gateways – will continue to grow over the next few years to be worth $9bn in 2027. The US is one of the hottest markets for FWA, driven by aggressive service rollouts by T-Mobile US and Verizon, which had signed up 4.2 million and almost 2.7 million FWA customers by the end of the third quarter of 2023 respectively, success that finally forced AT&T to join the fray last summer. Sales growth in the FWA technology sector is one of the few bright spots in the global broadband technology market, though, as Dell’Oro expects the overall sector to shrink this year by about 5% to $16.5bn.   

Nokia is to invest €360m in the development of software, hardware and chip design at its sites in the German cities of Ulm and Nuremberg. The initiative, part of a four-year European IPCEI (Important Projects of Common European Interest) project, funded by Nokia, the German Federal Ministry of Economics and Climate Protection (BMWK), and the German states of Baden-Württemberg and Bavaria, will see Nokia develop software, hardware and high-performance systems-on-chips based on a digital twin, for use in radio and optical products for 5G-Advanced and 6G. The Finnish vendor noted that the project also places a high importance on the energy efficiency of the systems, so it is collaborating with research institutes and universities, which will be backed by “long-term IPCEI investment and funding”. Nokia added that the project is set to “strengthen Europe’s competitiveness and innovative power”, especially in the field of microelectronics for future technologies, including 6G and artificial intelligence (AI). It is also expected to enable “complex applications for the metaverse” and “advance digitalisation”. As a result, the new systems are expected to make networks “more energy efficient and more powerful at the same time”. Read more.

AI is high on the agenda of all major summits, and the 2024 annual meeting of the World Economic Forum (WEF) in Davos is no exception. Speaking on the sidelines of the event, Verizon’s CEO and chairman, Hans Vestberg, told Yahoo Finance that AI is “an important tool” for the US operator. “When it comes to AI and especially generative AI [GenAI], I think at the edge of the network it’s going to be very important to have AI to take quick decisions very close to the end user – the customer or the enterprise,” he noted. AI could also help Verizon with its network investment planning too. “If we would know a little bit better where we have [capacity] holes… that would be helpful from AI. Ultimately, I have a person doing it but learning where I have the challenges, where I have the problems – that’s very important, so definitely it can make us much more efficient”. Verizon’s chief added that it is hard to know if AI will bring about a new wave of phone upgrades among consumers until it’s known whether or not it enables attractive new applications. Finally, when asked whether Verizon plans a similar move to the one by Vodafone and Microsoft, which unveiled a major GenAI partnership on Tuesday, Vestberg revealed that Verizon is already working with such partners. “When you deliver a service to customers – you need [it] to be configured right, you need the devices and the modems that are making the connections [to be] right, and you need the applications. We [think] long term, we work with our partners all the time to see that we have the best performance and the best innovative service on top of it. So, we are already working with all these players in order to see that customers get the best from us,” he told the business media outlet.

Still with AI at Davos… According to Sam Altman, the CEO of ChatGPT developer OpenAI, the future of AI depends on there being a breakthrough in energy production, Reuters has reported, given that the technology will consume vastly more power than people expect. The executive added that climate-friendly energy sources, such as nuclear fusion or cheaper solar power, are the “way forward for AI”. In 2021, Altman reportedly invested $375m in private US nuclear fusion company Helion Energy, which has agreed to provide energy to Microsoft, OpenAI’s largest investor, in the future. The CEO’s comments come amid growing concerns about just how much power AI will require: Recent research suggested the AI industry could use as much energy as a country the size of the Netherlands.

Telecom Italia (TIM) has been given the green light by the Italian government for the agreed €18.8bn sale of NetCo, its fixed access network division, to private equity firm KKR. The Italian telco announced that it has “received approval to execute the transaction pursuant to the Golden Power legislation” and noted that the Italian government had deemed the commitments made as part of the M&A deal to be “fully adequate to guarantee the protection of the strategic interests connected with the assets involved in the transaction.” This will no doubt further infuriate Vivendi, the French media giant that is Telecom Italia’s single largest shareholder, as it vehemently opposes the terms of the NetCo deal and has branded it “unlawful.” In late December, Vivendi issued a writ in an effort to halt the sale process, but Telecom Italia dismissed the legal action as too little too late and vowed to continue with the asset sale “as planned, without delay or interruption.”

Apple is to allow developers in the US to link to external websites for in-app purchases, after the US Supreme Court rejected its appeal on a previous ruling that required the tech giant to allow iOS and iPadOS users to use alternative payment methods, Engadget has reported. Following the change, developers will still need to pay a commission for in-app purchases that have not been made via Apple’s App Store. Small business developers will be charged 12% for payments made outside of the App Store, while larger developers will need to pay 27%. Developers will need to obtain an approval from Apple to enable the new billing options. They will also be able to notify users about alternative payment methods in specific ways, such as one-time links and only in a single, dedicated location in the App Store. The updated payment options come after Epic Games, the developer of popular gaming title Fortnite, filed a lawsuit against Apple in 2020 challenging the 30% revenue cut that Apple takes on purchases made within the App Store. In response to the new payment options, Epic Games CEO, Tim Sweeney, claimed that Apple has introduced “an anticompetitive new 27% tax on web purchases” which “kills price competition”. He added that the gaming company will contest Apple’s “bad-faith compliance plan” in District Court.

Deutsche Telekom (DT) has been recognised as one of the most valuable brands worldwide by the British market research institute Brand Finance. In the “Brand Finance Global 500” study, the institute ranked DT in ninth place, up two positions on last year. The German telco group was the only European company to feature in the top 10, and was found to be the most valuable telecoms brand in the world for the first time, surpassing Verizon and AT&T, which previously ranked above DT. The German operator was assessed based on its current brand value, which is estimated to be US$73.3bn, the highest in the company’s history and up 17% from $62.9bn in the 2023 ranking. Its increase is attributed to a “positive economic and technological development”, as well as sustainable investments in network quality, digital technologies and customer service. “Our global umbrella brand strategy is working really well and our investments in a strong brand are paying off. This goes hand in hand with our economic and technological successes in Germany, Europe, and the United States and plays a part in establishing Deutsche Telekom as a leading digital telco,” noted DT’s chief brand officer, Ulrich Klenke. The study also found Apple to be the most valuable brand worldwide, beating Microsoft, Google and Amazon. Read more.

- The staff, TelecomTV

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