Amazon Breaks into Europe 5G Networks with Telefonica Cloud Deal

Telefonica Germany will move one million 5G customers to the Amazon Web Services (AWS) cloud later this month, company executives told Reuters, in a bold move by the U.S. online retailer to break into the global telecoms market.

While some telecom networks have moved IT and other non-core operations to the public cloud, the move by Spanish group Telefonica’s subsidiary is a global first in which an existing mobile operator moves its core network to a public cloud.

Major companies that provide cloud computing services, such as Amazon and Microsoft, have tried to move more into the telecom sector, lured by billions of dollars in potential revenue, but operators have been wary of the capabilities of public clouds in managing a mobile network.

“I want it to work for at least one to two quarters and have a roadmap to move at least 30-40% of my customer base by 2025-2026,” said Mallik Rao, Chief Technology & Information Officer at O2 Telefonica, also known as Telefonica Germany .

The company has 45 million customers in Germany.

AWS and O2 Telefonica did not disclose financial details of the deal.

The core network, which consists of powerful servers in data centers, is the heart of a mobile network that routes data and calls securely and at high speed. A public cloud will reduce costs, increase scale, and handle repairs without disrupting service.

American Dish, which built its mobile network from scratch, became the only telecom company in 2021 to use the AWS cloud as its core network.

“Dish was much simpler because they didn’t have existing systems that had to be adapted to work with the cloud,” AWS vice president Jan Hofmeyr said in an interview.

Nokia, which also worked with Dish, will provide the software and AWS will provide the infrastructure for Telefónica.

Telefónica first worked with AWS and Ericsson and then switched to Nokia and AWS, Rao said. “The days of trial are over. I don’t want to keep trying.”

The global telecom cloud market is expected to reach $108.7 billion by 2030, up from $19.7 billion in 2021, making it a growth engine for companies like Amazon.

“We want to make it a company that runs telecom workloads,” AWS’s Hofmeyr said, adding that the company expects more deals with other operators in the next 12 months.

“I would say that in most cases the discussion is about timing and whether we should move to the cloud.” -Reuters 

May 08, 2024