Microsoft makes big 5G play as AT&T moves core to Azure cloud

In a major move, AT&T is shifting its existing 5G mobile core network to Microsoft Azure’s hybrid cloud. And the hyperscaler is scooping up intellectual property and engineering expertise to bolster its telco offering — Azure for Operators. Financial terms of the deal were not disclosed.

Microsoft is essentially taking over AT&T’s cloud network deployment, responsible for operations as it exists today and transforming it with a combination of hybrid cloud assets. Then, Microsoft will incorporate learnings and IP the carrier has built into its commercial Azure offering for operators, according to Shawn Hakl, Microsoft's VP of 5G Strategy, in an interview with FierceWireless.

A key part of the multi-year deal is that Microsoft is acquiring AT&T’s Network Cloud platform technology that runs AT&T’s 5G core. The deal also involves buying AT&T engineering and lifecycle management software that runs containerized or virtualized network services. Hakl said Microsoft is extending offers to several AT&T employees involved with the cloud network implementation and engineering team to join Microsoft as the company brings real-world production 5G workloads to Azure for Operators.

Microsoft introduced its offering targeting telco operators in September 2020.

RELATED: Telefonica taps Microsoft as private 5G teammate

AT&T was an early pioneer in the network cloud space, and he noted the operator’s years of experience and built-in capabilities around aspects like tier-one security and complex operations.

“We felt that was unique enough that we wanted to get it in our product set,” he said. Another aspect that makes the announcement stand out is that it’s the first time a Tier One operator is trusting its existing subscriber base to a hyperscaler, according to Hakl, whose experience also includes SVP roles at Verizon.

“Similarly, for core networking workloads, it’s not for a go-to-market relationship at the edge of the network,” he said, which is a relationship Microsoft also has with AT&T and which has also been seen with the likes of Verizon and AWS. “It’s not for IT workloads, it’s for the core network itself and for the existing customer base.”

The wireless industry has seen a trend of partnerships and shifts to cloud-based platforms. That includes plans by Dish Network to host its 5G core and RAN on Amazon Web Services (AWS).

RELATED: Dish makes a splash, picks AWS to host 5G RAN and core — Industry Voices: Chua

What makes the Microsoft and AT&T deal different in another way, is for one, it starts within weeks, Hakl said. It’s also the sheer size and scale of the subscriber base, he noted, as an established nationwide operator with hundreds of millions of customers.  

AT&T is entrusting its core to a cloud player, within a brownfield environment that also already involves multiple vendors. According to Hakl, the deal also extends as AT&T shifts to a standalone (SA) core 5G network.

RELATED: AT&T, Verizon hedge on 5G core timelines

“We’re not building something up from scratch where everything gets to be pristine from day one,” Hakl said. “We’re actually applying this to their existing subscriber base, we’re also applying it to their existing ecosystem.” 

As new capabilities are built within the cloud environment, additional suppliers will be added. Microsoft is assuming responsibility for software development and deployment of AT&T’s network cloud immediately, but it will take some time to fully bring the carrier’s existing network cloud to Azure.

That effort will also be multi-vendor and embrace components from other network equipment providers as well.

“Both sides are committed to a multi-vendor ecosystem versus sort of a vertical stove-pipe,” Hakl said.

AT&T, meanwhile, said that by using Microsoft’s hybrid and hyperscale infrastructure it expects to help reduce engineering and development costs, with added flexibility from the cloud, AI and edge to launch new services more quickly.

Deal helps Microsoft beef up Azure for Operators 

For Microsoft, the deal is big – it gains a key Tier one tenant, along with IP and engineering know-how, to show what it can do applying its telco platform to an existing brownfield network deployment.

And Hakl sees the combination of both as key for Microsoft.

“It gives you that super important anchor tenant, that first one in, in terms of who is willing to commit fully to their core network moving over,” he said. And “it gives a direct line of sight for the other operators who are considering making this change access to the intellectual property.”

So it’s not that the AT&T cloud move will just showcase learnings, but there is a commitment that Microsoft will bring some of the IP on board, explicitly available in the product, and that other operators can benefit from that.

In taking on AT&T’s in-house virtualization platform (which it’s been working on for several years) Microsoft will combine elements with its own technology. Hakl pointed to capabilities around edge compute, DevOps, and telecom assets brought in when the cloud giant acquired Affirmed Networks and Metaswitch last year.

“That all comes together in an Azure for Operators offering that we can then turn into…a carrier-grade platform” offered to other operators.

RELATED: Microsoft draws a bead on telcos with Azure for Operators

He noted that operators have unique requirements when it comes to scale, security and observability. And for Microsoft, Hakl said it views the deal with AT&T and ability to directly incorporate lessons learned as de-risking the cloud player’s overall operator 5G strategy, “bringing proven answers into solving some of those challenges we were seeing precisely because of those components.”

“Now, it just becomes an issue of execution,” he said. “We will continue to maintain the value of what we’ve taken over as well as moving that forward into the fully cloud world, which it’s going to be exciting.”