How and why Microsoft is building a 'telco-grade cloud'

Microsoft isn't trying to become a telco, despite recent forays into 5G. Instead, it's building out Azure to appeal even more to telcos, officials say.
Written by Mary Jo Foley, Senior Contributing Editor
Credit: Microsoft

On Sept. 28, Microsoft is going public with its strategy to try to make Azure even more appealing to telecommunications partners. Officials are sharing more details about Microsoft's "Azure for Operators" strategy, which is all about making Microsoft's cloud more appealing to these customers.

Microsoft's acquisitions of two 5G-centric companies -- Metaswitch Networks and Affirmed Networks -- had led some company watchers to wonder whether Microsoft was gearing up to become a telco provider in its own right.

But Shawn Hakl, partner for Azure Networking, said this is not the case.

"We are not trying to disrupt the carrier. We aren't trying to get into this business," Hakl said. He told me during a recent phone interview that Microsoft's Metaswitch and Affirmed Networks buys were more about getting lots of solution architects to help the company "create a telco-grade cloud."

"Our focus as a company hasn't changed. We remain a platform business," Hakl added. "We want azure to be the preferred vendor for cloud workloads. Having a common Azure platform layer for controlling management, DevOps, security, and orchestration is really important for the highly distributed workloads companies like telcos need."

(Hakl joined Microsoft from Verizon, where he was senior vice president of Business Products, in March 2020.)

Microsoft already counts a number of telcos as major partners. And telecommunications is one of Microsoft's primary vertical market targets. As part of its most recent reorg, Microsoft created the Azure for Operators unit in the name of better supporting new 5G, virtual networking, and intelligent-edge opportunities with technology like Azure Edge Zones

Today's announcement is designed to provide more details about how specifically Microsoft is targeting this market segment. Microsoft officials touted the company's hybrid approach as potentially helping telcos drive down infrastructure costs and create more service differentiation. Officials said Microsoft's software-defined networking, network-function verticalization, edge-computing/IoT capabilities, AI services, and even its productivity and gaming services (for those interested in them) were all part of its stable of telco offerings. In addition, Affirmed Network's packet core expertise will give telcos a leg up in terms of how IP traffic is handled and how customers connect to networks, and Metaswitch will bring voice-core and application functions behind the core network to the party, Hakl said. 

Microsoft is offering carriers three main ways of engaging with the company, Hakl said: Opt for Microsoft's carrier-grade cloud as a platform layer and build on top of it; take virtualized network functions and/or containerized network functions (VNF/CNF) from Microsoft and operate their own networks; purchase various services from Microsoft. Telcos then can decide how they want to package and price these services for their customers.

Already on the list of Microsoft's telco customers/partners are NTT, Vodafone, T-Mobile, Verizon Business, Deutsche Telekom, TelefonicaAT&T, Telstra, and more.

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