Red Hat sees opportunities with the rise of the horizontal telco cloud in APAC

It’s been some time since the Mobile World Congress in Barcelona, but the announcements made by tech vendors and telco companies continue to shape the goals for businesses in the APAC region. Telco companies are seeking newer revenue opportunities with the focus moving towards offering more cloud and AI capabilities to their customers that are built on the investments that have made.

For Red Hat, these new revenue streams also enable the vendor to expand its products and services with its telco partners in the APAC region. According to Ben Panic, Vice President and Head of Telco, Media & Entertainment Sales, APAC, Red Hat, there are a few drivers as to why telecommunication companies in the region are rolling out the horizontal telco cloud.

The first reason is the shift towards 5G networks. With virtualized networks in 4G becoming containerized networks in 5G, Panic explained that this has led telcos to push forward, especially in markets like India with telcos likes Airtel, Reliance Jio, Vodafone and such.

“They're all horizontal telco cloud. Similarly for Japan and Korea, who were early adopters, in the Asia-Pacific market. And many of the other operators are following and going that way. In fact, there was lots of dialogue with clients in Southeast Asia, from the Philippines, from Indonesia, and others around the journey, and why they should go this way. Because typically in the past, they've been building vertical stacks with some of the network equipment providers, be it Ericsson or Nokia or Huawei, whoever it might be. They now look at it differently, especially given what has happened over a couple of years in the virtualization space, and they're looking for other options,” he explained.

Panic shared the options include moving towards open source to be less locked in.

“Another hot topic is AI. A lot of telcos are not looking at how do they consume AI internally themselves. The secondary part is how do they monetize it. Given the mad scramble last year, everyone focused on buying GPUs and building GPU farms, I think now crystallization is what do we do with AI. How do we use AI? So, whether it's autonomous networks, how do we increase our customer experience and do better on that side of the fence? There's a lot of internal use cases for AI, all driven from a foundation of really good automation. And I think there's lots of opportunity in all of the telcos for that,” Panic said.

The third trend is the increasing opportunity and demand for sovereign cloud. Panic pointed out that this is incredibly important in APAC and was a big pillar of many of the conversations that took place at MWC.

“We see opportunities for our technology in sovereign cloud, in the telcos, in all of the different theaters in the APAC region. So, whether you're in India or you're in Singapore or Indonesia or Japan, even Australia, they've all looking at sovereign cloud as an opportunity. And I'm excited by that because when I think about the telcos, one of the challenges that they've all had is, how do they drive new revenue streams? Sovereign cloud is one that almost overnight, they will be able to incrementally drive new revenue streams. And I think they're really well positioned to be able to build sovereign cloud, because if we take a step back, what is a telco network? It's an on-premises network. It is a sovereign cloud. It is in the country,” he said.

Panic believes that telco companies have all of the key tenants of a sovereign cloud and have already been doing it themselves and operating it.

“They operate it in a regulated environment with extremely high service levels. And that's exactly what they need to do for sovereign cloud. So, I think the telcos have analyzed it. They're looking at it and saying, the governments and the different government departments in the countries that they operate in are all interested in sovereign cloud. So, they've almost got that target set of customers to go after. And that's quite exciting for them,” he added.

Opportunities for Red Hat

For Red Hat, there are plenty of opportunities for the vendor as it plays in all these domains. Panic explained that Red Hat has capabilities from virtualization through to the horizontal cloud, through to sovereign cloud and AI in between.

“We've got opportunities across the board where we're working with the telcos. So, it's a really exciting space. Our strength lies in being able to provide a platform for innovation and application development. Whether you're looking at it on the network side, the IT side, the enterprise, AI or sovereign cloud, our OpenShift platform is the development environment and the application platform environment that gives the operators an opportunity to, as we say, develop once and deploy anywhere,” said Panic.

Specifically, Panic believes the OpenShift enables and provides the flexibility to telcos to either build an on-premises cloud, like what some are already doing, or migrate workloads into the public cloud.

“We have also built upon a number of years of work in the telco landscape by recognizing the sorts of service levels that are required for the telco. Telcos work in highly regulated environments where they have commitments to the regulators, the governments, to all of us as consumers around things like uptime on mobile phones, broadband services, data services. And that's something that Red Hat has specific service and support offerings, tailored exactly for the telecommunications providers. We also provide subscriptions and services to be able to help our operator customers deliver that back to consumers and the regulators,” he explained.

On enabling telcos to generate revenue from AI, Panic shared that Red Hat is going to have lots of small language models that are going to be really prescriptive for different parts of the business.

“You're going to be able to tie into specific APIs in the network, and they're going to target any number of different market segments on the enterprise side. So whether it's a specific application that they have for logistics or transport or retail or healthcare or finance, I think the operators that get creative about the partners in the ecosystem that they choose and the solutions that they then build on top of an open platform, that gives the opportunity to target those different market segments,” he said.

This is also where he believes the recognition for Red Hat comes from. Customers in Southeast Asia recognize that if they are tied into a vertical siloed platform, they're really constrained when it comes to AI and even 5G application services, who they can then target in the market because they have to go back to mother vendor that they're using.

Hence, Panic believes the shift to the horizontal cloud will only benefit telcos with new revenue opportunities, and Red Hat will be there to support them.