Recent Announcement about Oracle Cloud Infrastructure and AT&T Shows That the Verdict of a Telco’s Enterprise Success Is Out of Their Control

By Leo Gergs | 3Q 2024 | IN-7487

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Earlier in August 2024, Oracle and AT&T announced a strategic partnership to integrate AT&T's Internet of Things (IoT) connectivity and network Application Programming Interfaces (APIs) with Oracle's cloud services in a move to streamline the management of IoT devices and enhance real-time data processing. The move will allow the Oracle Enterprise Communication Platform (ECP) to use AT&Ts 5G connectivity and network APIs.

At present, the partnership focused on providing communications-enabled restaurant operations, automated utility grid management, and "enriched telehealth" capabilities. This ABI Insight argues, however, that partnerships between communication and cloud service providers can have a much more fundamental effect on the industry and push enterprise digitization efforts beyond these boundaries.

This announcement is interesting from a range of different perspectives that go well beyond increasing the popularity and, therefore, commercial traction of IoT solutions and/or network APIs. Of course, it will lead to operational improvements and provide a push to digitization efforts. At the same time, it illustrates at least two fundamental shifts in the telco and cloud industries.

First, it underscores the ongoing disruption in the cloud service provider market-particularly as enterprises start to accelerate their cloud adoption strategies. As the market is becoming more competitive, cloud service providers face a growing pressure to strike new partnerships to expand their enterprise portfolio.

In addition, it shows an increased focus on bundling different services for enterprises, as it brings the telco and cloud industries closer together. Consequently, this can be the starting point to integrate enterprise cloud services with telco services and, therefore, create a new, combined value proposition. This would appeal to enterprises looking for seamless solutions that combine cloud computing with connectivity, potentially shifting market dynamics toward more integrated service models. As this partnership announcement allows Oracle to leverage AT&T's existing network infrastructure, it will offer more competitive pricing or value-added services. This will increase the competitive pressure on other cloud service providers-Amazon Web Services (AWS), Microsoft, and Google Cloud-to adjust their pricing.

Second, endeavors like this announcement from AT&T and Oracle strengthen the understanding of cellular connectivity as a key enabler for concrete enterprise use cases. Consequently, these partnerships can help communication service providers win back some relevance in the enterprise verticals, as it allows them to offer dedicated, outcome-based services that go beyond just providing connectivity. Instead, it will allow both AT&T and Oracle to provide connectivity bundled with cloud-based IoT management and analytics solutions. Furthermore, it allows the integration of AT&T's FirstNet with the Oracle cloud infrastructure to support first responders with real-time data, live video, and secure communication.

For several years, the telco industry has tried to prove its relevance for different enterprise verticals-with very mixed outcomes, as communication service providers, in particular, have struggled. Network APIs can certainly be a good tool for communication service providers to develop enterprise-grade applications and services.

Partnership agreements with cloud service providers can, in this context, be one of the last opportunities for communication service providers to change that and increase their relevance in the enterprise domain. To provide the best possible ground for successful partnerships, however, both players and cloud service providers will need to do their homework.

• Invest in Network & Cloud Integration: Communication and cloud service providers should focus on creating a deeply integrated infrastructure that combines the strength of both cellular connectivity and cloud domains. This can entail, for example, leveraging 5G networks to enhance cloud services-particularly for edge computing and IoT use cases. Open network APIs can play an important role in enabling this integration.
• Focus on Industry-Specific Solutions: Both communication and cloud service providers will bear in mind that different enterprise verticals have different requirements for network performance, data integrity, and use case criticality. Any partnership between communication and cloud service providers should focus on co-developing vertical-specific solutions targeting the pressing use cases within each vertical. In healthcare, the integration can support telemedicine and remote patient monitoring with secure, real-time data transmission. In manufacturing, it can facilitate smart factories with IoT sensors and predictive maintenance capabilities. Certainly, network APIs can be an interesting tool to facilitate the development of these applications and services, but they will not magically solve any of the current bottlenecks.
• Prioritize Flexibility and Security Provision: Enterprise digitization projects are likely to evolve and expand over time. Consequently, any telco and cloud offering will need to be designed to scale up easily with growing demand. Importantly, this does not only apply to the connectivity infrastructure, but also to cloud and device management solutions. A hybrid cloud approach that combines on-premises, private, and public cloud resources could be a beneficial approach.