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June 28, 2021

IBM expands telco stake with Verizon and Telefónica 5G deals

By Robert Scammell

IBM has secured contracts to provide cloud, artificial intelligence (AI) and blockchain solutions to Verizon and Telefónica as the enterprise tech giant looks to capitalise on 5G rollouts and bolster its position as a supplier in the telecommunications sector.

IBM and its Red Hat subsidiary will build and deploy an open hybrid cloud platform for US mobile operator Verizon. It will sit in the core of its 5G network and have the capability to automate operations.

An open hybrid cloud is one that combines public and private clouds and uses open source to improve interoperability. The 5G cloud platform will be created using Red Hat OpenShift.

It builds on existing arrangements between the two companies, announced last July, to collaborate on 5G and edge computing projects.

Separately, IBM will provide enterprise solutions running on an open hybrid cloud to Spanish mobile operator Telefónica. One service is an AI-powered virtual assistant for automating basic customer services, such as billing requests and processing claims. It will use IBM Watson Assistant, the firm’s proprietary chatbot, to do the natural language processing heavy lifting.

IBM and Telefónica Tech have also built an asset management solution using IBM Blockchain Platform to trace objects as they move throughout a supply chain.

The idea is to log an asset on the blockchain – a digital ledger that cannot be altered – to improve supply chain visibility. Telefónica Global Technology will initially use it for its internal supply chains in Spain and Germany and will look to expand it to the wider company.

Depending on its success, Telefónica Tech and IBM may also commercialise the blockchain platform, which will also run on IBM’s open hybrid cloud.

It comes after IBM reportedly scaled back its blockchain division after missing revenue targets. The Telefónica blockchain deal will mark a rare real-world application of the technology by large companies after a flurry of investments in enterprise blockchain failed to gain traction. Last month Microsoft announced it is retiring its Azure Blockchain Service.

The company has also found setbacks to its use of the equally buzzy tech of AI, with the Watson Assistant considered a flop in medicine after a planned disruption of healthcare with the chatbot went awry towards the end of the 2010s. Utilising the assistant for basic customer services may be more of a natural home for the bot than the complexities of healthcare.

“The new offerings we’re announcing today are key to accelerating the value Telefónica can drive from adopting an open hybrid cloud strategy that can speed the delivery of these solutions to market,” said Steve Canepa, global managing director and general manager at IBM Communications Sector.

“By harnessing technologies like AI and blockchain via an agile platform that enables flexible deployment – on-prem or on any cloud — customers can leverage and tailor these solutions to support their specific innovation strategies.”

The next generation of wireless communications offers lower latency and higher bandwidth. Where upgrades for older networks often required replacing physical infrastructure, 5G allows mobile operators to carry out updates using software.

This is creating opportunities for big tech players such as IBM and Amazon to provide software solutions to telecommunications networks. The deals with Telefónica and Verizon are IBM’s latest move to secure a slice of an increasingly lucrative market.

The shift coincides with the gradual uptake of OpenRAN, a framework that allows mobile operators to assemble a network using pieces of technology from multiple vendors.

IBM this week announced Cloud Pak for Network Automation, a slew of software to automate and monitor 5G networks.

According to Big Blue, IBM and Red Hat provide services for more than 140 telcos.

The deals were announced at the trade show Mobile World Congress, which is taking place this week in Barcelona as well as online.

According to GlobalData thematic research, there were more than 400 million active 5G subscriptions by the end of 2020.