Cisco is acquiring cloud-native mobile service platform provider Working Group Two in a move to bolster its recently launched Mobility Services platform and its IoT support services.

The deal will see Cisco acquire Norwegian telecommunications provider Telenor’s 44.6% stake in Working Group Two for $150 million. This will provide Cisco complete control over Working Group Two, which counts more than 90 employees.

Cisco will integrate Working Group Two into its Provider Mobility business within Cisco Networking, including CEO Erlend Prestgard and CTO Werner Eriksen becoming part of the Cisco team under Masum Mir, SVP and GM for Cisco Networking’s Provider Mobility business. The deal is scheduled to close during the first quarter of Cisco’s 2024 fiscal year, which runs through the end of October.

Mir told SDxCentral  that the move broadens the availability of its Mobility Services platform. This is based on Working Group Two’s “API mindset as well as its tech stack that they have built,” Mir said.

“The second part is we have been building our systems to run at fairly large scale but more centralized,” Mir said. “Because if you think about mobile operators in the past, it was very centralized for deployments. … In the future state we see that it has to be highly distributed, and we need to embrace cloud and [Working Group Two] started there. Basically, in our monolith it’s moving a pretty large deployment into a fully distributed deployment. This accelerates that.”

Mir also explained that the deal fills in some “missing pieces” of its Mobile Services platform. He noted this includes a subscriber data management layer and some of the voice capabilities.

“[Working Group Two] comes with experience, expertise as well as the tech stack built in a cloud-native way, which is not monolithic,” Mir said. “Those are the three areas that actually helps us to make this vision into reality faster.”

Cisco launched its Mobility Services platform earlier this year. The platform taps into the 5G, edge and cloud ecosystem to provide an as-a-service option for service providers to help them construct and manage new IoT networks and services.

Mir noted that IoT component is becoming increasingly important to what Cisco sees as a growing mobile IoT segment.

“With IoT and 5G coming together, it is also evident that you actually have to run services closer to where the machine is,” Mir said. “What Erlend and his team have built their stack is born in the cloud, runs in the cloud and cloud can run anywhere.”

The IoT management is also bolstered by Cisco’s API architecture that allows for more services to be built on the newly enhanced platform.

A recent Analysys Mason report noted that while revenues from IoT-related connectivity have slowed due to pandemic-related disruptions, “its role in the enterprise market is very significant, with IoT connectivity expected to account for more than half of operators’ incremental revenue from enterprise public network mobile services over the next 5 years.”

“Despite pressure on unit prices, the rapid growth in the volume of deployments is expected to support a strong, sustainable business,” Analysys Mason Research Director Catherine Hammond wrote. “For those operators with established propositions, IoT is also likely to deliver higher margins than most other growth services in the enterprise market.”

Working Group Two initially incubated within Telenor before becoming an operating joint venture with Cisco in 2017. It was tasked with offering cloud solutions for mobile operators and to use cloud-based platforms to launch new services.

Telenor provided the platform’s technology, which is an open source, cloud-native, multi-tenancy, full stack mobile core network delivered as a service. The software behind the platform is a single code base built on multiple radio networks.

Cisco provided a virtualized version of its evolved packet core (vEPC) and APIs into that packet core that are available to the Working Group Two platform. Cisco also provided go-to-market support for bringing those services to enterprise, commercial, IoT and mass-market customers.

Working Group Two’s cloud-based 5G core is offered to operators that can plug their 5G radio access network (RAN) and support systems into for seamless access. That core sits on Amazon Web Services (AWS) cloud infrastructure, with operators tapping into the platform through an as-a-service model.

Roy Chua, founder and principal at research firm AvidThink, previously told SDxCentral that Working Group Two running this infrastructure on its own AWS account provides the firm with an incentive to make it as efficient as possible, which also benefits operators.

“Which makes sense, right, the incentives are aligned correctly, which is [Working Group Two] has an incentive to try to lower the cost and improve the performance of the system, because they’re getting paid by the mobile network operator directly,” Chua said. “The more they save, the more profits they make.”

Mir said Cisco would continue to run the Working Group Two service on AWS in areas where it makes financial sense.

“I think running it on Amazon is a huge benefit for us because you can get to a lot more footprint much faster,” Mir said. “But there is always this trade-off of if you're running very high load of [input/output], bandwidth going in and out of cloud, and if too much data is stored in the cloud, oftentimes it breaks the economics. … We see that [Working Group Two] stack both running on public cloud as well as running on our own stack simultaneously.”

Working Group Two’s platform was backed by Hawaii-based mobile virtual network operator (MVNO) Mobi, which earlier this year launched a pilot service tapping into a fully cloud-native core from Working Group Two and riding on AWS that matches the technology sophistication of what established operators are only now just rolling out.

Mobi CEO Justen Burdette told SDxCentral in an interview that the Working Group Two platform was installed in a matter of weeks, a task helped by its use of a cloud-native architecture. Burdette explained he had the kick-off call with Working Group Two the last week of November 2022, and that the 5G core was operational by Jan 10, 2023.

This timing included the loss of several weeks due to one of its larger network partners shutting down all network access due to the end-of-year holidays. “I’m pretty sure they would have had it live by mid-December probably at the latest,” Burdette said of the effort.

Working Group Two also counts deals with operators in Sweden and its native Norway, with a significant customer in CK Hutchison. The company notes that last year it helped customers deliver 527 million text messages, make 354 million voice calls and transfer 33 petabytes of data.

"We have been on a journey to build a global programmable mobile core network and I think what we found in Cisco is someone had exactly the same vision," Erlend said of the deal. "I would say all the things that we miss, they have a slightly different scale. They have sales access, they have credibility and technically it's happening a lot. We fit extremely well together. So, for me personally, this is a realistic way of dramatically accelerating both the likelihood and timing of building this global programmable core."