Almost half of telecom network capacity will be totally cloud-native in the next three to five years, and operators will spend $200 million each year on that cloud transformation. Telecommunication operators that get in early on this cloud-native shift are likely to realize the most value in terms of economics and environmental sustainability, according to new research from the Capgemini Research Institute.

The report found telecommunications cloud investment priorities for the next five years center around technology infrastructure, which represents one-third of total telecom cloud budget plans. Investments will also be focused on research and development to automate networks using artificial intelligence (AI) and machine learning (ML). The majority of telecom operators surveyed noted private cloud as their preferred deployment environment.

“Cloud transformation is a fundamental change in the evolution of the network that has been dominated by physical devices and infrastructure," and "represents a significant change of mindset for telcos,” Capgemini Global Head of Telco Industry Jacques Assaraf noted. But early adopters of telecom cloud platforms can recover 47% of their investment in cloud transformation.

According to the research, operators anticipate optimizing network total cost of ownership by 13%, or $260 to 380 million per year. And being an early mover in the space should generate $110 to 210 million per year in additional revenues.

Along with the financial benefits of the cloud-native shift, cloud transformation is expected to enable carbon emissions reductions of 5%. That accounts for onethird of the network carbon footprint reduction operators expect in the next three to five years.

"Owing to their strong preference for private cloud architecture, telcos are expecting sustainability benefits on emissions from their direct sources (scope 1 and 2) due to lower emissions from facilities, including reduced physical hardware footprint, reduced power usage, auto-scaling of network on demand, and managing power consumption of mobile towers by using AI," the research firm explained.

"Telcos are ideally placed to explore opportunities offered by cloud," Assaraf added, citing "benefits in markets enabled by cloud-based platforms, not just financially but also from a business and sustainability perspective."