Neoclouds aim to bridge a gap between centralized hyperscale clouds and highly distributed telecom networks
As telecom operators face mounting infrastructure demands — from AI workloads to cloud-native 5G networks — the industry is entering a new era of cloud strategy. At the center of this shift is the neocloud: a next-generation model of cloud infrastructure purpose-built for AI performance by offering flexibility and local processing at scale.
Many of us first heard this term at this year’s MWC Barcelona — but what exactly is a neocloud, and why is it suddenly popping up in telecom conversations (as if this industry needs another buzzword, lol)?
They fill a ‘vital’ infrastructure gap
The term neocloud describes a modern class of cloud architecture that tackles the performance, latency and sovereignty limitations of traditional hyperscale platforms. Neocloud providers primarily offer GPU-as-a-Service and AI-as-a-Service (GPUaaS and AIaaS), enabling specialized compute for AI and high-performance workloads.
While public cloud once promised infinite scalability and cost efficiency, its one-size-fits-all model increasingly struggles with demands like edge computing, private AI models, data gravity and ultra-low latency services. Neoclouds aim to bridge this gap between centralized hyperscale clouds and highly distributed telecom networks by delivering infrastructure that is:
- Location-sensitive, supporting regional data processing and compliance requirements.
- Workload-optimized, built for AI/ML, analytics, telco core and edge applications.
- Ecosystem-integrated, often delivered through partnerships between telcos, cloud providers and infrastructure vendors.
“Neoclouds fill a vital gap in modern infrastructure by delivering AI-native, GPU-powered and scalable computing platforms,” Zayo said in a blog post. “Their architecture is purpose-built for the era of intelligent applications, positioning them as essential infrastructure for digital transformation across industries.”
They retain key benefits of public cloud — such as elasticity, DevOps readiness and service-based pricing — but shift the operational model closer to end users and the edge.
In essence, this type of infrastructure is:
- Distributed by design: Infrastructure is deployed in thousands of micro data centers or regional hubs, rather than a few hyperscale zones.
- Sovereign and secure: Architected to meet data residency and compliance needs, especially important in Europe, Asia and government sectors.
- Application-specific: Optimized for high-performance computing, AI inference, 5G core functions and other latency-sensitive use cases.
Who’s building the neocloud?
A growing roster of technology companies and telecom operators are bringing neocloud infrastructure to market. Notable examples include:
- Nvidia: Powers sovereign AI clouds with its Blackwell platform, in partnership with telcos and governments.
- CoreWeave: Its infrastructure is purpose-built for AI, featuring high-density clusters of powerful Nvidia GPUs
- Lambda: Focuses on AI-specific cloud services with high-performance GPUs and bare metal, catering to enterprises seeking sovereign workloads.
- Scaleway: French cloud provider offering sovereign AI infrastructure for public sector and startups in Europe
Meanwhile, telecom-led neocloud initiatives include:
- Deutsche Telekom’s strategy involves a recently announced range of cloud solutions, including private, public, hybrid and multi-cloud options, collectively known as “T Cloud.”
- Telefónica’s neocloud strategy involves adopting a cloud-first approach, prioritizing agility and automation by utilizing hyperscale cloud providers. The telco is migrating critical IT systems, including billing and customer relationship management (CRM), to the public cloud, aiming for a “zero on-prem” environment.
These efforts represent a shift from centralized hyperscale dominance to a multi-cloud, multi-partner model favoring flexibility and proximity.
Why it matters for telecom
Key telecom opportunities for neocloud services include:
- Cloud-native 5G networks: Running core network functions in containerized environments across public, private and edge cloud layers.
- AI at the edge: Supporting rapid deployment of AI models for applications like network anomaly detection and personalized content delivery.
- Enterprise services: Enabling telcos to monetize neocloud services through B2B cloud, security and AI infrastructure-as-a-service offerings.
Telcos are uniquely positioned to both use and deliver neocloud services. Their dense infrastructure footprints make them natural hosts for neocloud workloads. By adopting neocloud strategies, telcos can meet rising AI and 5G demands, better serve enterprise customers and compete with traditional hyperscalers in the next wave of cloud evolution.
