As per GSA, by the end of July 2020, 392 operators in 126 countries or territories had announced investments in 5G.
Edge plays a crucial role in providing on-demand resources to process 5G use cases closer to end devices. The edge isn’t new – content delivery networks (CDNs) have been used over the past few years to cache media content and save transit costs for operators. But now, with 5G, new use cases such as autonomous vehicles or data privacy for private industrial networks have brought the edge to the forefront of CXO's minds.
There is a big question to answer: who will drive this ecosystem and the applications that reside there? Hyperscalers are looking for dominance in this arena, relying on their strengths of selling enterprise applications and new age technology capabilities like cloud and AI. Telcos own the infrastructure and last mile connectivity space, have vast experience in operations and are further investing in capabilities such as network as a service and zero touch operations to enhance their operational efficiencies.
Both players are trying to drive an ecosystem of applications in an all-encompassing marketplace. By owning the ecosystem – the infrastructure, IT systems, platforms, cloud and applications and services that sit on top – the hyperscalers, or telcos, will control the software that routes data from the edge to the central cloud while managing a wide variety of use cases across industries.
What are hyperscalers doing to create their space with edge?
Hyperscalers such as Amazon, Google and Microsoft are cash rich organisations, and are looking to reimagine the future of enterprises for further growth.
They have global reach, have invested heavily in automation and AI, own large enterprise sales teams and have the scale to realise industry leading asset and operational efficiencies. Acquisitions are a tool for these companies to get the best talent and capabilities to fill in the whitespaces and create end-to-end offerings.
Analysis from CB Insights calculates that Microsoft alone has bought 11 companies worth more than $1 billion each since its inception. To strengthen its clout in the edge and 5G space, it recently bought Affirmed Networks and Metaswitch, which helps them offer a deeper telco solution.
Telcos gearing up to go up the value chain
Telcos have done a lot with legacy technologies like 2G, 3G and 4G, but now they are facing the challenge of stagnated revenue.
They have battled tough government restrictions and investments on the use of spectrum, network equipment and the quality of services offered to subscribers. This has only made them better. We have all observed the great job done by telcos during the Covid-19 pandemic to provide connectivity to everyone to stay connected. On the down side, they are under severe pressure due to increasing costs and a revenue forecast that may remain flat over the next five years, growing just 1% year-on-year.
5G and edge is therefore their opportunity to drive new revenue and go beyond mere connectivity.
To do this, they must leverage existing assets and reskill staff across network build, operations and sales. Smaller telcos are more likely to join hands with the hyperscalers to reduce cost and leverage on their technology. Larger telcos, who have the financial and human capital, are building multi-cloud capabilities and investing in technology for network-as-a-service to address a plethora of 5G use cases and to reduce the cost of operations through automation.
Recent initiatives like the 5G Future Forum and GSMA have been created by the leaders in this segment to explore new ways to drive the edge ecosystem, with thought given to how hyperscalers can play a part in this new business model.
Working together to provide value to customers
Amazon, among other hyperscalers, is using telcos to drive its own cloud/edge business. However, while ventures such as Amazon Wavelength (formed in partnership with Verizon) offer ultra-low latency, secure applications, enterprises and customers may not want to go all in on one hyperscaler’s services. Many would prefer a diverse range of choices so that they can compare prices and choose packages tailored to their specific needs.
This is where the leading telcos could use their years of connectivity experience to offer a well-orchestrated multi-cloud approach along with a telco-grade experience and a complete end-to-end use case ecosystem.
The race is on, but the best result for retail customers and enterprises is for telcos and hyperscalers to work collaboratively to drive an edge ecosystem that spawns wider growth across the digital market. Telcos should provide orchestration capabilities and offer flexibility of choice to enterprises, complemented by the capabilities offered by hyperscalers. In doing so both players will monetise the edge application ecosystem and drive global adoption of killer new applications at the edge.
