Some predictions have a ring of truth, based in part on history. One such prediction is that the telecom service provider business could be taken over by hyperscale cloud computing suppliers.
“I really do believe the hyperscalers are going to become the new telecom providers going forward,” says John Baker, Mavenir SVP.
“Apart from the physical radio that goes on a tower, everything we’re doing now follows the data center model, and these guys know how to manage data centers, software, and applications,” Baker said. “If you look at open RAN essentially as being a collection of applications that run on a server, then it really is falling into their camp.”
One might argue that view is a bit of technological centrism. We sometimes believe the “best technology” always wins." it does not. Sometimes the winner has the better ecosystem. Sometimes the best technology does not offer the highest value.
Obviously, there are many consumer acceptance issues that shape adoption as well. Brand preferences matter, in that regard. So does customer experience and the complexity of buyer behavior.
Still, the arenas where hyperscalers and app providers compete has grown over the past couple of decades. The number of roles in the ecosystem where app providers are competing with connectivity providers has grown. Facebook provides its own satellite access services in Africa.
For example, Google operates one of the world’s biggest collections of undersea networks, sells fiber to the home services, fixed wireless access services, balloon-based internet access and mobile phone service.
Facebook, through the Telecom Infra Project, shapes the development of new connectivity platforms and network elements. Though Apple is the biggest supplier of consumer devices, Amazon and Google both have significant roles in tablet or phone markets, or both. And all of those firms are leading providers of smart speaker systems.
The point is that boundaries between industry segments now are more porous than they used to be. That is the logic behind speculating whether one or more hyperscalers might eventually compete more extensively with connectivity providers.
While one might disagree with the extent of competition, we can note that competition in any established market generally begins at the revenue edges and gradually works toward the core revenue base.
MCI initially competed with AT&T only on a few long haul transport routes, but gradually became a full rival to AT&T in every product segment related to long distance services: wholesale and retail; voice and data.
Skype originally only was a substitute for community PC-to-PC calling. It gradually became a full substitute for calling between phones. Streaming services originally targeted only non-real-time pre-recorded content. Increasingly, some streaming services are adding live sports and other real-time content.
Streaming services once offered a menu of movies and older TV series. Now streaming services create original programming, offer first-run movies and increasingly could become a supplier of first-run release content as well.
Cable TV began life as an importer of distant TV signals. It eventually became a full-fledged supplier of new networks and original programming far beyond traditional broadcast TV.
Google remains a relatively niche supplier of internet access and mobile phone service. But that is consistent with the traditional attack trajectory, is it not?
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