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In late 2022, TecFutures undertook a global survey into drivers, challenges and opportunities for IoT Communications Service Providers. We looked at the perceived threat from hyperscalers and found that overall, just 14% of IoT CSPs ranked it in the top three challenges they are facing. The threat was seen as greatest by global operators.

For the majority of IoT CSPs interviewed, hyperscalers are not a threat. But for those global CSPs who do see them as an issue, it is apparent that:

  • Telcos have to invest continually in new networks particularly for potential opportunities offered by 5G and IoT but ROI is no longer guaranteed

  • These new services such as 5G and fibre to the home are data-intensive services

  • The value is shifting from the networks to the services running over these networks and that makes for attractive revenue opportunities to ecosystem players (hence rising competitive pressure)

  • A cloud-based architecture can support and enable new revenue streams from expanded service offerings, and Hyperscale providers operate to this model

  • There is a rapid growth of cloud providers and a wide range of cloud-based services and applications being developed and launched that leverage the next generation of mobile network technologies

However, the situation is not dire as it first appears as hyperscalers and telcos share similar goals and are already working together on key areas including 5G IoT and mission-critical 5G.

For the next generation of cloud, these services need a much tighter integration with telecom networks. 5G networks and offerings are proliferating across the globe and new in-building services – such as private networks – are driving the need to bring the cloud platforms closer to the mobile network and embed them in the network. This approach requires partnering to enable connectivity between these cloud platforms and the mobile networks.

Furthermore, telcos have a large capex which will be a crucial advantage in the future. Network investment is not of particular interest to hyperscalers as, because the EU is heavily regulated, it is not possible for a third party to deploy a network. This amounts to a very good opportunity in the future in partnership with hyperscalers.

For CSPs who are concerned about rising competitive pressure from hyperscalers, collaboration is the key to driving value and revenue generation on both sides

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