The relationship between Cloud Providers such as Amazon Web Services (AWS), Microsoft Azure and Google, and telecom providers is debated due to its complex, competitive, yet collaborative nature. Particularly, in the era of digital transformation involving 5G and edge computing, there are many players competing for B2B enterprise opportunities. This article will explore the reasons behind their ‘frenemy’ relationship and will summarise the latest three strategic partnerships between a telecom and a cloud provider.
In June 2021, Google announced its partnership with Telecom Italia SpA (TIM) which aims to bring cloud services closer to customers. It is reported that the offering will include cloud-computing for time-sensitive applications such as robotics, which require ultra-low latency and signals over a very short distance. Google has started developing and testing applications with Telecom Italia SpA, which it eventually plans to sell to other enterprises (Bloomberg, 2021)
This news showcases another strategic partnership between Cloud and Telecom in edge computing. Cloud and Telecom providers already have an existing relationship: telecoms provide connectivity to and from data centres owned by cloud providers. Telecoms also hire cloud providers to run some of their own work streams in the public cloud.
Edge computing poses a collaborative-competitive dimension to the Cloud-Telco relationship. On the one hand, the
collaboration is driven by the fact that 5G connectivity and edge computing are two inextricably linked technologies. 5G networks migrate computer processing (typically hosted in the cloud) closer to the edge, where 5G increases the speed and edge computing reduces the latency, as it brings computing and data processing capabilities closer to the end user.
For an in-depth explanation of Edge Computing, I recommend this article 'Edge Computing in 5G’ by my colleague Kye Grundy.
On the other hand, the
competition derives from edge computing’s opportunity for telecoms to leverage their 5G competencies and resources to move up the value chain. They aim to expand their offering beyond 5G networks and connectivity, and enter the vertical market through applications and end-to-end use cases for enterprise customers (GSMA Intelligence, 2020)
The CEO of Google Cloud, Thomas Kurian, has previously commented on this complex relation and has reassured that Google “does not have to be a competitor to a communications service provider” (Bloomberg, 2021).
From the perspective of Cloud providers, partnerships with telcos are considered a growth opportunity as Cloud providers seek to tap into billions of customer data retained by Telcos (Financial Times, 2021). Recent and notable Cloud-Telecom partnerships include:
Vodafone and Google Cloud have signed a six year partnership to develop a cloud-based data services platform to sell to other companies (Financial Times, 2021). The platform called “Nucleus” will be capable of “processing around 50 terabytes of data per day, equivalent to 25,000 hours of HD film,” and will enable Vodafone to “more quickly offer its customers new, personalized products and services across multiple markets.” (Vodafone, 2021)
The U.S based telecoms network DISH agreed to construct the world’s first standalone, cloud-based 5G Open Radio Access Network (O-RAN) on Amazon’s AWS, seeking to “achieve agile and cost-effective operations while seeking to redefine the practical applications of 5G.” (Amazon, 2021)
This article discussed the interdependence and competition between cloud and telecom providers in the era of 5G, cloud and edge computing, and provided examples of partnerships between the two sides. In the three strategic partnerships mentioned, the parties will work together on go-to-market initiatives, ranging from data-driven analysis to new applications of 5G, targeting other enterprises in the vertical market space. This suggests that the current trend of collaboration is key to mutually advancing both player’s enterprise goals.
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