The Big Tech telecoms convergence: dream or disaster?
2021 was a huge year for tech giants and telecoms with Google, Verizon and most recently Amazon Web Services (AWS) all announcing plans to enter the telecoms space. The convergence of Big Tech and telecoms is nothing new and each company has their own plans to disrupt the current landscape for the better. But is this disruption a dream or disaster for telcos?
Despite seeming similar, in many ways telecoms and Big Tech are polar opposites. While Big Tech tends to position itself at the forefront of innovation, paving the way for new upcoming capabilities, the telecoms industry tends to stick to its traditional but stable principles and ways of working. But could a unification be just what’s needed?
Big Tech’s entry into telecoms has a wealth of potential for service providers (SPs) and their customers. Big Tech has what many providers are lacking — the resources, financial resources and culture to accelerate the pace of innovation of the telecoms industry by applying a Big Tech approach product development and improvement. Big Tech brings its own way of innovating to the market, resulting in quicker, better products and services that smaller providers can tap into too.
This has a positive knock-on effect on consumers, who ultimately receive a better experience from their SP. Through their advance data management techniques, Big Tech has the potential to gather, organise and present more customer data from various sources. The more a SP knows about its customer, the greater the level of personalisation they can offer. A greater level of personalisation leads to more relevant marketing, great customer satisfaction and increased customer lifetime value (CLV) for the SP. A win-win for both the SP and the customer.
Personalisation is complicated to deliver, often requiring significant investment on new technology and involvement from stakeholders across the business. As a result, smaller and medium-sized providers often cannot offer personalisation services on par with Big Tech or Tier 1 SPs, leaving them uncompetitive and missing out entirely on new opportunities.
With the help of Mobilise’s HERO platform, small and medium-sized SPs can now deliver personalisation on par with industry leaders. This is because they have access to all customer data needed for such services through one central location which also houses an orchestration layer which acts as a single entry point between interconnected systems in order to capture the data required for hyperpersonalisation.
Despite the potential benefits that Big Tech could bring to the telecoms market, there’s also shared concerns from mobile operators all over the world. SPs’ ongoing dissatisfaction with Big Tech’s lack of investment into the physical telecommunications infrastructure has been documented publicly.
In December 2021, the Financial Times published an open letter from Europe’s 13 biggest SPs addressing tech giants to demand a greater contribution to network investment. Why is this so crucial?
Data from Sandvine’s Global Internet Phenomena Report revealed the top six tech firms are generating over 56 per cent of global network traffic. Their entire business model and profitability relies on the infrastructure funded by SPs, but despite their successes, they’re still not contributing investment that is commensurate with the gains they’ve reaped.
What’s more, telecoms’ frustration with Big Tech’s lack of infrastructural investment is without even considering the latest layer of the problem: Big Tech’s attempt to launch products and services that directly compete with SPs.
A market monopoly
Several tech giants are developing or already have developed telecoms business areas. There's concern from regulators, SPs and consumers that if Big Tech’s expansion continues, they could monopolise the entire technology sphere.
From a SP’s perspective, monopolisation has already begun. AWS and Microsoft have both acquired SAS-SM accreditation, required for the cloud deployment of one of telecoms’ latest development: eSIMs. eSIMs allow SPs to onboard subscribers remotely, virtually performing the traditional functions of a physical SIM card, directly provisioning a device over the internet.
While the intentions behind AWS and Microsoft’s acquisition of this accreditation are unclear now, it's possibly linked to the development of eSIMs for Internet of Things (IoT) use cases covering sectors like manufacturing and supply chains, where their use improves operational efficiency.
While Big Tech is free to do this, and has the technology and resources to develop products quickly, this approach of cherry picking certain areas of the telecoms network could negatively affect the industry.
The implications of Big Tech’s lack of infrastructural investment is concerning. Currently, SPs are entirely responsible for the physical infrastructure that keeps our modern digital societies connected. But as of yet, Big Tech’s shown no interest in supporting this activity.
If Big Tech continues to only cherry pick certain elements of telecoms it wishes to enter, it could jeopardise the revenue SPs can make from their products and services, reducing investment availability, which could then place the critical infrastructure under threat.
There’s buzz from regulators and consumers around the impact of Big Tech’s potentially anti-competitive app store practices. In the US, in February 2022 the Senate passed the Open App Markets Act, which seeks to remove the control of Apple and Google over their app stores, creating a more accessible and diverse market. Similarly, in the EU, in October 2022 the Digital Markets Act will be adopted, banning practices used by Big Tech to gatekeep information and encourage competition.
While these steps promote consumer choice and a fair market, regulators also must consider how Big Tech’s partial entry into telecoms could have a detrimental impact on infrastructure development. The juxtaposition we see is that Big Tech could provide much needed innovation to the telecoms industry, but the infrastructure required to support this innovation won't exist. Mobilise offers a suite of advisory services, including strategy and regulatory policy consultancy, to assist SPs and regulators in navigating these uncertain times and to see Big Tech as an opportunity rather than a threat.
The tech-telecom convergence will undoubtedly shake up the market. But more consideration needs to be taken to ensure infrastructure investment remains stable and the market remains competitive.