Webscales will ultimately become more like competitors than partners to operators to capitalize on 5G-era opportunities

Webscales are not the telco’s friend

The Big Nine have various initiatives underway that will disrupt aspects of the telecom business model and pose a direct threat to operators’ existing connectivity businesses and their ability to capitalize on new value created from 5G.

Though webscales are posturing like they want to partner with telcos on new opportunities, they actually need to disrupt telcos’ core business (i.e., providing connectivity) to realize their digital ecosystem goals.

Webscales ultimately need to become more like competitors, rather than partners, of telcos because they need access to new types of data, and realizing their digital lifestyle goals will require them to take control over the network rather than be beholden to telcos. Both of these needs are satisfied by owning greater portions of the network.

Webscales already own significant portions of long-haul transport, cloud data centers, SD-WAN and communications platforms globally, and TBR believes the next step will be for webscales to take over the mobile core and the last mile of the network. This is already occurring in the enterprise network domain, but TBR expects webscales will increasingly delve into the consumer domain as spectrum is increasingly democratized and key technological advancements make it much easier, faster and cheaper to build and operate greenfield networks.

The webscale companies (hyperscalers or internet content providers) covered in TBR’s Webscale ICT Market Landscape invest in ICT and related digital infrastructure to drive their core businesses, which can include, but are not limited to, advertising, cloud services, e-commerce, financial services and media. In some cases, webscale companies will also invest in and provide telecommunications services, such as broadband access, to accelerate their digital businesses. This report focuses on the nine webscales (the Big Nine — Alibaba, Alphabet, Amazon, Apple, Baidu, Facebook, Microsoft, Rakuten, Tencent) that TBR believes will own the largest, most comprehensive end-to-end digital ecosystems in the digital era. Additionally, the report includes key findings, market size, customer adoption, operator positioning and strategies, geographic adoption, vendor positioning and strategies, and acquisition and alliance strategies and opportunities.