Here’s how Google, Amazon, Facebook, Apple and Microsoft will focus on telecommunications
All the moves of Google, Amazon, Facebook, Apple and Microsoft in telecommunications, Le Monde's in-depth study
Google, Amazon, Facebook, Apple (Gafa) and Microsoft – writes Le Monde – are positioned in markets coveted by operators, when they do not compete with them in their core business
For those who have doubts about the willingness of the high-tech giants to play a role in the field of telecommunications, the example of the laboratory opened by Orange in Châtillon (Hauts-de-Seine) will be illuminating.
Here, the French incumbent allows companies to test new applications, whether it be piloting drones, analyzing video to detect fires, measuring quality in real time in factories or setting up a telemedicine service … All these new uses have been made possible from the 5G network and from edge computing, the technology that allows you to connect smartphones and objects in real time. Except that in order to offer these solutions, Orange had to rely on the solution of a partner, and not just any partner: Google.
This partnership indicates a basic trend: large digital players are gradually invading the telecommunications field. “So far the operators have not been" eaten "and have defended their territory. But they have also failed to establish themselves in the field of content and applications, and have fallen behind ”, analyzes Nicolas Colin, co-founder of The Family, a“ start-up incubator ”.
Above all, the arrival of 5G, edge computing and the Internet of Things could shuffle the cards a little more. “The operators will ally themselves with the technological players, but what will the value be? Will they be confined to the role of simple pieces? " Indeed, Google, Amazon, Facebook, Apple (Gafa) and Microsoft are taking positions in new markets coveted by telecommunications operators, and sometimes even in the core business of the latter.
MESSAGES, CALLS AND VIDEOS… OPERATORS UNDER PRESSURE
The development of instant messaging services such as iMessage (a subsidiary of Apple), WhatsApp and Messenger (Facebook) or WeChat has come at the expense of telecom operators. The fault lies in the sin of greed: for years, text messages have been charged around ten euro cents each, a much higher price than their cost. “It was a bit like telecommunication cocaine,” one analyst teases.
Where texting has not been integrated into affordable unlimited offers, the decline has been dramatic. In Spain, the number of SMS exchanged was divided by ten between 2008 and 2019, according to the local regulator. In France, it has declined by a third since 2016, according to the French regulatory authority for electronic communications, mail and print distribution (Arcep).
Operators are also facing competition from Skype (owned by Microsoft), Zoom and WhatsApp for voice and video calls to the public and businesses, which are changing the way people communicate.
The Covid-19 pandemic has accentuated the trend. “This is the market of the future. With 5G, we could see new communication services, for example, in virtual reality. Competition between telecom operators and tech giants will increase, ”predicts Wedbush Securities analyst Daniel Ives.
DIFFUSION OF 5G, GAFA ARE ESSENTIAL
The Gafa are becoming "indispensable resources" for telecommunications as 5G represents a technical "break", warns the National Association for Research and Technology (ANRT) in an April report. Networks are becoming “virtualized”: the functions performed by hardware devices are now managed by software.
The champions of the “cloud” (data hosting and online software services) have therefore increased the number of contracts with operators. The one signed in July 2020 between Orange and Google envisages, in addition to the Chatillon laboratory, the "creation of a data analysis and machine learning platform". The Californian giant is also associated with Telecom Italia, Telefonica and Vodafone, which is helping to "introduce new services", such as the ability to have faster speed instantly if needed.
Number two in the cloud, Microsoft has a contract with AT&T. AWS, a subsidiary of Amazon and market leader, is a partner of Verizon, Swisscom, Bell Canada and others. "We are starting to become the technical base for many operators around the world," said its CEO, Adam Selipsky, at the Mobile World Congress in Barcelona in June.
Its partner Dish, the fourth largest US mobile operator, even announced in April that it would build "the first 5G network built entirely on the cloud," using small physical servers built by Amazon and placed at the base of the antennas.
These agreements reveal that operators "do not have all the skills to distribute 5G," says computer scientist Guy Pujolle, a professor at the Sorbonne University (Paris). Yet they initially hoped to have full control over the networks and data passing through them, he recalls.
For Mr. Colin, it is possible to imagine that by offering their services to operators and businesses, "the digital giants will gradually grasp the margin".
CLOUD AND BUSINESS SERVICES, COMPETITION INCREASES
The move to 5G is expected to generate revenue in the enterprise services market, a key point of contracts between cloud giants and telecom operators.
The agreement between Orange and Google aims to “expand the Orange Business Services portfolio of offers”. This branch aimed at the professional market achieved a turnover of 7.46 billion euros in 2020 by selling fixed telephony, but also digital services similar to those of the technology giants.
“Telecommunications could eventually win by further penetrating the enterprise market, which has been conquered by cloud companies,” says Daniel Ives, although he warns that competition will be tough.
Others see these deals as a sign of weakness for traders. “Previously, telecommunications were able to sell a vision of change and digitization to large companies, with connectivity and services. Since 2010, the tech giants seem to be telling more compelling stories to these big groups, ”says an industry insider, adding that no operator is truly“ global ”like cloud leaders.
TELEVISION AND CONTENT, A MODEL AT RISK
Another front in this war of influence is television and entertainment. In the early 2000s, Jean-Marie Messier's Vivendi supported the idea that "pieces (editor's note: telecommunication operators)" should invest in "content". Other operators have tried, such as AT&T (Time Warner), Orange (Orange Sport, later OCS) or Altice (RMC Sport, Zive). With mixed results.
Today the new entrants come from the digital world: Netflix, Apple, Google and Amazon are invading everywhere, from series to movies, through music, online video and, from today, sport, with the Premier League on Prime Video, the service of the e-commerce leader.
Operators are also facing competition in television broadcasting. Currently, more than one in two French people watch the small screen through one of their TV boxes. This is a profitable service, integrated into nearly three-quarters of fixed internet packages in France, according to Arcep. So much so that even today, Netflix, Amazon and Disney + are negotiating with operators to have them present in the interface of these boxes.
But this model is under threat: Gafa is trying to become the new gateway to content. Connected televisions, but also Apple TV, Google's Chromecast or Amazon's Fire TV Stick (of which 100 million units have been sold) allow access to the applications of the series, but also to Arte, France Télévisions, etc. A quarter of Internet-connected televisions in France already have it.
SATELLITES, A NEW BRECCIA
In the longer term, high-tech players may have another access to the telecommunications sector: satellite constellations. These promise high speed internet connections around the world. Elon Musk's company Starlink launched an offer at the end of 2020 at $ 99 (€ 84.50) per month, not including the cost of the antenna. Amazon's "Kuiper" project is less advanced, but similar.
For the moment, the threat to operators seems limited: satellite communications currently represent less than 1% of data transport (ie $ 6 billion per year). And in the short term, Starlink and Kuiper are targeting people in poorly connected, white-covered areas. “But this market could play a considerable role in the future,” Pujolle believes.
Indeed, satellite actors risk invading the telecommunications field in the long run, as they are projected towards the cloud, energy companies or agriculture, etc. They are also looking at the future market for web connections on airplanes and ships. Finally, Kuiper would like to offer its services to operators as a "secondary link network" in some areas.
(Extract from the foreign press review of Epr Comunicazione)
This is a machine translation from Italian language of a post published on Start Magazine at the URL https://www.startmag.it/innovazione/ecco-come-i-gafa-puntano-sulle-tlc/ on Sun, 03 Oct 2021 14:02:56 +0000.