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A few short years ago, we were gearing up for another spectacular showdown the battle for the edge. Both from a mobile network operator (MNO) or wireline network operator standpoint, there was a sense that we in telecom had ceded the spoils of 3G, 4Gand wireline broadband networks to the cloud providers and the OTTs. In the telco consulting and analyst space, you'd be hard-pressed not to find PowerPoint decks replete with slides showing the ascent of cloud providers (and associated valuations and profit margins) compared with the generally tepid growth of key business indicators at communications service providers (CSPs) worldwide. The telecoms industry had lost the battle for the cloud, but with 5G rollouts in process, it was certainly not going to lose the battle for the edge.

The edge looked like a rich oasis telcos could go after. It was projected to be a significant portion of cloud computing in fiveyears. Gartner says that by 2025, 75% of enterprise-generated data will be processed at the edge. Whether you believe that number is closer to 30%, 50% or Gartner's 75%, it's still a tremendous opportunity.

Telecom operators who had previously failed in building successful public cloud offerings vowed not to mess up this time. They planned to build MEC (multi-access edge computing) platforms that would be the next generation of AWS, GCP, Azure. But now, fast forward a couple of years, instead of building out sizable MEC platforms at cell-towers, or at mobile switching centers or at regional edge data centers, most carriers are partnering with the hyperscale cloud providers.

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Cloud partnerships galore

AT&T and Microsoft Azure have partnered on Azure Carrier Edge Zones. Right behind AT&T, Azure has Rogers, Telefonica, Vodafone Business, SK Telecom, Telstra, Etisalat, and NTT Communications lined up on similar partnerships. And AT&T, back in July 2019, had announced that they would use Microsoft's cloud service for non-network workloads.

AT&T has also partnered with AWS on its Greengrass IoT platform in the past, and with Google on Google's Mobile Edge Cloud (GMEC) efforts, powered by Google Anthos, a next-gen orchestration system.

Meanwhile, Verizon has partnered with AWS on their AWS Wavelength edge cloud platform, opening up their 5G infrastructure to hosting AWS Wavelength at crucial locations on their network. Of course, Verizon has its own "edge" service in the form of its CDN for content hosting but soon to be upgraded to host applications.

Keeping your enemies close

There's plenty of movement across other CSPs worldwide in a similar vein. In AvidThink's conversations with numerous CSPs, the strategy appears to be about keeping your "frenemy" close. In addition, every telco aims to take a poly-cloud approach, hoping that by befriending multiple cloud providers, they can play one against another, negating the negotiating power of a single hyperscale cloud provider.

Furthermore, their thinking goes a little like this:

Indeed, the above all sound like valid reasons for CSPs to justify partnerships with all of the top cloud providers.

Beware the camel's nose

It certainly looks rosy and promising right now, with the chants of kumbaya filling the air. Hyperscalers are courting carriers for partnerships and permission to access carriers' networks without definitive business models. However, we at AvidThink suggest CSPs be cautious because:

Once CSPs let hyperscalers into their networks, the undo function will be quite expensive and perhaps impossible. It's worth considering second-tier cloud providers, or interexchange carriers and colocation providers as safer options for partnerships. Regardless, if there's value in the edge, CSPs need to quickly figure out where it is and secure it before they accidentally give it away by letting that pesky camel's nose into the tent.

Roy Chua is founder and principal atAvidThink,an independent research and advisory service formed in 2018 out of SDxCentral's research group. Prior to co-founding SDxCentral and running its research and product teams, Chua was a management consultant working with both Fortune 500 and startup technology companies on go-to-market and product consulting. As an early proponent of the software-defined infrastructure movement, Chua is a frequent speaker at technology events in the telco and cloud space and a regular contributor to major leading online publications. A graduate of UC Berkeley's electrical engineering and computer science program and MIT's Sloan School of Business, Chua has 20+ years of experience in telco and enterprise cloud computing, networking and security, including founding several Silicon Valley startups. He can be reached at[emailprotected]; follow him at@avidthinkand@wireroy

Industry Voices are opinion columns written by outside contributorsoften industry experts or analystswho are invited to the conversation by FierceTelecomstaff. They do not represent the opinions of FierceTelecom.

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Industry Voices Chua: CSPs, hyperscale clouds and edge - beware the camel's nose - FierceTelecom