How can MNOs thrive in the cloud era?

In today’s rapidly evolving digital landscape, telecommunications companies face both pressing challenges and transformative opportunities. To stay competitive, they must transition from traditional infrastructure providers to profitable service providers. The dominance of hyperscalers such as AWS, Microsoft Azure, and Google Cloud demands that Telcos leverage their unique assets and carve out distinct roles in the cloud ecosystem. This article examines how Telcos, particularly in Germany, can reposition themselves as profitable players by harnessing their edge infrastructure and developing differentiated cloud offerings.

The cloud industry is now dominated by hyperscalers, who provide scalable, cost-efficient cloud infrastructure to enterprises globally. This has revolutionized how businesses access and utilize computing resources, but it has also introduced challenges & complexities for Mobile Network Operators (MNOs).

Hyperscalers such as AWS, Microsoft Azure, and Google Cloud dominate the market with their vast, scalable infrastructures, seamlessly delivering computing, storage, and data services globally. Their enterprise-ready solutions have become the benchmark for reliability and scalability across industries.

• Challenges & Opportunities for MNOs

• Increasing dependence on hyperscalers: MNOs are dependent on hyperscalers for hosting and managing their as well as their clients’ operations, reducing their control over critical infrastructure while increasing operational costs incurred to hyperscalers’ services.
• Local expertise advantage for MNOs: MNOs tend to have a far better understanding of local standards, legislation, and market sentiment compared to mostly US-based hyperscalers. This serves for an added value to the clients. Building this expertise is costly and time consuming for hyperscalers, an opportunity to exploit for MNOs.
• Strategic value of edge computing: Hyperscalers recognize the criticality of local edge-computing infrastructure to customers & applications. These infrastructures have been developed and are operated mainly by MNOs such as Telekom, Vodafone, Telefónica as well as in large European-wide collaboration programs. With its proximity to end users and low latency, edge computing is vital for industries such as IoT and autonomous vehicles. For hyperscalers, replicating this infrastructure at scale is prohibitively expensive, carving out an indispensable role for MNOs as partners as well as competitors.

• Open gateway collaboration
• Initiatives like Open Gateway and Open Access Point reflect the telco industry's shift away from old business models, highlighting the need for collaboration to reach new customers and customize services for existing ones. Open gateway models allow partnerships between hyperscalers, MNOs, and developers and are becoming more common to enable the digital economy. In sharing infrastructure such as computing resources and data storage, MNOs can create specialized services alongside hyperscalers’ global capabilities and yet again create a differentiated value add in the ecosystem.

• The next Frontier: going for the 6G edge advantage
• Even though monetizing the 5G / 5G SA networks is not yet completed, the industry moves towards 6G. There again, it intends to enable edge computing and de-liver low-latency connections. MNOs will further leverage their existing edge net-works to deliver real-time applications, such as autonomous driving and remote healthcare that hyperscalers cannot match. This positions MNOs to capture critical markets as demand for advanced connectivity grows.

The path to profitable growth for MNOs demands that existing assets be utilized & optimized and strategic collaborations be established in the ecosystem to deliver innovative services & solutions.

• Optimize infrastructure performance
• Expanding edge capabilities and automating network operations significantly reduce costs and free resources for new service opportunities. The example of Vodafone Germany’s integration of AWS Wavelength into its 5G network demonstrates that it enables real-time data processing for connected cars and digital twins while streamlining operations. Such quantum leaps are vital as 5G and 6G rely on faster, more efficient networks.
• Leverage partnerships
• Strategic alliances with hyperscalers can expand MNOs’ reach into new markets.
  Example: In partnering with AWS, an MNO can launch joint edge computing solutions that combine AWS’s scale with the MNO’s local network. Collaborations among MNOs themselves can also create region-specific offerings, enhancing competitiveness (e.g. Deutsche Telekom & Orange network sharing).
• Innovate with proprietary services
• In rolling out hybrid cloud solutions, MNOs can enrich their value beyond connectivity, while monetizing the core Data networks. In providing data analytics services combined with real time data availability & processing, MNOs can improve industries such as logistics, enable initiatives such as smart cities, offering actionable value creating insights that generate recurring revenues.