Google to offer broadband in Europe, predicts CCS Insight

Every year, analysts at CCS Insight take their crystal ball out of the cupboard to come up with a fresh set of predictions. The latest edition covers everything from smart power grids to mobile devices and open RAN.

When it comes to European operators, the analyst firm identifies two big names that may in future try to compete with telcos on their own turf – Cellnex and Google.

Cellnex is the company to which a lot of European telcos have sold their tower infrastructure, including Three UK and SFR in France. CCS proposes a scenario in which the company, under the leadership of a newly appointed CEO, would add its own network equipment to at least 1,000 towers in Europe by 2026. As a result, it could broaden its services.

This could play out in several different ways. The company might choose to partner with operators, allowing them to save money on network rollouts.

On the other hand, as CCS Insight's director of consumer and connectivity, Kester Mann, told Light Reading in an interview, Cellnex could be more disruptive than that. "I sense a bit of an undertone of uneasiness and skepticism about what Cellnex's long-term aspirations are,” he said, noting that it could become a competitor against telcos in the long term. 

Big Tech fears

Asked about which course of action – partnering with telcos or competing against them – might be more advantageous for Cellnex, Mann points out the difficulties involved in entering the market.

He cites the high upfront costs involved, as well as regulatory hurdles. Equally, all is not rosy at Cellnex, which amassed a considerable amount of debt during its multi-billion-euro shopping spree.

It also posits that Google may launch a broadband service in a European country by 2026. To bolster the sales of its smart home and/or TV products, it may decide to bundle them with cheap broadband services.

Mann says that the prediction focuses on Google because it is already involved in the broadband market in the US, where it is building its own infrastructure. In Europe, it would more likely partner with an established wholesale provider. 

Even if this scenario plays out, it would start off as a relatively small-scale affair, he thinks. The move "could potentially be quite disruptive, but doesn't necessarily need to be so," Mann says. "I'm sure that in Europe it would send shockwaves, potentially, through the operator community." 

It is worth noting, however, that there are no concrete signs yet that Google is plotting such a move.

Mann also points out that, much like Cellnex, Google would have to navigate some of the challenges presented by the telecom industry, such as strict regulation and poor returns. In addition, the company already has established partnerships with operators, which it would risk jeopardizing if it decided to compete against them directly, Mann says. 

Balancing act

That same balancing act is also present on the telco side. "We see operators feeling a little bit under pressure from these big hyperscalers and there is that tricky balance between competing with them and cooperating with them," Mann says.

This concern is part of a broader malaise that has taken hold at many European operators. At this year's MWC, Orange's CEO, Christel Heydemann, went as far as to question whether there would still be a role for telcos to play in five to ten years' time.

One specific concern is that hyperscalers might decide to act as MVNOs, although this has not happened in Europe so far. It has, for example, been raised in connection with the growing importance of eSIMS, which continue to gather momentum.

By 2029, CCS Insight predicts that all new cellular connections in one or more leading telecom markets will be made via eSIM. This is based on Apple's removal of the SIM tray from US iPhones last year, which may prompt Samsung to speed up its own eSIM strategy. 

The connectivity trump card

Asked what telcos could do if some of the fears about hyperscalers do materialize, Mann notes that the operators' trump card is connectivity, be it mobile, broadband or otherwise. "We're seeing operators double down on that recently," he says, adding that many have moved away from areas like sport and content, or, in the case of Orange, banking.

At the same time, there are other business streams where operators can differentiate themselves, including gaming, security or smart homes in the consumer sector, he says. In the enterprise sector, which offers the greatest opportunity, areas like private networks, network slicing and smart cities play into the strengths of 5G standalone (SA).

CCS Insight predicts that more than 45,000 private networks will emerge by 2027. As the rollout of network slicing enables more hybrid networks to be deployed. However, network slice connections will outgrow dedicated private networks by 2030, it says.

The company also predicts that communications-as-a-service platforms will become a driver of growth for network slicing by 2026. Slicing will improve the quality of experience, helping differentiate platform providers' portfolios, according to the analyst firm.

While 5G SA will likely open new opportunities, Mann also notes that one of the industry's biggest challenges is articulating the benefits to verticals and other sectors and convincing them to invest.