Why the future of telecoms lies at The Edge
Thu 2 Jul 2020 | Jon Abbott
Vertiv’s Jon Abbott on how telcos will seize the edge opportunity
Edge infrastructure is critical to secure the future of telecoms. This is an industry in flux. Revenues are flattening as consumers demand more data at a static cost.
At the same time, OTT players such as Facebook and Netflix have created innovative, consumer-friendly services using existing telecom infrastructure. Edge presents an opportunity for the telco industry to carve out a new role for itself; one that it is best placed to own.
Telcos are in a strong position to capitalise on the edge. Unlike the existing data centre giants, they boast an extensive real estate footprint ripe for conversion.
Deploying an edge platform on existing real estate has both operational and cost benefits. Their locations are positioned far closer to the end-user than the cloud and hyperscale players, giving them a commanding position for offering new services.
It is no surprise that many key telecom operators have already well-evolved edge strategies in place, according to research from Omdia. For example, CenturyLink announced in August 2019 that it had more than 100 locations ready to be utilised for edge compute services. It is planning to invest several hundred million dollars in this new program.
This means that there are huge opportunities for telecoms in edge infrastructure and the market growth should open up new areas of competition. So much so, that 36 percent of respondents in Omdia’s research believed network operators will be most important in the creation of new revenue services from the edge.
Seizing the opportunity
The foundation for monetising 5G is tens of thousands of points of presence close to the end-user; this means more edge infrastructure. Telcos are fortunate to already have a considerable real estate register. For example, in the US, AT&T is set to change over 4,000 existing telephone exchanges into micro data centres.
To act on these revenue opportunities, operators will most likely partner with cloud providers as they have the tools that the developers are already familiar with. Combine these tools with the existing subscriber base of telcos, and every party wins.
In a recent report from Vertiv, we identified the four kinds of revenue opportunity for edge infrastructure. The biggest revenue opportunity is using 5G to deliver low-latency data for human consumption, be this in retail technology or AR.
The inability to attend live events may also increase the adoption of virtual reality (VR) to amplify user experience. For example, the NBA first adopted VR technology for game broadcasts in the 2016-2017 season and has notably expanded its offering as a way to grow its international fanbase by replicating the live experience.
It will take 5G and its ability to leverage more spectral bands for a truly high-quality networked VR experience, and there is a reason to believe users are willing to pay for this service.
Other revenue opportunities for edge infrastructure include:
- Using 5G to deliver low-latency data for machine consumption, in particular through the likes of smart security and smart grids
- Using 5G to support data-intensive edge use cases. Smart cities are a good example of this. To get an idea of the volume of data that could be generated in a smart city, consider Santander, Spain, which serves as a smart city testbed. The city has deployed more than 12,000 sensors to support traffic intensity, irrigation, and environmental monitoring as well as event reporting. The variety of sensors within the city make over 300,000 observations daily just to support these functions. Moving beyond monitoring to proactive management will require faster transmission of even more data
- Using 5G to support life-critical edge use cases, including digital health, smart transportation and logistics, autonomous vehicles and drones
The Future of CDNs and Aggregation points
In an application such as a gaming service, users will no longer rely on connecting directly to the core data centre processing the game, which brings higher latency the further away from the data centre they are. Instead, by connecting locally to the edge network, all users will experience the same, ultra-low level of latency.
Architecturally, edge networks are typically simpler in their infrastructure, and provide more resiliency, than CDNs. What this means for businesses is that they will have more time to focus on their customers rather than their infrastructure.
A rise in edge networks alone will not lead to a decline of aggregation points, such as central offices. However, the rise of distributed working due to the current pandemic could lead to just that. At Vertiv, we are beginning to operate, maintain and provide support to data centre managers more remotely, and it looks like a trend that will continue as businesses adapt plans to protect employees in the future.
Infrastructure at the edge
Prefabricated modular infrastructure (PFM) at the edge requires the same equipment of a traditional data centre but on a much smaller scale: an uninterruptible power supply (UPS), a thermal management system, power distribution units (PDU), a solid rack infrastructure, and a serial console with integrated remote monitoring.
The scale and speed of growth at the edge is demanding efficient approaches to retrofitting existing edge sites for new edge applications, as well as deploying new edge infrastructure.
The market for edge node equipment such as micro and PFM data centres is already far outgrowing other sectors within the cloud data centre market.
For example, The Omdia report specifically addresses the role PFM data centres will likely play in helping telecoms operators deliver future edge infrastructure, with the PFM market forecast to grow from $1.2 billion in 2018 to $4.3 billion in 2023.
This is reflective of the growing enthusiasm for the edge. However, given the size and repeatability of the market, some degree of standardisation will be necessary.
Road to success
For long-term success, telcos need to consider how edge sites will be used and adapted as 5G is rolled out.
Hardware needs to be able to scale in terms of processing, memory, and storage. It must also be able to withstand a range of environmental conditions. It is also important to bear in mind that virtualized core network components and associated services might also need to be hosted later on the same platforms.
In terms of new edge services solutions, providers will need to establish their role in the value chain by determining the right business model and partners and where new revenues will come from.
As 5G will consume more energy than previous networks, strategies to drive energy efficiency are critical for managing costs. Across the board, capital will be cautiously invested because, at this stage, there is no indication about the final use cases of 5G. But I do believe there is enough potential now for serious planning and deployment to start. Operational efficiency of the site is key to making the business case fly.
- Jon Abbott is Technologies Director, Global Telecom Strategic Clients EMEA, at Vertiv