The big cloud players have been deploying edge computing for years. AWS, Microsoft Azure, Netflix, and others have been migrating toward regional colocation data centers, with several sites in each major country. This approach has allowed them to save money on long-distance transport of data and spread their computing load across multiple locations. Hey, the giant “hyperscale” data centers were getting ridiculous anyway, at a few million square feet of space and hundreds of thousands of servers; how many eggs should they put in one basket?
Today, I would argue that more than half of the wired internet uses “edge computing,” since regionally localized data centers and CDNs handle more than half of web traffic. But AWS, Google, and Microsoft Azure can’t extend the web for low latency by themselves, because all kinds of networks have more centralized core networks. So data needs to flow 500 miles to a core network first, then branch out to a regional data center.
Where Amazon considers the “edge” to be hundreds of miles from the user, the mobile market sees it differently. In the mobile market, network hardware is positioned within 1-2 km of most users. Deploying meaningful computing power would be a crippling expense—so Mobile Edge Computing (Multi-access Edge Computing) is still in its infancy. The mobile operators have been exploring ways to build their own cloud environment and hoping to set up new “walled gardens” where applications run on their infrastructure. Sound familiar?
Today, the edge is not a well-defined place.
- Enterprises see the edge on premises, or even on the client device.
- Mobile operators see the edge somewhere between the tower and the CO.
- REITs and “micro data center” supporters are trying to push the edge out toward the tower sites.
- Web-scale players see the edge as a regional concept today.
The opportunity lies in a difference of perspective. Because each company sees the “edge” in a different place, and each brings different assets to the party, any partnership that marries the two views will leap ahead of the rest of the market.
The web-scale guys will almost certainly control most of the applications. But they can’t address the low-latency applications without a network that brings its core out to each city. So the web guys are stuck with their regional centers, waiting for the networks to improve.
On the other hand, mobile operators control access to customers, as well as spectrum and local real estate assets. They can’t get the developers to support them adequately. So they will be stuck with a low-latency network and no customers if they try to fly solo.
Some operators (notably AT&T) are in position to use their local real estate assets as a cache for interesting content, low-latency gaming, and AR. If their content is compelling enough, they could benefit from their own edge cloud. However, most operators don’t have exclusive content or any other compelling reason to create their own cloud, and they will be better served by hosting AWS or Azure in their edge data centers.
The mobile operators can resolve the conflict by hosting the cloud guys in their local data centers, and by supporting enterprises with on-premises gear that includes the core network and easy-to-use edge computing platforms. The first operator to do this in each country will be in the game. The second and third operators in each country could be left out of big opportunities.
How big are the opportunities? Glad you asked. Mobile Experts recently forecast a rapid rise in revenue for three main apps: gaming, automotive HD maps, and industrial analytics. Industrial Augmented Reality and Robotics also hold big potential but may drift away from the mobile operators if they act slowly and private LTE/5G systems take hold instead. Our breakdown by level of latency is very revealing and shows that the best strategy for operators is to invest in central office and other local micro data center sites as a platform to host multiple cloud players. This way, the operators can keep their investment low and put the burden of heavy computing investment on the big web players.
Here’s the point: The operators should not waste three years trying to create their own clouds. They should use the next three years to partner with major cloud players instead, creating a low-latency cloud that will benefit all parties.
Joe Madden is principal analyst at Mobile Experts, a network of market and technology experts that analyze wireless markets. The team provides detailed research on small cell, base station, carrier Wi-Fi, and IoT markets. Madden currently focuses on trends in 5G, IoT, and enterprise markets for wireless infrastructure. Over 26 years in mobile communications, he accurately predicted the rise of digital predistortion, remote radio heads, small cells, and a mobile IT market. He validates his ideas with mobile and cable operators, as well as semiconductor suppliers, to find the match between business models and technology. Madden holds a physics degree from UCLA. Despite learning about economics at Stanford, he still obeys the laws of physics.
"Industry Voices" are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceWireless staff. They do not represent the opinions of FierceWireless.