Marek’s Take: Hyperscalers are the likely winners in the edge

Marek's take

Edge computing is the latest catch-all phrase in the telecom industry – ask any company about their edge solution and they will undoubtably have one. But ask them to define the edge in layman terms and you may hear about a dozen different definitions. 

It’s very similar to the challenge the industry faced about a decade ago with the cloud. Every company had a cloud solution but it was never clear what that really meant – at least not in the beginning.

But edge computing promises to be big business, particularly as enterprises look to the edge for applications that leverage large amounts of data and depend upon it being processed in real-time such as video security, robotics, virtual and augmented reality (VR/AR) or image processing. On the consumer side, the use cases for the edge include cloud gaming, mobile broadcasting, autonomous vehicles, VR/AR and more.

According to GlobalData, edge computing products and services will be a $17.5 billion business globally in 2025. North America will make up a large portion of that; GlobalData estimates it will be a $6.85 billion business in 2025.  

Wireless operators are caught in the middle when it comes to the edge. They know that it is important to their customers and to their networks but delivering on that promise isn’t easy. That’s why it’s becoming increasingly apparent that the easiest way for mobile operators to play in the edge is if they partner with hyperscale companies.

Hyperscaler partnerships are happening
In fact, hyperscaler partnerships are already happening today. Verizon has edge partnerships with Amazon Web Services (AWS), Google Cloud Platform and Microsoft Azure. During the company’s Investor Day earlier this year, CEO Hans Vestberg said that the company will recognize revenue from its mobile edge compute (MEC) in two ways:  through its public model where it shares revenue with its partners and through its private MEC model where it owns the relationship with the customer and doesn’t share the revenue.  

Verizon has announced customers like UPS and Corning but is also trying to build an ecosystem with the 5G Future Forum, which it founded along with Rogers, Telstra, Vodafone, America Movil and KT. The goal of the group it to develop interoperability across the 5G edge so developers can create applications that will work consistently across operators around the globe and it has already introduced some specifications to help that effort.

 Although the 5G Future Forum bills itself as being open to all operators, other U.S. operators have so far steered clear of the group —which seems like it could hinder its progress.

AT&T also has a MEC offering and is partnered with cloud providers Microsoft, IBM and Google. T-Mobile so far hasn’t announced any partnerships with hyperscalers for the edge. The company instead touts its standalone 5G network as being able to deliver MEC and says it’s engaged with enterprises that want to use its network for MEC and private 5G deployments.

Fast and easy
Hyperscaler partnerships are occuring because many operators believe that it’s the fastest and easiest way to get MEC.  

A recent survey conducted by Heavy Reading found that 39% of service providers said they had already deployed edge computing and another 32% plan to deploy it in the next 12 months.

The study also found that service providers are very interested in partnering with hyperscalers, if they haven’t already, because they have dedicated edge products such as AWS’ Wavelength, Microsoft Azure’s Edge Zones and Google Cloud’s Anthos for Telecom.

The study said that 56% of operators said that they will partner with a hyperscaler because of the ease of deployment and 38% said because it will accelerate the time to market.  Only 11% of respondents said that they weren’t planning to partner with a hyperscaler.

Nevertheless, there are some operators that still view hyperscalers as competitors in the edge — an Analysys Mason study from 2020 found that operators in Europe consider hyperscalers a threat while in North America and Asia-Pacific operators consider them both potential partners and potential threats.

Interestingly, the Analysys Mason study also found that most operators are hoping to be more than just connectivity partners and provide either a platform-as-a-service or software-as-a-service.

Edge computing, like cloud computing, is gradually moving from an over-hyped concept into commercial reality thanks to some partnerships and early customer wins.  But the industry still has a long way to go to make edge services something that can clearly be monetized and deployed.