If the telcos are under threat for basic services, from multiple sources, can they hope to gain new revenue at the edge? Telcos are surely potential edge players, but not the only ones, as Light Reading suggests HERE. Will there be competition for edge computing deployment, will telcos end up losing out to other more aggressive players (who would be less aggressive than a telco anyway?) The edge market has always been a bit of an opportunity question mark, and complications in terms of who provides the services could make things better, or worse.
The biggest question in edge computing is just what “edge” means. There are three theoretical possibilities. First, it could mean the customer edge, meaning the point of service connection or demarcation. Second, it could mean the inside edge of the access connection, which would typically be a telco central office. Finally, it could mean the inside edge of the access network, the place where access meets metro/transport. Each of these areas has advantages and disadvantages in terms of things like latency, and each drives a different business model for providers of edge computing.
Customer-edge technology favors a customer-purchased platform, though in theory a third party could provide a box for the customer edge, what used to be called “CLE” or customer-located equipment. The customer edge offers the lowest latency possible, but the poorest economy of scale, and since so far its ownership doesn’t seem up for grabs, the players most interested in it are the public cloud providers, who’d like to see cloud middleware pushed onto the customer edge to create a bond with the provider’s cloud solution.
Access edge is largely a space owned by telcos because they’re the most common access provider, but cable companies and independent broadband companies would also have pride of place in this zone. Because messages generated by users or “things” in IoT need travel only to the other end of the access connection, latency is as low as it can be without moving back to customer-edge solutions. There’s typically telco/cableco real estate available at the access edge, so you could site computing there, and because multiple customers are served at the access edge, you could justify a resource pool with better economy of scale than pure customer-edge deployment could achieve. If a deal with the owner of the access edge could be struck, third parties could hope to deploy there.
The interconnect edge, the inside of the access network, is the last edge and the one that creates the largest number of potential competitors. Content delivery networks (CDNs) have connections to the access network providers to facilitate high-speed delivery, and players like Equinix have data centers that connect to this spot, so there are hosting resources available for those who want to get into the edge game at this point. Since many interconnect edges share access to multiple local access networks, you can potentially reach a broader community of users with something hosted here, and so economies of scale are higher yet.
The biggest threat to telco’s natural edge position is still the cloud providers, for two reasons. First, they have successfully used the telco cloud-phobia as a lever to engage operators in edge partnerships. In exchange for cloud know-how (which the cloud providers likely figure won’t make the telcos into cloud competitors in any case), the cloud providers get access to telco edge locations to site 5G (usually Open RAN) hosting. Second, the cloud providers have been turning user edge hosting into an extension of the cloud.
I’ve blogged before about the impact of operator partnerships with cloud providers, and the fact that these risked the operators never getting around to building out their own facilities. If 5G applications at the edge do develop, the operators would then have no facilities available to offer them, or would have to pay a percentage to cloud providers through the partnership agreements. That could reduce the revenue benefits of higher-level services to the operators, and that in turn could cut off what is likely the most credible new revenue resource available to improve profit per bit.
The issue of the “creeping cloud”, as one enterprise CIO described it to me, is more insidious. The fact is that in applications where latency is critical, such as closed control-loop IoT process management, the best place to host an edge process isn’t at the service provider’s edge, but on the premises. Public cloud providers have accepted that, and their own edge strategies have long included offering tools that, when installed by an enterprise on their own edge, make it effectively an extension of the cloud.
The principal “insidious” aspect of this is obvious, because the tool that extends the cloud to the edge tends to tie edge development, and the user overall, to the cloud provider. It’s also valuable to the user because it creates a uniform edge/cloud platform with the best possible edge latency. If it were to take hold, it could have a major impact on edge computing as a service, favoring instead private local edge deployments.
Equally insidious is the impact of the approach on the way telcos would have to address edge computing. They have no cloud service to extend to the premises, and so they would have to either promote the user into creating an edge partnership with the telco edge, which means defining something specific in terms of services, or promote the telco edge in a service mission that a local edge isn’t particularly good for.
I think you could make a case for the notion of a tiered edge strategy, with a local (on premises) edge and a linked deeper provider edge, but it’s a case that remains to be made. Would the telcos, notorious followers and play-it-safers, be the logical players to make such a case? I think we all know the answer to that one.
The problem for the telcos is that the other option takes them in the same direction. If you want to define specific edge partnership services, you have to start from scratch because no such service relationships have been established. What would a “deep” versus “shallow” edge look like, how would each work in terms of capabilities and interfaces, and how would they cooperate? These are good questions that have to be answered, but again is it likely that the telcos could be the ones to come up with the answer?
I think that this is an indicator of another battlefield in a war we don’t often acknowledge, which is the one between vendor and cloud provider. If users consume services they don’t consume platforms. Edge computing vendors, for example, would have to sell to a different customer with a different price point and expectations if edge computing were realized totally in the cloud versus in a combination of telco and premises. Those vendors have a strong vested interest in pushing an edge strategy that promotes their own interest, and so I think they’re the ones who will have to push the edge strategy forward for telcos.
Ah, but which vendors? The traditional network vendors like Cisco, Ericsson, Juniper, and Nokia are all network vendors not compute vendors, though Cisco does offer compute products. The platform vendors like Dell, IBM/Red Hat, HPE, and VMware would be the ones best positioned to define an edge approach for the telcos. All these organizations have a telco group, and most even have specific telco cloud and edge strategies, but they’re not thinking of how to sell through their actual buyer to the downstream, ultimate, actual buyer who has to drive the whole process. In this case, that’s the consumer of edge computing.
Providing tools that would facilitate the creation of edge services to someone who doesn’t know what they should build with them isn’t helpful. That’s what the platform vendors do with their telco strategies today, and it’s not going to be successful. The key lesson here is that a win by public cloud providers, in any compute area, is less of a win for the platform vendors because public cloud providers are really platform competitors themselves. Sure, they’ll do a deal here and there to host a platform, but they know that’s just a tactical concession. In the long term, they want to be the platform, particularly at the edge.
If you’re a platform vendor, this is what you need to be looking at. Your program has to reflect the strategy that, if implemented by your buyer, maximizes your own sales. For the telco world, that means that you’ll need to come up with the strategy as well as its implementation, and the sooner you face that truth, the less at-risk your telco strategy will be.