Could edge computing shift the balance of power from the big public cloud providers like Amazon Web Services to network operators and and help them address a $4 trillion market? How well do operators understand this and what are they doing about it? Sue Tabbitt investigates.

As the communications industry moves into virtualised infrastructure and value-added services, network operators and service providers must keep reviewing whether they are doing enough to maintain and grow their share of the action.

With momentum gathering around the Internet of Things (IoT), especially as 5G takes shape, conversations are turning increasingly to enhanced data requirements – not just speed of transmission, but enterprise-level service guarantees about performance consistency, latency, uptime and security. In this context operators are developing or reassessing their position on edge computing.

In telecoms, placing data processing at the edge of the network aims to reduce network congestion and ensure application performance by running software/processing tasks closer to the end user. Low latency is always cited for mission-critical applications, with automated cars as the favourite life-and-death example, but while gaming is not mission-critical, gamers are very intolerant of glitches in network performance, and collectively they represent a global, multi-billion-euro market that is growing rapidly.

Cost is an important aspect, too: is it economic or necessary to fire CCTV footage of a wall behind a building to a central cloud service for continuous analysis, when it could be processed closer to the point of need, especially as most of the data is likely to be discarded?

Charging for added value

It also makes sense that communications service providers (CSPs) should have a hand in addressing IoT traffic routing and data management. Certainly, as core network services have become commoditised, and/or have succumbed to software-based treatment, operators are being forced to reinvent themselves and IT-based services have become a logical extension of digital innovation.

Just as operators have long wanted income from the chargeable content and value-added services delivered across their infrastructure, so too are they keen to play a part in ensuring robust assurances around services’ performance, security and more – and to charge for that assurance.

“The transition for telcos is now more towards helping on the data side, to uphold the performance of critical applications,” said Kevin Hasley, who heads up performance benchmarking in telecoms at analyst firm RootMetrics by IHS Markit.

Whether customers of IoT services are farmers using data visualisation in managing plant crops, utility companies monitoring asset maintenance and service demand, or highways and other transport organisations striving to keep people and goods moving, they need to be able to count on a reliable data service.

At Swisscom, IoT-based edge opportunities are an extension of the operator’s broader emphasis on enterprise IT services. Today, half of the turnover from its enterprise business comes from such propositions, including systems integration and capabilities to develop data-based services at the edge, according to Julian Dömer, the operator’s Head of IoT.

“We have been shifting to IT services and the cloud for a decade, and the edge has been on our roadmap for a while,” he said.

“IoT requires a lot of IT integration capabilities,” he noted, emphasising the scope for a value-added service play. “Those providers offering ‘only’ connectivity will not profit from the higher margin parts of IoT business.”

Beyond traditional connectivity

“Telcos need to look beyond the traditional connectivity services market boundaries, seizing the opportunity to play key enabling roles in the broader IoT ecosystem,” agreed Gabriele Roberti, European Edge Computing Practice Lead at IDC. “Since they operate infrastructure close to the end devices, they are well-positioned to provide several enabling services, such as edge computing resources; connectivity of edge devices to cloud; data management services; data security; connectivity management; device management; and hosting facilities.

“These various services can be profit centres in their own right, as well as differentiators for the operator,” he stated, adding that customers are likely to pay for premium services, where operators can meet or exceed expectations for network reliability and service quality for critical application services that rely on low latency and high service uptime.

Edge computing services do not begin with IoT – nor with 5G – however, so this is not a new approach or market. This means operators need to be clear about what their precise role might be and how they might best align with partners to position themselves most strongly for specific opportunities – without trying to reinvent the wheel or invest in areas that will take them too far from their core business.

MobiledgeX – a common telco view

There are signs that operators have realised this. Pointing to specific developments across Europe, Roberti called out Deutsche Telekom’s MobiledgeX, which DT established last year to present a common telco view of edge computing to the software developer community, to make it easier for them to develop latency-critical applications.

Dean Bubley, Director of Disruptive Analysis, a consulting and ‘futurism’ firm, agreed it is unrealistic to imagine that 800 mobile operators will each develop and run their own edge capabilities. He sees enterprise customers buying into hybrid data scenarios for their IoT and other comms-reliant data needs. Here, the big public cloud players or ‘hyperscalers’ (the likes of Google, Amazon and Microsoft) are likely to provide an aggregated service that splits out applications activity across the optimum combination of major data centres and more local facilities or telecoms operators, through their own partnerships, he believes. In which case, operators need to ensure they are well positioned to take their share of the action – and profits – via the right industry tie-ups.

Bubley thinks scenarios such as DT’s MobiledgeX, Ericsson’s Edge Gravity and Kinetic Edge Alliance – which he refers to as ‘federated edge’ provision or ‘edge ecosystems’ – are the way forward. Here, operators band together with cloud providers, content delivery networks, device manufacturers and application developers to provide a complete offering to enterprise clients.

The power of ecosystems

This kind of set-up is attractive to IoT developers who will ultimately come up with the products that entice customers. It’s also appealing to enterprise clients, who don’t really care about who does what as long as they get the service they need at the right price point.

“The idea [of the federated model] is that it’s a coordination of lots of edge resources, all presented to developers as a unified platform,” Bubley explained.

Tower companies, property firms, independent edge providers might all be part of that federation, but the point is that participants each focus on what they’re good at with no need to overextend themselves.

Bubley warned, too, that the ‘edge’ means different things to different representatives in the industry. Edge data processing could actually happen in a grey box attached to a set of traffic lights or on a tiny chip implanted in a smart sensor. In which case the prospective role for the telecoms operator will be non-existent, unless they are part of a broader ecosystem specialising in traffic-based IoT or smart cities solutions, where operators may be welcomed for their investments in secure data transmissions and trusted enterprise relationships.

Device manufacturers and technology providers to the telecoms industry have also identified the need to play a proactive and innovative role within these expanding ecosystems. Take Nokia, which, in conjunction with Telia Finland and Intel, is using 5G to enable ‘industrial IoT at Nokia’s factory in Oulu. It is also working with DT on a 5G pilot at the Port of Hamburg; and with mobile operator Smart Communications and the Philippine Red Cross (PRC) to bring innovative technology such as LTE-connected drones and a portable network into areas struck by disasters.

Sandro Tavares, head of mobile networks marketing at Nokia, believes operators need to position themselves to take advantage of more of these ambitious projects. “Operators should evolve their business models and drive an evolution towards becoming a full provider of digital services to consumers and enterprises,” he said.

More to the edge than IoT

Indeed, given that the role of the ‘edge’ is much broader than for IoT alone, there could be numerous additional business opportunities once network operators have the right partnerships in place. Said IDC’s Roberti, “We see ‘edge’ as an opportunity for telcos that is not confined to IoT use cases such as connected vehicles and industrial automation scenarios. In general, every low- and very-low-latency digital use case will benefit from edge capabilities – from augmented and virtual reality applications and mobile gaming to remote surgery and content  delivery networks.”

From an internal operational perspective, meanwhile, edge computing could offer new options to CSPs looking to drive greater service differentiation. As well as ensuring that gigabytes of network traffic are not being moved unnecessarily to a distant cloud facility, the ability to draw on edge computing facilities provides a means for operators to apply discrete security rules or other controls for different environments. “Edge will play a significant role in telecom infrastructure transformation, toward distributed clouds, also called ‘telco cloudification’,” Roberti said. But his advice is clear, and it comes back to operators determining their own particular source of value-add – whether as edge integrator, aggregator, edge platform as a service provider, something else or a combination of these roles in different situations.

Big numbers, big markets

Certainly, the projections for enterprise spending on such services look enticing. Looking specifically at IoT, worldwide spending is forecast to reach $725 billion in 2019, an increase of 17% over 2018, according to IDC’s Worldwide Internet of Things Spending Guide. Yet connectivity services represent just 10% of that spending, “So it is important that telcos look at other parts of the value technology stack,” Roberti concluded.

Chetan Sharma, who sees edge computing as a $4 trillion opportunity, believes that ultimately most data processing and AI deductions will happen at the edge in all major markets. He concluded that although cloud computing isn’t going away, “The big [cloud] players realise that at a minimum they need to partner up with operators to get access to their real-estate property.”