By Danny Wong, Senior Director for Telecoms, Asia, Vertiv
Understanding how the shift to edge computing will benefit telecommunications operators is critical not only for the operators themselves but for the ecosystem of telecommunications technology suppliers. It is widely accepted now that the shift to edge computing is real and underway in key sectors such as manufacturing and digital healthcare.
What is less well defined is the specific opportunities for the existing ecosystem of digital infrastructure suppliers, operators and customers, and new entrants. There is also a very serious question around how the ongoing crisis might slow, or conversely accelerate the need for edge infrastructure.
Questions over the implications of near-term disruption and longer-term opportunities for edge are challenging to answer. While answers to the former are extremely fluid — and will continue to be for some time — the latter long-term edge opportunity is becoming more defined.
The rise of edge computing in the region
According to the research conducted by analyst firm Omdia, edge data centers already accounted for 1.2% of global IT rack unit shipments in 2018, and their penetration of the market will have more than doubled by 2023. Other estimates put the total edge computing market at more than $600 billion by 2024. Underpinned by the rapid adoption of cloud-based services and digitalization, Southeast Asia has not been left behind in this global trend.
Based on an industry outlook report done by Reportlinker, a 6% CAGR growth rate of the data centers market in the region is expected from 2019 through 2025. The report further indicates that the trend is being driven by a multitude of factors, a key one being the deployment of 5G to enable edge data centers.
With the soft launch of Fixed Wireless Access (FWA) in the Philippines and a majority of developed countries in the region expected to deploy 5G strategies within a few years of 2020, regional telecommunications operators could utilize equipment, infrastructure to deploy and establish edge computing strategies.
Several key telecommunications providers in the region are already evolving their edge strategies to gain a competitive edge over other providers and unlock a plethora of benefits. With the commercial rollout of 5G, communications service providers (CSP) are developing the capability to deliver unprecedented network speeds, greater capacity, and massively reduced latency.
Network evolution and the transition to 5G are together providing CSPs with the necessary basis to support the emerging Multi-access Edge Computing (MEC) architecture. As they transition their networks toward greater virtualization and cloud-native network platforms, CSPs are moving more applications into the cloud where they can start to benefit from a more agile service creation environment than was previously possible.
For example, in Singapore, SingTel announced plans to integrate with Microsoft Azure in 2019 to utilize its IoT Edge cloud services among other services to deliver “business breakthroughs,” through a data-oriented approach.
Is the edge creating more problems for telco operators?
However, Omdia’s research also revealed that the “edge is complex and yet not fully defined.” That is creating some uncertainty for telcos as to how best to position and invest in edge infrastructure. For example, when asked by Omdia only 36% of operators said their sector would be most important in the creation of new revenue services from the edge with application developers (30%) and public cloud providers (25%) also identified as taking a large slice of revenues.
As well as addressing the question around specific opportunities, Omdia also provided some insights on how the edge could conversely actually be a distraction or perhaps even a threat to some operators that are not sufficiently informed or prepared. The report states, “Edge is broadly viewed as an opportunity for CSPs, but if not approached in the right way, it could be a distraction for some players and even a threat to others.”
Scaling down the collection, storage, and processing of data for deployment at the network edge ought not to present a major technical challenge in and of itself. It is rather the practical, logistical, and commercial obstacles of edge computing that need to be overcome. Critical questions such as who will pay for the infrastructure and who stands to derive the greatest benefit from such an investment are yet to be answered.
Ultimately, edge growth — in its myriad forms — is already creating new business models for operators. Some of that growth is being disrupted by recent events, but the takeaway from researchers such as Omdia is that the long-term opportunities are there for the taking. Yes, edge also presents specific threats and distractions, but as the current crisis shows, life goes on.
Vertiv is a global provider of critical digital infrastructure and continuity solutions.