Telco MEC Role Shaping Up

In the early days of the edge computing ecosystem, and despite the hopes many participants have for revenue growth based on edge computing, roles in the ecosystem are starting to shape up. Since edge computing as a service remains a “computing service,” it is perhaps entirely logical that the hyperscalers who dominate cloud computing would be leading suppliers of edge computing that is an extension of their cloud offers. 

source: STL Partners 

Generally speaking, with the exception of Mobiledge, which hopes to create an edge platform controlled by service providers, the edge platform space is occupied by the same names you would expect to see leading cloud computing as a service. 

Real estate--facilities, racks, electricity, security, rackspace and access network colocation--was among the reasons for the interest in multi-access edge computing on the part of connectivity providers. 

 Recent deals made by hyperscalers with mobile operators--including Google Cloud with AT&T or Verizon with Amazon Web Services confirm that trend, with telcos acting as providers of edge real estate. 

Device suppliers, also as one might expect, are supplying the edge hardware. 

How much of a platform role telcos might create, as opposed to providing real estate and dumb pipe colocation remains to be seen. Some observers estimate telco edge revenues at between $2 billion and $4 billion by 2025, for example. 

The concern some might express is that the incremental new revenue and profit margin from real estate (hosting) at the edge--and any significant “platform” opportunity--might not be large enough to offset expected revenue losses from legacy services and average revenue per user diminution. 

Of course, one way of looking at edge computing is to view it as a necessary capability mobile operators will require in the 5G and coming eras simply to operate their virtualized networks. In other words, edge computing might be more important as a “cost of infrastructure” and “capabilities” spending item than a revenue source.

There will be some incremental revenue for telcos from edge computing, but importance might be derived from support of core network operations and the indirect effect of edge computing in getting and keeping business customers on the network.