Real Estate Often Drives Value Connectivity Service Providers Bring to the Edge

Many connectivity industry participants have been hoping that edge computing might create new roles for access providers--beyond connectivity--in the same way that app stores, data centers, cloud computing, content ownership or devices sometimes have been seen in that same light. 

It would be fair to say that success has been quite mixed. It might also be fair to say that “real estate” has emerged as a clear business model for data center operators, and might develop as a key driver of edge computing value for connectivity providers. 

At a functional level, data center real estate adds value by shifting compute and storage operations to remote locations, essentially substituting remote racks, cabinets and rooms for on-premises facilities. 

Computing services drive revenue but the real estate investment trust often drives the asset model. That already seems to be emerging for much of the edge computing opportunity for connectivity providers as well. 

“The world’s network operators have the most valuable real estate in the world,” says Dennis Hoffman, SVP and GM, Dell Technologies Telecom Systems Business. “At the end of the day, they own an awful lot of edge.” 

source: Xenonstack 

And it is the real estate (location) that is meant, and not the ability to provide connectivity. Perhaps it also is fair to note that “ownership” of the computing services and ownership of real estate already are bifurcating.

“Some large enterprises will likely build their own edge infrastructure, but most of the world’s businesses are going to be renting it from telcos,” Hoffman says. The implication is that enterprises will choose between their own infrastructure and reliance on somebody else’s facilities. 

But that already often is not the case. Enterprises buy their compute services from AWS or another cloud computing provider. Connectivity providers benefit largely as the suppliers of some amount of edge real estate (racks, cabinets, power, air conditioning, security). 

For the most part, it seems as though connectivity provider roles will often not be as the branded supplier of edge computing services but as the supplier of edge “data center” real estate.