Building telco edge: Why multi-cloud will dominate

Developing edge-enabled services is complicated; there are key decisions to be made at each level of the value chain, starting with infrastructure. Leveraging results from a survey conducted by STL Partners with 150 CSPs, this report outlines why edge infrastructure will be multi-cloud and what telcos should do about it.

Defining the edge

Edge computing will remain a focus for telecoms operators for the foreseeable future, both to optimise the network and enable new, third-party applications and services. In fact, 70% of survey respondents believe investment levels of edge computing for supporting third-party applications will increase over that for internal network infrastructure in the next five years.

This report explores how telecoms operators will build their edge computing business, infrastructure and services, and the role multi-cloud will take in this. Before diving into this, it is worth defining this confusing and complicated space. At a high level, edge computing refers to cloud-native computing (and storage) being brought closer to the end-device or source of the data, rather than centralised in a remote, hyperscale data centre.

The telecoms industry has been exploring the role of edge computing for over four years, starting when network functions virtualisation (NFV) began to make real strides. The initial interest was in mobile edge computing (MEC), but this has now evolved to multi-access edge computing to incorporate fixed networks and non-cellular networks too. Outside telecoms, there is edge compute capacity in regional data centres provided by third parties centres, e.g. data centre operators and cloud providers. These are often in untapped geographies, such as Tier 2 cities. In addition, there is edge compute at customer premises, e.g. business campuses or factories.

We outline the scope of edge computing below. There is a full spectrum of possible edges from devices to regional data centres. Some of these edge locations may be owned and/or operated by communications services providers (CSPs). The CSP edge contains the most relevant types of edge for CSPs: network edge and on-premises enterprise edge. They contain infrastructure either owned by a telecoms operator (e.g. a CSP data centre) or operated by one (e.g. network CPE at a customer site).

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The spectrum of edge computing locations

There are two main types of applications that can be processed on CSP edge computing:

1. Telecoms applicationsthat run, protect and monitor the network – i.e. CSP’s own network functions;
2. Consumer/enterpriseapplications – which CSPs may provide for third-party customers.

STL Partners has been supporting the telecoms industry in exploring the opportunity to provide services and solutions to third parties by leveraging their edge computing infrastructure. These could include enterprises deploying IT applications locally to comply with data sovereignty laws, developers using edge to optimise their applications, IoT solution vendors using edge to reduce latency for mission-critical applications, etc. Our survey highlighted the importance for CSPs in investing in the infrastructure for these applications. On average, CSPs believe that 40% of edge computing investments in the next 1-2 years will be used to support these applications, rather than be used for network functions infrastructure.

Defining edge computing within telecoms

Although the edge computing market is nascent, there are emerging use cases that seek to take advantage of edge computing’s main benefits. These include offering the flexibility that comes with the cloud more local to reduce latency, improving reliability, keeping data secure, and offloading processing from the end-device. However, use cases are at different stages of maturity; some will be deployed in the next two years in early adopter markets, others are more than five years away from commercial, wide scale deployments.

The maturity stages of edge computing use cases

Telecoms operators are keen to leverage edge computing to grow revenues, particularly in their enterprise business. There are different strategies emerging: one is to focus on enterprise connectivity and networking, another on developing a horizontal, cloud-like platform for developers, while a third focuses on building end-to-end solutions for specific verticals.

Types of edge services and business models

The challenge with any new technology is that it takes time to educate the market and engage the innovators who will build the applications that will leverage its potential. Edge computing is complex, because it has a unique ecosystem that spans several industries: cloud, telecoms, industrial, traditional ICT, plus specific vertical sectors. In order to build an edge-based solution, there needs to be adequate infrastructure (facility, hardware, connectivity, edge cloud) plus the applications and services, and these need to be integrated so they work together seamlessly.

The edge value chain

Regardless of the business model and services strategy a telecoms operator chooses to pursue, it will need to first determine how best to build its edge infrastructure to optimise results. This report will dive into three key questions CSPs are still trying to evaluate:

1. How should telecoms operators build edge computing infrastructure that can support both enterprise applications and network functions?
2. To what extent should telecoms operators work with partners, particularly the hyperscalers, to build their edge and take services to market?
3. How can telecoms operators effectively work with the ecosystem?

Table of Contents

• Preface
• Executive Summary
  • There are three key factors to consider to build the CSP edge
  • The edge will be multi-(edge) cloud
  • CSPs must build capabilities and partnerships today to support their edge business
• Defining the edge
• Laying down the foundations: Options for building the CSP edge
  • Convergence
  • Organisation
  • Hyperscaler partnerships
• There is no single edge – it is multi-cloud
• Conclusions and recommendations: What CSPs should do next
• Index

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