Forecasting capacity of network edge computing

There is much debate in the industry on the topic of telco edge computing, but little clarity for players within the telecoms industry and potential customers on how much capacity will be available. This report forecasts the capacity of network edge data centres from 2021-2025.

We have updated this forecast. Check the latest report here

Telco edge build has been slower than expected

Telecoms operators have been planning the deployment of edge computing sites for at least the last three years.

Initially, the premise of (mobile) edge computing was to take advantage of the prime real estate telecoms operators had. Mobile operators, in particular, had undergone a process of evolving their network facilities from sites which housed purpose-built networking equipment to data centres as they adopted virtualisation. The consolidation of networking equipment meant there would be spare capacity in these data centres that could easily host applications for enterprises and developers.

That evolution has now been accelerated by the advent of 5G, a mobile generation built on a software-based architecture and IT principles. The result will be a proliferation of edge data centres that will be used for radio access network and core network hardware and software.

However, the reality is that it has taken time for telcos to deploy these sites. There are multiple reasons for this:

1. Cost: There is a cost to renovate an existing telco site and ensure it meets requirements common for world-class data centres.
2. Demand: Telcos are hesitant to take on the risk of building out the infrastructure until they are certain of the demand for these data centres.
3. 5G roll-out: Mobile operators have been prioritising their 5G RAN roll-out in the last two years, over the investment in edge data centres.
4. Partnership decisions: The discussion around who to partner with to build the edge data centres has become more complicated, because of the number of partners vying for the role and the entrance of new partners (e.g. hyperscalers) which has slowed down decision-making

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Early adopters have taken significant strides in their edge strategy in 2021

2020 and 2021 have been seen as inflection points as a number of leading telecoms operators have launched edge sites: e.g. AT&T, Verizon, Cox Communications, SK Telecom and Vodafone. Arguably, this was triggered by AWS announcing partnerships on AWS Wavelength with four telecoms operators in November 2019, with more recently announced (e.g. Telstra in 2021).

Going forward, key questions remain on the trajectory of telco edge build:

• How many edge data centres will telcos build and make available for consumer/enterprise applications?
• How much capacity of telco edge computing will there be globally?
• How much of telco edge computing will be used for distributed core network functions vs. consumer/enterprise applications?
• What proportion of telco edge data centre capacity will be taken up by hyperscalers’ platforms?

This report seeks to forecast the capacity at telecoms operators’ edge data centres until 2025 and provide clarity on the nature and location of these sites. In other words, how many sites and servers will be available for running applications and where will these sites be located, both physically and logically in the telecoms operators’ networks.

Before reading this report, we would recommend reading STL Partners’ previous publications on telco edge computing to provide context for some of the key themes addressed, for example:

• Telco edge computing: What’s the operator strategy?
• Telco edge computing: How to partner with hyperscalers
• Building telco edge infrastructure: MEC, Private LTE & VRAN
• Building telco edge infrastructure: MEC, Private LTE & VRAN

The report focuses on network edge computing sites

Edge computing comprises of a spectrum of potential location and technologies designed to bring processing power closer to the end-device and source of data, outside of a central data centre or cloud. This report focuses on forecasting capacity at the network edge – i.e. edge computing at edge data centres owned (and usually operated) by telecoms operators.

The initial version of the forecast models capacity at these sites for non-RAN workloads. In other words, processing for enterprise or consumer applications and the distributed core network functions required to support them. Future versions of the forecast will expand to RAN.

Forecast scope in terms of edge locations and workload types

The report covers two out of three scenarios for building the network edge

Table of content

• Executive summary
• Introduction
• There are 3 key factors determining telco edge data centre build out
• Logically, most network edge will be in the transport aggregation layer
• Geographically, we will see a shift in the concentration of network edge data centres
• The limited capacity at network edge DCs will largely be used for edge applications
• Most telecoms operators are taking a hybrid approach to building their edge
• Conclusions and next steps
• Appendix: Methodology

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