Network edge data centre forecast: The rise of the non-telco

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There is much debate in the industry on the topic of edge computing, but little clarity for vendors and potential customers on how much capacity will be available. STL Partners’ Network Edge Data Centre Forecast estimates the number of network edge data centres and their capacity from 2021-2027. We also breakdown who will operate these sites: telcos, hyperscalers or other third parties.

The scope and architecture options of the network edge are changing

The telecoms industry has always been a key part of the buildout of the network edge and pioneered early developments, such as through initiatives like ETSI MEC (multi-access edge computing). However, there are several different scenarios for building out the network edge, all of which are playing out today. This report covers all three scenarios for building the network edge, as illustrated in the graph below.

Scenarios for building the network edge

Source: STL Partners

This report focuses on network edge computing sites

Edge computing comprises a spectrum of potential locations 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.

This 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. We cover forecasts on RAN as part of our network innovation research services portfolio.

Forecast scope in terms of edge locations and workload types

Source: STL Partners

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The output of the forecast focuses on capacity: Number of edge data centres and servers

STL Partners has always argued that for network edge to take off, developers and enterprises need to see sufficient capacity at the edge to transform their applications to leverage its benefits at scale. The forecast provides an indication for how this will grow over the next five years, by predicting the number of edge data centres owned by telecoms operators and how many servers they plan to fill these up with.

Hardware vendors have been evolving their server portfolios for several years to fit the needs of the telecoms industry. This started with core network virtualisation, as the industry moved away from an appliance-based model to using common-off-the-shelf hardware to support the virtualised LTE core.

As infrastructure moves “deeper” into the edge, the requirements for servers will change. Servers at RAN base stations will not have full data centre structures but need to be self-contained and ruggedised.

However, at this stage of the market’s maturity, most servers at the network edge will be in data centre-like facilities.

Types of servers assumed in the model

Source: STL Partners

*NEBS is a compliance level that confirms the reliability, safety and quality of a vendor’s telecommunications equipment. NEBS Level 3 is considered carrier-grade.

**NFs = network functions

There are three factors determining a telco’s approach and timing for its edge computing data centres

Telecoms operators want to build their network edges where there is demand. In general, the approach has been to create a deployment strategy for network edge data centres that guarantees a level of (low) latency for a certain level of population coverage. Interviews with operators has shown this has often ranged from 90-99% of the population experiencing sub-10 to 20 millisecond roundtrip latency for applications hosted at their network edge.

The resultant number of edge data centres will therefore be impacted by the spread of the population, the size of the country and the telecoms operator’s network topology. For example, in well connected, small countries, such as the Netherlands, low latencies are already achievable with the current networks and location of centralised data centres.

The actual number of sites and speed at which a telecoms operator deploys these sites is driven by three main factors:

  • Factor 1: edge computing strategy
  • Factor 2: the speed at which it has or will deploy 5G (if it is a mobile operator)
  • Factor 3: the country’s geographic profile*

Details on the evidence for these factors can be found in the inaugural report, Forecasting capacity of network edge computing.

*Telcos and non-telco network edge data centre operators are also considering demand-driven factors increasingly. For example, areas with potential customers, which could be urban areas, but also industrial centres.

Key factors determining network edge build

Source: STL Partners

Table of contents

  • Executive Summary
  • Introduction to the forecast
  • Evolution of network edge
  • State of the market
  • Regional deep-dives
  • Conclusions
  • Appendix: Methodology

Related research

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