Scaling private cellular and edge: How to avoid POC and pilot purgatory

Evaluating the opportunities with private cellular and edge

The majority of enterprises today are still at the early stages of understanding the potential benefits of private cellular networking and edge computing in delivering enhanced business outcomes, but the interest is evident. Within private cellular for example, we have seen significant traction and uptake globally during 2020 and 2021, partially driven by increased availability and routes to spectrum due to localised spectrum licensing models across different markets (see this report). This has resulted in several trials and engagements with large companies such as Bosch, Ford, Rio Tinto, Heathrow Airport and more.

However, despite the rising interest, enterprises often encounter challenges with a lack of internal stakeholder alignment or the inability to find the right stakeholder to be accountable and own the deployment. Furthermore, many enterprises feel they lack the expertise to deploy and manage private networking and/or edge solutions. In some cases, enterprises have also cited a lack of maturity in the device and solution ecosystem, for example with lack of supported (or industry-grade) devices which have a 5G/LTE/CBRS capability embedded in them, or a significant inertia in the installed base around other connectivity solutions (e.g. Wi-Fi). Therefore, despite the value and business outcomes that private cellular and edge compute can unlock for enterprises, the opportunity is rarely clear-cut.

Our research is based on findings and analysis from a global interview programme with 20 enterprises in sectors that are ahead in exploring private cellular and edge computing, primarily in the industrial verticals, as well as telecoms operators and solutions providers within the private cellular and edge computing ecosystem.

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Telcos see private cellular and edge as two peas in a pod…

Telecoms operators see private cellular and edge computing as part of a larger revenue opportunity beyond fixed and public cellular. It is an opportunity for telcos to move from being seen as horizontal players providing increasingly commoditised connectivity services, to more vertical players that address value-adding industry-specific use cases. Private cellular and edge compute can be seen as components of a wider innovative and holistic end-to-end solution for enterprises, and part of the telcos’ ambition to become strategic partners or trusted advisors to customers.

We define a private cellular network as a dedicated local on-premises network, designed to cover a geographically-constrained area or site such as a production plant, a warehouse or a mine. It uses dedicated spectrum, which can be owned by the enterprise or leased from a telco operator or third party, and has dedicated operating functions that can run on the enterprise’s own dedicated or shared edge compute infrastructure. Private cellular networking is expected to play a key role in future wireless technology for enterprise on-premises connectivity. Private cellular networks can be configured specifically to an individual enterprise’s requirements to meet certain needs around reliability, throughput, latency etc. to enable vertical-specific use cases in a combined way that other alternatives have struggled to before. Although there are early instances of private networks going back to 2G GSM-R in the railway sector, for the purpose of this report, we focus on private cellular networks that leverage 4G LTE (Long Term Evolution) or 5G mobile technology.

Figure 1: Private cellular combines the benefits of fixed and wireless in a tailored way

benefits of private cellular

Source: STL Partners

Edge compute is about bringing the compute, storage and processing capabilities and power of cloud closer to the end-user or end-device (i.e. the source of data) by locating workloads on distributed physical infrastructure. It combines the key benefits of local compute, such as low latency, data localisation and reduced backhaul costs, with the benefits of cloud compute, namely scalability, flexibility, and cloud native operating models.

Figure 2: Edge computing combines local and cloud compute benefits to end-users

benefits of edge computing

Source: STL Partners

Within the telecoms industry, private cellular and edge computing are often considered two closely interlinked technologies that come hand-in-hand. Our previous report, Navigating the private cellular maze: when, where and how, explored the different private cellular capabilities that enterprises are looking to leverage, and our findings showed that security, reliability and control were cited as the most important benefits of private cellular. In many ways, edge compute also addresses these needs. Both are means of delivering ultra-low latency, security, reliability and high-throughput real time analytics, but in different ways.

…but this is not necessarily the case with enterprises

Although the telecoms industry often views edge computing and private cellular in the same vein, this is not always the case from the enterprise perspective. Not only do the majority of enterprises approach edge computing and private cellular as separate technologies, addressing separate needs, many are still at the early stages of understanding what they are.

There is oftentimes also a different interpretations and confusion of terminology when it comes to private cellular and edge compute. For example, in our interviews, a few enterprises describe traditional on-premises compute with local dedicated compute facilities within an operating site (e.g. a server room) as a flavour of edge compute. We argue that the key difference between traditional on-premises compute and on-premises edge compute is that with the latter, the applications and underlying infrastructure are both more cloud-like. Applications that leverage edge compute also use cloud-like technologies and processes (such as continuous integration and continuous delivery, or CI/CD in short) and the edge infrastructure uses containers or virtual machines and can be remotely managed (rather than being monolithic).

The same applies when it comes to private cellular networking, where the term ‘private network’ is used differently by certain individuals to refer to virtual private networks (VPNs) as opposed to the dedicated local on-premises network we have defined above. In addition, when it comes to private 5G, there is also confusion as to the difference between better in-building coverage of public 5G (i.e. the macro network) versus a private 5G network, for a manufacturing plant for example. This will only be further complicated by the upswing of network slicing, which can sometimes (incorrectly) be marketed as a private network.

Furthermore, for enterprises that are more familiar with the concepts, many are still looking to better understand the business value and outcomes that private LTE/5G and edge compute can bring, and what they can enable for their businesses.

 

Table of Contents

  • Executive Summary
  • Introduction
    • Evaluating the opportunities with private cellular and edge
    • Telcos see private cellular and edge as two peas in a pod…
    • …but this is not necessarily the case with enterprises
    • Most private cellular or edge trials or PoCs have yet to scale
  • Edge and private cellular as different tracks
    • Enterprises that understand private cellular don’t always understand edge (and vice versa)
    • Edge and private cellular are pursued as distinct initiatives
  • Breaking free from PoC purgatory
    • Lack of stakeholder alignment
    • Ecosystem inertia
    • Unable to build the business case
  • Addressing different deployment pathways
    • Tactical solutions versus strategic transformations
    • Find trigger points as key opportunities for scaling
    • Readiness of solutions: Speed and ease of deployment
  • Recommendations for enterprises
  • Recommendations for telco operators
  • Recommendations for others
    • Application providers, device manufacturers and OEMs
    • Regulators

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Building telco edge infrastructure: MEC, Private LTE and VRAN

Reality check: edge computing is not yet mature, and much is still to be decided

Edge computing is still a maturing domain. STL Partners has written extensively on the topic of edge computing over the last 4 years. Within that timeframe, we have seen significant change in terminology, attitudes and approaches from telecoms and adjacent industries to the topic area.  Plans for building telco edge infrastructure have also evolved.

Within the past twelve months, we’ve seen high profile partnerships between hyperscale cloud providers (Amazon Web Services, Microsoft and Google) and telecoms operators that are likely to catalyse the industry and accelerate route to market. We’ve also seen early movers within the industry (such as SK Telecom) developing MEC platforms to enable access to their edge infrastructure.

In the course of this report, we will highlight which domains will drive early adoption for edge, and the potential roll out we could see over the next 5 years if operators move to capitalise on the opportunity. However, to start, it is important to evaluate the situation today.

Commercial deployments of edge computing are rare, and most operators are still in the exploration phase. For many, they have not and will not commit to the roll out of edge infrastructure until they have seen evidence from early movers that it is a genuine opportunity for the industry. For even more, the idea of additional capex investment on edge infrastructure, on top of their 5G rollout plans, is a difficult commitment to make.

Where is “the edge”?

There is no one clear definition of edge computing. Depending on the world you are coming from (Telco? Application developer? Data centre operator? Cloud provider? etc.), you are likely to define it differently. In practice, we know that even within these organisations there are differences between technical and commercial teams around the concept and terminology used to describe “the edge”.

For the purposes on this paper, we will be discussing edge computing primarily from the perspective of a telecoms operator. As such, we’ll be focusing on edge infrastructure that will be rolled out within their network infrastructure or that they will play a role in connecting. This may equate to adding additional servers into an existing technical space (such as a Central Office), or it may mean investing in new microdata centres. The servers may be bought, installed and managed by the telco themselves, or this could be done by a third party, but in all cases the real estate (e.g. the physical location as well as power and cooling) is owned either by the telecoms operator, or by the enterprise who is buying an edge-enabled solution.

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Operators have choice and a range of options for where and how they might develop edge computing sites. The graphic below starts to map some of the potential physical locations for an edge site. In this report, STL Partners forecasts edge infrastructure deployments between 2020 and 2024, by type of operator, use-case domains, edge locations and type of computing.

There is a spectrum of edge infrastructure in which telcos may invest

mapping edge infrastructure investmentSource: STL Partners

This paper primarily draws on discussions with operators and others within the edge ecosystem conducted between February and March 2020. We interviewed a range of operators, and a range of job roles within them, to gain a snapshot of the existing attitudes and ambitions within the industry to shape our understanding of how telcos are likely to build out edge infrastructure.

Table of Contents

  • Executive Summary
  • Preface
  • Reality check: edge computing is not yet mature, and much is still to be decided
    • Reality #1: Organisationally, operators are still divided
    • Reality #2: The edge ecosystem is evolving fast
    • Reality #3: Operators are trying to predict, respond to and figure out what the “new normal” will be post COVID-19
  • Edge computing: key terms and definitions
    • Where is “the edge”?
    • What applications & use cases will run at edge sites?
    • What is inside a telco edge site?
  • How edge will play out: 5-year evolution
    • Modelling exercise: converting hype into numbers
    • Our findings: edge deployments won’t be very “edgy” in 2024
    • Short-term adoption of vRAN is the driving factor
    • New revenues from MEC remain a longer-term opportunity
    • Short-term adoption is focused on efficient operations, but revenue opportunity has not been dismissed
  • Addressing the edge opportunity: operators can be more than infrastructure providers
  • Conclusions: practical recommendations for operators

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