Two of the most talked-about growth opportunities for mobile operators are edge computing and private LTE/5G networks. Both looked to be high on the agenda of Mobile World Congress – always a good bellwether for the year’s trends – until it was cancelled last week. But despite the allure of likely growth in revenues from these nascent sectors, they are challenging for MNOs. Unlike previous growth opportunities based on cellular voice or broadband networks that only they controlled, edge and private networks are open to competition from a wide range of other players too, including cloud providers and equipment vendors.
There is considerable growth potential in both these markets, and they are, of course, interrelated. A private network for an enterprise, transport system or city could well be controlled by a local virtualized core, deployed on an edge cloud node along with data processing and storage capabilities, to create a self-contained connectivity/data platform that can be optimized for the priorities of the organization, from enhanced data privacy to low latency.
Recent forecasts published by Rethink Technology Research show that enterprise networks combining localized small cell RAN and virtual core with edge computing will grown at a compound annual growth rate of 94% between 2019 and 2025.
But only some of the elements of this self-contained network are controlled by the MNO, and so, however high the demand from enterprises and other organizations grows, they will have to fight hard for their share of the winnings.
The same Rethink forecast (see Figure below) predicts that, while the majority of private cellular networks with edge computing capabilities will be built and operated by MNOs in 2019 to 2021, after that, a rising percentage will be built and run by other deployers, the primary groups being:
- Vertical-focused private network operators or neutral hosts, sometimes extending an existing business based on wireline or WiFi private networks
- Cloud providers, adding connectivity and distributed cloud to their core propositions. They will often partner with a private connectivity builder to deploy the physical networks.
- Cable operators, focusing on access-neutral systems which combine wireline access, small cells with cable backhaul, and a converged, distributed core. This is particularly seen in the USA.
Deployments of private network radio units when integrated with vEPC and edge computing, by operator type. Source: Rethink RAN Service
These non-MNO deployers will account for 33% of private networks with edge in 2020, rising to 59% in 2025.
Recent developments highlight the diversity of companies which will take part in this sector. Mobile operators certainly have the advantage when it comes to understanding how to deploy a cellular RAN and core, and they control most of the spectrum to do so. But as regulators and the 3GPP make it increasingly possible for 4G and 5G to be deployed in shared spectrum, that barrier to new providers will be lowered. And in some environments, the MNOs’ expertise in cellular connectivity will be outweighed by the need for companies with proven skills in cloud infrastructure, virtualization, enterprise security and advanced data processing platforms.
So for every player that is cultivating the telcos at the edge, such as Dell, there are others which are forming partnerships that could potentially sideline the MNO, or commoditize their role. The alliances between Amazon Web Services and shared spectrum players such as Federated Wireless should raise concerns for telcos, despite AWS’s recent partnerships with operators like Verizon for 5G edge. And even in the telecoms space – in environments where edge connectivity will be multi-access, and the core will be the brains of the private network – cablecos are sometimes mounting dangerous challenges to the MNOs even in 5G-oriented markets.