Tower operators are looking for ways to extend their businesses in the face of the consolidation of their MNO customers in many markets, and the shift of new cell sites from tall towers to roofs and street furniture. Some have done this through significant geographical expansion, an approach American Tower, IHS and others have attempted with strings of acquisitions.
Others are moving into adjacent markets for neutral host infrastructure, such as fiber and small cells, a strategy most aggressively followed by Crown Castle in the USA. Now edge computing is presenting another potential way for infrastructure companies to add new revenue streams, especially when the distributed cloud infrastructure can be collocated with existing assets such as cell sites.
Rod Smith, SVP of corporate finance at American Tower, summed it up when he told the recent Oppenheimer investment conference: “We’re really looking at these networks of the future to say, with our existing assets, are there any additional customers that we can bring in and have them utilize our tower space in addition to the core wireless carriers?”
He added: “We’re also saying: are there new types of assets that we can offer back to our traditional carrier customers?” such as street furniture or light poles. And finally, the firm has to evaluate whether there are any new classes of asset in which to invest to bring in new customers.
American Tower has been less interested in small cells or edge computing than Crown Castle, or some more specialized neutral hosts like Zayo or Vapor IO. Although it is the world’s largest wireless infrastructure owner, with over 170,000 tower sites in 17 countries (57,000 in the USA), it has not, to date, made a move comparable to Crown Castle’s investment in neutral host edge platform provider Vapor.io. Vapor.io has partnered with Crown to locate some of its micro data centers at the base of towers, though it also works with other, non-tower partners; and another US towerco, SBA, has a similar deal with another edge infrastructure start-up, Packet.
But American Tower told a recent investor event in Boston that it was starting to make preparatory investments in edge, looking ahead to a future date when the micro-data centers might be deployed at the base of its towers. This echoed comments made by CEO James Taiclet on an earnings call last October, that the firm had conducted an “ongoing evaluation of edge compute solutions at our tower sites”.
He added: “We are currently engaged in discussions with players in numerous industries that may ultimately be edge compute tenants and expect to further explore the potential long term opportunity going forward, noting that the tower sites can act as convergence points for the RAN, cloud services, the IoT and enterprise networks.
Smith told the conference that edge nodes were not yet distributed out to cell towers – where they are on telco sites, they tend to be in central offices while many new edge deployments are on enterprise premises, and therefore often out of direct reach of telcos or towercos.
But he said: “We think there could be a day where the latency in a 5G network is so important that having that edge computing right at the base of a tower improves 100 milliseconds of latency, it actually makes the applications and the services work better.”
The company is now evaluating how the cloud-based 5G networks of the future will look and what infrastructure they will require, so that American Tower can start to make investments in the most likely candidates, including edge data centers. “We’re looking for more new innovative things to do,” he said.
This means predicting the new types of infrastructure on which future telco networks will run, rather than getting into the data center business in its own right. So American Tower acquired an Atlanta-based collocation data center, ColoATL, earlier this year, “not because we want to be in the data center business but … to learn more about how data centers operate”.
Steve Vondran, president of American Tower’s US tower division, insisted at the time of that acquisition that it should not be taken as a sign that the firm has committed, as yet, to a “wider strategic shift”, though he did say it would enable the company to test the linkages between wireless connectivity, integrated edge computing and edge caching.
Vondran added: “ColoATL is a small, strategically located data center with sufficient space and power to enable us to work with the wider ecosystem as we drive our innovation efforts.”
American Tower has also made some steps towards edge computing by placing micro-data centers at the base of some towers, to support new revenue streams, but Smith does not categorize this as edge computing yet. “The most important thing there is we’re learning about how to deploy these things, we’re learning about the cost of deploying small data centers, power and cooling,” he told the event. Then if the tower-based edge market does take off, the firm will be ready to move quickly.
Crown Castle has been more active in developing its edge+tower proposition than its arch-rival. It has worked closely with a neutral host edge infrastructure start-up, Vapor IO. Recently, Vapor filled in another gap in the edge jigsaw, by offering a direct connection between its edge computing nodes, called Kinetic Edge – many of them located in Crown Castle sites and supported by Crown’s fiber – and AWS’s cloud data centers.
A “straight fiber line” from a Vapor micro-data center to the AWS cloud would reduce latency and make it easier for customers to decide, on the fly, which data needs to be processed and stored locally and which needs to be sent to the central repository. Developers will have access to the full suite of AWS cloud services and can create applications which split workloads between the edge and the central cloud.
The service was jointly developed with Crown Castle and initially uses the towerco’s high speed Cloud Connect fiber-based links, which support one or more links of 50Mbps to 500Mbps, to implement AWS Direct Connect, which Amazon offers as a private connection from a customer’s location to the AWS cloud services. This is an alternative to routing traffic to AWS over a public Internet connection.
Despite the closeness to Crown Castle, Vapor IO is likely to develop similar capabilities with other site and fiber partners. It also has agreements with other tower companies, like SBA, to locate its edge hardware on their sites, and Crawford said it would work with other fiber owners, like Zayo, to ensure its growing network of micro-data centers always has connectivity to AWS.
And the firm acknowledged earlier this year that, despite its close ties to towercos, their sites did not always align well with all the edge services required. Crawford told LightReading that it was “not relevant to talk about sitting at the bottom of one tower”, but instead to focus on “tower-aggregated and connected, not tower-located” scenarios. In fact, the firm’s first edge data center in Chicago is in a DAS hub which, unlike some cell towers, has significant amounts of fiber. Another edge neutral host, EdgeMicro, has also moved away from the idea of building its nodes at the base of cell towers, because there is often insufficient fiber.