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More start-ups target cell towers for edge, but Crown Castle turns cold

At the start of the edge computing, when the telcos’ dream that most of the edge would be built on their sites was still alive, some tower operators also saw the opportunity to extend their neutral host business model beyond cell towers, fiber and power, to include edge processing and storage at their sites. This could target more revenues from telco tenants, or support for enterprise or cloud clients wanting to leverage these locations.

Crown Castle was the leader of this thought process, and made some ambitious statements about the business opportunity, as well as signing a strategic alliance with Vapor.io, a start-up specializing in building neutral host edge data centers, with a particular focus on towercos.

However, Crown Castle CEO Jay Brown seemed to backtrack from many previous pronouncements at the firm’s quarterly results call last week, saying he has no plans to operate edge data centers as part of the business.

“At this point, I really don’t see data centers playing a significant role in our long term strategy. We think the opportunity for us really relies around towers and then the use of fiber for small cells,” he said.

This comes at a time when its main US-based rivals, American Tower and SBA Communications, which were initially sceptical about the edge business, have made more positive statements, and have each acquired data centers to test potential services and business cases. American Tower acquired the Colo Atl data center in Atlanta in April, while SBA bought the New Continuum data center in Chicago in August.

But now, Crown Castle’s Brown is scarcely mentioning edge, though he remains bullish about small cells, another change in the telco network where Crown has been ahead of its rivals in expanding its model.

“As 5G becomes a reality and wireless networks expand from connecting everyone to connecting everything, we believe new use cases will develop that will generate significant long-term demand for our infrastructure, with towers remaining at the core of the wireless network,” he said.

Vapor.io seems prepared for a possible cooling of relations with its highest profile partner. It has agreements with other tower companies, like SBA, to locate its edge on their sites, and will work with other fiber owners, like Zayo, to ensure its growing network of micro-data centers always has connectivity to AWS, having announced an AWS connectivity offering last year.

This 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.

But it will not remain tied to Crown Castle connections. Indeed, Vapor.io acknowledged earlier this year that, despite its close ties to towercos, their sites did not always align well with all the edge services required. CEO Cole 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.

Others, however, continue to target the tower opportunity. Joining Vapor, Packet and EdgeMicro is a Florida-based start-up called EdgePresence, which is working with towercos to build neutral host micro-data centers, and has two ready to go, in Jacksonville, Florida and Austin, Texas. It plans to open four more sites by the end of the  year.

The firm’s CEO Doug Recker founded Colo5, a disaster recovery and colocation firm that was acquired by Cologix in 2014, and started Modular Life Solutions in 2017. EdgePresence was spun out of this to focus on the micro-data center, which it brands the EdgePod. EdgePods are designed to be deployed at the base of cell towers but can also be placed on enterprise sites.

Recker would not reveal its towercos partners but said that, while towers are ideal locations because they have fiber and power, and are secure, the towercos have no data center expertise. “They don’t understand the data center business,” he said.

He believes 5G will enhance the edge business model, but there is plenty of revenue available that does not need 5G but is mainly based on small and medium companies’ need for data security and lower cost. “My target market is not the Fortune 100 companies. It’s the local insurance agency, or real estate offices or doctors’ offices. It’s anyone that can’t afford to lose their data,” he said in an interview.

Other companies building data centers es in edge locations include EdgeConnex (see separate item), DataBank, Compass, Baselayer, Switch, DartPoints, vXchnge and 365 Data Centers.

SBA and American Tower move to the edge:

Crown Castle may be cooling on the edge market, but its rivals are becoming more active. As well as buying a data center in Chicago to test use cases, SBA formed an alliance with Packet, which provides edge data center platforms, last year. Packet broke ground on its first edge data center location, in Boston, last autumn, positioned at the base of an SBA cell tower (Packet has since built two more locations, of a targeted number of 50 in the USA, but those are at Crown locations).

Earlier this year, American Tower told an Oppenheimer investor event 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.

Rod Smith, SVP of corporate finance, said: “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? 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, he said the firm has to evaluate whether there are any new classes of asset in which to invest to bring in new customers.

CEO James Taiclet has spoken of an “ongoing evaluation of edge compute solutions at our tower sites”, and of “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.”

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. It 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”.

It has also placed 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 said.

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