Packet and Vapor IO vye for towerco alliances to push edge compute

There is hot debate about whether the emerging edge compute business models will really dovetail as neatly with telcos’ networks as they would like to think.

ETSI’s Multi-access Edge Computing (MEC) architecture started with the assumption that cell sites and central offices would make idea locations for edge cloud deployments, and so would put operators in pole position in the value chain. However, while that may be true for classic telco applications like video caching and content delivery, much of the potential of the edge cloud lies in industrial applications, and there, each industry and use case may require a different edge – in a factory for a manufacturer, for instance.

But some companies are clinging to the telco edge dream and hoping that a combined cell site/edge cloud location will prove attractive to many organizations requiring edge compute resource. Towercos are particularly interested in adding to the value of the sites they operate, and two of the big three USA-based companies are supporting start-ups in this area. Crown Castle has been working with Vapor IO, and now SBA has announced a similar partnership with Packet.

Packet has broken ground on its first edge data center location in Boston, positioned at the base of an SBA cell tower. This should be open for customers to use by the end of this year.

“We are excited to partner with Packet to bring the power of edge computing to our tower site in Foxborough, Massachusetts, the first of what we expect will be many sites in our extensive portfolio to become distributed network connectivity points for emerging 5G and edge computing applications,” said Clay Moran, director of strategy at SBA.

Jeff Stoops, the CEO of SBA, was discussing the potential to add edge capabilities, and revenues, to the firm’s real estate holdings, on a recent earnings call. “We continue to work on initial prototype mobile edge computing locations built around our existing property locations,” he said. “It’s still very early in the development of these solutions. But we believe we have a distinct advantage with the quality locations we are targeting and we are excited about the potential for this additional business line down the road.”

Packet raised $25m in a second round of funding in September, to help build 50 new edge sites. It is currently working on the first three, though they are not all with SBA – in fact, the other two are on Crown Castle sites in Chicago, which is also the first city targeted by Vapor IO. Packet says it will have started deployment of 10 edge sites before year end and its medium term goal is to have 50 in the USA.

Tower analysts at Wells Fargo expect to hear a lot more about edge in 2019, even though the trend is “in its very early innings”. In a client note, they wrote: “In our view the towers are in a position to play a very significant role in this developing theme. The base of the tower is a logical place for a micro edge data center given the power and fiber to the location as well as the security in place. We look for more developments around this theme to come in 2019.”

Packet was founded in 2014 and provides cloud infrastructure, automation and management in its own locations and on customer premises, on customer-specified and specialist hardware. Its new funding will help it move, like Vapor IO, into deploying locations specifically as edge data centers. It provides a choice of Layer 2/3 networking and will support wireless connectivity soon, when it has developed virtualized packet core capabilities.

Packet already provides the automated cloud platform used by the Cloud Native Computing Foundation (CNCF) organization, as a neutral provider.

Meanwhile, Vapor IO also raised new funds in September, in a third round reportedly worth about $100m. It sourced its latest round through private equity, rather than venture capital, and the financing was led by Berkshire Partners with participation from Crown Castle itself.

“This gives us the capital to go out and actually put money to work for our own technology, the intellectual property we’ve developed,” Vapor CEO Cole Crawford said at the time. “We’re now an edge colocation company.”

The new money also marked a change of relationship with Crown Castle. Previously, Crown provided colocation services to clients using Vapor’s edge technology, which the start-up offered as a managed service. Now, Vapor has acquired the assets which were built as part of that Crown project (an effort codenamed Volutus), and has become the direct colocation service provider. The assets include the Vapor Chamber, a cylindrical mini-data center housed in the Vapor Edge Module, which provides the security, infrastructure and shelter requirements. Then there is Synse, the telemetry system for remote management of the edge data center; and other software for managing data center infrastructure and connectivity.

Together with Crown, Vapor has so far built two sites in Chicago, with three more planned in that city, and next year, it aims to deploy in 13 more locations across multiple cities, reaching over 100 locations by 2020. In each metro, it will build several locations and interconnect them to form a virtualized, city-wide data center to minimize latency for customer applications. Vapor IO will sell colocation space in these edge sites – as Equinix and others do in larger data centers worldwide – and the sites can also support network peering.

Another US telecoms infrastructure operator, Vertical Bridge, is also taking an interest in edge compute, if a more cautious one than Crown Castle’s. It recently announced a partnership with DataBank, which provides data center, cloud and interconnectivity services, to build micro data centers on its cell tower and broadcast sites and in 6,000 buildings to which it has exclusive rights.

The two companies have the same parent – Digital Bridge Holdings – which also owns ExteNet, a neutral host operator in small cells; as well as core data center firm Vantage. The potential for an integrated edge/connectivity neutral host portfolio is clear, and according to Bernard Borghei, EVP of operations at Vertical Bridge, it will find a ready market among telcos and content owners, which are already familiar organizations in the company’s existing broadcast and wireless value chains.

“We are the owners of the largest portfolio of broadcast towers in the country and the broadcast sites come with a lot of land,” he told Light Reading. “All of our sites have their LTE deployment and through the radio stations that operate on them, we have fiber. There is power available; there is land, there is fiber, there is water for a cooling system. So we started talking to DataBank and decided we would be able to use our sites and deploy these modular, scalable edge micro data centers right at the edge of the network.”

Vertical Bridge also has rights to over 6,500 buildings in the USA for rooftop and in-building deployments, and believes that will help it pursue business in edge compute/aggregation for virtualized RAN, content distribution and more. MNOs are looking for in-building locations to house their virtualized baseband units for vRAN in urban areas, said Borghei. The initial idea of vRAN – that it would be highly centralized with the central baseband connecting remote radio sites spread over huge areas – has given way to a more multi-tiered approach in which some vRANs support dense capacity over fairly small areas; while some functions are left distributed at the radio sites to enable very low latency.