Cloud-Edge Deployments as a Catalyst for New Value Creation in Telecoms

In telecoms, small but highly distributed cloud-edge deployments are increasingly augmenting centralized radio architectures. A wider diffusion of 5G core will accelerate that trend. Relative to public cloud implementations, cloud-edge implementations are much more local in deployment and global in demand. The requirements of the automotive industry drive that point home. Players like Toyota and BMW have a global presence; consequently, their requirements for cloud-edge deployments vary in scope and scale. The cloud-edge market promises growth, but is one that is composed of a plethora of solution providers and technologies that the industry must grasp. This is particularly relevant for Communications Service Providers (CSPs), which need a clear sense of existing revenue streams vis-à-vis additional new value that falls within the boundary of cloud-edge. For example, in addition to existing mass-market subscriber-based revenues, new value will materialize from solution-led products and tailor-made transactions in end verticals like finance, manufacturing, and the automotive industry.

On a related point, the likes of Amazon, Google, and Microsoft are taking advantage of a homogeneous technology ecosystem to launch their cloud-edge solutions in the market. They have the vision to build capabilities close to the edge, but they do not have the networking expertise that CSPs do. Moreover, they do not have CSPs’ base-station density and distribution of networks in radio access. However, hyperscalers own highly advanced software development tools, standard tool chains, and operational automation processes with a strong foundation on software capabilities. Clearly, new value creation abounds, but the jury is still out on who will capture what parts of the emerging cloud-edge ecosystem.  

The importance of cloud-edge is highlighted in its relationship with 5G, which, as a technological evolution of radio, forms a symbiotic association with cloud-edge deployments as a technological evolution of the cloud. This relationship bodes well for real-time processing and a programmable infrastructure required to incubate new-growth use cases. Cloud-edge deployments expand the network horizontally, with dozens of central and thousands of cloud-edge sites. This horizontal expansion serves as the foundation of a robust platform for offering network exposure services. With unique assets such as spectrum, central offices, and base stations, CSPs can create new services by consolidating Application Programming Interfaces (APIs) and present them in a unified fashion at the “outer” edge.  

A cloud-edge deployment encompasses three pillars: one, a connectivity platform (e.g., 5G); two, orchestration that spans the breadth and depth of any given entity’s network assets; and three, service exposure anchored on a unified API framework available to ecosystem partners and third-party stakeholders. The utility of cloud-edge does not lie in the local compute infrastructure. After all, when it comes to size of deployment, cloud-edges typically consist of a single-server type infrastructure. Rather, the value lies in having the compute power as close to the source of data as possible. This reduces latency and bandwidth usage, but it also creates local break points and processes that would otherwise be running in central clouds. 

Lastly, there is a growing belief in the industry that if CSPs can move value creation into software, they can compete effectively in the digital economy. Cloud-edge deployments may well be the winning formula on that front. Cloud-edge can serve as a critical enabler to accelerate the much-coveted software programmability that CSPs are trying to embed in their operations. The sheer number of deployments, and their intrinsic software architecture, serves as a bedrock for a “moldable” and elastic environment that accelerates the creation and delivery of new cloud-based services and use cases. To that end, partnerships that Tier-1 operators (e.g., AT&T, Verizon, and Vodafone) are establishing with hyperscale players provide valuable lessons for the rest of the CSP community.

Edge-cloud related developments and partnerships announced to date highlight three important lessons for the industry at large:

• Understand the Requirements of Industry Verticals: At present, there is no “right” business model. Vendors will pursue different business models and some providers are very likely to have cloud-edge offerings that leverage numerous business models. A key element for both the supply and demand sides in telecoms is to understand that it is employing the right strategy in the right circumstances that makes a difference. A diverse set of commercial requirements must be satisfied with a cloud-edge deployment model that does not fit the profile of a general-purpose, all-in-one network approach.

• Work on “Operational Effectiveness”: Vendors that are staking a claim in the market range from telco vendors (e.g., Ericsson and Nokia) to hyperscalers (e.g., Amazon and Microsoft) and software and application vendors (e.g., MobiledgeX). Such diversity translates to a wide range of infrastructure that will need to be automated and put together with a new operations model. Such models will need to be supported by interoperable standards and uniform technical specifications that simplify the ecosystem and bring the best partnerships to bear. CSPs and their technology partners can apply that knowledge to design operational requirements that comprehensively span a number of deployment sites and supply chains.
• Determine Viable Partnerships: The ecosystem for cloud-edge deployments is evolving. The challenge going forward is to figure out who is buying what from whom and where exactly new revenue will come from. Given the plethora of cloud-edge providers in the market, viable partnerships will not emerge overnight. The industry should acknowledge that the market will need to build critical mass and momentum. The market for cloud-edge solutions could potentially constitute tomorrow’s major market opportunity. But first, the industry must coalesce into a single, vocal force in terms of interoperability to simplify the ecosystem and bring the best partnerships to bear.