Single operator network edge deployment models have been sluggish, due mostly to telco investment risk-aversion. A federated network edge may be the answer, but telcos must first become more risk-tolerant and look beyond Proofs of Concept (PoCs) and be open to “failing fast” like hyperscalers with real-world infrastructure deployments.
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Federated Network Edge Seems Like an Answer to the Network Edge Problem
By any standard, Multi-Access Edge Computing (MEC) has been slow to develop with very few tangible deployments. Only in the United States have Tier One operators been slightly active, but even so, deployment remains on a city by city basis. Given the monetization potential that 5G plus the network edge brings to telcos and the wider ecosystem, reducing deployment time to market is essential. One possible solution is the “federated network edge.” This is a joint initiative aiming to standardize hardware and software requirements to open MEC, so that each telco can interconnect their network edge platforms and deploy value-add services.
A number of groups are undertaking Research and Development (R&D) in this area: the GSM Alliance (GSMA) is building the Telco Edge Cloud, a federated edge infrastructure for multiple providers and working in parallel with the Operator Platform Group (OPG), which is setting the technical framework for its implementation; ETSI, an MEC industry-specific group; and the Bridge Alliance, a partnership of 34 telco operators based in Asia-Pacific that have built the Federated Edge Hub (FEH), a platform that interconnects multiple operators’ MEC platforms.
Most recently, the Bridge Alliance with MobiledgeX (acquired by Google Cloud Platform in 2022), Singtel, and Telefónica achieved an interconnection between two heterogenous MEC platforms as part of the GSMA Foundry Telco Edge Cloud trial. This connection allows each telco’s customers to deploy edge applications on both Singtel’s and Telefónica’s network edge, enabling multi-market services across different regions. This is a big step forward since their previous PoC involving Singtel and SK Telecom’s MEC platforms, which was focused on cloud gaming across only two markets.
Federated Edge Deployment Will Be Universally Valuable
Federated edge rollouts will motivate marketplace progress by improving network edge accessibility, lowering barriers to deployment, and enhancing the economic case for deployment from the perspective of demand (end users) and supply (telcos).
- Shared Innovation Costs: 5G infrastructure rollout has been high, making telcos highly risk-averse to future investment. Developing common standards will ensure that MEC deployment costs are lowered, reducing the investment risk for participants.
- Improve Time-to-Scale: Telco-led network edge deployment has been slow so far, but with interconnected MEC hubs, telcos will not be responsible for universal deployments; instead, they can share infrastructure to quickly roll out applications and services to enterprises. This will enhance revenue creation and underpin the commercial model moving forward.
- Expand Application Total Addressable Market (TAM): Reaching the top of the edge stack and delivering vertical-specific services will be the key to creating value on top of the underlying 5G network. A federated edge would create a global interconnected customer base and the possibility for telcos to offer symmetric services across regional boundaries.
- Ease of Use: A federated edge would enable cross-border connectivity and access to symmetric services, regardless of enterprise location. This would ensure that enterprises with global footprints can universally deploy network edge services.
- Time-to-Deployment: Latency bottlenecks for 5G applications are slowing enterprise transformation journeys. Speeding up network edge deployment through federated models will enable enterprises to deliver transformation more quickly.
- Lower Application/Service Cost: Applications can quickly become expensive within a single operator model due to vendor lock-in. An open edge platform would drive more developers and interconnection with hyperscalers, increasing competition and lowering application costs. This would also be complemented, assuming that telco pass on their infrastructure Capital Expenditure (CAPEX) savings to the enterprise.
- Consistent Quality of Service (QoS): Different network edge platforms will have varying QoS, but with a standardized federated model, this consistency will ensure that developers can deploy applications universally, ensuring symmetric performance for enterprise customers.
- Ease of Commercial Activity: Substantial time and effort would be expended dealing with multiple operators. Each interaction would involve PoCs, negotiations, deployment, etc. But with an open approach, this process can be streamlined, given that all applications can be deployed across network edge locations.
- Diversify Focus and Access More Consumers: At present, developers focus on the hyperscaler market, given its increased maturity. However, by leveraging the federated edge to drive growth, developers can shift their focus and access the massive revenue opportunity offered by combining 5G and network edge services.
Telcos Must Move Away from PoCs to More "Risk-Tolerant" Real-World Network Edge Deployments
Significant challenges remain in the way of federated edge progress, as described below:
- Commercial plans remain murky for developing and deploying the federated edge. As with most standardization bodies, determining “who should pay” for innovation is always challenging. Most telcos and application developers will benefit from greater proliferation, but some Tier One players with a substantial network edge built out already (e.g., Verizon and AT&T) may stand to lose from greater openness. For these players, a single operator or “walled garden” approach may be preferable.
- Significant technical barriers remain, especially if universal MEC openness is the goal for the federated edge. Standardization bodies must look to develop Application Programming Interfaces (APIs) that can function across a variety of architectures. Given the heterogeneous environment with various cloud providers and hardware/software vendors, this will be challenging.
- Network edge market dynamics are not certain. Hyperscalers pose a very real threat to telco network edges, with some commentators expecting that they will make up at least 50% of total network edge deployments by 2028. Without clearly defined long-run value, hyperscale-led competition will make telcos more risk-averse.
- 5G has yet to show compelling a Return on Investment (ROI), which has made telco investment strategies heavily risk-averse and the commercial case for supporting network edge standardization even more challenging, given the substantial CAPEX requirements.
Although the federated edge will not guarantee commercial success for telcos, speeding up network edge deployment gives telcos the best opportunity to deploy vertical-specific services and accrue value from the underlying 5G network. But to achieve this, telcos cannot retain the same risk-averse investment strategy and rely on PoCs. Telcos must shift their mindsets to better balance investment risks with rewards. This involves relying on a hyperscale-like “fail fast” mentality that downplays PoCs and prioritizes time-to-scale. Bridge Alliance’s latest PoC will only be a small step forward for the market, with real-world deployments of significantly more value. Transitioning to a more risk-tolerant, or at least risk-neutral, mindset will be challenging, given the number of participants within these standardization bodies, but worth it considering the potential revenue upside from network edge service deployment.