The 5G edge networks value chain represents an opportunity for the industry to generate new revenue and gain visibility in a market that is set to include data center companies, enterprise end verticals, public cloud providers, and content delivery network providers. All these players are investing significantly in edge locations, 5G infrastructure, and the backbone networks that connect them. According to a new report from global tech market advisory firm ABI Research, 5G edge networks will play a key role in unlocking the commercial potential of new use cases such as 5G private networks. In fact, ABI Research estimates that 5G private networks revenue is expected to grow from US$1.6 billion in 2021 to US$65 billion in 2030, with a Compound Annual Growth Rate (CAGR) of 60.1%
“With 5G edge networks, every enterprise engagement is a custom job. Consequently, communications service providers (CSPs) and vendors seek to establish business models that are governed by different KPIs, both technical and commercial,” explains Don Alusha, Senior Analyst, 5G Core & Edge Networks at ABI Research. This stands in contrast with product-led solutions that fit well with mass-market, country-specific/region-specific subscriber commercial models. 5G edge network deployments mark the first time that the industry focuses on business evolution and integration with vertical industries. To that end, tier-1 CSPs (e.g., AT&T, Telefonica, Verizon, and Vodafone) and vendors (e.g., Ericsson, and Nokia) are all establishing new enterprise business units.
Moreover, hyperscalers like Amazon, Google, and Microsoft are taking a strategic approach with new solutions aimed at unlocking the value of 5G and edge networks. “CSPs own edge infrastructure that holds potential in terms of local compute and low-latency connectivity, but they have limited cloud experience. Cloud providers are agile and innovative. With the right collaboration arrangements in place, there is no reason why 5G edge computing cannot yield value for all parties involved. At present, however, nobody can predict where this is going to go. It will be a captivating journey to see how different parties collaborate and co-create to unlock the value of the 5G edge networks being built today,” says Alusha.
However, 5G edge networks face several key barriers that could impact market maturity. The business cases remain a key area where further work is required from the industry at large. The business case for advanced use cases depends on the market’s appetite for 5G edge networks and enterprise’s desire to modernize their operations. Furthermore, the technology ecosystem for edge computing is subject to ongoing maturity. It will take time to re-engineer existing hardware and software for highly distributed, space- and resource-constrained edge locations.
“A good starting point to drive ecosystem maturity is for the industry to acknowledge that building a 5G edge network is the first step. The second step is to figure out how to best integrate these new technologies into enterprise verticals’ business processes. That may not be a matter of technology but a matter of the degree of effort required to initiate service convergence and a process change that spans marketing, sales, product design, and so on. This strand remains the topic of much discussion in the industry,” Alusha concludes.
These findings are from ABI Research’s Monetizing 5G Edge Networks: Different Approaches and Scenarios application analysis report. This report is part of the 5G Core and Edge Networks research service, which includes research, data, and analyst insights. Application Analysis reports present an in-depth analysis of key market trends and factors for a specific technology.
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