The Edge game, How Data centre players can play with the Telcos, and Why?

The Edge is the buzz. Everyone who can, is trying to get in on the game. It’s simple. You’re either on the table or on the menu. However, the Edge computing (Edge Cloud) concept is far from new. First patents date to 2001, with more Edge like activity seen in the 1980’s. So what makes it different now? Well for one thing, it is being led by the folks who control the access to the customer, the Telcos. Ok so ‘led’ is a strong word! But there is now a much greater push for Edge computing. And if you want to know what the use case for this is? The answer is plain and simple, 5G. And if you’re reply to this is that, 5G Edge computing will be small boxes at the end of every tower, then we have a conversation to have. And the reason for this, is that 5G is wireless, but driven by fibre. Anyone putting Edge infrastructure in the mobile network, will only look at the 9% of data carried on the wireless networks, compared to the 90%+ still being carried on fibre. Which essentially is lost opportunity, and tremendous additional cost and complexity. Aligning the mobile and fixed networks is something that has not been previously possible. However, to fully implement the non-latency benefits of Edge computing, and to fully recognise the latency benefits of Edge computing, the Edge will have to have visibility of both mobile and fixed networks for a Telco. Anything else is a distributed Edge architecture, which will exist, will distribute value to different players.

This is where the central offices come in to the picture. The brick and mortar asset the Telcos still hold and hold with great belief of future cash flow via this asset. In a country, there can be over 1000 central offices, some will have close to 5000. Yes, a lot of them will be sold and closed as fibre enables longer distance from the customer, with better latency, compared to copper, for which these offices where developed. Most of them have connectivity and usually hold the fixed and mobile networks, physically in the same building, but logically separated. And this purely a hand me down from the band-aid style network upgrades in the mobile network, from 2G.

So now we have an opportunity to convert the central offices to Edge assets. For the Telco, these are small power, micro data centres, running a distributed cloud architecture. In the DC world, this does not make sense. Think colo, and now think small. For example, the Onlife Networks initiative in Telefonica Spain, aims to convert 800 Central offices in Spain alone to micro edge DCs. This is a huge undertaking. Initial assessment shows that majority of the space inside the central office will be vacant after this transformation takes place. The space needed to service the clients (usually 5000 odd per CO) is only upto 50% at the most. And now you have this great PoP available, incredibly close to the clients, with possibly direct peering in to the Telco. If the Telco plays its card right, this is an opportunity to revolutionise the age-old peering business, and finally add value to it. Imagine Edge peering vs. Core peering. The capillarity offered is incredible. The edge peering model can also make the Telco more inclusive in the value chain rather than be a GB per $ arrangement. Think, advertising, prioritisation, critical peering, content peering etc.  

And this is where the DC folks come in. Telcos are fantastic at selling connectivity, not so in building data centres. They tried once, and burnt their fingers, bad. As one Deutche Telekom executive said, “Telcos have the memory of an elephant”.

This effectively means, there is an opportunity for seasoned DC players to show a distributed DC design and then to build, and deliver micro DCs to the Telco central offices. The benefit of these central offices, is that for the first time,, connectivity will be available freely, and at a much great capillarity than before. Extra capacity can be used for DC colo clients, struggling to get connectivity at other locations, or wanting to build a multi resilient direct connect to their own Edge locations. The knowledge the DC players have is critical in executing this architecture. The additional capacity can then be leased jointly by both DC and Telco to cloud providers. On their own, neither party can execute the Edge infrastructure, at the scale needed. True, vendors can probably put boxes on masts, but to really get network and latency benefits of the technology, a more versatile arrangement must be executed. Furthermore, there are future scenarios in which Telcos could interconnect at the Edge instead of the core, but let’s not dream too far in the future.

If the above excites you, or you have a comment or something you disagree with or would like to discuss, message us. We at Take 3 Innovate, provide customer centric consulting and strategy for the Edge and Telco space. We also run Innovation and Startup focused programs with our clients, building a true Technology Innovation Corporate solution under one roof, that is how we build the Edge. You'll be working with true pioneers of the Edge.