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IDC analyst: It’s time for telcos to explore edge computing 5G revenue streams
Analysts expect to see the rise of edge computing in the next decade due to data intensive workloads such as AI, machine learning (ML), and augmented and virtual reality apps. This growth provides telecommunication companies with a fascinating opportunity. Because they already have thousands of edge sites powering mobile and fixed networks, telcos are uniquely positioned to lead the edge services market.
According to a recent IDC white paper, telcos can only realize this opportunity if they pursue strategic and timely investments in edge operations and monetization tools.
“Only 10% of enterprises perceive telcos as edge players. However, enterprises expect telcos to provide products and services beyond edge connectivity. 40% would consider telcos as their main edge service provider. This would, however, require telcos to move up the value chain beyond connectivity. The worldwide end-to-end edge operations and monetization software opportunity amounts to $513 million in 2023.” –Martina Kurth, Assoc. VP, Head of Telco Research Europe, IDC
This must-read paper, The Edge Orchestration Market Opportunity in Telecommunications, by IDC’s Martina Kurth, details how telcos can capitalize on edge services opportunities. In this blog, I summarize key points from Kurth’s paper.
Potential edge opportunities
Kurth identifies four potential edge opportunities, highlighted below:
- Unprecedented Monetization Opportunities
Edge is an unprecedented telco asset monetization opportunity, along with many additional prospects for increasing revenue. Valuable end-user data from devices pushed to the edge present a myriad of uses cases such as AR/VR streaming, advertising, machine learning, pre-processing, and caching.
- New Business Models
Edge operations and monetization also gives telcos more opportunities to participate in external enterprise value chains and evolving digital ecosystems. Telecom operators can deliver end-to-end services based on their own services or in cooperation with content providers to enrich existing services.
- Ecosystem Partnerships
Telcos that want to benefit from new revenue streams must offer an edge platform as a service or become an end-to-end edge value-added service provider. To achieve this goal, they need to set up new delivery value chains consisting of developers (ISVs, enterprises, OTT players) as well as other telcos.
- IoT Enablement
Edge computing in IoT portfolios will reinforce the role of telecommunication operators in managing IoT gateways and providing analytic services, edge security services, and enabling critical applications.
The importance of edge orchestration and monetization tools
To compete effectively with hyperscalers in this market, Kurth says telcos must provide differentiated offerings and avoid being thought of as mere connectivity providers. Multi-access edge computing (MEC) is one place where telcos can differentiate themselves from hyperscalers. IoT, augmented/virtual reality (AR/VR), cognitive systems, and robotics are all areas that will require enhanced technical performance that cannot be delivered by the centralized architectures provided by hyperscalers.
However, Kurth believes the real opportunity for telcos is in edge orchestration software, which lets telcos operationalize and monetize their edge assets in conjunction wth 5G, WIFI, LTE, and NaaS. Edge orchestration ensures applications running at the edge are easy to deploy and manage across many sites. Using this new type of software, telcos can generate new revenue streams with targeted vertical solutions and enterprise applications—all centrally manageable across thousands of distributed locations through simple self‐service tools.
Kurth explains that this is an opportunity for telcos to play to their strength and leverage customer experience and relationship, performance, reliability, and security, while simultaneously driving new digital value streams, capturing external enterprise innovation. “In this context, edge orchestration will be the critical glue that allows the operationalization and monetization of backend distributed cloud and edge technology investments across industry enterprise partner value chains.”
Words of wisdom
Kurth concludes with advice for telco CTIOs looking to pursue strategic investments in edge:
- Telco edge projects risk failing without timely investments in operations, monetization, and orchestration, because costs may outweigh benefits.
- Due to legacy complexity, telcos are well advised to take an evolutionary approach to edge to mitigate risk and leverage corresponding existing technology investments such as WIFI, LTE, VOLTE, and 4G.
- Edge can accelerate innovation if deployed as a separate greenfield entity (e.g., as a new IoT industry vertical/edge division) in conjunction with a new business and operational model (e.g., IoT or augmented reality-based logistics governance deployed as-a-service).
- Telcos should not procrastinate with investments in adequate operational tools, to avoid the pitfalls of disaggregated technology silos as the telco cloud journey evolves, which may result, for example, in severe service quality degradation or outages.
- Telcos need to have a clear end-to-end edge technology road map, including business case and financial cash flow.
- The telco's cloud journey needs a holistic operations and monetization strategy, well aligned with unified digital KPIs (e.g., digital event or transaction latency) that cater to the needs of innovative digital business models and ecosystem value chains.
- Without the corresponding cultural change management initiatives, agile operational mindsets, and new organizational structures and models (such as holacracy), the full potential of edge innovation technology will fail.
A trusted partner: How HPE can help telcos succeed
To capitalize on the edge services opportunity, telcos need to bring applications from the cloud out to the edge where the data exists and combine them with innovative network services, creating an end‐to‐end flow across the edge. The key to making telcos' edge computing deployments successful for both the operator and their enterprise customers lies in ensuring that applications running at the edge are easy to deploy and manage across many sites.
HPE Edge Orchestrator enables this ease of deployment and management, helping telcos deliver new, targeted vertical solutions and enterprise applications—all centrally manageable across thousands of distributed locations through simple self‐service tools. HPE is the global, edge‐to‐cloud, platform‐as‐a‐service company that helps organizations accelerate outcomes by unlocking value from all their data, everywhere. HPE delivers unique, open, and intelligent technology solutions with a consistent experience across all clouds and edges to help customers develop new business models, engage in new ways, and increase operational performance.
Read the full report, The Edge Orchestration Market Opportunity in Telecommunications, Check out this video to see how you can optimize infrastructure resources and automate delivery of customized services when and where your customers need them.
About the author:
Rolf lEberhardt eads the orchestration solution family of Communications and Media Solutions at Hewlett Packard Enterprise. He has over 25 years of industrial experience in the telecommmunciation and computing industry, beginning with Swisscom in R&D, followed by 21 years at HP/HPE. Rolf holds an MBA from University of St. Gallen, and a Masters in Informatics from ETH Zurich.
Telco Industry Marketing
Hewlett Packard Enterprise
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