Just mention 5G in the communications industry and you are going to get some kind of reaction. Usually these reactions alternate from wild-eyed speculative visions to bitter skeptical rants. But one thing is certain: Service providers need to get their 5G cloud edge strategy right, whatever shape and size it comes in.
It's industry legend how the major carriers missed some of the greatest technology revolutions in the cloud. Video streaming and enterprise cloud services are the first to come to mind, delivering companies such as Amazon, Microsoft, Google, and Netflix trillions of dollars in value while the service providers merely collected a few shekels on the broadband toll roads. They also bungled data centers, through billions of dollars in investments that were reversed as the cloud took off.
The largest global service providers such as AT&T, BT, Deutsche Telekom, Telefonica, and Verizon, are gearing up for the next phase of cloud investment, as they place their bets on 5G technology at the network edge. This has the potential to unleash a new wave of apps and business opportunities at the edge of the cloud, as data and compute power gets pushed closer to the customer.
Will they make hay or blow it again? Let's take a look at potential strategies. Futuriom spent the last three months studying the potential strategies for the 5G Edge market in our report "5G Catalysts: Opportunities at the Edge" (subscription required). Here are some of the conclusions I have reached from that report.
Embrace the apps
As 5G and other wireless technologies such as private WiFi get rolled out, many are expecting a wave of capital investment that may exceed LTE. In addition, it's expected that new apps such as smart cities, augmented reality (AR) /virtual reality (VR), real-time analytics, artificial intelligence, autonomous driving, and gaming will require new infrastructure closer to the customer—at the edge.
As I look through the missed opportunities by service providers, there's a common thread—they tend to impose apps upon people rather than let people choose. When the first flip phones came out, service providers toyed with how to provide Web access. It always boiled down to some version of a walled garden on a proprietary browser they could control. Briefly, they had some hits with ringtones, but these apps were quite simplistic and obviously short--lived. Netflix flourished on the premise of choice, working around telco and cable walled gardens.
Then along comes Instagram, driven by the zeitgeist of mobile social culture. This is not something a major service provider could invent. Ditto Netflix, which was antithetical to the bureaucratic service provider doctrine of control.
So how would things be different on the edge? Service providers should focus on creating world-class infrastructure and leave the apps to the developers. The infrastructure in itself will present new opportunities as new apps are discovered.
The best multiple systems operators, such as Comcast and Charter Communications, have been doing well focusing on infrastructure and services. There's nothing wrong with that. Cable MSOs are also making into inroads to business services with software-defined networking (SD-WAN), encroaching on traditional carriers' turf. If you don't focus on the best networking, you may even lose ground in legacy services.
Instead of being worried about being just "pipe providers," service providers should focus on being the best pipe providers. They are regulated utilities, after all.
As 5G edge infrastructure gets rolled out, there will be many new undiscovered and innovative apps for the telcos to connect—the Instagrams of the edge. Interesting apps and potential services are already emerging. The potential to connect and bill both new and existing customers—their core competency—will be plentiful.
Some of these markets could be huge. Start with apps such as autonomous vehicles and gaming. With an estimated 1.5 billion passenger vehicles on the road, vehicles will be a perfect market for service providers. They already have links to household customers through wireless and broadband services, and linking to their multiple vehicles with add-on services isn't a stretch. Next-gen gamers, who are known for buying the most souped up computers, will be willing to pay for high-performance networks that deliver low latency.
Once vehicles become more autonomous, apps and data consumption by vehicles and passengers will explode. This should be a major focus for service providers.
Leave innovation to the cloud
If service providers focus on connecting, billing and providing world-class infrastructure, they should leave development to the cloud. I'm not talking about internal development, in which service providers upgrade their antiquated operations and support systems (OSS) technology. I'm talking about development of the so-called edge stack—the suites of software and hardware that will aggregate and deliver services to the customers.
Service providers are still struggling with the legacy of network functions virtualization (NFV), an effort they invested billions in but have rolled out slowly. The cloud platforms such as Amazon Web Services (AWS), Google Cloud Platform (GCP), and Microsoft Azure, have developed innovation at a much higher rate.
Rather than setting up parallel committees such as the ETSI, service providers need to merge or plug their edge and NFVI (network functions virtualization infrastructure) efforts into cloud efforts. Let's stop talking about service provider edge platforms as different from cloud platforms, and work on them being the same.
There are already indications that the industry is heading in this direction. For example, progress in Microsoft's Azure Edge stack and Red Hat's partnership with NVDIA have produced edge platforms being put into use today in industries such as the automotive business. VMware recently announced that its SD-WAN and NFV platforms have been implemented at more than 100 global service providers.
Service providers shouldn't be paranoid about outsourcing their technology. They've never been particularly good at building their own. The cloud moves too fast for them, and there are innovators that can provide them with the best technology on a better timeline.
Next week I’ll dive into some of the emerging 5G apps, and which ones have the best potential.
R. Scott Raynovich is the founder and chief analyst of Futuriom. For two decades, he has been covering a wide range of technology as an editor, analyst, and publisher. Most recently, he was VP of research at SDxCentral.com, which acquired his previous technology website, Rayno Report, in 2015. Prior to that, he was the editor in chief of Light Reading, where he worked for nine years. Raynovich has also served as investment editor at Red Herring, where he started the New York bureau and helped build the original Redherring.com website. He has won several industry awards, including an Editor & Publisher award for Best Business Blog, and his analysis has been featured by prominent media outlets including NPR, CNBC, The Wall Street Journal, and the San Jose Mercury News. He can be reached at [email protected]; follow him @rayno.
Industry Voices are opinion columns written by outside contributors—often industry experts or analysts—who are invited to the conversation by FierceTelecom staff. They do not represent the opinions of FierceTelecom.