Why Multi-Access Edge Computing Opportunity is Possibly Fleeting

The problem with big lucrative new markets is that they attract lots of competition. "Your margin is my opportunity," Amazon CEO Jeff Bezos notably has quipped.

So even if internet of things and multi-access edge computing are legitimate areas of potential new revenue for telcos and other internet service providers, they also are highly interesting to all sorts of other powerful potential competitors. And they are moving.

Walmart, for example, plans to build its own edge computing centers. Furthermore, Walmart expects to make that capability available to third parties. Also, Walmart expects to make its  warehouse and shipping capabilities available to third-party sellers, using a model perhaps similar to the way Amazon supports third-party retailers. 

Walmart further says it will use its large supercenter store locations to fulfill online orders for Walmart’s groceries and other items.

The point is that the market opportunity for multi-access edge computing now is being challenged by retailers, Amazon and eventually others who plan to deliver edge computing as a service themselves, perhaps foreclosing much of the potential role for connectivity service providers to become suppliers of edge computing as a service. 

“All the cloud providers see themselves as extensions of edge computing,” says James Staten, Forrester Research principal analyst. “They’re trying to become the edge gateways. One of the biggest ways they’re gaining attention--and every enterprise should pay attention to this--is that they want edge computing as a service.

At this point, it also is possible to flip that argument. Cloud computing might not be an "extension" of edge computing. Edge computing might be an extension of cloud.

In other words, to the extent the next generation of computing as a service is "at the edge," then the cloud kings have all the incentive they need to master edge computing themselves, simply to protect their existing businesses, instead of possibly losing that new business to others in the ecosystem.

The challenges for telcos at the edge are reminscent of their experiences in the data center or colocation business. In the former case, telcos generally have added little value. In the latter case, telco facilities have not proven to be the logical neutral host platforms.

It is possible that distributed telco central offices will become convenient locations for some types of edge computing facilities. Those will probably develop around a relative handful of important use cases requiring ultra-low latency and high bandwidth in outdoor settings.

The reason "outdoor" becomes important is that any on-site, indoors use cases arguably will work using on-premises edge computing platforms and fixed networks for access. The specific value of 5G access might not be relatively lower for indoors use cases, compared to
outdoor and untethered use cases.

If you think about it, that reflects the current value of mobile access networks. They are most valuable for untethered, outdoors, mobile instances, least useful inddors, where fixed network access using Wi-Fi is arguably a better substitute.

The larger point is that edge computing value will come as it supports important applications delivered "as a service." The physical details of colocation, rack space, cooling, power and security will be a business, but not as big a business as applications based on edge computing.

It remains unclear whether telco execs really believe they can master roles beyond access and rack space rental. Early moves by others in the ecosystem suggest why the multi-access edge computing (ISPs as the suppliers) opportunity will be challenging.

If the biggest customers for computing as a service increasingly become the biggest suppliers, opportunities for others in the ecosystem are limited.