Fixed Wireless, FTTH Will Eat Into Cable Market Share

Most equity analysts following U.S. home broadband expect cable TV operator market share to continue dipping as telcos and other independent internet service providers ramp up investments in fiber to home and 5G fixed wireless. 

The amount of fiber to home investment also will be propelled by private equity and institutional investor interests who are buying access network assets with an eye to upgrading copper access networks to optical fiber. 

source: NextTV, Lightshed Partners 

For most of the past two decades cable operators have steadily gained market share and installed base, often getting 80 percent to 100 percent of net home broadband account additions in any given year. 

But that has largely been possible because hybrid fiber coax networks have trounced telco digital subscriber line networks in terms of performance. That changes as DSL is replaced by fixed wireless and FTTH. 

So we can be sure that mobile accounts will eventually replace home broadband as the cable operator revenue growth driver.

Some "Metaverse" Related Trends Will Detract from Realism

It is not clear how soon metaverses will be commonly used for gaming, commerce or other content use cases. It is safe to argue that some platforms providing realism and a three-dimensional representation of reality could come much sooner. 

As we experiment, it also is possible that the movement towards higher realism will be set back, as when people on a video conference use avatars instead of a live image. Still, as a rule, the advantage of any of the technologies underlying the metaverse is "greater realism."

In some cases that also applies to the ability to model changes to any system if one or more parameters are changed. It is safer and a better use of deployed capital to conduct a "what if" experiment not on an actual real world system but on its virtual twin.

Digital twins seem ideally suited for many industrial use cases, for example. Real-time reporting might not always be the advantage. Sensing and control functions might already be available. 

What is new is the ability to vary parameters and play “what if” scenarios, much as accountants in the early days of the personal computer used spreadsheets for financial analysis. 

The other new element is the ability to apply machine learning to performance data. 

source: SWAN 

Such practical implementations are both easier to create, as they are confined to a bounded universe of requirements. Other more-immersive environments will take longer to construct, as they are more complex and have the relative disadvantage of an uncertain advantage over legacy ways of doing things.  

It is easy to underestimate the challenge of introducing major immersive new experiences to any legacy process. Though not a full “metaverse,” three-dimensional experiences are expected to improve video conferencing, for example. 

source: Rave 

But the shift to business and consumer use of video conferencing already has consumed the better part of a half century in practice, and nearly two centuries as a concept. Some users might prefer the use of avatars within the conferencing experience. Others might see that as a step backwards in terms of realism.  

Metaverse Roles for Connectivity Providers?

If “metaverses” become a salient feature of the internet experience, such experiences will be supported by a range of computing and connectivity roles: edge computing, data centers, 5G and Wi-Fi, high-speed and low-latency access and transport networks. 

For Verizon, metaverse roles include compatibility with 5G and multi-access edge computing.  For SKT metaverse roles include creation of an actual platform, ifland . For Deutsche Telekom metaverse means creating a German version of SKT’s ifland. 

Many “over the top” roles related to connectivity also are possible, such as new ways of providing ownership of mobile phone numbers. 

In principle, there are many roles or functions beyond connectivity or cloud or edge computing that connectivity providers could seek to embrace. Just as obviously, few will succeed, if history is any guide. 

But some will try. As we have seen earlier in internet history, investments in content, or content production, are possible new roles some will try. 

For most, connectivity, edge real estate, managed private networks and other features or products are more likely to produce measurable revenue boosts. 

source: ey

"You Will," AT&T Said About 30 Years Ago. Mostly, We Do.

Predicting the future always is hard, but AT&T Bell Labs has to try. And so it did. Smart home technology, video on demand, distance learning, smart watches, videoconferencing, voice activation AT&T got right. 

But not every prediction proves correct. It is a hazard of the craft. 

Can IoT, Edge Computing, Private Networks Move the Service Provider Revenue Needle?

Estimates of annual global telecom service provider revenue vary by about $300 billion to $400 billion, from a low of about $1.4 trillion to a high of about $1.8 billion. Those figures typically are of little importance to most people inside and outside the industry, but are vital for analysts who estimate the importance of new revenue sources and markets. 

This matters, for example, when trying to assess the revenue contribution any new product might represent. Under normal circumstances, global service provider revenue grows by at a slow rate. Growth in the 1.5 percent range or less is the present status for the industry overall, though some markets and some companies see higher growth than the average. 

The point is that organic revenue growth can be as low as $20 billion to $30 billion in a typical year. So any new product that generates $20 billion to $30 billion in industry new revenue in any given year is a big deal.  

It is almost certain that global service provider revenues from multi-access edge computing, for example, will be in the single-digit billions ($ billion) range over the next few years. The same is true of forecasts of service provider internet of things revenue. The service provider 4G or 5G private networks revenue stream is likely to be small as well. 

The point is that new revenue sources such as edge computing, IoT and private networks are unlikely to move the global service provider revenue needle over the next several years, and perhaps not for a decade. 

Those revenues might be more important in a handful of markets, however, such as large countries that are early adopters. Even there, however, the large installed base of revenue means the incremental growth from the new services will make a generally slight contribution. 

In some part, the growth challenge is the result of the size of the installed base itself. 

When including the value of subscription TV services, the global telecom services market (mobile plus fixed) amounts to about $1.8 trillion in annual revenues, according to Precedence Research. The firm uses a cumulative annual growth rate of 4.85 percent from 2022 to 2030, a figure most observers would likely agree is too optimistic. 

source: Precedence Research 

Grand View Research estimates revenue in about the same range. But others, such as Analysys Mason, tally global revenue at a lower level. closer to $1.4 trillion. 

source: Analysys Mason

IDC forecasts are close to those of Analysys Mason, with 2021 revenue in the $1.5 trillion range. 

source: IDC 

As a rule, I have found the more-conservative figures are closer to reality. What matters is the impact new service sources could make.

Will MEC Revenues Ever Surpass Capex to Create it?

One recurring issue with forecasts of multi-access edge computing is that it is easier to make predictions about cost than revenue and infrastructure investments than customer demand. Beyond that, MEC almost necessarily involves some sharing of revenue among ecosystem participants. 

To determine whether the connectivity provider business model for MEC actually works, one has to delineate cost (capital investment as well as operating costs) as well as revenue. And some of us still do not clearly see how the business plan works out, at least where it comes to retail revenue.

It is a bit easier to envision how edge computing works as a necessary part of the network infrastructure to support advanced mobile networks, which are, by definition these days, distributed. In other words, MEC might be just as important as telco operating infrastructure as a possible source of retail revenue from customers.

Research and Markets has forecast 2028 MEC revenue at about $23 billion. That mostly includes infrastructure sold by hardware and software suppliers to create MEC capabilities. 

Service revenue from actual “edge computing” is included, but one still must make assumptions about the receipt of such revenue by ecosystem partners, such as a hyperscale computing as a service supplier and its access network partners. 

But one matter is clear enough: most “MEC” revenue is generated by the sale of hardware and software to create the capability, not revenues earned by the supplier of the actual “computing” service. 

source: Research and Markets 

It matters greatly “who” is supplying the edge computing “as a service” and who is providing other necessary infrastructure. It also matters “what” is defined as “edge computing revenue and services.” In addition to the “as a service” revenue, there are recurring revenue contributions from real estate (colocation) and connectivity. 

Right now, it is nearly impossible to accurately predict the magnitude of “edge computing” revenues. How does Amazon Web Services state revenue for a customer account that uses both cloud and edge resources, for example? 

Does a mobile operator report additional connectivity revenue supporting internet of things use cases as “connectivity” revenue in its business customer segment, or as “edge computing” revenues?

Looking only at private networks, there are similar issues. How do we separate “edge” from other “computing infrastructure” spending? As always, attributions matter. What is “private edge;”what is use of “public edge?”

 It is far easier--if not “easy”--to estimate what it might cost to create MEC capabilities. 

Private network multi-access edge computing investments will amount to about $6 billion by 2030, ABI Research now estimates.  

Juniper Research predicts that annual investments by telecommunications operators on multi-access edge computing infrastructure will reach $11.6 billion in 2027, up from $5.4 billion in 2022; a CAGR of 16.7 percent.

Total “spending” on  MEC facilities will be higher. Juniper Research estimates investment of nearly $9 billion in 2022 growing to nearly $23 billion in 2027. 

By 2027 mobile operators will have built out more than 3.4 million MEC nodes, up from less than one million by the end of 2022. 

Juniper forecasts that over 1.6 billion mobile users will have access to services underpinned by MEC nodes by 2027, up from only 390 million in 2022. 

Of course, that is a prediction about capital investment, not revenue. And revenue also is a complicated matter where it comes to edge computing. Edge computing spending can represent purchases of user or network devices; software capabilities or computing as a service or 5G access to support edge computing. 

So revenue can accrue to a number of participants in the edge computing ecosystem: device retailers, network infrastructure providers, software suppliers or connectivity service providers. So when researchers talk about MEC revenue or investments, one has to separate shares within the ecosystem. 

source: Grand View Research 

Some estimates have total MEC revenues exceeding $25 billion by perhaps 2027 and close to $70 billion by 2032.  Other estimates suggest annual revenue of close to $17 billion by 2027.  

But those forecasts virtually always lump together revenues earned by hardware, software and services suppliers: infrastructure and platform plus computing as a service revenues. And computing as a service revenues will likely be dominated by hyperscalers, not mobile operators. 

Connectivity providers will profit from real estate support and some increase in connectivity revenues, but relatively rarely from the actual “edge computing as a service” revenues. 

For example, assume 2021 MEC revenues of $1.6 billion globally; a cumulative average growth rate of 33 percent per year; services share of 30 percent; telco share of service revenue at 10 percent. 

Multi-access Edge Computing Forecast
Year	2021	2022	2023	2024	2025	2026	2027	2028
Revenue $B	1.6	2.1	2.8	3.8	5.0	6.7	8.9	11.8
Services Share	0.3	0.6	0.8	1.1	1.5	2.0	2.7	3.5
Growth Rate	0.33
Telco Share	0.1
Telco Revenue	0.2	0.2	0.3	0.4	0.5	0.7	0.9	1.2
source: IP Carrier

The actual MEC revenue from MEC is quite small by 2028. In fact, too small to measure. Of course, all forecasts are about assumptions. 

One can assume higher or lower growth rates; different amounts of connectivity provider participation in the services business; different telco shares of the actual “computing as a service” revenue stream; greater or lesser contributions from mobile connectivity revenue from MEC. 

The point is that actual MEC revenues earned by mobile operators or other connectivity providers might actually be quite low. So value earned from all those infrastructure investments would have to come in other ways.

Higher subscription rates; higher profit margins; lower churn; higher average revenue per account are some of the ways MEC could provide a return on invested capital. Some service providers might actually provide the “computing as a service” function as well, in which case MEC revenues could be two to three times higher. 

But many observers are likely to be disappointed by the actual direct revenue MEC creates for a connectivity provider.  

So revenue can accrue to a number of participants in the edge computing ecosystem: device retailers, network infrastructure providers, software suppliers or connectivity service providers. So when researchers talk about MEC revenue or investments, one has to separate shares within the ecosystem. 

How Much Incremental New Revenue for Mobile Operators from Edge Computing?

As important as they might be, incremental new revenue streams from 5G, internet of things, private networks and edge computing might possibly be far smaller than many assume. For starters, the bulk of 5G revenues will continue to come from business and consumer "phone" subscriptions.

New connectiions supporting IoT, private networks or edge computing will take time to develop, and might not create as much revenue as some project. IoT average revenue per device, for example, is more than an order of magnitude lower--and often nearly two orders of magnitude lower--than for a consumer mobile phone connectiion. So volume matters.

5G private networks will not necessarily be "managed" services supplied by mobile operators. Enterprises will build their own networks, as they build their own Wi-Fi and other local networks.

And multi-access edge computing business models are generally shifting towards partnerships with hyperscale cloud computing suppliers. That means most of the "edge computing service revenue" will be earned by the hyperscalers, not mobile operators.

But value and revenue for mobile operators are expected from all those areas. The issue is how much it will cost to participate, and the magnitude of revenue streams. Consider the investment side.

Juniper Research predicts that annual investments by telecommunications operators on multi-access edge computing infrastructure will reach $11.6 billion in 2027, up from $5.4 billion in 2022; a CAGR of 16.7 percent.

Total “spending” on MEC facilities will be higher. Juniper Research estimates investment of nearly $9 billion in 2022 growing to nearly $23 billion in 2027.

By 2027 mobile operators will have built out more than 3.4 million MEC nodes, up from less than one million by the end of 2022.

Juniper forecasts that over 1.6 billion mobile users will have access to services underpinned by MEC nodes by 2027, up from only 390 million in 2022.

Of course, that is a prediction about capital investment, not revenue. And revenue also is a complicated matter where it comes to edge computing. Edge computing spending can represent purchases of user or network devices; software capabilities or computing as a service or 5G access to support edge computing.

So revenue can accrue to a number of participants in the edge computing ecosystem: device retailers, network infrastructure providers, software suppliers or connectivity service providers. So when researchers talk about MEC revenue or investments, one has to separate shares within the ecosystem.



source: Grand View Research

Some estimates have total MEC revenues exceeding $25 billion by perhaps 2027 and close to $70 billion by 2032. Other estimates suggest annual revenue of close to $17 billion by 2027.

But those forecasts virtually always lump together revenues earned by hardware, software and services suppliers: infrastructure and platform plus computing as a service revenues. And computing as a service revenues will likely be dominated by hyperscalers, not mobile operators.

Connectivity providers will profit from real estate support and some increase in connectivity revenues, but relatively rarely from the actual “edge computing as a service” revenues.

For example, assume 2021 MEC revenues of $1.6 billion globally; a cumulative average growth rate of 33 percent per year; services share of 30 percent; telco share of service revenue at 10 percent.

The actual MEC revenue from MEC is quite small by 2028. In fact, too small to measure. Of course, all forecasts are about assumptions.

Multi-access Edge Computing Forecast $Billions
Year	2021	2022	2023	2024	2025	2026	2027	2028
Revenue $B	1.6	2.1	2.8	3.8	5.0	6.7	8.9	11.8
Services Share	0.3	0.6	0.8	1.1	1.5	2.0	2.7	3.5
Growth Rate	0.33
Telco Share	0.1
Telco Revenue	0.2	0.2	0.3	0.4	0.5	0.7	0.9	1.2
source: IP Carrier

One can assume higher or lower growth rates; different amounts of connectivity provider participation in the services business; different telco shares of the actual “computing as a service” revenue stream; greater or lesser contributions from mobile connectivity revenue from MEC.

The point is that actual MEC revenues earned by mobile operators or other connectivity providers might actually be quite low. So value earned from all those infrastructure investments would have to come in other ways.

Higher subscription rates; higher profit margins; lower churn; higher average revenue per account are some of the ways MEC could provide a return on invested capital. Some service providers might actually provide the “computing as a service” function as well, in which case MEC revenues could be two to three times higher.

But many observers are likely to be disappointed by the actual direct revenue MEC creates for a connectivity provider.