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.
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.
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