Can You Enjoy Metaverse Without Edge Computing?

Edge computing is certain to play a bigger role in our computing fabric as augmented reality, virtual reality and future Metaverse environments become possible. “Even at ultra-low latency, it makes little sense to stream (versus locally process) AR data given the speed at which a camera moves and new input data is received (i.e. literally the speed of light and from only a few feet away),” says Matthew Ball, EpyllionCo managing partner.

The conventional wisdom today is that multi-player games, to say nothing of more-immersive applications, do not work when total latency is greater than 150 milliseconds and user experience is impaired when latency is as low as 50 milliseconds, says Ball. 

source: Matthew Ball 

Will the Metaverse require 1,000 times more computing power? Intel thinks so. And that implies we might be decades away from a ubiquitous and widely-accepted Metaverse that people actually use routinely. 

“Consider what is required to put two individuals in a social setting in an entirely virtual environment: convincing and detailed avatars with realistic clothing, hair and skin tones; all rendered in real time and based on sensor data capturing real world 3D objects, gestures, audio and much more; data transfer at super high bandwidths and extremely low latencies; and a persistent model of the environment, which may contain both real and simulated elements,” says Raja Koduri, Intel SVP and GM of Intel’s Accelerated Computing Systems and Graphics Group. “Now, imagine solving this problem at scale--for hundreds of millions of users simultaneously--and you will quickly realize that our computing, storage and networking infrastructure today is simply not enough to enable this vision.”

“We need several orders of magnitude more powerful computing capability, accessible at much lower latencies across a multitude of device form factors,” says Koduri. 

“Truly persistent and immersive computing, at scale and accessible by billions of humans in real time, will require even more: a 1,000-times increase in computational efficiency from today’s state of the art,” he notes. 

Whales Really Do Matter, for Firms of Any Size

Whales matter, in business, and for just about every business. Look at expected profit contributions across a firm’s customer base. The first 20 percent of customers will supply the most cumulative profit. The tail of the last 80 percent of customers might contribute almost nothing in that regard. 

source: Baker Tilly 

How can a software startup better estimate where its revenue might come from? Nnamdi Iregbulem, Partner at Lightspeed Venture Partners, actually has thought quite a lot about that subject. Basically, it appears the Pareto Principle holds for software startups, across the full range of firm sizes. 

“I think people talk about concentration as if there are a couple of companies that have revenue concentration issues, and then the rest are fine,” says Iregbulem. “ It just turned out that literally every company has pretty high customer concentration, not in the sense that there was one customer that was 10 percent of revenue, but in the sense that there was a subset of customers that were a pretty meaningful share, something like 20 percent being 70 percent of revenue.”

source: Nnamdi Regbulem 

In other words, in every industry segment, it is not just “whales” who see Pareto distributions, but firms of every size in every segment. The implications are clear enough: even a smaller firm targeting a smallish niche is going to have its own “whales” (a few customers than anchor total revenues). The same goes for profits. 

source: Baker Tilly 

“It’s a very common mistake I find among investors where they'll meet a company, the company will have X number of customers and the standard ACV (average contract value) will be fairly small because most of their users are either free users or in some kind of lowest-tier version of the product,” says Iregbulem. “But they do have a couple of meaningful customers that are spending real revenue or paying the highest tier of a product or what have you.”

It is not unusual for as much as 60 percent of customers to provide no more than “breakeven” performance, in terms of profitability. 

source: Baker Tilly 

In other words, software monetization is a power law. A power law distribution is a curve that looks like this: most of the results are generated by a small fraction of instances, products or customers. “Rather than the exception, high concentration is the norm in certain verticals (for example cloud infrastructure) or pricing models (consumption/pay-as-you-go) where a "customer" can be as small as tens of dollars per month,” he notes. 

source: Reaction Wheel 

In the data center and connectivity businesses, that rule tends to hold as well. A handful of customers anchor demand for global bandwidth and data center capacity. The rule also seems for  devices connected to Wi-Fi. 

“Combined, the above insights form a mathematical justification for "land and expand"-style go-to-market strategies,” he adds. “Here, land and expand is effectively an indexing strategy: land at as many organizations with as little investment as possible.”

“Every once in a while you'll land a Google, a Facebook, or an Amazon (both figuratively and literally) which will drive a disproportionate share of revenue,” he says.”Even if those customers start off small, any given customer could potentially become quite large.”

Whales matter, in business, for revenues and profits.

Hybrid Access Networks Might Get More Hybrid

The “hybrid” in “hybrid fiber coax” has been a key strategic approach used by the cable industry more generally. Fiber and coax; owned spectrum and mobile virtual network operator; MVNO and Wi-Fi offload; linear video and on-demand streaming; analog and digital; content ownership and distribution.

Keep in mind the "hybrid" business strategy often suggests itself at times of key technological change. Perhaps the classic example is the transition from sailing ships to steam-powered ships, when for 100 years many sailing ships were outfitted with steam boilers, but used both methods of propulsion.

The key point is that any hybrid still represents a transition strategy "from something to something else."

Now hybrid looks to happen for next-generation access networks. Cox Communications, joining others such as Comcast, says it will deploy fiber to the home and DOCSIS 4.0 networks using HFC. 

Though Cox has given few details, the network aims to supply 10 Gbps. Cox does not say whether that is symmetrical or not. DOCSIS 4.0 will feature upstream speeds to 6 Gbps, as the standard calls for. FTTH is almost certainly going to be symmetrical.  

 In a first, Virgin Media O2 plans to operate its gigabit hybrid fiber coax network side by side with the coming fiber to home network. That has never been done before at scale, if ever, by a cable TV company. 

The best analogy is the way mobile network operators run several generations of mobile networks simultaneously, using discrete radios, spectrum and often towers or radio sites. When telcos deploy optical fiber, they decommission the copper access network. 

That decision should have operating cost implications, positive and negative. On the positive side of the ledger, VMO2 will not have to migrate customers from the hybrid fiber coax network to the FTTH network in every case. 

That will save truck roll costs, customer premises equipment costs and some amount of customer service work to explain and convince people to switch over. 

On the negative side of the ledger, supporting two separate networks, with different underlying technologies, will not provide clear operating cost advantages. Energy costs for two networks will be necessary. Support staff will have to be trained to support both networks. 

It is possible migration will not be necessary in a majority of cases, for some time. So we will have to wait and see how the operating cost advantages and disadvantages appear over time. 

Take rates will be important. Though VMO2’s national FTTH network will  not operate in parallel everywhere, it will do so in areas where the HFC network already operates, which might mean 15.6 million or so homes. Seven milliion homes will have FTTH only.  

Cox and Comcast will operate two networks as well; just not two networks in the same area, as a rule. FTTH will undoubtedly be targeted to business-rich areas or higher-demographic suburban areas first, where the demand for multi-gigabit service is expected to develop first.

Virgin Media O2 Will Run HFC Network Side by Side with the New FTTH Network, in a First

In a first, Virgin Media O2 plans to operate its gigabit hybrid fiber coax network side by side with the coming fiber to home network. That has never been done before at scale, if ever, by a cable TV company. 

“We don't intend to shut down the HFC network,” Fries says. “ In fact, it wouldn't be surprising to me if the HFC network were operating for quite some time in a sort of a dual mode because we don't want to force migration to fiber.”

That sort of flies in the face of the argument that running a single network costs less than running two at the same time. That suggests operating cost savings will not be a significant part of the upgrade of the whole network to FTTH. 

“In our case, we'll migrate people to fiber who want 1, 2, 3, 10-gig,” says Fries. “But if you're happy with your 500-meg or your 250-meg, we may or may not incur the cost of migrating a customer from HFC to FTTH. 

“We continue to see cost per premise decline to below GBP 600 (USD 816) per premise as we use more of BT's passive infrastructure, and that only improves the significant return on capital we're already seeing from this investment,” says Liberty Global CEO Mike Fries. “We are accelerating our Lightning build program in 2022 from around 330,000 homes last year to over 500,000 homes this year.”

“Second, we completed the 50,000 home fiber-to-the-premise trial that supports our previously announced intentions to upgrade our entire 15 million homes to fiber by 2028,” says Fries. That build confirms Virgin Media O2 assumptions about build cost. 

“VMO2 will commit to be an exclusive anchor tenet of the network” while also opening up the network on a wholesale basis to other internet service providers, he says. 

In practice, since the whole VMO2 HFC network runs at gigabit downstream speeds, the only customers that would choose to migrate are those that want higher upstream speeds or “faster than gig” downstream speeds.

Mobility is the New Battlefield in War Beween U.S. Telcos and Cable TV Operators; Home Broadband the Current Issue

The U.S. cable industry has fared relatively better in the competition with telcos for at least some logical reasons, aside from arguable industry culture advantages. In the competition for fixed network voice and mobile services, cable has been the attacker, starting with zero market share and winning accounts from the incumbents. 

In home broadband, cable has benefitted from the relative slowness of telco adoption of fiber-to-home platforms. Simply, cable has leveraged its lower-cost hybrid fiber coax platform to radically boost performance at much-lower cost than telcos have been able to do. 

In video services, where cable was the incumbent, there was a slow attrition of some market share to telcos. The big share held by non-cable providers was in the hands of the satellite providers, and AT&T at one point owned all of DirecTV, immediately making AT&T one of the largest providers of linear video subscriptions in the U.S. market. 

That stake in DirecTV has been spun out to private equity group TPG, but AT&T retains a 70-percent interest in the venture. 

Still, terrestrial fixed network market share held by telcos was relatively small. 

source: Cable Compare 

In recent decades, competition between telcos and cable has shifted. Video share has remained relatively constant, with the overall market gradually shrinking. The fixed network voice market is declining, for all leading providers. 

Home broadband has emerged as the revenue growth driver. And while cable has held close to 70 percent of the installed base in that market, many observers--perhaps most--now expect telcos to take more share as FTTH becomes more common. 

Nationally, telcos have about 30 percent share of the home broadband installed base. The issue is how much additional share telcos can gain as they ramp up FTTH platforms and as 5G fixed wireless becomes a factor for Verizon and T-Mobile. 

All that likely means that mobility will become the new growth battlefield between cable and telco.

Does More Privacy Mean Fewer Ads?

One way of the other, users are going to have more privacy and control over their data where it comes to its use for advertising. But that almost assuredly does not mean there will be less advertising. There could plausibly be more advertising, simply because less-targeted ads mean "more waste."

To make up for the less-effective targeting, advertisers will have to spend more.

It is probably the case that most people, most of the time, do not prefer to see or hear advertising. Which is one way of saying they do not like advertising. 

Of course, many argue what people hate is bad advertising. Some surveys suggest 70 percent of consumers globally tolerate ads, including about a quarter who say ads can be enjoyable. 

source: Marketing Week 

 

But that is likely a minority opinion, sometimes advanced by marketing professionals, not consumers who are exposed to the ads. These days, people tend to view ads as intrusive, too numerous and an infringement on privacy. 

source: Stepan Stroe 

It’s more than that: ads are viewed as intrusive, in much the same way that  many people also do not appreciate unexpected phone calls, which likewise are viewed as intrusive. 

And yet advertising is a big business of perhaps $300 billion in annual revenue in the United States alone. But grumbling about targeted advertising seems to be growing in some quarters. The European Parliament is looking at legislation outlawing targeted ads using religious beliefs, sexual orientation and racial or ethnic origin.  

Facebook already does so. And Google is ending behavioral targeting. That means cross-site tracking will not happen, outside properties Google itself owns. 

Perhaps more important, many in the internet ecosystem--especially Apple--are moving to give consumers more control over ad tracking data. 

Apple will allow its users to opt in or out whenever an app wants to track a user’s activity across other companies’ apps and websites. 

source: Medium

And the trend has been underway for some time. Restricting use of third-party cookies provides one example. 

One way or the other, targeted advertising is going to change. Which also means advertising is going to change. But most of us likely do not believe there will be less advertising. It might be more private. 

Ads might be less effective. But who believes there will be fewer ads? Probably nobody. Not so long as advertising enables access to “free content” that people want. And not so long as firms still need to sell their products. 

source: Statista

Video Drives Most Bandwidth Consumption, Mobile Phones the Most Connected Devices

Some really-important trends might not be entirely obvious in this description of a report about how customers used Wi-Fi on the Comcast network. 

You might think the biggest use would be video streaming, and that is likely true in terms of bandwidth consumption, though the report is organized around “numbers of connected devices” not “bandwidth consumption.”

You might be somewhat surprised that personal computers do not even show up as a category worth quantifying. It is not so much home broadband as a platform for work, homework or economic growth is unimportant. PC use for work or learning is important. 

But such use cases do not dominate bandwidth consumption, which is led by gaming, TV and other entertainment purposes. 

source: Comcast  

Bandwidth consumption is another matter, as global bandwidth consumption is dominated by video, including entertainment video and video clips on social media and for advertising. 

source: Comscore

source: Comscore

source: NCTA