Verizon Business, IBM Collaborate for Edge Computing

A new collaboration between Verizon Business and IBM illustrates the way 5G, multi-cloud support, edge computing, artificial intelligence, internet of things, “Industry 4.0,”  private networking are intrinsically related. 

The companies plan to combine Verizon’s 5G and Multi-access Edge Compute (MEC) capabilities, IoT devices and sensors at the edge, and IBM’s expertise in AI, hybrid multi cloud, edge computing, asset management and connected operations. 

source: IBM

The collaboration uses Verizon’s ThingSpace IoT Platform and Critical Asset Sensor solution (CAS) plus IBM’s Maximo Monitor with IBM Watson and advanced analytics. This effort has IBM supplying the needed analytics and multi-cloud computing support; Verizon the edge devices, access network and collocation facilities. 

source: IBM

IBM and Verizon are also working on potential combined solutions for 5G and MEC-enabled use cases such as near real-time cognitive automation for the industrial environment. 

Separately, Verizon says the 5G Future Forum will release its first technical specifications in the third quarter of 2020. The 5G Future Forum is a group of 5G service providers and suppliers working to  accelerate the delivery of Multi-access Edge Computing-enabled solutions around the world.

The 5G Future Forum was established in January 2020 by América Móvil, KT Corp., Rogers, Telstra, Verizon, and Vodafone.

What is edge computing?

S Curve, Bass Model, Gompertz Function

The concept of the S curve has proven to be among the most-significant analytical concepts I have encountered over the years. It describes product life cycles, suggests how business strategy changes depending on where on any single S curve a product happens to be, and has implications for innovation and start-up strategy as well. 

source: Semantic Scholar 

Some say S curves explain overall market development, customer adoption, product usage by individual customers, sales productivity, developer productivity and sometimes investor interest. It often is used to describe adoption rates of new services and technologies, including the notion of non-linear change rates and inflection points in the adoption of consumer products and technologies.

In mathematics, the S curve is a sigmoid function. It is the basis for the Gompertz function which can be used to predict new technology adoption and is related to the Bass Model.

 I’ve seen Gompertz used to describe the adoption of internet access, fiber to the home or mobile phone usage. It is often used in economic modeling and management consulting as well.

We Don't yet Agree on What the "Fourth Industrial Revolution" Entails

One hears quite a lot about how 5G will help power the “fourth industrial revolution.” It never is completely clear how people are using the term, but one way of looking at matters is to recall three earlier revolutions based on mechanized looms, steam power and railroads, oil energy and mass production. Using that typology, computing will power the fourth industrial revolution, which we have been in for some decades. 

source: Carnegie Investment Counsel

Others might describe the revolutions slightly differently, basing the first revolution on mechanization, steam and water power. The second industrial revolution then is mass production based on the use of electricity. The third revolution then was based on use of electronic and information systems plus automation. The fourth revolution then is based on cyber-physical systems. 

source: Britannica

There are yet other ways to describe the fourth industrial revolution, where the first was based on the steam engine, the second on mass production, the third on information technology and the coming fourth on smart finance. Some descriptions of the revolutions focus on steam power, electricity and information technology as the drivers of the first three industrial phases. 

source: Digital Republic

Others think the fourth industrial revolution is about applying artificial intelligence to create autonomous decision making. 

With that amount of disagreement, it seems obvious that we do not yet all agree on what is coming.

Since 1997, U.S. Internet Access Prices Have Dropped 25%, "All Other Prices" Up 50%

Since 1997, U.S. internet access prices have dropped about 25 percent while the prices of “all items” have grown 50 percent, according to the Bureau of Labor Statistics. 

source: Statista

Moving Up the Stack Still a Requirement for Some Tier-One Telcos

As hard as it typically is, many tier-one service providers will have to consider ways to continue “moving up the stack” into applications, or across the ecosystem into new roles, to jump on a higher-growth revenue curve. Those options might not be available for smaller specialists in the access or transport parts of the business, simply because scale is not possible.

The basic connectivity business is growing at less than one percent a year, while most other parts of the information industry (apps, hardware, devices) is growing at perhaps 12 percent annually. 

source: Ericsson

source: Ericsson

Though the surest revenue opportunity remains connectivity, the big potential roles include service enablement or possibly apps, in some cases. Dial-up internet access, for example, did not produce much incremental revenue for telcos. Broadband access has driven incremental revenue, as has mobility services. 

There is a difference. Broadband is mostly a “dumb pipe” service, while mobility includes voice and messaging, which are apps, plus mobile internet access, which is a dumb pipe product. 

Service enablement might be an opportunity, if service providers can create valuable digital platforms for third parties, or provide system integration and content management. 

Service enablement provides value by freeing developers from handling their own low-level data structure or connecting with 5G and other internet of things platforms. Little of that has developed so far in the internet era, as far as telco platforms are concerned.

Some Competitive Markets Make FTTH a Tough Business Model

Competitive markets make market share a key issue. Consider areas where firms such as Verizon, AT&T or CenturyLink have fiber to home networks. You might consider that a no-brainer, in terms of share. Not so. 

Even with years of marketing, Verizon’s FiOS fiber to home network seems to get sustained share of only about 30 percent. Across a base of 16 million homes, some note that Verizon seems essentially stuck at about that level of adoption.

AT&T has about 14 million to 15 million homes able to buy FTTH service. But AT&T seems relatively stable at about 30 percent share. 

CenturyLink fares worse, with FTTH take rates at about 11 percent to 17 percent. Of course, the U.S. market is different in that cable TV operators have about two thirds market share in consumer markets, using hybrid fiber coax networks routinely making gigabit per second service available. 

That does not mean most cable TV internet access customers buy service at gigabit speeds, only that they generally can. In such a market the business case for additional FTTH is very difficult, since any service provider has to expect stranded assets of perhaps 70 percent to 80 percent of locations passed.