5G + edge computing = New service revenue opportunity
Right now 5G is primarily focused on providing an enhanced mobile broadband experience primarily to consumers with compatible handsets. As people upgrade their devices and carriers invest in scaling networks, adoption is growing and will continue to do so. As this happens, 5G will continue to evolve to support a broader range of features that position it to underpin digital transformation for enterprises.
But 5G isn’t a silver bullet; there’s a whole set of attendant technology that has to be considered and incorporated in a successful 5G strategy. As it relates to realizing the revenue opportunity associated with differentiated enterprise services, 5G and edge computing go hand-in-hand. By extending the compute, storage and additional functionality generally associated with a centralized data center out to the edge of the network–a term with distinct definitions–the latency benefits of 5G come to the forefront. When data can move with single-digit millisecond latency, computing has to be distributed in order to realize real-time applications.
In 2018, Gartner Research projected that 75% of data will be processed at the edge by 2025. Similarly, market research firms, while arriving at different numbers, all agree edge computing is a large and quickly growing segment. Markets and Markets projects growth from $2.8 billion in 2019 to $9 billion in 2024, a 26.5% CAGR. EMR sees the market hitting $11.6 billion by 2025 with a 24.48% CAGR. And Valuates Reports sees edge generating $8.85 billion by the end of 2025, a 19.9% CAGR.
The real opportunity for meaningful new revenue creation for telcos comes from the type of real-time services that require the combination of 5G and edge computing–things like vehicle automation, precision robotics, mission critical AI applications and mobile virtual reality. This shift to totally new types of services is the 5G promise–a new era of enterprise enablement and connected consumer experiences.
Kevin Shatkamer of Dell Technologies summarized the need for telcos to fully leverage edge computing in the context of 5G service delivery. “Consumers are only going to pay so much for faster mobile broadband. Where the real opportunity is on the enterprise side. Vertical industries will be transformed by the higher-speed, lower-latency, QoS-enabled capabilities that 5G networks bring. There are all kinds of verticals where [service providers]can create new services, specific applications that service those verticals. That, to me, is where the door is wide open from an opportunity perspective. We see this in connected energy, smart warehouses and logistics, healthcare and retail, as examples.”
This reiterates a point made by Terry Young, Director, Service Provider and 5G Product Marketing, A10 Networks. Operators need to optimize investments in each edge computing site based on delivering services with a clear path to revenues. She said the need for 5G and edge is clear but traffic characteristics and volume are “really unknown. This is really new territory for everyone.”
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