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August 21st, 2019

The MEC market is characterised by a diverse range of players offering solutions based on different standards. As a result, there is a lack of convergence that is holding back the market.

Multi-Access Edge Computing (MEC) is a key technology that enables mobile network operators (MNOs) to open up their networks to new, differentiated services while providing application developers and content providers access to the benefits of the edge cloud.

MEC is important for 5G applications such as augmented reality, cloud gaming, delay-free HD video streaming, IoT and autonomous vehicles, because it provides benefits such as low latency and reduced network congestion. For example, it will allow data from thousands of IoT devices to be processed locally, significantly reducing cloud storage and transport costs. Importantly, this data remains local, which is critical for privacy and security.

Although the benefits are undisputed, the MEC market is only slowly transitioning from vision and proof-of-concepts to commercial reality, as there is uncertainty surrounding a number of key issues.

“5G MEC is an emerging market with a diverse range of players, from start-ups to multinationals, and both from within and outside the mobile industry”, said Gareth Owen, Associate Research Director at Counterpoint Research. “Many of these players are offering different solutions, and as a result, there is lack of convergence, which is holding back the market”, he added.

One major issue is standards. As the edge becomes more vital to emerging 5G and IoT use cases, there has been a surge in the number of standards for edge computing. In addition to the ETSI MEC standard, there are several other open-source edge standards including from the OpenFog Consortium, the Linux Foundation Edge Consortium, Facebook’s TIP, Open Edge Computing and the Edge Computing Consortium. These approaches compete and overlap with each other, which is creating uncertainty and delaying investment in edge infrastructure.

As a result, there are a host of vendors offering ETSI and non-ETSI-based MEC solutions including established vendors such as Nokia, Ericsson and Huawei and many smaller players such as Saguna Networks and Deutsche Telekom supported start-up MobileEdgeX.

Another issue is who will build and operate these edge networks: the MNOs themselves or third-party companies? There are numerous start-ups building edge networks who plan to offer access on a “MEC-as-a-Service” basis. These include Packet, Vapor IO, Edge Micro, EdgeConneX, Vertical Bridge, DartPoints, BaseLayer, Compass Datacentres and Edgeinfra. These companies are targeting both MNOs and large enterprises.

However, a major challenge for all of them is to sign-up MNOs in the face of stiff competition from much larger, established content delivery network (CDN) providers and cloud data centre providers such as Akamai, Amazon, Google, Equinox, Rackspace, etc., all of whom are now targeting the edge market.

All these major players already have peering relationships with content and application providers. Instead of dealing directly with many MNOs (with widely differing network set-ups), content providers will likely prefer dealing with a single major CDN provider, thereby achieving maximum reach while minimising the number of business relationships.

According to Peter Richardson, Research Director at Counterpoint, “The largest MNOs, particularly those with a PTT legacy, are likely to leverage their existing central office real estate and build their own MEC networks rather than outsource to third-party service providers. However, they might also contract a big CDN player to run software/applications at central office locations.”

“Non-PTT based MNOs are more likely candidates for a “MEC-as-a-Service” option, particularly Tier-3 and Tier-4 operators, although some of the larger, newer operators may also be interested”, he added. To date, none of these start-ups have signed major deals with any MNOs, although Packet is supporting the build-out of Sprint’s Curiosity IoT platform.

As a result, Counterpoint Research believes that 2019-2021 will be transitional years for the MEC market, led by trials and small-scale commercial deployments by some of the major MNOs such as Verizon, SK Telecom, and China Mobile. Counterpoint expects more mainstream adoption by other MNOs starting after 2022, once clarity is obtained on MEC standards and in tandem with the deployment and development of 5G/vRAN infrastructure.

Counterpoint Research’s latest report “5G Edge Computing – An Emerging Technology Slowly Transitioning to Commercial Reality” provides an in-depth analysis of the 5G MEC market, discussing the various MEC standards, key market drivers and challenges, edge deployment options and the overall MEC ecosystem, with profiles of key edge middleware aggregators and micro data centre vendors. Brief details of major MNO MEC trials are also provided.

Background:

Counterpoint Technology Market Research is a global research firm specializing in Technology products in the TMT industry. It services major technology firms and financial firms with a mix of monthly reports, customized projects and detailed analysis of the mobile and technology markets. Its key analysts are experts in the industry with an average tenure of 13 years in the high-tech industry.

Analyst contact:

Gareth Owen

Peter Richardson

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press(at)counterpointresearch.com

5G Edge Computing – An Emerging Technology Slowly Transitioning to Commercial Reality

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