5G Multi Access Edge Computing or 5G MEC has generated a significant amount of hype in recent years promising to deliver low latency and improved quality of services which will enable a plethora of commercial opportunities for Mobile Network Operators (MNOs).  However, the ecosystem is complex with many stakeholders now positioning themselves to benefit from this new opportunity.

5G MEC Ecosystem

As the edge becomes a commercial reality, stakeholders are seeking to leverage their infrastructure assets through partnerships in order to capitalise on the emerging edge business opportunity. These stakeholders range from communications services providers (MNOs, fixed telcos, cable companies, etc) to big cloud providers, data centre providers, CDN players, tower companies, real-estate companies and even big retail chains with nationwide footprints.

Opportunities for Data Centre Industry

The big cloud providers are an important part of the ecosystem as they have an established and ever-growing customer base and will play an important role in seeding the MEC market (Exhibit 1). However, they are competitors to all stakeholders in one way or another. For MNOs, these partnerships should be complementary and not mutually exclusive. MNOs should also develop their own edge computing agreements with others cloud providers as well as offer services via their own platforms.

Big co-location providers such as Equinix, CenturyLink and Digital Reality are expanding their footprint to the edge either by acquiring small edge data centres or by partnering in a bid to position themselves as neutral interconnect platforms between enterprise networks and cloud providers.

Meanwhile edge data centres and CDN players are extending the edge of the Internet further from the traditional Internet hubs and building smaller hubs in Tier-2 markets. Primary customers are “enablers” such as the big cloud providers, private cloud operators and bare-metal hardware companies rather than enterprises. In addition to offering co-location and edge interconnect services, data centre companies see opportunities to offer value-added services such as edge compute services, NVFi platforms, etc. Examples include some of the biggest players such as Equinix as well as micro edge data centre start-ups such as Vapor.io and EdgeConneX.

Exhibit 1: The 5G Ecosystem: Data Centre Companies

Source: Counterpoint Research

5G MEC Opportunities

The edge is reshaping the way the Internet works by shifting processing and cloud functions away from a few hundred massive data centres to thousands or even millions of smaller, more distributed computing facilities. This will significantly reduce the costs of data transport as well as enable new use cases that are latency-sensitive and computing/data intensive, but also require data residency, security and network resilience. All stakeholders are now rushing to the edge but it will be a few years before the dust settles and it becomes clear who will ultimately control the edge: the big hyperscale cloud providers, MNOs, both (or neither?).

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