Will carriers use 5G to provide edge services?

US mobile carriers see an opportunity to broaden their role in the enterprise marketplace as the rush to deploy 5G continues, but it’s unclear whether their strategy will be sufficient to achieve that goal, according to industry analysts.

Verizon, AT&T and T-Mobile are cornerstones of America’s Internet infrastructure, but their role has been largely restricted to data transport for most of their history. The provide data pipelines, but efforts to monetize their networks beyond the simple provision of transport for other companies’ data have met with mixed success, at best.

“If you put yourself in the network operator’s shoes, you’re talking about a huge [capital expenditure] ] for implementing 5G,” said Christian Renaud, research director of 451 Research’s IoT practice. “They’re trying to accelerate the curve by appealing to the enterprise.”

5G features support new services

That appeal is based on new technology in 5G, according to IDC senior research analyst Patrick Filkins. One in particular, network slicing, can divide a single connection into multiple virtual connections, each providing different resources tailored to customer need. Another, network-exposure functionality, streamlines APIs to network services to simplify creating new services. These could allow carriers to offer highly specific access to their networks in much the same way that a cloud service offers parts of its platform to allow customers to build applications.

“While that monetization model doesn’t necessarily exist in the telecom space today, there are some proxies to base it off of in adjacent PaaS businesses, whereby a telco could charge a fee to a developer to access that network data,” he said. “That is one area where a telco could move beyond dumb-pipe.”

The fear of remaining a dumb pipe—simple transport—is a big piece of why the carriers are in such a hurry to deploy 5G. Witness the billions of dollars they spent on 5G bandwidth in the recent FCC C-band spectrum auction, as well as the ongoing race to deploy higher-density 5G access points in major U.S. markets.

The carriers had a chance to broaden their revenue base earlier in the cloud era, according to Forrester vice president and research director Glenn O’Donnell, but failed to appreciate certain fundamentals about cloud computing with sufficient alacrity.

“They just didn’t understand the business model [at first]—it’s not a network model, it’s hosting of applications,” he said. “That’s different, but in general, AWS et. al. were successful because they offer an application platform, not just infrastructure.”

That’s the same issue facing the telecoms as the 5G era begins, O’Donnell said. The idea has to be to leverage 5G’s new features to offer services like narrow-band IoT and, somewhat more ambitiously, edge computing, rather than just selling a new type of connectivity, which would leave the carriers right back where they started.

“They have the potential to do something here, but the risk is that everyone in the world of tech is gunning for [edge computing], and it’s going to be hypercompetitive for a long time,” he said.

Why edge is the opportunity

While narrow-band IoT is an obvious potential win for the carriers—letting them offer a hassle-free, almost omnipresent service for connecting low-demand IoT devices across any number of potential industries—edge computing is thought to have the most potential for carriers to offer a competitive service that appeals to the enterprise customer.

The key advantage once 5G really is up and running in more of the country is the carriers’ overwhelming presence. Turning a 5G base station into an edge point of presence could be as easy as adding compute and storage nodes, enabling AT&T, Verizon and T-Mobile to sell edge services to anyone in range of their networks.

The appeal, of course, will vary by industry, but Renaud said that one potential target market could be utilities.

“There’s a fairly likely chance that they’ll get a big chunk of the automated meter-reading market,” he said. “All the communication and all that signaling is a localized function, so either the utilities can bid on those frequencies like everyone else or they can go through the wireless carriers. If you’re mid-American, do you want to be operating a wireless network or just have the ability to talk to your devices?”

This kind of set-it-and-forget-it appeal is likely to stretch beyond the utility sector. Moving away from the capital expenditure and the headaches of running a network in-house and simply handing things off to a mobile carrier could be attractive to a wide variety of businesses. The trick, however, is making inroads among companies used to doing business with a particular set of vendors.

And the way to do that, according to O’Donnell, is to form partnerships with companies that have industry experience, like GE Digital or Honeywell for the IIoT sector, for instance.

“The telcos shouldn’t think this is going to be their world to own,” said O’Donnell. “If I’m running a big multinational, and I’m partnering with ABB, and AT&T comes along with a better partnership story than Verizon, AT&T gets my business.”

Enterprises should be watching mobile carriers’ efforts with interest, according to Renaud. The ability to buy edge services with connectivity baked in from the outset and little network management to worry about could put the carriers in a strong position if they’re aggressive in pursuing partnerships.

““It’s their fight to lose. They’ve got spectrum, cell towers—it’s just going to be a business model thing,” he said. “This is a ready-made opportunity for them.”