June 29th, 2007, a day of infamy in the world of telco’s.  On that day, the vestiges of “walled gardens” and premium data services crumbled like the Berlin wall did 16 years earlier.

On that last Friday of June, the iPhone was first released in the U.S. by AT&T. While it would take over a year for the first Android phone to appear, the future for the next decade had already been written.

Capitalizing on the incredible investments of the wireless carriers, empires were built, without compensating the fundamental transport system that made it all possible.  No other ecosystem that carries goods and services has such a lopsided value extraction. The “Toll” roads for all this commerce, carry no tolls.

As data traffic continued to expand geometrically requiring greater and greater network investments, companies such as Google, Facebook, and Netflix raked in ever increasing revenues by introducing new services on these enhanced mobile internet pipes.  The situation is neither tenable nor feasible as the basis for a long-term stable marketplace.

We are now on the cusp of another inflection point in mobile network capabilities. Two major technologies are in the pipeline for the global wireless network: mobile edge computing (MEC) and 5G.

The question is, “What can MNOs do to change the value creation paradigm to garner their fair share of the revenue?”  An answer is to provide value that is more than just faster transport. Faster Transport will just trigger even higher bandwidth services, thus keeping the existing cycle going.

MEC, however, is a different story.  It is an opportunity to break the pattern of the last decade and to provide differentiated services that are valued and properly compensated.

MEC and 5G will shape the next decade of mobile telecom.  The standard path of decade-long technology transformations is in the past.  The deployment strategies and enhanced services value creation from these technologies are the determinants of the future of the industry.

The pipes get bigger in 5G

5G is going to continue to allow high-bandwidth applications to dominate the market. The technologies that are promised with 5G (VR and AR streaming, IoT, smart cities, autonomous vehicles) are all going to produce an enormous amount of data. The throughput required to serve the new applications of 5G will have to be much larger than that of 4G LTE. Mobile operators will continue to be treated as pipes in 5G. Edge computing allows the mobile operators to re-join the market of application providers. The mobile operators can implement an edge computing architecture into their infrastructure creating the Edge Internet. Do not be mistaken, the cycle will not be broken without the Edge Internet.

Value-added services (VAS)

Mobile operators have not been data services and application providers for over a decade. Even if they have provided applications throughout the past decade, their market share, quality of applications and ability to be seen as more than a way to connect have been lost to the over-the-top application providers. Inserting VAS at the edge of the mobile network allows for the mobile operators to check back into the application provider game.

No, by VAS, I am not referencing the rudimentary VAS that are being provided today, such as ring tones, chat applications, location-based services, etc. By inserting VAS at the edge of the mobile network, operators can become the leaders (or co-leaders) of application providers. The Edge Internet allows mobile operators a chance to create the first “Edge App Store.”

The edge internet applications

Edge applications have never been created and, while the market is searching for a “killer application” for edge computing, there may not be one, but rather many applications for edge computing. One example that can solve issues on today’s 4G LTE networks is video. OTT TV providers have long provided TV applications for smartphones, but the quality or business model has not been perfect. An Edge TV application would create the differentiation needed to stand out. The physics of cloud computing put live TV on smartphones at a disadvantage. Outside of a lag in the stream, the quality of the video is not on par with what consumers are watching over Wi-Fi. A mobile operator owned, or co-owned Edge TV application would become par for the industry. Live video is one use case with several applications.

Video telematics offerings are often hindered by the network that they are using for their service. An edge telematics application would allow advanced video monitoring, alerts and notifications, intelligence, and more to smartphones. While video gains from edge computing, video is not the only application that benefits from edge computing. Smart cities (video telematics fall under smart cities) require the Edge Internet to operate well beyond today’s capabilities and in only previously imagined ways. The amount of data coming from the tiniest devices in autonomous vehicles, smart sidewalk sensors and road side units (RSU’s) will be enough to create issues on any network. Edge computing allows the data to stay local and for application providers to create intelligent edge apps on the Edge Internet. The time is now.

Why now?

The common misconception that MEC requires 5G is based partly on the assumption that deploying MEC requires upgrading the network infrastructure of 4G LTE. By that logic, it makes sense to wait and add MEC during 5G’s forklift upgrades.

Those assumptions are wrong. It’s possible to deploy MEC as an overlay on the 4G network. A MEC overlay, where applications can be hosted at the edge of the network, can’t come fast enough for operators. MEC arrives just in time to meet unprecedented, demanding requirements from next-generation applications such as autonomous vehicles. The bottom line is that the Edge Internet is here.

What will the next decade bring for mobile network operators?  Will they continue to provide commodity transport, with increasing costs, and low (if any) margins?  Or, will they seize the day!

About Steve Spencer

Steve Spencer is co-founder and chief operating officer of Alef Mobitech. He has more than twenty years of telecom industry experience, serving in executive management and technical roles at several companies prior to Alef. He has also served on the advisory board of several mobile content companies, such as Yankee Group and Mojiva, and was a founding board member of the CTIA Internet Caucus. He has authored 14 patents.

The post The edge internet: Balancing the market power in the mobile internet value chain (Reality Check) appeared first on RCR Wireless News.