In Business Model, Internet Access, Mobile

Walmart plans to build its own edge computing centers. Furthermore, Walmart expects to make that capability available to third parties. Also, Walmart expects to make its  warehouse and shipping capabilities available to third-party sellers, using a model perhaps similar to the way Amazon supports third-party retailers. 

Walmart further says it will use its large supercenter store locations to fulfill online orders for Walmart’s groceries and other items. 

AWS has launched its own initiatives (AWS Wavelengths) to supply edge computing as a service. But it has to be said: in choosing to supply AWS with edge hosting facilities, a few tier-one telcos, likely to be followed by others, are making a considered bet that edge computing as a service is likely to be lead by, if not dominated, by the same providers in the ecosystem that dominate computing as a service. 

There are other rational considerations. It likely is too late for telcos to replicate the hyperscaler role in “as a service” computing. 

In seeking a role in edge computing, the telco partners avoid the heavy capex required to emulate what the hyperscalers can provide their customers, instead choosing the hosting role (rack space, security, cooling and power). 

What they may be hoping is that the AWS moves lead to similar deals with many of the other hyperscale computing as a service providers, creating a data center hosting role some telcos tried and abandoned earlier. 

While other roles are not foreclosed, the AWS partnerships suggest that executives do not believe they are in position to invest in–or win–the battle for computing as a service. As many discovered earlier, the data center business has generally not been an area where telcos brought  significant advantages. 

On the other hand, perhaps many are betting that an early lead can be gained in the “edge facilities” part of the data center business, before potential rivals can scale their efforts. Of course, the hyperscale computing as a service suppliers are at the top of the list of potential leaders of the coming edge computing business. 

So the optimistic view might be that although not in position to lead edge-based computing as a service, telcos might secure a meaningful role in the edge data center hosting business, which requires distributed smallish data center locations.

Telcos of course have long considered former central offices or switching centers to be ideal real estate, in that regard. In metro areas where most of the edge computing demand will develop, central offices sit at the center of access networks running a few miles or so from end user locations. 

At least some mobile switching offices also are viable candidates for edge facilities as well.

Other roles are not foreclosed by the telco deals with AWS. It is conceivable that some vertical market services might develop where a few telcos are significant providers of the applications or capabilities. Vehicle communications and computing are logical candidates, for example. 

Still, the AWS deals are stark reminders that the edge computing ecosystem is, at the moment, most favorable for telcos as suppliers of rack space and communications. Most observers would probably agree with that assessment. 

That role also is arguably a capital-efficient and low-risk way  to enter the market. Other roles are not foreclosed. But perhaps few observers really believe the long-term telco opportunity is greatest anywhere but in the “pipeline” and “real estate” areas.

The point is that the market opportunity for multi-access edge computing now is being challenged by retailers, Amazon and eventually others who plan to deliver edge computing as a service themselves, perhaps foreclosing much of the potential role for connectivity service providers to become suppliers of edge computing as a service.

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