Companies are again making significant investments in the network infrastructure required to handle the coming wave of traffic. Gartner forecasts that communication service providers around the world will spend $238 billion by 2020 on network, software and services operational technology. Much of this spend is focused on preparing network capacity and performance to handle the demands of 5G connectivity.
Communication service providers will upgrade their radio access network (RAN) to ensure subscribers (people and things) have a strong 5G signal for connectivity and data transmission. Manufacturers will upgrade their devices to operate on 5G networks.
However, 5G requires a wholesale rethinking of network architecture. Broadly speaking, the telecommunication industry is borrowing virtualization concepts from cloud computing to prepare the core network for this growth. You have likely heard of Network Function Virtualization (NFV) and Software Defined Networks (SDN). Spending on NFV and SDN began in 2014 and is expected to grow at a 113.8% CAGR through 2020 to nearly $157B. (Technology Business Research, 2015)
SDN and NFV will prepare the core of the network to handle this new traffic and arm it with the agility to respond to peaks and valleys of traffic. This will allow operators to not be physically restrained when dealing with unexpected increases in demand but allow them to intelligently program their networks based on demand and capacity needed.
The focus on core network, cloud computing and 5G-enabled devices is necessary, but there is a critical area of opportunity to deploy intelligent devices at the edge of the network. Multi-access Edge Computing (MEC) is defined as “IT and cloud-computing capabilities within the Access Network in close proximity to the mobile subscribers.”
MEC incorporates the benefits of virtualization and cloud-computing in order to place high-powered computing capabilities as close as possible to subscribers. Edge computing offers a service environment with ultra-low latency and high-bandwidth. This physical proximity could, as an example, reduce video stalling by storing video content closer to the edge (35% backhaul capacity reduction), or reduce webpage download time by 20 percent.) (Source: ETSI Industry Specification Group for Mobile Edge Computing presentation at SDN World Congress)
Application developers and content providers can use direct access to real-time network information (such as subscriber location, cell load, etc.) to offer context-related services that are capable of differentiating the mobile broadband experience. MEC allows content, services and applications to be accelerated, increasing responsiveness from the edge. The mobile subscriber’s experience can be enriched through efficient network and service operations, based on insight into the radio and network conditions.
MEC also provides a new ecosystem and value chain. Operators can open their RAN edge to authorized third-parties, allowing them to flexibly and rapidly deploy innovative applications and services towards mobile subscribers, enterprises and vertical segments. Proximity, context, agility, rapid response time and speed can be translated into value and can be leveraged by mobile operators, network equipment vendors, and third-parties, enabling them to play complementary and profitable roles within their respective business models and allowing them to monetize the mobile broadband experience.
MEC Opportunities in Retail
While the manufacturing, healthcare, social assistance, transportation and warehousing industries will benefit from MEC investments, retail is expected to realize immediate benefits.
The largest number of MEC appliances are expected to be in the retail industry simply based on number of locations. A national retailer, for example, may have 2,000 locations, each with a small MEC appliance, while one manufacturing plant could be supported by a single, MEC installation. iGR estimates 166,000 commercial, MEC installations in the United States in 2021 and just over 563,000 in 2026. The firm forecast similar growth in Western Europe (163,000 and 563,000 installations in 2021 and 2026 respectively.)
Retail Use Case – Total Cost of Ownership (TCO)
iGR conducted a total cost of ownership study with a major, US retailer. Rather than look at a single store, iGR studied 25 new, “greenfield” stores for the retailer. Each of the stores used Wi-Fi infrastructure and video servers for employee devices, printers, PCs, point-of-sale devices and digital signage. Every store had a minimum 100 Mbps dedicated network connection, while larger stores upgraded to 1 Gbps.
The team proposed a standard MEC appliance configuration (read more in the full, white paper)
The three-year, TCO benefits of the MEC solution were significant:
- 55.9 percent cost savings for those stores remaining on 100 Mbps network
- 54 percent savings if store moved to 1 Gbps connection
- 59 reduction in WAN traffic during peak business hours
The concrete TCO results also don’t highlight more intangible benefits, such as improved customer service or experience in the form of reduced wait times and faster resolution of customer issues.
5G will create incredible challenges and opportunities. Communication Service Providers are re-architecting networks in a way that supports exponential data growth. At the same time, these investments will open industries to innovative applications and services that drive new savings and business opportunities across the globe.
White Paper & Webinar
We invite you to learn about the opportunities surrounding 5G, Multi-access Edge Computing and more by reading the whitepaper.
Recently, iGR, Hewlett Packard Enterprise and Intel delivered a webinar on this topic. We welcome you to watch the replay at your convenience.
About the Author
Caroline Chan is the General Manager of 5G Infrastructure Division within Intel’s Network Platform Group (NPG). She is responsible for leading a cross functional organization driving global network infrastructure strategy for 5G, bringing Intel processor into the Wireless infrastructure, projects such as virtualized RAN, mini-Cloud RAN, 5G network, heterogeneous network consisted of small cell and WiFi, and mobile edge computing for IoT. Her research interests include 5G and HetNet performance.