Linsey Miller, VP Marketing, Artesyn Embedded Technologies
First of all, in case you’re wondering “what is MEC?”, MEC is Mobile Edge Computing, a disruptive ETSI standard and growing movement with the broad support of the telecom industry, driven by players such as AT&T, Cisco, HP, Huawei, Intel, Nokia, NTT Docomo, Orange, Telefonica, and Vodafone.
MEC originated from a need to address the gaps in network coverage that limited new applications and services, and the desire to provide additional services to consumers without the burden of additional expensive backhaul infrastructure.
Also, MEC is exciting because it can truly deliver mobile life-changing experiences that consumers demand, such as video analytics, location services and augmented reality - with ultra-low latency, high bandwidth and real-time capabilities.
However, beyond the problem of bandwidth-hungry consumer network demand, and an aging and incapable network coverage model, where small cell technology failed to materialize, MEC holds the promise of new revenue for operators, which is the real issue I want to explore here.
With LTE rollouts mostly done, issues such as net neutrality limiting revenue creation, and ARPU coming down, operators are looking for new revenue streams - but are also focused on profitability and thus lower cost. MEC is an ideal solution to address both ends of this spectrum.
Artesyn’s Christof Wehner on a panel chaired by Nurit Sprecher of Nokia at the Mobile Edge Computing Congress in Munich.
I recently attended the first MEC conference in September in Munich (yes, it took place during Oktoberfest!) and the hot topic for the operators attending from BT, Deutsche Telekom, Telekom Austria, Telefonica and Orange was HOW CAN WE MAKE MONEY FROM THIS?
Artesyn’s MaxCore™ Platform was at the heart of a Deutsche Telekom demonstration at the NGMN event with xran.org and Intel.
Many proof-of-concept demos and concepts have been shown over the past year, (such as our mini C-RAN demo with China Mobile at Mobile World Congress. Artesyn has also developed demos for conferences such as MEC and NGMN and spoken on panels with TIA.
After talking to operators and suppliers all over the world, I’d like to offer my own opinions in response to the question of which business models are most compelling for operators looking to deploy MEC – in the form of a revenue stream for enterprise and a revenue stream for consumers:
Infrastructure as a Service – When you look at the initial use case that MEC seeks to address, it is peak coverage demands in places such as stadiums, concert venues and shopping malls. Today the owners of these facilities bear the CapEx costs of serving these areas with Wi-Fi coverage through DAS equipment and use old models for provisioning for peak capacity. However, these days peak capacity means enough network bandwidth for data coming down and going back up, as in videos uploaded to Instagram during the Coldplay concert.
|Seeing the MEC use case in action on Aug. 22 at the Coldplay concert, Rose Bowl in Pasadena, CA.|
This is a problem that exists well before 5G networks are rolled out and needs to be addressed now, but the point is why would you pay for it if you can’t make money on it? As operators look to new business models, they can address the issue of poor coverage to the users while creating the opportunity for new enterprise revenue streams. An IaaS model takes the onus of expensive CapEx costs off the stadium owner’s hands, reducing their overhead and allowing the operator to deliver a much higher-performance network that uses a dynamic mobile coverage model. The fact that the system is MEC and therefore mobile-based means it is location-aware, which means the venue and network owners can offer services to consumers that relate to the venue and can offer sales of new products, related attractions, and augmented content, all of which engages the user and can create new consumer revenue streams. If I were a venue owner, I would even get excited about the possibility of turning this into a cost I could turn on or off based on usage, and make that a COGS item vs. a sustaining cost I had to absorb regardless of how often I host events.
Revenue from Consumers – Ad Revenue: In the model above, the new consumer revenue streams are the icing on the cake! But that brings me to my next point – how can operators make money from MEC from consumers?
The answer lies in the ownership of content and application platforms that lets service providers be content providers and not public utility companies. Why, for example, would you equip a stadium with a better network when - as a service provider - you are not allowed access to the user data patterns to make money from service revenue?
However, if you are a smart operator and adapt around these limitations– take Verizon again as an example – and you have media holdings such as Yahoo Sports or exclusive NFL-streaming content rights, you can leverage those platforms to access the user outside the domain of just being a public utility company. And that is the key to unlocking access to them for advertising! Once that user enters the app, it’s open season for all the context-aware advertising you want. If you imagine the possibilities at a sporting event, the concept has multiple revenue stream options, some as location-specific as concessions which means the stadium owners can get in on the revenue stream as well, with a service enabled by the operator.
At Mobile World Congress, Artesyn accelerator platforms were used in demonstrations on the Intel booth and China Mobile booth covering mini C-RAN, vRAN (now referred to by Intel as FlexRAN) and MEC applications. These demonstrations were developed for and with operators such as China Mobile, SK Telecom and Telefonica.
These are the two areas that stand out the most to me, but many more exist. Admittedly, we in the MEC community did scratch our heads for a while about what business models would prevail, because we were so focused on the huge network performance gains MEC brought (shiny objects...), but this really stands out to me now as far as relevance to operators.
The best part about all of this is that it adds revenue now – on LTE networks – and it doesn’t need to wait for 5G, because that is a wide abyss that operators need to cross in terms of revenue. As a product manager at heart, and if I were a mobile operator, I would be all over two things here when it comes to exploiting the merits of MEC:
- Packaging new enterprise infrastructure-as-a-service offerings
- Acquiring media assets to directly reach and advertise to consumers. This isn’t just nice to have – it is actually a necessity as major cloud players such as Google and Facebook come on the scene to exploit the domain of operators.
Additionally, we realize that the “M” in MEC will transform from “Mobile” to something else, as it will encompass not just mobile networks but all networks that touch the customer.
I look forward to ongoing collaboration with our MEC platform partners such as Intel, Wind River and independent software vendors (ISVs) as well as our system partners including Baicells/China Unicom. We’re also excited about being part of the Intel Network Builders/Verizon Innovation Lab program for low-latency networks and the 5Tonic lab founded by Telefonica and IMDEA Networks, focused on 5G technologies. All these relationships and developments mean that we keep a keen eye on the business value of this disruptive trend that is happening now that will pave the way for incredible new service opportunities between now and 5G.