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Communications Infrastructure

Fritzsche's Forum

Expect a lot more PINS on that bulletin board……

April 26, 2022 | In my past write ups, we have tackled the edge theme with my token tagline being: “Edge is more than just a white board concept.”

I was pleased to see that there was tangible ‘meat on the bone’ evidence of this concept this past week.  Specifically, EdgePresence, a distributed edge player, announced its new EdgePod in Orlando had 100% customer occupancy Day 1 of deployment.  Day 1. According to its press release, EdgePresence will be deploying four additional EdgePods in key markets – including Washington DC and LA – in the next 3 months.  The DC site is already 70% full, even before the official open. 

Recall, DataBank – the leading “edge” data center player – made a strategic investment of $30MM in EdgePresence in October, 2020.  At the time of the investment, DataBank’s CEO Raul Martynek noted: “With the continued expansion of 5G and internet infrastructure, we are seeing the need for geographic-specific colocation solutions….EdgePresence’s modular installations will allow DataBank to deploy these targeted solutions for specific applications and use cases where traditional data center options are not optimal.” 

Since my time as an analyst, I have always thought Martynek was one of the executives who literally skated to where the proverbial ‘puck’ was going, maybe not where it was at that exact moment.  While DataBank in and of itself is an edge play, the edge is getting smaller and more precise.  DataBank recognized this trend early and found a way to participate.  It rightly foresaw where its customers’ “pucks” were going to go and it arranged its asset mix around this view. 

In its 2021 “State of the Edge” report, Equinix quantified the explosive growth yet to come for the edge.  By their estimates the global IT power footprint for infrastructure edge deployments will increase from 1 GW in 2019 to over 40 GW by 2028, representing a CAGR of 40%.  

But the edge is not just for the CSPs – wireless will play a major role.  EdgePresence noted last week when it went live in Orlando it was with a “full-slate of revenue generating customers” including ISPs, fiber carriers and a “large Mobile Network Operator” (our guess is Verizon who seems to be the most front footed with Multi-access Edge Compute [MEC] rollout). 

While 5G infrastructure is still somewhat nascent, it is growing quickly and the edge will play a key role.  One only has to wordsearch the phrase “C-Band” from the Verizon Q1’22 earnings transcript last week if there is any question there  (note: it was mentioned 37 times).  This midband spectrum is the foundation for 5G and edge compute and remains a core part of its overall strategy. 

  

The key tenant of any 5G infrastructure deployment is densification.  With densification comes more and more pins on the map. What we heard last week from EdgePresence may offer one of the early dominoes to fall which will generate a whole new wave of ‘pins’ waiting to emerge. 

This same State of the Edge white paper draws the connection between 5G and the edge.  Specifically, it notes: “Virtualized network functions that support 5G require a highly-distributed data center infrastructure …. These same data centers (typically micro-modular data centers) can house sufficient server capacity not only to operate a 5G network but also to run the cloud services that can deliver applications at the edge over that same 5G network.”   Once again we see the walls between different silos of broadband infrastructure are getting very blurry (perhaps even crumbling down?). The edge may just be the main jackhammer driving this.  

Going back to those pins on the map….watch for them.  I would expect them to come at a fast and furious rate. Stating the obvious, it will be those companies that identify the trends on their proverbial “corporate bulletin board” early and align their strategic assets around these expected tailwinds that will be most rewarded.


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