Growth of Edge Computing Brings New Revenue Potential for Rural Telecom

DENVER (October 5, 2022)—As data storage and computing is increasingly decentralized, rural telecommunications companies have an opportunity to capitalize on the burgeoning edge computing market. Edge computing refers to a distributed data center architecture. Data is stored and processed at the periphery of the network, closer to where applications are being used, rather than in centralized datacenters typically located in major urban areas. 

Edge computing is poised for steady growth as businesses in urban and rural areas alike adopt highly automated machine learning and artificial intelligence applications that require low latency. According to a new report from CoBank’s Knowledge Exchange, the emerging market represents a new business opportunity for rural telecom operators. 

“While the lion’s share of revenue at the edge is expected to go to application providers, telecom operators are still exposed to about 20% of the market via connectivity, managed services, hosting and integration,” said Jeff Johnston, lead communications economist for CoBank. “For rural operators, establishing partnerships with large data service providers looking to deploy edge computing equipment in rural areas is probably the best strategy.” 

The key advantages of the decentralized approach of edge computing are cost and latency, the time that elapses between a user request and the completion of that request. The cost savings stem from reducing or eliminating data transportation. The longer data has to travel, the more it costs to send. Storing and processing data on premise, or at a nearby edge computing co-location, is less expensive than doing it in the cloud.

As for latency, the highly automated AI applications rely on low-latency network support. Robotics in a manufacturing plant environment and virtual reality goggles are examples of applications that require low latency. Moving data centers closer to where these applications are used reduces latency and ensures proper operation.

The global edge computing market is expected to grow at a compound annual growth rate of 37.3% between 2022 and 2031, according to Transparency Market Research. Several factors, including the emergence of private wireless networks, are contributing to that growth and the decentralization of data storage and processing. 

Increasingly, private wireless networks are being deployed by oil and gas companies, mining operations and agribusinesses in rural markets with poor or no wireless coverage. In these instances, storing and processing data at the edge is preferable as it reduces transport costs and network latency. 

“Edge computing is becoming a larger focus for the ‘hyperscalers’ like Amazon, Google and Microsoft, and the reality is they need help building and managing these networks in rural America,” said Johnston. “This could involve using existing central office real estate, providing connectivity or managed services for security, construction and maintenance.” 

Read the report, Partnerships Are Key for Rural Telecom Operators in Burgeoning Edge Computing Market.