First movers to the edge

We’ve all heard the hyperbole about edge computing, including suggestions that 5G, IoT-enabled use cases will drive data closer to the edge, creating hundreds of edge data centres co-located with cell sites. But what will an edge data centre really consist of? How much power and space will it need? What are kinds of sites will be the best locations for edge data centres? To answer these questions, TowerXchange spoke to Cara Mascini, CEO and Founder of EdgeInfra, which might well be Europe’s first edge data centre play.

TowerXchange: Please introduce EdgeInfra and how you’ll make edge data centres a reality.

To make edge data centres a reality you need locations where there is need for an ecosystem of interconnection, storage and computing. You need to physically locate edge data centres where the wireless networks of consumers, businesses and the Internet of Things (IoT) come together at the edge of the network – and where there is fibre and power.

The power density of edge computing is higher than caching and storage, and accentuates the need for security, and for robust Data Centre Infrastructure Management (DCIM) systems. DCIM needs to be tailored to enable the operator to know what is going on at many instances of smaller, distributed locations.

An ideal location would be a shared fibre tower where there are a number of operators that have a need for exchange of traffic or data with one another and with other parties in the data centre. First there will be edge caching and edge storage, but eventually more and more edge computing driven by IoT platforms and applications that need local processing and/or low latency such as AR/VR, autonomous driving and AI use cases.

There are specific requirements in terms of the mobile network architecture setup, for the interconnection part of the solution. An edge data centre can’t just be at any shared tower – the networks needs to have specific density, for example C-RAN or X-RAN sites – hub locations in mobile networks.

EdgeInfra are still designing the specification to build edge data centre prototypes and do proofs of concept early next year. We are planning two prototypes: one in The Netherlands as we have access to local market players and we know the suppliers, and another in Germany.

The rollout schedule for edge data centres will be modest at first. Initially tens then hundreds, it might rise to thousands of sites. The rollout will grow with the deployments of new architectures and technologies as well as in geographic span, up to hundreds of locations in over ten counties in just a few years.  

The greatest need for edge data centres may be in countries with huge geographies presenting limitations to provision of service. In such countries, edge data centres will deliver huge improvements in latency and the cost of transport where the distances to core network sites is currently significant.

TowerXchange: Most of our readers understand the economics and cash flows of towers or fibre – when you’re talking to prospective investors, how do you compare the economics of data centres, particularly edge data centres.

Our financial model is different from the fibre business. Where some fibrecos invest up front then let the customers come, others invest for a specific customer. We have a rollout plan for edge data centres, but we won’t build without an anchor tenant, although of course we ideally want anchor tenants interested in many sites!

Ultimately edge data centres are an asset model, similar to tower and fibre. You invest in assets driven by an anchor tenant. It’s a lean business similar to tower and fibre. Edge data centres will have a long write off, although not as long as fibre or towers. We’ll typically depreciate assets in ten years, and earn back on anchor tenants in less than five years. Data centres have a larger cost base in terms of power, so if the power market changes, it can alter the business model.

Where towercos would talk about tenancy ratios and lease-up, the equivalent for data centres is utilisation, measured in terms of utilisation of power. Large data centres are built in multiples of 10MW, often on a modular basis, typically with a plan to achieve 25% utilisation within a year. In contrast an edge data centre is built once, with perhaps 48kW, starting with 25% utilisation. Achieving 75% utilisation within a year would make for an interesting edge data centre business model.

Data centres typically deliver EBITDA margins of 50% or so – not as high as the margins for fibre or towers.

TowerXchange: What does an edge data centre consist of? And what does that mean about the space and power requirements at a prospective site?

We’re using the high-end engineering specifications of a very large data centre, where the centralised clouds are located, and applying them to a much smaller unit. Our initial thinking is to have six racks of 8kW, totalling 48kW. When combined with cooling that brings the total power density to around 70-80kW, and of course we’ll have UPS and battery packs. We’re leaning towards using three phase power service here in Europe which is more prevalent and economic.

In terms of security, we will have access control with proximity readers and two-factor authentication, CCTV with indoor and outdoor surveillance, and fire detection systems. We will have a DCIM covering the building, asset, access control, workflow, customer service and maintenance.

Together with an Internet exchange switch for the exchange of traffic between the parties at the location, our edge data centres will be enclosed in a custom enclosure of around 15-20 sqm. With space for cooling and walkabout, plus we may need our own fencing if the site is not already enclosed, the footprint could rise to 30-40sqm. That should still fit under a macro tower.

However, edge data centres can be located in places other than at the foot of macro towers. We could also use a fibre junction, or a central location backhauled between several sites, for example a parking lot in the middle of a city. The only constraints are practicalities such as access to power and the fact that the cooling systems make a noise that can be an issue in densely populated areas.

TowerXchange: Will EdgeInfra build your own edge data centres, or do you anticipate sourcing containerised solutions from third party manufacturers?

No-one really has the ultimate specification for edge data centres yet. We are the first to design these for the European market.  Of course vendors of power solutions are working on developing micro data centres and enclosures, supporting sales of their power and other appliances, but there are also several independent manufacturers and integrators. We are currently reviewing a number of solutions and will decide, at least for our proof of concept, before the end of the year. One thing is certain, we prefer to have a  manufacturing partner with production facilities in Europe. Because even if these may turn out to be containers, shipping them halfway over the world will not do for our sustainability. 

TowerXchange: What is your view on the convergence of the data centre industry with fibre and towers? Should we anticipate these sectors consolidating?

There will be large conglomerates that want to own and operate the whole communications infrastructure supply chain. But there is a big need for neutrality in the application, IoT and content spaces, as well as in the cloud space. Fibre carriers and data centre companies have long known the importance of neutrality, and towercos have been neutral for a long time. They all share infrastructure to offset the high capital costs, and you would need very deep pockets to own everything.

We think there will always be a need for neutral parties in edge data centres, but we expect MNOs, towercos and fibrecos to all play in this space. We want to start this with a neutral model – coming from Internet Exchange world we’re strong advocates of neutrality. We want to build this business in a sound way, with the right drivers, creating a specialist product to support multi-tenants across ecosystem. And partnering with the other players in the space.

While there will be a degree of convergence and consolidation, operating a data centre is very different from operating towers or fibre. Yes they’re all about sharing infrastructure, about power, and about being in the right location, but the actual operation of the asset is different – data centres are active, there are people coming in and out, many changes are required, and 24x7 customer service is expected – it’s a service not just infrastructure.

TowerXchange: Is EdgeInfra the first mover into this space in Europe?

There might be other initiatives, but as far as we know we’ve seen only them in the U.S. and Asia so far.

Edge caching, edge storage and edge computing needs a degree of market scaling to come together. A lot of ICT architecture is still in the process of moving to the cloud, and the cloud currently lives in large data centres.

There will be a growing need for storage and processing at the edge, driven by the proliferation of IoT devices, autonomous cars, industrial and even agricultural applications – as these use cases grow, so data will be pushed to the edge.

Of course this is also related to the emergence of 5G, and many countries haven’t even auctioned 5G spectrum yet. In the 5G era we’ll need edge data centres to provide ultra-local storage and interconnection at the edge. If you don’t have storage and computation at the edge then the Internet will slow to the extent that many of these 5G-enabled IoT use cases will fall apart. In larger cities you might have the low latency necessary to enable autonomous vehicles, but as latency increases further away from the core network, if you don’t have computing and storage at the edge, your autonomous vehicle may brake too late to be safe.

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Cara Mascini has a rare blend of commercial, strategic and technical experience across multiple disciplines in communications infrastructure.

Cara graduated in IT and telecommunications in 1994. Despite her engineering background, she started out in commercial roles initially with France Telecom and Global One, before spending five years in consulting with DDV (now CGI), working with BT, Versatel, Tele2, Orange and UPC (now Liberty Global).

In 2003, Cara was headhunted by former colleague Job Witteman, now co-founder of EdgeInfra, who appointed her CCO of Amsterdam Internet Exchange (AMS-IX). After ten years AMS-IX had become the largest exchange in Amsterdam, with 14 data centres and an international footprint in the U.S., Hong Kong, the Caribbean and Africa.

Cara subsequently moved to the access side of the network with Vodafone MVNO and Cable operator Ziggo (now Liberty Global and Vodafone), before joining Eurofiber to head up marketing, product and solutions.

With the emergence of edge computing and micro data centre business models in the U.S., Cara and Job felt edge data centres in Europe were the missing piece in the ecosystem. Having previously worked with data centres and interconnection on a macro scale at AMS-IX, the need for edge data storage, computing and interconnection suggests it is now time for an ultra-local ecosystem.

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