Edge computing has two aspects and three sizes, according to Marc Ganzi, president and CEO of DigitalBridge Group, which has 23 portfolio companies, including several that are involved with edge computing. According to American web infrastructure and security company Cloudfare, edge computing optimizes internet devices and web applications by bringing computing closer to the source of the data. Edge computing minimizes the need for long-distance communications between client and server, which reduces latency and bandwidth use, as stated by Cloudfare.
Within the DigitalBridge portfolio, companies that provide data centers, optical fiber connectivity, macro cell towers and edge infrastructure have roles to play in edge computing.
Of the two aspects of edge computing, Ganzi said, one is the physical aspect of where infrastructure sits. The second part, he said, is the experience, how the customer ultimately participates in a low-latency environment and how its applications work. He said the two functions are consumer and geography.
“Let’s start with geography,” Ganzi said, in speaking about edge computing with Matt Niknam, director of equity research and communications infrastructure analyst at Deutsche Bank, during the bank’s 29th annual Leveraged Finance Conference on Oct. 4. “Geography is pretty easy to understand, because there are three layers to edge infrastructure: main edge workloads, mid-range and micro edge,” he said.
“Main edge workloads are secondary and tertiary markets, where you’re not in a primary hyperscale market, as in Ashburn, Virginia; or Goodyear, Arizona; or some of the other big areas such as Atlanta, where you have massive, hundreds of megawatts of power and compute,” Ganzi said. “And then you go to you go outside of that for what’s happening in markets like Salt Lake City; Austin, Texas; Cleveland; and Minneapolis. These are good edge markets.”
The main edge workloads, Ganzi said, range from half-megawatt to 4-megawatt workloads in secondary and tertiary markets. He said that one of DigitalBridge’s portfolio companies, Databank, is providing such service every day. He said that Databank is delivering and fulfilling the main edge workload need for hyperscalers as they continue to deploy and densify their infrastructure in secondary and tertiary markets. According to manufacturer NAI Group, a hyperscaler is a data center that can add or reduce computing power quickly and cost-effectively. Market research firm International Data Corporation defines hyperscale computing as exceeding 5,000 servers and 10,000 square feet.
According to Ganzi, mid-range edge computing are special, purpose-built data centers between 5,000 and 20,000 square feet that most often are built in suburban locations. He gave as an example Somerset, New Jersey, that he said is neither a secondary nor a tertiary market. “That’s a suburb of New York,” he said.
In such suburban locations, Ganzi said, “you’ll have either a repurposed central office or a small data center. In there, you’ll have aggregation points of radios; you’ll have a small presence from the cloud players — maybe two to three racks — and then you’ll have adjacent content players there. That’s what I would call a true edge out workload, where you’re out in the suburbs and you’re trying to execute the main thesis of their business plan, which is to increase the throughput out to the suburbs, but reduce latency.”
The third layer to edge computing in the aspect of geography, Ganzi said, is the micro edge. He said DigitalBridge supplies micro edge computing through its portfolio company EdgePresence. DigitalBridge made its investment in EdgePresence through Databank. He described EdgePresence managers as great entrepreneurs.
“They really understand the business,” Ganzi said. “We have 12 micro edge locations, most of them at Vertical Bridge towers. We built at a couple at other towercos’ sites.”
EdgePresence housed the micro data centers in repurposed intermodal shipping containers, Ganzi said.
“We have anywhere from 10 to 20 racks in those containers,” he said. “We’re getting lease rates that are effectively a half of a broadband equivalent (BBE) for a rack. We’re leasing compute space at the base of cell towers.”
Ganzi said he wanted to be clear with investors, so he emphasized that placing edge micro centers would not happen at every cell tower.
“You don’t need an edge data center at the bottom of every cell tower,” he said. “You probably need one at one out of 100. We started trial testing this in Atlanta.” Ganzi said that Atlanta was a test market for the EdgePresence micro data centers.
“What’s great is that we’re doing all three,” Ganzi said, referring to the three layers of edge computing. He said that another DigitalBridge portfolio company, AtlasEdge Data Centres, in Europe, is using many previous Liberty Global central offices in a project to run more than 100 edge data centers on the continent. “We’re renovating them, putting in edge infrastructure,” he said.
Databank is doing massive edge workloads in places such as places like Bluffdale, Utah; Overland Park, Kansas; and Eden Prairie, Minnesota; Ganzi said. “Then, in Atlanta with EdgePresence, we’re building micro data centers,” he said.
“So, the three layers, right?” Ganzi said. “You go way out to a half-megawatt to 4 megawatts, then you get into a zone with 10 to 20 racks, and then you get to the micro edge, which is literally a couple of racks that are based at the tower. The network begins to move out, but you can take the network down to a very surgical level and deliver edge computing.”
In explaining that the objective is all about what the customer wants, Ganzi said that the customers in this instance are Amazon, Microsoft and Google. In addition, he said customers in the United States include the four major mobile carriers. More customers include the internet-of-things players, he said.
“It’s trying to make sure that we’re delivering a high-powered high compute experience on the periphery of the network, ultimately, to serve consumers,” Ganzi said. “This is totally consumer-facing, because most of the edge compute in an enterprise environment is going to happen in the bottoms of office buildings where we build out small edge data centers in the basements of office buildings as we light up enterprise CBRS.”
Don Bishop is executive editor and associate publisher of AGL Magazine.
The largest private owner and operator of communications infrastructure in the United States, by its own account, Vertical Bridge manages more than 300,000 properties. The company’s vice president of tower development, Ariel Rubin, said that Vertical Bridge builds towers with a focus on increasing its return on investment (ROI). Rubin spoke during an AGL Virtual Summit in June at the session, “Increasing ROI at the Tower,” moderated by Spencer Kurn, an analyst who leads coverage of U.S. towers for New Street Research.
Tower construction affects Vertical Bridge’s capital expense (capex), as reflected in the cost to build the sites, and affects the company’s operating expense (opex), Rubin said. Controlling those expenses helps to raise the company’s ROI.
“On the capex side, we have a great network nationwide of partners that help us not only with the services side, which include everything from site acquisition to engineering services and environmental services, but also one of our largest costs, steel and the towers we procure,” Rubin said. “The network of vendors that provide us with steel and being able to have ready access to sites anywhere in the country have been helpful at keeping some of those costs down.”
Construction is another large capex component, Rubin explained. He said Vertical Bridge has networks of regional contractors and nationwide contractors that help the company when it needs more volume in certain regions or when it needs more specialized contractors in some other markets.
When it comes to capex, Rubin said, “the less you spend, the better your returns will be. More importantly, as we look at ROI and how it’s tied to tower cash flow, the more we can keep of the rent we collect on a site is directly reflected on the return on that particular site. Thus, the operating expenses that each site incurs are one place where we looked and made sure to focus on as we build new sites.”
Rubin identified six items of opex that primarily affect tower cash flow: ground rent, maintenance, utilities, monitoring, insurance and taxes.
“The largest is ground rent,” Rubin said. “We always look to have long-term rights, or purchase the land, or have long-term easements on a property. That helps us control some of the ground rent costs that we incur.”
Vertical Bridge must maintain its sites properly, and it acquires sites with maintenance in mind. Although sites with long access roads or otherwise designing sites that would be expensive to maintain, although perhaps not costing significantly more initially, affect the company’s cash flow because those sites would need to be maintained for years and years, Rubin said. As a result, Vertical Bridge takes maintenance into consideration when designing and building the sites.
As for utilities, Rubin said Vertical Bridge typically does not have high utility costs, but it pays for tower lighting and some power accounts.
“We’ve worked with federal agencies on eliminating nonflashing lights,” Rubin said. “As an example, we were going to LED lights that not only help us reduce some of our opex costs and bring down our utility bills, we’re also helping reduce bird collisions and reducing some of the effects that our towers have in the environment. We’ve seen cost savings from $500 to $1200 to $1300 a year in power bills. We make sure that as sites are being put up, utility costs are minimized for years to come.”
Rubin said that monitoring and insurance costs are somewhat more difficult to control on a site-by-site basis. He said Vertical Bridge’s size helps the company to negotiate, because of the volume of sites.
“If somebody could figure out how to pay less taxes . . .” Rubin mused. “That’s something that we’re subject to. That’s another expense that affects our tax control framework and our return on a particular site.”
Session moderator Kurn said that controlling expenses is one side of the ROI equation — the other, improving tower lease-up.
Rubin then spoke about Vertical Bridge’s large portfolio of broadcast towers and tall towers, aside from what would be called the traditional towers for carriers. He said Vertical Bridge has been able to make the broadcast towers available for use by wireless carriers.
Meanwhile, Rubin said, the broadcast towers typically have a significant amount of land beneath them, and that is where edge data centers come in as additional lease-up.
“We have enough ground space to not only offer for edge computing, but also solar and some other applications,” Rubin said. “We to work with government entities and wireless internet service providers (WISPs). WISP rollouts are more regional, and we see groups of activity here and there. It’s a mix that continues to grow, but nothing significant at least on the new tower development side. Once the towers are up, this is where a lot of these new opportunities are coming into play.”
Vertical Bridge capitalizes on the edge computing opportunity with existing infrastructure and with what Rubin called edge-to-suit.
“We work not only with the direct carrier contacts that we have at Vertical Bridge, but also we have partnered with our sister companies. DataBank and EdgePresence, and are able to use our existing infrastructure and leverage that from some of the contacts that they bring where we can find some synergies in optimizing the use of our assets,” Rubin said.
“The second part is what we like to call edge-to-suit, which is leveraging our site acquisition teams and development teams to identify, lease, permit and build out to your power and fiber-ready location. It’s kind of like a build-to-suit, but just for edge services. We have the team in place. We think about longer term, making sure we have the ability to put up a tower if needed, but providing that service to our carrier, contacts, just for the edge solution that they need. We have the knowledge.We don’t necessarily have to go put up a tower on day one, but it’s a lot of the same skill set that we already have that we’re using on a daily basis. Using our existing infrastructure and our existing knowledge —that’s where the opportunity for us is key.”
For the June 8 AGL Virtual Summit, Total Tech sponsors included Raycap, Valmont Site Pro 1, Vertical Bridge and B+T Group. Tech sponsors included Alden Systems and Aurora Insight. Viavi Solutions sponsored the keynote address. Additional sponsors included Gap Wireless, NATE, VoltServer and WIA.
J. Sharpe Smith programmed the Summit, and Kari Willis hosted. AGL Media Group has scheduled the next AGL Virtual Summit for Sept. 8. To register, click here.
Don Bishop is executive editor and associate publisher of AGL Magazine.
EdgePresence CEO Doug Recker is on the prowl at this year’s Connectivity Expo in Orlando. His company is looking for partners as it pursues a creative strategy for edge computing that leads to the placement of edge points of presence (PoP) at tower sites.
A PoP is an artificial demarcation point or interface point between communicating entities. EdgePresence owns and operates PoPs that provide space, power, bandwidth and interconnection on a leased basis either in multi-tenant or in single-tenant build-to-suit facilities.
The company places its PoPs, called EdgePods, at telecommunications tower sites to take advantage of such sites’ available electrical power and fiber-optic cable route connections. These locations place the PoPs closer to EdgePresence customers. According to Recker, the customers for the PoPs are the same as what he calls standard customers that would otherwise use a brick-and-mortar data center.
“A customer is someone who goes inside data centers for power, cooling and network redundancy or for connectivity and fast connections, transport and low latency,” Recker said. “These include cloud providers and retail customers, anywhere from local banks to credit unions — anyone who needs quick access, low latency and a presence in that region.”
Recker said that EdgePresence announced its project at last year’s Connectivity Expo. Since then, a tower company has agreed to make space available for PoP placement at relevant antenna sites. He said that EdgePresence has enclosures for the EdgePod PoPs, which he calls micro data centers, in production. “We have four built,” he said. “Two more are being deployed in the next two weeks.”
EdgePresence has completed its proof of concept, Recker said, and it is ready to launch in 20 markets by December. “We have customers that are installed and billing,” he said. “We have the product deployed and working in Jacksonville, Florida. We have customers and potential customers on a national scale.”
The company is deploying with tower operators now so its micro data centers will already be installed at tower sites when mobile operators need them for edge computing associated with 5G wireless communications.
“We are trying to get the product out there, but we have to have revenue on the product now, because it could take two to three years before true edge requirements develop,” Recker said. “We are at Connectivity Expo this year for the same reason we were here last year: We are looking for partners to deploy a greater number of edge micro data centers. Tower partners are talking with people about the edge, because that is where the mobile operators are. Everyone is rushing to get there, but no one has a plan. We want to get boxes out there for customers who are deployed right now.”