Next-generation networks: Necessity of edge sharing

1. Introduction

Sharing has always been fundamental to the design of telecommunication networks. Statistical multiplexing of the traffic from multiple end-users makes it economically feasible to provide end-user services with capabilities and performance that would not be affordable if end-users had to be provisioned with dedicated facilities. From an engineering perspective, the history of networking is one of evolving from purpose-built silo networks to general-purpose digital networks offering an evolving range of services with diverse bandwidth and other Quality of Service (QoS)performance needs. Historically, the sharing was managed on behalf of end-users by legacy telecommunication service providers who mostly owned and operated the networks over which the shared services were provided. The centrality of these service providers was also reflected in the roaming agreements and sharing via wholesale service offerings that facilitated the accelerated build-out of fixed and mobile coverage and allowed operators to make use of the excess capacity that networks typically have available. From an economics perspective, regulators have sought to balance the dual goals of minimizing total costs and promoting competition, which is arguably most intense when the service providers own and operate separate facilities-networks. Consequently, regulatory policies have often sought to restrict network sharing, or when necessary, viewed it as a last-choice option.

With the transition to next-generation networks, in the following referred to as 5G+, the need to deploy many more small cell sites and the significant increase in capital costs required to provision 5G+ networks makes it increasingly important that network resources be shared, in particular, if national (or supranational as in the EU) 5G service goals are to be realized in a timely fashion and at reasonable cost. For example, BEREC concluded that there are significant benefits to both passive and active sharing, with the potential to reduce total operator OPEX and CAPEX by 20–40%. Those cost savings are a direct result of reducing the need for redundant infrastructure investment and the potential to realize higher asset utilization when resources are shared. Capacity sharing also makes it feasible to realize economies of scale and scope. Additionally, the evolution of networking technology toward 5G+ implies a transition toward more modular, flexible, software-controllable networks supporting much expanded and dynamic customization capabilities on a more fine-grained or granular basis. These capabilities contribute to reducing overall network costs while also making it possible to provision customized services with different QoS on a more granular basis in the face of more dynamic and heterogeneous demand. Essentially, 5G+ networks are predicated on novel resource sharing approaches (aka “next-generation resource sharing”) that allow multiplexed sharing in multiple dimensions (time, QoS, control, etc.) of an expanded range of digital (bandwidth, computing, storage, etc.) and non-digital (local antenna sites, power supply, conduit, etc.) resources.

In this essay, we explore the necessity for dynamic edge sharing in 5G+ next-generation networks. We make the case for why increased options for sharing of end-user owned network infrastructure ought to be more actively considered and embraced by policymakers. We explain why converging policy, business economics, and technical forces are expected to make local end-user provided edge network infrastructure an increasingly important feature for 5G+ networking and thus our digital future. In this context, we contextualize the discussion within the existing technical and economics literature on Network Sharing Agreements (NSAs) and explain how the need for increased edge-resource sharing is a technical and market driven imperative requiring appropriate regulatory policy consideration and responses. The remainder of this essay is structured as follows. Section 2 lays out some key considerations related to the technical aspects of migrating toward next-generation infrastructures and resource sharing and emphasizes its implications. Section 3 then discusses the ensuing policy challenges and outlines key features of and a path toward next-generation regulatory policies capable of facilitating and matching changing industry structures. Section 4 distills major insights and discusses the case for edge sharing. Section 5 concludes.

2. Technical implications—Toward next-generation resource sharing

Next-generation 5G+ networks are transformative, giving rise to new ownership and value chain constellations. More specifically, respective infrastructure resources will be provided by an array of entities and lead to ownership and value chain constellations that deviate from those that characterized the legacy world. To the extent that ownership of capital intensive 5G+ resources (mostly passive, but also including active) is shifted to end-user owned edge networks, the economic tension between minimizing total network costs while enabling facilities-based competition among service providers can be reduced. On the continuum of strategies for addressing the challenges posed by the increasing need to provision for shared edge networks while addressing the difficulty of sustaining facilities-based competition among service providers, the rise of TowerCos is an important example. Other examples include community or municipal networks, neutral hosts, and a variety of other novel business models that seek to solve the edge-network provisioning challenge of 5G. Additionally, from a technical and business perspective, there are growing strategic reasons why end-users with edge networks may wish to assume control (including ownership) of relevant network resources.

Options for dynamic provisioning and cooperative sharing among end-users already exist. However, the basic software and network support is expected to improve significantly in the next few years to enable the provisioning of end-user local clouds as an alternative and complement to private and public connectivity and cloud service providers. The implementation of active and more efficient sharing of existing, complementary communications and computing resources owned by different/competing entities both located at the edge and in core networks, however, is predicated on enhanced contractual flexibility and evolved forms of coordination between and among diverse entities. Whereas, those business models are evolving, the precise form they may take remains uncertain.

At the same time that edge-cloud technical capabilities and demand for edge-based control and investment in edge-based (local) digital infrastructure and capabilities (including intelligence, computing, storage, and connectivity) is increasing, national and international cloud and digital infrastructure providers are expanding their capabilities to dynamically reconfigure their resources and push their services closer to the edge. Some of the motivation for this expansion is in response to the growing threat to legacy ISP business models posed by edge providers that are adding capabilities to provide value-added capabilities that compete with ISP services. Downstream, providers of end-user devices and applications that are part of the Apple iOS and Android ecosystems offer ways to enable services that augment ISP resources and capabilities. Upstream, digital platform service providers like Google, Amazon, and Microsoft offer cloud and higher-level content and application services that both compete with ISP services and increase the need for additional downstream capacity.

The nature and pace of changes associated with these developments will impact how the ecosystem for 5G+ networks and services evolves. Importantly, 5G+ networks may act as “enabling platforms” (e.g., Bauer and Bohlin, 2022). They may nurture and facilitate innovation processes among networks, the services they provide, and their interactions with the other digital and non-digital resources that they depend on. Additionally, newly emerging edge network providers with (asset-heavy and) locally focused business models may disrupt incumbent legacy operators and service landscapes (e.g., Knieps and Bauer, 2022).

Earlier, we noted how passive and active sharing among network operators can lead to significant—large double digit—reductions in total costs by avoiding duplicative excess investment in multiple network elements. Avoiding such excess investment reduces operator investment costs, and in the face of bottleneck constraints on finances and other operator resources, may allow industry investment to be better targeted to provide expanded access to improved network services sooner, thereby realizing additional total welfare benefits and assisting in the realization of national connectivity targets as specified, for example, via universal service goals.

Shifting the cost of network elements from operators to end-users, however, will have less obvious implications on aggregate investment requirements and costs. Whereas, the cost shift will not eliminate the costs, it may actually sacrifice scale and/or scope economies and sharing opportunities if end-user owned/managed network assets (e.g., computing resources, site power, and other elements) are utilized less efficiently than edge computing or edge network assets owned by an operator, which has an incentive to share operator owned assets by multiplexing the demand of multiple end-users. Additionally, integrating end-user resources into the fabric of the Internet infrastructure will add novel complexities that may add to coordination and interoperability costs, at least in the short-term. Offsetting such potentially lost cost-economies, however, is the potential to make use of significantly under-utilized existing computing and network resources that end-users already own or are in a better position to deploy or expand.

The rise of new models for 5G+ cost sharing among new types of edge and legacy core network providers has the potential to reorganize and restructure ownership and value chains. It may thus generate more liquid technical and business relationships and render the associated contractual fabric more flexible. This will, in turn, yield an ecosystem that is inherently not only dynamic and complex, but also diverse along multiple dimensions (e.g., control, space, time, etc.). This increased complexity will challenge traditional notions of industry structures or market definition that seek to classify and categorize the interactions between service providers on the basis of vertical or horizontal interactions.

The forces propelling the vision of 5G+ infrastructure are part of the global digital economy transformation underway. This transformation reflects the expanded integration and application of digital technologies to all aspects of social and economic activity, which presents the ultimate demand driver for investment in 5G+ infrastructure: to enable increased access to networked, on-demand, high-performance ICT resources—for communication, computation, and storage. These resources constitute the infrastructural basis needed to enable Smart-X capabilities where X is any task that may benefit from automation or augmentation with information and communication technology (ICT). Examples of the most ambitious ICT applications that 5G+ infrastructure is expected to support include Virtual/Augmented/Mixed/Extended Reality (VR/AR/MR/XR) use cases, Autonomous Vehicles (AV)/Unmanned Aerial Vehicles (UAV), and Robotic Process Automation (RPA). Some of these applications will be edge-native, for example, because of stringent latency requirements or edge-device limitations.

5G+ infrastructure constitutes an enabler of our digital future. At its core, its bottom-line technical implication is that respective 5G+ networks will include interfaces (by design) to facilitate dramatically expanded mix-and-match opportunities among the various components needed to assemble an end-to-end service. From an end-user’s perspective, a key economic driver for these expanded mix-and-match capabilities is to allow the digital infrastructure to simultaneously and seamlessly support diverse and increasingly demanding services, which potentially may be offered by multiple entities. The applications and end-users may have widely different requirements along one or more dimensions related to connectivity (e.g., bandwidth and other QoS performance metrics), computation and storage, time, cost of service, and other factors. A key aspect and “byproduct” of the associated technical changes and expanded capabilities that are motivated by the desire to meet end-user requirements for more capable services efficiently (i.e., at lower total cost) is that it is increasingly feasible to consider many more technical network sharing options. As the technical design space of sharing options expands, so too does the business design space for sharing options (so long as economically viable options are not precluded by regulatory policies).

In Table 1, we identify three key technical/market trends that exemplify the forces making it technically and economically feasible to adopt more dynamic sharing approaches.

3. The policy challenge—Toward next-generation regulatory policy

Expanded technical capabilities give rise to potential demand growth. This is because lower costs and increased capabilities make it economically viable to expand services to previously uneconomic sources of demand and also foster innovation and new services. When coupled to the expanded mix-and-match capabilities, the increased demand creates potential opportunities for expanded competition via entry using legacy or novel business models in both component or system markets, if new models for network resource sharing are embraced.

Historically, when the last-mile networks were provided by integrated providers over separate, service-provider owned and managed facilities-based networks, policymakers viewed NSAs as threats to competition. As a consequence, they often severely restricted such agreements. In light of the increased difficulties of promoting facilities-based competition and industry consolidation at multiple service provider levels (among MNOs, digital platform providers, and device/ancillary service providers), the necessity for policymakers to embrace a richer perspective on NSAs among service providers has increased. This necessity has been emphasized by a growing body of economic research investigating these NSAs among service providers; it has shown that under most conditions and those that have prevailed in practice, NSAs have tended to be efficiency and welfare-enhancing (e.g., Maier-Rigaud et al., 2020; Pápai et al., 2020; Koutroumpis et al., 2021).

In the case of MNOs, the most common and least worrisome type of sharing for policymakers is passive, but technologists and economists who have considered 5G, anticipate a greater need for active network sharing in the future. Many have noted that active NSAs are preferrable from a competition perspective to mergers as a mechanism for realizing cost economies (Afraz et al., 2019; Motta and Tarantino, 2021; Oughton et al., 2022).

An implicit assumption of the technical and economics literature that has examined network sharing has taken the perspective that the networks are provided by (legacy) service providers that own/manage the networks to deliver services to increasingly demanding and heterogeneous end-users. With this perspective, industry structures are framed in a particular and rather static way and the sharing of resources is assumed to remain among a specific set of service providers. Occasionally, however, it has been recognized that more efficient sharing calls for the restructuring of asset ownership and control to enable the NSAs. A key example is the sharing of towers by MNOs that helped promote the emergence of independent tower companies as significant players in the industry. Economics research on NSAs has identified the importance of TowerCos, while acknowledging that more research is needed to understand how they should fit into the industry economics and policy challenges associated with managing the transition to 5G (Mölleryd et al., 2014; Koutroumpis et al., 2021).

As we explained above, enabling the more local digital infrastructure needed to support 5G+ going forward (i.e., smaller cells, edge computing, etc.) will increase opportunities for entry by additional novel participants in the 5G+ landscape; it will also require accessing and sharing resources that are controlled and owned by end-users. Those may mostly include non-digital assets such as antenna-sites, final-hop access wiring, and end-user owned servers and network terminal equipment for running hosted software applications that may be provided by other service providers.

In this context, embracing end-user sharing as a potentially efficient solution will help reorient regulatory attention away from policies inappropriately anchored in models of legacy industry structures that focus attention on imposing performance and coverage requirements based on the identity of the provider. Moving beyond a focus on NSAs between legacy telecommunication service providers, or only slightly better, between legacy telecommunication service providers and other large-scale service providers such as digital platform service providers, TowerCos or others, should help in enabling regulatory policies to be more responsive to the changing needs and potential for 5G+ digital infrastructures. Establishing guardrails and frameworks that facilitate market entry and edge sharing at different levels (at the component or system-level) should increase the ecosystem’s capabilities to adapt to newly emerging demands and technical innovations.

Embracing a richer perspective on NSAs that includes end-users also acknowledges the potential need for changes in ownership structures and reorganized industry value chains that can assist in paving the way for achieving 5G service goals in a timely fashion while promoting competition (contestability) and enabling market forces to direct ecosystem participants toward cost-minimizing and welfare maximizing deployment and sharing options. Significantly, regulatory attention can then be directed toward wherever problems may actually arise, rather than on where problems were perceived to be most likely to arise based on legacy industry value chains.

Adopting and “triangulating” different but complementary perspectives reveals that end-user sharing offers a range of important benefits, yields more sharing capabilities, and enhances market opportunities and end-user choice as well as competition.

3.1. The technical perspective—More sharing and local infrastructure deployments

The shift to small cells implies that the need for new investment and access to resources that are inherently local (site, power supply, etc.) increases. This, in turn, means that end-users are closer to where investment is needed and less likely foreclosed by the economics of distance. In legacy settings, a service provider has a clear advantage over individual end-users when it comes to investments in assets that provide services over a large area. For example, a central computer has a lot of capacity that provides a service to many end-users that are distributed over a large area. The necessity or role of any single end-user (“bargaining position”) is reduced and does not shape the design of respective investments and assets. Small cells are fundamentally different and subject to a different investment paradigm. They are inherently local infrastructure, and each individual end-user (depending on how small the cell is) represents a bigger share of the end-users for which that investment is co-specialized and localized.

Moreover, assets that must be shared by large numbers of end-users (e.g., a large-scale data center) are typically too expensive in terms of upfront cost (fixed, potentially even sunk) and realize too much in the way of scale economies to be competitive with end-user-deployed infrastructure. Put another way, individual end-users would never deploy a Class 5 switch but may very well-deploy a Private Branch eXchange (PBX) or local router—and as the modularity and costs of technology decline, the PBX/local router becomes a more affordable and capable competitor for delivering functionality that previously required the Class 5 switch.

In recent years, the trend toward more modular , smaller ICT components that are more capable has driven a move toward more embedded CPUs and lowered the costs for deploying more capable CPUs and other ICT devices at all levels. This trend drives changing cost economies, expanding opportunities for more distributed and local infrastructure deployments, including those located close to end-users or on end-user premises. As a consequence, these trends pave the way for change—in terms of how networks are designed and provisioned, where they are deployed, by whom they are owned, and how they are shared.

3.2. The markets perspective—More market opportunities and end-user choice

The expanded technical capabilities explained above expand markets and market opportunities. They imply a digital future that is both more heterogeneous and unpredictable. For example, in a world where AR/VR did not exist, no one would have it. In a world where AR/VR can exist, different users will use AR/VR differently, depending on the applications used and the configuration of the end-user’s in-home or on-device networking capabilities. Just as we see increased fragmentation of digital markets with extremely long tails and unstable concentration of Top 100 websites, media properties, etc., we should expect to see fragmentation of digital resource demands.

End-users’ heterogeneous preferences are not limited to the selection of applications used, but also includes the range of options for satisfying end-user demand. That includes the ability of end-users to select among different suppliers and contracting terms. As there is no unique industry structure that maximizes end-user choice across these multiple dimensions, there are benefits of enabling expanded options for end-user self-provisioning.

However, many end-users—indeed, most—may prefer not to self-provision. Relying on a service provider that is able to aggregate the traffic and demands of many users to realize scale and scope economies in many cases may offer lower costs, and service providers even may know better than many end-users (e.g., mass market consumers) how to match products and services to maximize consumer welfare. In a world of uncertain demand and supply trajectories and where information is asymmetric and imperfect (i.e., there are fundamental unknowns and unknowables), the allocation of decision-making control (choice) among end-users and service providers so as to maximize total or individual welfare is indeterminant. In many cases, service providers may be better (or worse) situated to manage the risk associated with uncertainty—but which is the case will depend on the context.

Nevertheless, and despite these considerations, one can think of scenarios in which even when end-user deployed infrastructure and sharing among end-users and among end-users with service providers is less efficient (i.e., costs are not lower or networks not more capable), enabling end-user deployed infrastructure can still deliver benefits in terms of competition (due to increased contestability) and resiliency (due to non-correlated failure modes).

4. The case for edge sharing

In view of the points made above, we identify several substantial reasons that make a compelling case for closer consideration of edge sharing. In many cases, end-users either own relevant resources, control access to them (e.g., access to a small cell site or power) or can provide them most efficiently (e.g., basic maintenance—plugging a resource in or other actions that would otherwise require a truck-role since they cannot be accomplished solely by software-initiated remote action). In those situations, which we anticipate to increase in a world of 5G+ networks, options for end-user involvement must be ensured.

Edge sharing has many benefits but comes in different shapes and forms. First, edge sharing will need to be among end-users. For example, edge sharing may take place within the same household across multiple individuals, devices, and apps that are likely to share a single or multiple connectivity options with the larger world. This might also be the case in multi-tenant occupancy situations where the edge network is shared as in a mall, apartment building (or gated community), or campus (anchor institution like a school, library, or industrial campus). Second, another relevant form of edge sharing may be between end-users and established service providers (e.g., legacy service providers like access ISPs, digital platforms, and cloud service providers) as well as alternative/novel service providers (e.g., neutral hosts, next-generation antenna or ancillary resource enterprises).

One strategy for reducing the service provider costs of deploying 5G+ infrastructure is to shift the costs of certain elements from service providers to end-users. For example, the broadband modems provided by fixed-broadband providers and the small-cell hotspots provided by MNOs are typically leased to subscribers, but make use of subscriber-provided site-access and power. The control of these assets is divided between service providers and end-users. For example, the service provider may install the devices on end-user premises and have significant capabilities to remotely monitor and control the functioning of the devices. However, the end-users also have control power associated with the device configuration and service options they elect to enable (including their rights to terminate or modify their service agreement). Distributing ownership and control of key assets to end-users restructures the bargaining and contracting relationship between service providers and their customers. On one hand, it shifts parts of the total costs off the books of service providers onto the books of end-users. This reduces the investment burden for service providers, which may make additional facilities-based competition more likely or improve the return on the investment that remains on service provider books. On the other hand, it may shift, to a certain extent, bargaining power to end-users (but that need not necessarily follow), or if it enables additional facilities-based entry, may intensify competition. With this in mind, small cell portability and open architecture options should be protected to support and safeguard edge sharing, competition, and end-user choice.

5. Concluding remarks

An unavoidable consequence of where the trajectory of digitalization is taking us technically and from an economic-access-to-critical-resources perspective is that end-users will need to be more involved in enabling next-generation networks and services. Recognizing and understanding that point is critical for designing marketplaces and suitable guardrails and regulatory policies for network sharing.

Network sharing of local 5G+ infrastructure that is owned by end-users has the potential to yield significant benefits. First, cost savings can be achieved by taking advantage of existing ICT resources that otherwise need to be duplicated to provide services. Moreover, end-users may be in a better position to deploy or expand relevant local resources. Second, strategic flexibility to adapt industry value chains to respond to and enable more robust innovation in technical architectures and business models can be enhanced by expanding the realm of NSAs to new types of edge-networks, up to and including NSAs involving end-user digital and non-digital resources. Third, competition for last-mile infrastructure can be intensified by embracing the option for end-users’ self-provisioning, even if many end-users may quite appropriately opt for service provider provisioning. It expands the options for mix-and-match competition (contestability) among technical and business model alternatives for provisioning the resources, components, and systems needed at the edge to support 5G+ services and applications. Embracing end-user NSAs expands mix-and-match opportunities.

Existing regulatory models are too predicated on legacy models of industry structure. Those legacy models anticipate and thereby reinforce barriers to entry that presume particular architectures and provisioning approaches. Those are burdened by the legacy of silo-based telecommunication services where the critical service was the bit-level transport connectivity provided by access service providers to edge content and application service providers.

That industry value chain model is under assault as fixed and wireless, terrestrial and non-terrestrial technical alternatives for providing last-mile connectivity are simultaneously competing and being integrated into a richer connectivity fabric for providing mobile and fixed services. Moreover, the digital infrastructure required to support 5G+ services and applications requires that edge-based networks provide dynamic access to computing and storage resources in addition to just the traditional telecommunication “bit-transport” services, especially if the more demanding applications such as AR/VR and AI-driven automation are to be realizable. Precisely how best to provide and integrate those computing and storage capabilities with broadband connectivity capabilities is uncertain.

Although there is broad support from policymakers, industry, and academics of the long-term vision of what sorts of capabilities we want and expect our global digital infrastructure to provide, there is no general agreement as to what the best industry structure and path for realizing those capabilities should follow. There is also significant variance with respect to forecasts of how the future will evolve.

In light of this uncertainty and in recognition of the fact that public investment will comprise at most only a small share of the total investment needed to build next-generation digital infrastructure, a key goal of policymakers will be to promote a healthy market ecosystem which will imply continuing with a light-handed regulatory approach. The Internet ecosystem is too complex and geographically diverse to be amenable to command-and-control, public utility-style regulation, even if one were to imagine that that were desirable. In such an environment, policymakers should embrace more expansive NSAs to realize the efficiency benefits that expanded active as well as passive sharing of network resources can enable. Introducing such flexibility is necessary but hardly sufficient to also enable expanded sharing with end-users. It will also be necessary to make sure that regulatory rules are not biased against end-user provided network elements. For example, regulatory rules that block community-based networks (or community franchises that discriminate against competition from other service providers) both risk distorting costs and erecting inefficient barriers to competition. Next-generation regulatory policy should recognize and embrace the opportunities end-user participation offers, not preclude them.

Additionally, to protect against the many ways that NSAs might be abused to harm competition, policymakers will need to encourage an inclusive and dynamic ecosystem for network performance measurement. Part of that will include active government monitoring and measurement programs and transparency and disclosure mandates. However, the latter, while important, are hardly a panacea and are difficult to craft appropriately. Finally, as network edges and end-users (in gated communities, shared tenant dwellings, industrial and academic campuses and other edge-private networks) assume a greater role in providing key elements comprising the fabric of our global digital computing and communications infrastructure, regulators will need to adapt how regulatory rules are targeted. Instead of targeting regulatory obligations to actors with specific business models (e.g., differentiating between access ISPs and edge providers), regulators will need to focus on whichever actor is engaging in the harmful behavior. Enabling this shift will be difficult since expanding the scope of businesses that may attract regulatory attention will make it difficult to enable sufficiently flexible regulatory oversight without risking regulatory abuse of its discretionary authority.

Recognizing the unavoidable and expanded role that end-users (and by extension, new types of service provider business models) will be required to play in more efficiently provisioning essential resources and edge-network components for the 5G+ future should motivate policy-makers to embrace expanded notions for regulating NSAs. As explained herein, embracing end-user/edge-based sharing is compatible with the capabilities of today’s technologies and their potential to enable growth in demand, reduce network costs, and expand end-user choice. Failure to do so risks biasing regulatory policies that may preclude efficient restructuring of edge networks and the emergence of novel business models and efficient sharing arrangements. Blocking such emergence may limit competition that might otherwise add an important source of competitive discipline to the 5G+ ecosystem.

Data availability statement

The original contributions presented in the study are included in the article/supplementary material, further inquiries can be directed to the corresponding author.

Author contributions

WL and VS collaborated in co-authoring the contribution and are jointly responsible for the analysis and opinions offered. All authors contributed to the article and approved the submitted version.

Funding

Funding for publication provided by MIT Open Access publication support.

Acknowledgments

WL would like to acknowledge the support of NSF Grant #2228470. VS would like to acknowledge funding by the Federal Ministry of Education and Research of Germany (BMBF) under grant no. 16DII131 (Weizenbaum-Institut für die vernetzte Gesellschaft—Das Deutsche Internet-Institut).

Conflict of interest

The authors declare that the research was conducted in the absence of any commercial or financial relationships that could be construed as a potential conflict of interest.

Publisher’s note

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