People are often willing to trade speed for reliability. A car that goes fast is fun, but many would prefer a car they know won't break down much, even if it's slower. The same reasoning can apply to 5G technology, and it's this logic that Verizon Communications (VZ +1.64%) is using to define its place in the telecom market.
Many wireless customers know the frustration of paying premium rates for 5G access and yet still encountering dead zones and dropped calls. Now imagine you're a multimillion-dollar company that relies on your 5G connection to manufacture goods or perform a critical task. Even a momentary loss in connection could cost an untold amount of revenue or damage your reputation. Anticipating this potential issue, Verizon invested $40 million into mobile edge computing technologies in 2022.
NYSE: VZ
Key Data Points
The value of private mobile edge computing
Now Verizon has begun to shine thanks to its focus on specialized private mobile edge computing (MEC) services. Private MEC offers an on-site connection for companies that outsource their data processing needs to cloud computing providers.
By pairing its highly reliable 5G network with a secure and integrated cloud computing network, Verizon currently has one of the most stable data processing methods on the market. Verizon also offers public MEC, which is accessible to more than one customer.
Healthcare opportunities
Yet private MEC may one day service some of the most lucrative sectors in enterprise 5G connectivity. Two examples of such applications are automated manufacturing and telehealth. While on wildly different ends of the service spectrum, both rely on robots and devices with 5G connections for successful results.
Starting with general telehealth, Verizon's head start in offering private MEC means it can give providers unmatched security when treating patients. That's because Verizon's private 5G network provides an encrypted end-to-end connection between the healthcare worker and the patient.
As such, critical medical records, test results, and overall sensitive patient information are protected, while still being accessible at low latency speeds -- even for remote patients. Plus, data processing speeds are also extremely diminished, since any medical data that needs to be stored or interpreted goes directly to the edge computing service.
In the case of remote surgery, Verizon's private MEC provides "ultralow" latency between remote input and on-site output. This is due to the secure connection between the site's surgery robot, the remote-controlling surgeon, and Verizon's 5G network all outsourcing the high-speed data processing to a cloud computing site.
For healthcare companies seeking to serve more distant patients, the prospects of telehealth and remote surgery open up new profit opportunities while lowering staffing costs. Thus, current estimates for the two markets predict a total value of $7.2 billion by 2033 for medical robotics and $285.7 billion by 2028 for telehealth.
Manufacturing opportunities
In the case of automated manufacturing, robots are still involved but the stakes are lower, and the focus is production efficiency and profitability. For companies with automated production lines, private MEC networks provide a closed loop for maintenance personnel to diagnose inefficiencies.
Real-time data collection and review such as this offers companies using Verizon's private MEC service a level of insight into production like never before. It also helps significantly protect companies that rely on automation for critical manufacturing -- such as defense contractors -- from cyberattacks. Moreover, the automation industry has been mostly held back by latency issues, and Verizon's specialized private MEC nearly eliminates this issue. Once the latency issues are resolved, analysts predict the industrial automation market could potentially reach $115 billion by 2025.
The Verizon MEC verdict
While it's unlikely Verizon will remain the sole offering for individualized private MECs, its head start means it'll iron out many of the early issues its competitors will soon face. It also means Verizon has the chance to make the best first impressions with its MEC and build lasting relationships so long as its network remains reliable. Even if the company focused on marketing MECs solely to hospitals and factories, the growth potential is massive. Therefore, as the industries that benefit from edge computing continue to expand, so should Verizon's stock as it positions itself to grow with its customers.
