AWS Private 4G, Meta's Telco Ambitions, and More

Last updated on by Christian Koch

Hey Friends,

Welcome to another Weekly Briefing.

I wrapped up this week's newsletter in a rush and a bit late last night, so please excuse any typos/errors you come across.

Most of the companies that I track have wrapped up earnings, so let’s get into this week’s update.

Your Weekly Briefing

Cloud Infrastructure

Last week DigitalOcean, Edgio, and Akamai reported earnings, so here's a few key takeaways from 2Q22.

DigitalOcean reported revenue of $134M, up 29% y/y but is decelerating since reaching 37% in 3Q21, CFO Bill Sorenson is retiring (again), The company is working with colocation providers to right-size and re-rate pricing (DOCN uses most expensive, premium-priced retail-focused data centers highlighting substantial opportunity for improvement) which should have a positive impact on margins, 3,300 customer accounts are using serverless functions and PasS now accounts for 18%/revenue, and Blockchain exposure was 5% of 2Q22 revenue  (~$6.7M).

Akamai reported revenue of $903M, up 6% y/y, with Security rev. $381M, up 17% y/y, Content Delivery rev. $417M, down (11%) y/y, and Compute rev. $106M, up 74% y/y, while traffic growth continues to decelerate among largest media customers, management expects Content Delivery rev to decline at a slightly higher rate y/y over the next few quarters. Akamai said it signed one of worlds largest media companies to multi-million/multi-year compute contract who cited competitive concerns with a large hyper-scale cloud provider which is likely AWS/Prime Video.

And Edgio, the newly combined Limelight and Edgecast, reported revenue of $74M, w/legacy LLNW contribution of $61M and Edgecast contribution of $13M. Gross Margin was 30%, which isn't anything to write home about. The company clearly has a lot of work ahead after LLNW was ran into the ground for the last two decades and its first smart move was acquiring Layer0 last year. The company said it acquired new capacity to support Thursday Night Football and a large software customer doubling down on its traffic commitment.

News

  • Google announced new cloud regions coming to Malaysia, Thailand, and New Zealand. Link
  • AWS Private 5G is generally available, but 1) it does not currently support 5G (it uses CBRS in the US and only currently supports 4G/LTE), 2) you can only deploy a mobile core in three standard regions at the moment—us-east-1,us-east-2, and us-west-2, with on-prem options (outposts) coming later, and 3) supports only a single radio and 150mbps throughput at this time. Very much a beta product. Link
  • Google Cloud Functions v2 is generally available and adds new region availability, larger compute instances and many other enhancements to the serverless product. Link

Connectivity

On the connectivity side of the house, Starry reported earnings along with Megaport. Starry reported a whopping $7.8M of revenue, up 52% y/y, adding 9,703 new customers in 2Q bringing the total subscriber count of 80,950, up 69% y/y and Starry has only penetrated 1.4% of the 5.7M homes across serviceable markets. Megaport will get a more lengthy analysis later this week, but highlights include cracking AUD$100M in annual revenue with FY22 revenues of AUD$110M, up 40% y/y, while MRR was AUD$11M, up 43% y/y. North America accounts for more than half of that at AUD$58M or 53% of revenues. The company ended the quarter and fiscal year with 2,643 customers buying 15,545 virtual cross connects through 9,545 physical ports. Stay tuned for more on $MP1 later this week.

News

  • Meta announced a partnership where it will provide the Appalachian Power Company (APC) and Gigabeam with engineering and construction resources as well as backhaul capacity from a local market in West Virginia to support broadband for more than 13K+ residents. Whether or not you use Facebook, Instagram, or WhatsApp, Zuckerberg will find a way to creep into your life one way or another. Link
  • Google announced it is in discussions to expand Google Fiber to new markets across Arizona (previously announced), Colorado, Nebraska, Nevada, and Idaho. Link
  • Ting Fiber raised $60M from Generate Capital, including access to an additional $140M dependent on reaching performance milestones, to fund the expansion and its fiber broadband network across US markets. Link
  • The US FCC has rejected applications from SpaceX Starlink and LTD Broadband for RDOF funding, citing issues with subsidizing the Starlink’s pricey end user CPE/terminal, Dishy and consulting LTD is not capable of building and operating a network at the scale required in relation to its winning bids.
  • Starry announced a new feature that makes customers pay $5 extra a month for symmetrical upload speeds instead of just investing to build a better network and simply providing customers with symmetrical broadband speeds like a fiber broadband provider would. Why would anyone bother buying service from a company like this in the first place unless you really had no better choices? Link

Data Centers

Cyxtera and Switch reported earnings last week, here's a brief summary. Switch reported revenue of $168M, up 19% y/y, with Colocation rev. of $134M, up 17% y/y and Connectivity rev. of $31M, up 26% y/y. The acquisition by DigitalBridge/IFM is expected to close in the fourth quarter. Cyxtera reported revenue of $184M, up 5% y/y with interconnection revenue growth coming in at 1.2% y/y (excluding revenue from Lumen). The company also highlighted that power costs are anticipated to increase 17% for the full year.

News

  • Compass Datacenters is expanding to Europe with plans to develop a 2.3M SQFT / 48MW+ data center campus in Milan, Italy as part of a Joint Venture with global real estate investor, Hines. Link
  • As I highlighted back in December 2021, EdgeConnex has been fiddling with an EV strategy, and the new company, Voltera, is now being spun out of EdgeConnex with backing from EQT to build EV charging infrastructure at scale. Link
  • Media is reporting that the Dataplex Group is entering voluntary liquidation after waiting more than 12 months for power approvals, only to be denied two power contacts from Ireland’s troubled provider, EirGrid. Link
  • CBRE teased out some highlights from its upcoming half yearly data center report as demand for both hyperscale and enterprise data center capacity continues to surge. Link

Are you playing catch up with your infrastructure deployments?

At Aptient, we can help you go beyond smart hands to eliminate your “COVID backlog.” We’re already working with many of our clients on a large number of high-risk, high-value infrastructure projects that were previously put on hold because of the global pandemic. We also know that for better or worse, there are vast new opportunities for massive growth owing to increased demand. Aptient specializes in using expert network engineers, dedicated project management, and constant communication to flawlessly complete your mission-critical deployments all around the world.

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Further Reading

The Cloud 100 2022

Bigger, faster, better | APNIC Blog

Take a look inside the lab where AWS makes custom chips

Cloud Power Up – Platformonomics

What goes in a metacloud? | InfoWorld

One of 5G’s Biggest Features Is a Security Minefield | WIRED

DigitalOcean CFO: ‘We are masters of our own destiny’ — The Technology Letter

What Spectrum for Enterprise Private Networks Tell Us About Risks and Opportunities - Frank Rayal

Man who built ISP instead of paying Comcast $50K expands to hundreds of homes | Ars Technica

A final goodbye – On my Om

Latest Research Notes

Equinix 2Q22 Product & Interconnection Highlights

Cloudflare, Fastly 2Q22 Highlights

Notes from DigitalOcean's 2022 Investor Day

Thoughts on the Jim Chanos Data Center/REIT Short

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