Can telcos get a 'leg up' in the cloud?

Cloud computing and cloud services will change organizations in every vertical, as businesses use the more scalable approach to applications and network services to nimbly shift expenditures from “business as usual” toward innovation and growth.

Rather than be forced to create co-location agreements, buy inventory or hire people for “rack and stack” to set up a network, many enterprises, multinationals and small- and medium-sized businesses (SMBs) are looking to the cloud instead – where much of that work is bundled into a “service.”

“We see in [Asia-Pacific], for example, that IT budgets and economies have to expand greatly to accommodate the enormous growth and increase in needs; they need infrastructure right away to meet their needs,” said Joe Crawford, executive director of IT solutions product management for Verizon Business. Verizon is in the process of building a node in Hong Kong to answer the growing demand for this type of infrastructure-as-a-service requirement. “And in North America, many companies are expanding into different geographies, such as Europe, and they want to reduce ‘man days’ in establishing themselves,” he said.

According to Crawford, Verizon’s cloud services environment has allowed some enterprises to do in half a day what would otherwise take at least a couple of weeks for some to accomplish.

With network services relationships already in place, it’s a natural step to allow those same customers to leverage other network and computing assets “as a service,” as well.

Market opportunities

At least theoretically, cloud services should appeal to a broad range of users, from residential customers to SMBs to large enterprises.

Telecom operators, though, could face greater challenges in the low end of the cloud market. For instance, small business customers don’t really care about who is providing the cloud service as much as price points and time to market. “These companies just want someone who will quickly and cost effectively sort out their backup and security issues and allow their employees and customers easy accessibility,” said Matt Edwards, director for TM Forum’s newly minted Cloud Services Initiative. “To SMBs, cloud represents a way to take away the mundane day-to-day grind that distracts them from focusing on customers.”

Similarly, residential customers are another market that may not look to telcos for cloud services. Edwards believes consumers will be an important opportunity, as they build up archives of photos, videos, movies and music that they want to access regardless of where they are in the world. “They want their ‘lives’ backed up so they have the same experience whether at home, at work or traveling,” Edwards said.

While the questions surrounding consumer and SMB cloud services are fairly straightforward, issues get more complicated in the enterprise market. For example, large multinationals, especially in financial services, medical or pharmaceuticals, would seem to have much to gain from cloud services, but they also face major barriers to adoption in terms of regulations, security, privacy, data portability, vendor lock-in and even service definitions. For instance, an increasing number of laws in certain countries regarding where data has to be housed (some restricting the storage of data outside of certain geographic boundaries) quickly bring into question many of the benefits of private, public and hybrid clouds.