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Storage Services for Sale

NEW YORK -- Storage area networking services may be coming back to the forefront of carrier agendas.

While most carriers are still in the planning stages of offering these services, there is growing interest in the technology among carriers. Today, at Light Reading’s Storage Over Optical seminar in New York, 55 percent of the 228 registrants were service providers.

“We’ve all got the infrastructure and the fiber rings to do storage,” says Renee Lem, a senior carrier sales executive for WilTel Communications Group Inc. (Nasdaq: WTEL), who attended the event. “Now we just need to provide the protocols and the mechanisms to turn it into a product.”

WilTel is already working on a managed storage service in its labs, says Lem. Other carriers are also working on offerings. AT&T Corp. (NYSE: T) began offering its storage extension service back in January.

Carriers like AT&T and WilTel already provide the optical pipes used for building out storage area networks. Enterprise customers add equipment to connect these pipes to different sites to form their networks. Typically, they implement and manage these networks themselves.

“Customers have been building these networks themselves,” says Craig Krivin, product manager of StorageConnect, from AT&T. “But the one thing they have been lacking is the management piece.” With the AT&T solution, the carrier manages the infrastructure and monitors the network. When a failure occurs, it’s the carrier who will go in and fix the problem.

Disaster recovery and business continuity requirements are the two biggest drivers in this push for improved storage area networking.

Government regulations are also a driver. More than 10,000 government regulations affecting storage in the U.S. have been implemented in the past few years. These regulations require financial institutions and other organizations with critical data to have a network in place that can store and quickly retrieve it. The regulations mandate the kinds of data that are to be stored, the time within which it must be retrieved, and even the distances between storage sites.

All of these new regulations and requirements have put increasing pressure on companies to update and expand their storage area networks and disaster recovery mechanisms.

“Even the customers who aren’t being required by law to improve data recovery are updating their networks anyway,” said Steven Montag, of ADVA AG Optical Networking (Frankfurt: ADV) during a panel discussion at the seminar today. “In order to compete, some of the smaller companies want to show that they can provide the same level of recovery as the big players.”

Damian Goldstein, senior IP solutions consultant for AT&T, says service providers can offer enterprise customers a more cost effective solution to satisfy these new requirements. This is especially true for companies that are adding secondary and tertiary data recovery sites.

“A lot of these companies don’t have the capital to buy a bunch of new equipment,” he says. “We can offer them a managed service for a monthly fee that doesn’t require an upfront capital expense.”

But some enterprise customers say they don’t want to give up control of their networks to their service provider.

“When something goes wrong I can be there in half an hour,” said David Billingsley, chief network architect of Baptist Heath, in an interview after his keynote speech at the seminar today. “I don’t want to wait for a service provider to figure out the problem. In a disaster, it’s my neck that’s on the line.”

But Billingsley says he sees instances where a managed service might be a good fit. He says companies that have an immediate need to expand their storage and data recovery networks can benefit from a managed service that will get them up and running much more quickly than if they were to develop the expertise themselves.

While managed storage services may provide a big opportunity for carriers, they likely won’t generate much revenue in the near term.

“This is mission-critical stuff, and it takes six to nine months to get things implemented,” says AT&T’s Goldstein.

— Marguerite Reardon, Senior Editor, Light Reading

BobbyMax 12/4/2012 | 11:32:19 PM
re: Storage Services for Sale By the time ASPs have built necessary infrastucture and invested in hardware and software, there will not be enough profit for the service provider. There will be only a very small number of customers that will subcribe to the service because of reliability, network management and security concerns. Another issue for the provider is interoperability, cost, and service. It would be helpful if existing providers can provide data to determine the cost structure.
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