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C Chappell
C Chappell
9/3/2013 | 4:00:19 AM
Re: Is Cloud Passing Over Telcos' Heads..
I agree that telcos are going to have to develop a lot of the software they need to create a 'differentiated' cloud themselves, especially at the interface between WAN and data center. In fact, Verizon Terremark at a Light Reading cloud event last year said that any would-be cloud provider not prepared to do this shouldn't get into the business. And certainly the most advanced telco cloud players I've talked to are making investments in the hundreds of millions of dollars range to build enterprise cloud capability - though you're right, this investment is not always joined up with internal use of cloud.

So perhaps the barriers to entry to the cloud provider market are getting too high for the average telco? Perhaps there will only be a handful of global cloud provider players plus niche/regional opportunities for a few software-savvy operators?

 
C Chappell
C Chappell
9/3/2013 | 3:46:48 AM
Re: Is Cloud Passing Over Telcos' Heads?
I hope to be able to share this shortly - waiting for one of the most advanced players here to announce their service.
ericjras
ericjras
8/30/2013 | 1:53:11 PM
Re: Is Cloud Passing Over Telcos' Heads?
Nice article Caroline.  You mention operators experimenting w/ virtualized CPE, can you share who some of those are and what they are encountering?  Thanks.
brookseven
brookseven
8/19/2013 | 5:41:36 PM
Re: Is Cloud Passing Over Telcos' Heads..
Well, maybe...

Here is the problem.  The idea is to connect the service via the Internet.  If that is so, then bandwidth tools are restricted.  We used a private Ethernet over SONET to connect to one of the data centers.  There could be something in connecting like that.

The problem is the "softer" the application function the less in control the bandwidth will be.  Where will a new instance be turned up?  Will it be assured that the instance will turn up behind a particular carrier's bandwidth?  What about applications that move with the timezones?  Do you have global connectivity?

The whole notion here is commoditization.  Then everybody turns around and says wow...we need to differntiate!  Differentiated commoditization!  Interesting notion eh?

So how does AWS do it?  Many of the services they offer are pure commodities.  Some of them can really only be done because they are doing it for themselves.  I think this is the bit I am having a hard time explaining here.  Look at becoming an e-commerce site.  Amazon invested 100s of millions of R&D dollars in that function. Then it used it to build a big business.  Then it sliced and diced it and allowed 3rd parties to use it.

Let us apply this to the telcos.  Where are they investing 100s of millions of dollars of pure R&D to run their own business (my answer by the way is nowhere)?   Are they inventing their own software?  Their own hardware?  Maybe this is a better spin on this for folks here.  Think of Amazon as say Cisco...then Cisco allowed others to make routers by offering IOS to 3rd parties.

seven

 
Carol Wilson
Carol Wilson
8/19/2013 | 3:58:22 PM
Re: Is Cloud Passing Over Telcos' Heads..
Are there advanced cloud services telcos could offer their enterprise customers that leverage network connectivity? Or do you think they are blowing smoke about that?
brookseven
brookseven
8/19/2013 | 3:24:53 PM
Re: Is Cloud Passing Over Telcos' Heads..
Telcos have 0 chance of copying the advanced AWS services.  They simply are NOT an set of ecommerce vendors.  So, for example how would a telco provide the ability to sell and ship and bill clients for products?  I think people really don't look at the sites and look at the services that are offered.

Let me ask it this way:  How is a Telco going to do a better job of making Microsoft Office software than Microsoft?

I think that is the challenge for telcos.  They show up with a solution 1 - 5 years after the first movers in the market.  

What you may not know is I built/sold SaaS capabilities to Telcos/Cablecos/Wirelesscos.  What I saw was LOTS of commoditization and little innovation.  To develop high margin services telcos will have to invent brand new services.  In other words, what will a telco do that Amazon can not?  The most obvious thing is to open up the network in a way that might have been imagined in AIN more than 20 years ago.

So my view of telcos is that they do a nice job in commodity services as a follower.  Nothing wrong with that.  But to expect them to take ahold of what an Enterprise CIO wants - what is the pitch?  How about the IT Director?  How about the Software Engineers or web developers?

And telcos have invested in LOTS of things....

seven

Edit:  Take a look!

http://aws.amazon.com/products/
C Chappell
C Chappell
8/19/2013 | 1:48:14 PM
Is Cloud Passing Over Telcos' Heads..
It will be interesting to see if others agree with you. Some telcos are making big investments in SaaS so they must believe they can offer benefits to enterprise customers  - from aggregation, single billing, low latency delivery etc - back to bandwidth again!

Are there really inherent reasons why telcos can't do things that Amazon and Rackspace can? 
brookseven
brookseven
8/19/2013 | 12:02:33 PM
I think the problem is different....
There are 3 basic parts of "cloud services":  Bandwidth, Computing, and Applications.

Telcos do well at the first and have essentially no competitive advantage at the other two aspects.

For Bandwidth, essentially it is buying IP services to data centers or your location.  Yes there is bandwidth in the data center and it is charged for in different ways by different data center operators.  Compare for example the bandwidth charges of Rackspace and Amazon.

For Computing, the whole point is to make this a complete commodity.  My one comment here is that many functions are NOT cheaper when virtualized.  My friends at the telcos will learn this through NFV.  The reason is simple.  Virtualization costs computing power and memory.  To run an application non-virtualized in a 1 off is always less expensive.  Where Virtualization comes to the fore is where capacity needs a large change in usage.  However, if you have to build capacity to handle the max and then when it is turned down it is not repurposed, you have lost money.  Running a virtual set of instances to deliver a mission critical service is a LOT more complicated than I have seen presented here (having done it).

For Applications, this is really broken into two categories:  SaaS and APIs.  The Telcos have no particular advantage in SaaS and have a negative advantage in APIs.  Why negative?  AWS is essentially a productizing of the Amazon internal APIs used by Amazon to make Amazon.  Unless they go to completely unbundle network services, the telcos do not have an equivalent.  They could have done payment services, but others have beaten them to that and by years.

Which I think is the entire problem.  A telco can not (by its nature) be at the forefront.  How do you expect them to have top of the line services?  So, what they can do is implement incremental services that have already achieved volume and stability.  Nothing wrong with that (see the CLASS services) as it has brought them tons of profit in the past.

 

seven

 
C Chappell
C Chappell
8/19/2013 | 10:22:27 AM
Is Cloud Passing Over Telcos' Heads?
Telcos do have to push against the fact that CIOs naturally talk to IT companies, no question. But all the more reason to educate CIOs that ownership of the network can make a real difference to cloud delivery.

There are examples of telcos that are successfully persuading enterprises to buy cloud services from them - some of them are trying to distance themselves from the telco moniker, though. And these telcos are making good money from cloud, so is it failure of vision or confidence on the part of others?
Ray@LR
[email protected]
8/19/2013 | 8:59:31 AM
Matter of effort or perception issues?
To what extent might this be down to enterprises still viewing their comms service providers as the companies that deliver a connection but not one that would  deliver a full suite of IT services?

Surveys of business users over the years suggest that the telcos are not regarded as primary sources of cloud services because, well, 'they don't do IT, do they?'

So maybe it's a chicken and egg situation -- which telcos will invest big in cloud capabilities if they can't see any return on investment? 

 
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