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Carrier Cloud Stirs the Telco Pot

Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
Heavy Lifting Analyst Notes
3/29/2012

Those of us who have been in the industry long enough to remember the arrival of the first LANs and distributed file systems to connect standalone PCs are more than familiar with the long-running slogan, "The network is the computer." (Attributed to VP John Gage of Sun Microsystems Inc. , the phrase dates from the 1980s, not the late 1990s as a Wall Street Journal article recently asserted.) Cloud is the end-game of Gage's vision – the place where network and compute, IP and IT, are truly converging. The slogan has never looked more prescient, which explains the frequency with which it has recently been reappearing on the lips of cloud visionaries.

The first manifestation of cloud-driven, IT and IP convergence is taking place today in the "cloudified" data center, where virtual compute, storage and network functions are becoming ever more entangled. The next waves of cloud are beginning to replicate this entanglement across wide-area and access networks. These networks are evolving to be as "cloudy" as the data center: software-defined, de-layered, virtualized (or "resource-pooled" in network parlance, to avoid the enterprise connotations of "virtualization") and capable of running on standard computer hardware.

This is good news for telcos that have been struggling to differentiate first-generation, data center-centric cloud services and infrastructures from those provided by non-network-owning competitors. Amazon is their top nemesis in developed markets, but they face tough competition for enterprise minds and wallets from systems integrators, startups and internal IT divisions implementing private cloud. Heavy Reading has long argued that to stand out from the cloud crowd, telcos need to do something different – something that exploits their unique asset: their network footprint.

As the new Heavy Reading Service Provider IT Insider, "Big Vendors Race to Establish Carrier Cloud Leadership," finds, network equipment vendors are now pitching in to help telcos create a "carrier cloud" infrastructure that embraces and converges both the WAN and the data center. Such infrastructure, which the report helps define, can enable telcos to provide a cloud that is higher-performing, more cost-effective and secure than what is on offer from their data center-centric competitors.

The report also points out that the race is on to drive cloud customers to engage with the cloud at the higher levels of PaaS and SaaS, rather than at the "legacy" level of infrastructure as a service (IaaS). Mobile cloud is a good example of this: Mobile app developers and consumers are creating and using applications in the cloud, without having to stand up data center resources first, and eventually this will be the norm for all digital applications. This market trend frees up telcos to do interesting things with the data center infrastructure underneath, for example, dispersing it within the network in optimal ways, unifying and simplifying both the converged data center/WAN/access network infrastructure and unifying its management. All carrier cloud resources, whether IT or network, will then scale together, efficiently for, and transparently to, the services running on top.

Of course, "Big Vendors Race to Establish Carrier Cloud Leadership" acknowledges that a fully "cloudified," converged and distributed carrier cloud infrastructure is some way off – not least because there will be strenuous market resistance both from telcos and the box shifters that serve them to software-defining and virtualizing their core networks. But the report concludes that the future of the (IT-based) cloud and the future of the network are closely entwined and leading-edge telcos (and equipment providers) agree.

Followers of recent discussions from OFC/NFOEC 2012 on the Light Reading website will have read Verizon Communications Inc. (NYSE: VZ) Chief Technologist Stu Elby's comments on the cloud, including: "Cloud computing technologies are revolutionizing how networking and network services are provided. ... We can do real-time packet processing on computers. It doesn't have to be on ASICs anymore." As "Delivering a Trusted Enterprise: Can Standards Help?" reported, Verizon made its cloud acquisitions to boost its software development capability; Cisco Systems Inc. (Nasdaq: CSCO) recently talked to Heavy Reading about the cultural pain of transitioning its organization to be software and services, rather than hardware-led.

The thundercloud on the horizon remains the Web-based competition. Events over the past five years have shown that the Web players have far greater software innovation and development capabilities than telcos. They have already had a significant impact on telco services. Could they start on the network – implementing or even acquiring advanced carrier cloud-like infrastructure ahead of operators themselves? Of course they can, especially if they perceive that the dominance of their cloud services is under threat. So while operators moving fastest to embrace carrier cloud may carve out a tenable position in the market as cloud infrastructure (and service) providers, the future for telcos in general is cloudy in more ways than one.

— Caroline Chappell, Analyst, Heavy Reading Service Provider IT Insider

Big Vendors Race to Establish Carrier Cloud Leadership, a 26-page report in PDF format, is available as part of an annual subscription (6 bimonthly issues) to Heavy Reading Service Provider IT Insider, priced at $1,595. Individual reports are available for $900.

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