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Home > Telecom News > Enterprise services revenues climb as telecoms tap economies of scale |
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Long only a minor slice of a telecom's revenue pie, this potential market could be huge. U.S. companies have become comfortable with outsourcing expensive, difficult tasks that telecoms can provide at a lower cost through economies of scale, such as hosted VPN or distributed denial of service (DDoS) attack protection. "My guess would be [hosted services] are still relatively low compared to voice or other services, but it certainly seems to be the future many telecoms are betting on," said Counse Broders, research director for Current Analysis. Service providers will see these services as an avenue toward transforming themselves from "dumb pipe" providers into companies that offer value-adds more resistant to commoditization and the inevitable margin drops that follow, Broders said. Service providers say the visibility they can provide into the network is a key asset when selling services. "The level of intelligence we can provide when customers use our network is incredible," said Mike Marcellin, vice president of global product marketing for Verizon Business. "If applications have performance issues, being the one that can own and manage and provide visibility into the network can be extremely valuable." Service providers will need to offer a continuum of services, so that customers can upgrade as their needs change or as they become more comfortable with a hosted model. "What we do in our security practice is give our customers a continuum of capabilities from turnkey to very managed, and gradations in between," Marcellin said. "We have an absolutely broad array of security capabilities." Service providers overseas have already built strong portfolios of enterprises services. In some ways, the U.S. market is playing catch-up. "Managed services have been as important in Europe, for example, since the beginning of the world," said Tom Nolle, president of telecommunications consultancy CIMI Corp. "That's not true here." But even in Europe, he said, there are indications there is demand for even more managed services offerings . Visibility and hosting services go a long way toward filling some needs, but many telecoms are building up their networks' intelligence to go beyond those basic services, particularly in regard to security. DDoS defense, for example, often utilizes probes and other equipment throughout the network to detect and re-route malicious requests while leaving legitimate traffic alone. Network visibility and control give service providers a serious edge over the competition in offering managed security. "It's hard to point to many independents doing managed security without several other services," Broders said. Many which once did just that have been acquired -- Verizon's purchase of Cybertrust a year ago, for instance, produced the largest managed security vendor in the world. Beyond security, managed website hosting is the second largest segment of hosted enterprise services, Broders said. But another emerging element may soon be a game changer. "The other option that comes into play here is this whole cloud computing," he said. "It moves more applications customers might do on their own, on their own data centers, onto the network." Broders pointed to the recently launched Synaptic service from AT&T, which provides companies virtualized storage and servers that can be expanded or contracted on the fly as needs change. "Longer term, we're going to see more in managed applications," he said, "and I think there's an advantage to hosting things in the networks." A related service that may see rapid growth is diagnostics, particularly as enterprises use more and more Software as a Service (SaaS) offerings. "One of the things that TMF [TeleManagement Forum] has taken up recently is the issue of enterprise security management and enterprise identity management and end-to-end testing and diagnosis," Nolle said. "If they're popping up in TMF, then service providers are looking at this area."
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