News Stay informed about the latest enterprise technology news and product updates.

Carrier cloud services: Do customers care if you own the network?

With carrier cloud services, telcos can differentiate with their networks. Whether enterprises care remains to be seen.

With a longstanding heritage of providing enterprise voice and data services across their networks, many traditional telecommunication providers view carrier cloud services as a natural extension of their business. Carriers can deliver cloud services over their own networks, giving them an apparent service-level agreement advantage over cloud providers who deliver services via the public Internet. But not all enterprise customers are taking the bait.

As a network operator, we have the fiber that allows traffic to go around the world in a quarter of second -- that provides such a powerful infrastructure that an average [cloud provider] isn't going to be able to build out.

Anthony Bartolo,
senior vice president of UC and collaboration, Tata Communications

Buying carrier cloud services from a telco provider can assure end-to-end performance and availability, but not all telcos who have entered the cloud market have been able to win with this sales pitch, said Roopashree Honnachari, program manager of business communication services for the Stratecast division of San Antonio-based Frost & Sullivan.

"Amazon Web Services [AWS] is still the cloud market leader, but things are going to change," Honnachari said. "As customers adopt cloud, they are realizing the importance of owning network access over public Internet access to their clouds." AWS also counters the carrier cloud services edge with services such as AWS Direct Connect, a service that allows customers to establish private connectivity between Amazon's cloud and an enterprise data center.

Carrier cloud services: The importance behind owning the network

Private and hybrid cloud adoption is growing, which should prompt enterprises to seek secure, high-speed connections between their data centers and the public cloud. This environment offers telcos an opportunity to promote carrier cloud services, Honnachari said.

Tata Communications Ltd., a Mumbai-based global telecommunications provider, is promoting its worldwide IP network as a differentiator for its Infrastructure as a Service (IaaS) and Software as a Service offerings for cloud-based unified communications, compute and storage, said Anthony Bartolo, senior vice president of unified communications and collaboration for the company. Not every customer is looking for a provider with their own network, but large enterprise customers are recognizing the value in having access to a private connection, especially when trying to run and manage user experience for sensitive applications -- such as voice, he said.

"As a network operator, we have the fiber that allows traffic to go around the world in a quarter of second -- that provides such a powerful infrastructure that an average [cloud provider] isn't going to be able to build out," Bartolo said.

Terremark, the cloud services business unit of Verizon, also markets its global IP network and private multiprotocol label switching network for ensuring high availability, performance and control of its IaaS offerings, said John Considine, chief technology officer of the division. As businesses grow and need to link together remote office locations and data centers, relying on the public Internet and cloud providers with small pipes can become problematic, he said.

"It's going to come down to: What is the customer trying to accomplish, and how much [do] they care about the performance or the deadline of the outcomes?" he said. "In these cases, the intrinsic advantage of a company that owns the network starts to become apparent."

Do enterprises trust telecommunication providers with their data?

While it may seem like a good fit for enterprise customers to buy carrier cloud services such as AT&T and Verizon, adoption hasn't taken off the way telcos expected. They may have network expertise, but business customers aren't convinced that carriers have the IT hardware and software expertise that is needed in the cloud.

"Many enterprises initially viewed having a telco as a cloud provider as a negative, because the perception is that their focus will be on voice, not data," said Amy DeCarlo, principal analyst for security and data center services at Sterling, Va.-based Current Analysis Inc. "However, there is a growing understanding on the importance of performance, and that maybe a global telco is better suited to provide [an] end-to-end solution."

More on telecommunication providers in the cloud market

Cloud providers, telcos partner for cloud adoption

Will telecom cloud services investments pay off?

Telco provider benefits of offering cloud services

In order to fill out their cloud strategies, many large telcos have been actively acquiring cloud service providers with software and development expertise -- such as Verizon's acquisition of Terremark and CloudSwitch, and CenturyLink's acquisition of Savvis and more recently, Tier 3 -- a strategy that will continue, DeCarlo said.

The cloud is never going to be a carrier's core business, but staying out of the cloud market isn't an option. While there is no guarantee that carrier cloud services will be immediately profitable, cloud services can be used to make up for eroding revenues in other areas -- like voice, she said.

"The cloud represents a fundamental disruption in the IT industry, and becoming a part of that disruption is really in the telco's interest because we carry a lot of capabilities that the enterprise needs," Verizon Terremark's Considine said.

Let us know what you think about the story; email: Gina Narcisi, news writer, and follow @GeeNarcisi on Twitter.

This was last published in November 2013

Dig Deeper on Cloud and Managed Network Services

Join the conversation


Send me notifications when other members comment.

By submitting you agree to receive email from TechTarget and its partners. If you reside outside of the United States, you consent to having your personal data transferred to and processed in the United States. Privacy

Please create a username to comment.

As much as they would like, vertical carrier silos simply do not scale rapidly obsoleting supply across constantly shifting and growing mobile and HD/high-capacity demand. Horizontal models and vertical bundles will win. Vertical integration will lose.
Vertically integrated carrier silos do not scale rapidly obsoleting supply across constantly shifting and growing mobile and HD/high-capacity demand. Horizontal scaling and vertical bundles win. Vertical integration loses.