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Way back at the turn of the century, rapid revenue erosion from legacy voice services drove carriers to look for new profit sources. Strategic data services, like managed hosting, looked promising from the perspective of using their existing infrastructure for a new source of new business that was in demand. Telecom providers poured billions into buying and building data center facilities and reinventing themselves as full-scale IT service providers.
At the end of the new century's first decade, when cloud computing emerged as the next big thing, the top global carriers went all-in to promote themselves as the best-positioned to deliver end-to-end on-demand services. But that was before Amazon Web Services (AWS) and a small handful of other cloud providers came to dominate the infrastructure-as-a-service (IaaS) market. It turned out to be tough to compete in the on-demand arena against companies that could operate at hyperscale. Customers flocked to the pure-play hyperscale providers and environments like Microsoft Azure, leaving telecom providers out in the cold.
So, if you're not AWS, Microsoft Azure or IBM, what do you do? You reimagine your role in the cloud.
Top global carriers that once aspired to be AWS slayers pulled back on their public cloud efforts and data center-focused research and development. Traditional providers made something of a retreat from the IaaS sector, but they are hardly absent from the cloud. AWS, Microsoft Azure and IBM may dominate IaaS, but without the network connection between customers and their on-demand providers' data centers, there is no cloud.
Instead, after some careful reassessment of where their best opportunities are going forward, most major global carriers have refocused their cloud efforts on their core strength in secure cloud network services. These secure cloud connections essentially extend the customer's virtual private network (VPN) all the way to the cloud provider's facility. Using them, customers can move workloads from their premises to the cloud; securely move data between and among different clouds; or perform other functions, like backup.
Carriers' secure cloud network services serve cloud migrations
As enterprises moved from experimenting with the cloud in one-off projects in areas like test and development to more complex and broader-scale deployments, demand for more advanced and secure cloud networking connections grew.
Top IaaS providers cultivated relationships with multiple network providers to connect their customers to their clouds. But only a handful of carriers emerged with the global reach and technical depth to build network connections designed specifically to handle dynamic cloud traffic.
Secure network cloud services like AT&T's MPLS-based NetBond, Level 3's Cloud Connect and Verizon's Secure Cloud Interconnect are designed to meet that need. These services are fundamentally important as customers migrate more application workloads from their premises to a third-party cloud or multiple clouds.
As enterprises move more operationally important workloads into on-demand environments, the rapid expansion in hybrid cloud deployments is fueling uptake in these secure cloud network services. A RightScale-sponsored 2016 survey of more than 1,000 IT professionals found, on average, companies with on-demand deployments use six different clouds. Providers are at the ready with network connections for these environments. AT&T NetBond alone saw quadruple growth in connections in the last year, and it now touches 16,000 VPNs.
While some telecom cloud strategies are still muddled, many carriers are finding their footing -- and big revenue opportunities -- in cloud connectivity. The savviest providers are leveraging a combination of technology advances and strategic IaaS alliances to distinguish themselves from more commoditized networking services. Capitalizing on developments in areas that include software-defined networking and network functions virtualization, carriers can provision services faster and automate the delivery of new features in areas like security and bandwidth optimization.
Carriers succeeding in this space are creating deeper relationships with IaaS providers that were once their competitors. Alliances like AT&T's NetBond partnership with AWS go beyond simple cloud connections to include deeper integration of AT&T cloud network services in security and the internet of things. Ultimately, carriers that thrive in the cloud will innovate around their fundamental strengths and adapt as this young market continues to evolve.
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