Are Cloud Services a Market for Telcos to Lose?

At the Comptel User Group last week, a number of the communications industry’s issues du jour were offered to the delegates for roundtable discussion. Amongst the most popular was the topic of cloud services.

It’s a subject which has not exactly suffered from neglect this year, but nonetheless, it was interesting to hear it discussed between communications service providers (CSPs) and network specialists (such as Comptel partners IBM, Cisco and Alcatel Lucent)—people who have a real and pressing interest in how cloud will play out as a credible service for CSPs as well as a possible new revenue source for equipment and software suppliers.

The attention of the group was quickly caught by the question of how big an opportunity cloud could be for telcos.

There is little doubt that cloud services are going to be big and in great demand—the business case is easy to make, in terms of both cost savings and business flexibility. Furthermore network and virtualisation technologies are making cloud increasingly viable. This will continue with the roll out of 4G, which will make access to cloud-based services ubiquitous across fixed and mobile networks.

And no one questions that carriers have some real competitive advantages to exploit in the cloud services market, particularly through their command of the communications network and their influence and control over the quality of delivery.

So cloud services for telcos—it’s all good? Well maybe.

Our delegates raised an issue which we don’t believe has been widely discussed—exactly how evident are telco advantages to the addressable market? Telcos know the value of their technology, but to what extent is it a differentiator for the average customer? After all, it’s hard to value what you don’t understand. Are SMEs aware of the difference between ‘smart pipe’ and ‘dumb pipe’? Do they know (or care) how little influence the IT- or Internet-based provider can have over the quality of service (QoS)? Do they understand the difference that QoS will make to the reliability of their connection?

Telcos undoubtedly have great advantages in the provision of cloud services, but there’s still a lot of education to be done to sell those advantages to the market. Now, as we move out of the early-adopter phase, telcos must grab that all-important mindshare.