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Telecom’s and Cloud players (By Vincent Bissett of BT Ireland)

Telecom's And Cloud Players

By Vincent Bissett of BT Ireland

A lot of focus these days on these 2 industry players as both are seen as key to supporting home working during these challenging times.

In some ways they are distinct businesses operating in their own markets but in many others there is strong overlap, dependencies and competition but up until recently a lack of deep partnership arrangements and even mergers and acquisitions. Could that be about to change?

The success of the cloud business model was built around large companies investing heavily in infrastructure and critically the IT systems that allowed that infrastructure to be “shared” in a very dynamic way. Initially this was focussed on the infrastructure itself, processing power and storage but has evolved to include applications, software components and full platforms.

The telco business model involved large up front investment in infrastructure which is then sold to customers on a pay as you go subscription basis linked to the amount of the service that you consume. Hmmm that sounds familiar. Ok, so while there are similarities in the model in terms of investment and payment, perhaps the key difference is the flexibility that cloud providers offer. You can’t really buy network capacity for an hour, cloud services are very much self service and self managed, there are other operational differences of course.

With the similarity in model and with the lines between IT and Telecoms becoming more and more blurred, perhaps then it is no surprise that cloud players like Azure, AWS and Google have been able to encroach into areas of business that have traditionally been seen as telecoms such as contact centre or enterprise voice communications and even network connectivity. Telco’s on the other hand have tried to create and launch cloud propositions selling both Infrastructure and Platform as a service, but most have now withdrawn or minimised their offerings at this stage. Many are now instead helping their customers to consume services from the big cloud providers by providing secure access on their networks. Not quite a partnership approach perhaps but certainly moving towards an ecosystem. Although you will see many telco’s listed on the partner pages of the cloud providers it is primarily as providers of network connectivity. We also see many telco’s include cloud services such as Microsoft’s Skype for business as part of an enterprise voice proposition. However while the telco may implement, migrate and manage the service very often the end customer will buy the licensing directly from Microsoft so again this would be more akin to an ecosystem than a real partnership.

We are seeing cloud players like Google, Facebook and Microsoft invest heavily in new subsea cable with new links being privately built by these companies both in the Atlantic and Pacific oceans. The decision to bypass existing suppliers and specialists in this space maybe borne from a perceived slowness or inflexibility often associated with the telecoms industry.

In the US, Google even launched their own broadband company, Google Fibre, in 45 locations across 10 states, it appears there are no plans to expand beyond these locations having paused the rollout project in 2016. This initiative seems to have spurred the incumbent broadband providers to action on improving broadband services for broader society and in turn making it easier for customers to access Google’s services. Job done perhaps?

Given you are reading this via it is worth a consideration on the skills being acquired by the major Cloud players. A quick look at their job pages and a keyword search for “optical” “ethernet” and “SIP” will likely throw up more jobs than you might have expected. So from a skills and capability point of view Cloud players are starting to look and feel more like telco’s.

So with similar business models, shared customers and routes to market, common skills and capabilities and with overlapping infrastructure (fibre and subsea) why have we not seen deeper levels of integration.

The recent tie up between Google and AT&T on consumption of cloud services at the network edge using AT&T’s network maybe something we will see a lot more of in the near future. At a really simple level this perhaps highlights the very real unique capabilities of a telco over that of a Cloud company. Telco’s have the processes, tools, network and people capable of delivering and supporting services at literally millions of physical locations. They have been doing this since 1877 when Bell Communications was created, now AT&T of course. If the next phase of development of the “cloud” is the move to “edge computing” pushing the power of the cloud applications closer and closer to the consumers of those applications then we may very well start to see deeper integration between telco’s and cloud companies.

Vincent Bissett

Strategic Deals Team

BT Ireland

“These opinions are all my own.”

Vincent Bissett

“Vinnie was with Ericsson for 15 years and is now in BT Ireland for 7 years as a senior member of their Strategic Deals Team. If you ever need to send a ‘steady hand on the tiller’ guy into a project or tender bid, Vinnie is your guy!” –