Last month, Jo Maitland at GigaOM Pro referenced the work Cloudscaling is doing in a report titled, “How carriers can catch up in the cloud race.” (subscription required, and worth it) Her work provides practical advice for Communication Service Providers (CSPs) asking this very question.
How did the CSPs let themselves get in the situation of needing to catch up in the first place?
Looking back, most carriers had hosting and co-location offerings, which provided a level of security, reliability, and performance which was usually a notch above the same type of offering from the low-cost, internet centric public datacenter provider. CSPs believed that there would be an upper crust of enterprises which would value the premier service being offered and stick with the CSP for their hosting needs. In the earlier days of the Internet, the network connection to the enterprise was expensive, not as fast as the LAN, and was almost always provided by the CSP. The CSP likely connected the multiple offices of the enterprise together with an MPLS VPN, and so for both bandwidth reasons and for the ability to conveniently have the outsourced datacenter within your MPLS VPN network, the CSP was a logical choice for most.
Much has changed since then. Today, most mainstream datacenters have the same advanced security, reliability, and performance capabilities CSPs offer. As Jo points out, “The larger players have been able to buy their way into the market: We saw Verizon acquire Terremark”. One could argue, that the multi-carrier network of the “carrier neutral” hosting and co-location companies is actually better connectivity than any one CSP could offer. Some believe this strategic multi-carrier connectivity is the real reason Verizon acquired Terremark, with its “NAP of the Americas.” Finally, performance improvements and cost reduction in encryption-capable routers are allowing customer-configurable, IPSec-based VPN capability over multiple carrier networks an attractive alternative to the carrier-configured and controlled MPLS-based VPN.
Jo goes on to point out, CSPs find themselves looking at a $40-50 billion market led by such offerings as AWS, GCE and Rackspace Cloud. It’s no wonder that many CSPs are beginning to build out cloud offerings themselves. As Jo puts it, “with mixed successes: Telstra, SingTel, French operator SFR, British Telecom, KT Corporation, Orange, AT&T, KDDI Corporation and Chunghwa Telecom, among many others, have all taken a shot at creating a cloud-services business.”
So, why have carriers experienced mixed success? Because building cloud infrastructure at scale is not easy. Solving this problem is Cloudscaling’s raison d’être.
Jo’s report outlines three areas in which carrier clouds have fallen short: cost competitiveness, acumen in selling cloud services, and bad technology bets. She then points out that, in an effort to address those shortcomings, many carriers “are now turning to commercial products or well-supported open-source systems to take another crack at it.” That’s what we’re seeing, too.
Cost competitiveness is partially about equipment cost and software licensing, but equally important is operational efficiency. Achieving operational efficiency starts with cloud design, and that’s where the discomfort starts for many carriers. One need look no further than comparing the architecture of EC2 or GCE with that of Terremark or Savvis. They’re completely different. Our approach is to help CSPs understand how cloud design and architecture profoundly impact their long-term ability to deliver services cost competitively.
The operational efficiency of cloud virtualization and automation provides for ultimately powerful pricing advantages over virtually any other model in hosting and co-location.
Cloud developers and application technicians know how they want to acquire clouds services, what they should pay for them, and how they should work. Amazon has been quite successful in listening to the community and delivering a constant stream of innovation. CSPs usually set out to offer their cloud services in their home regions, where Amazon is not strong. We suggest a go- to-market model drafting on this runaway success, delivering what the early adopters want, but in the countries and using the special capabilities that the CSP has.
And finally, it’s hard to argue with “open cloud” technology, as epitomized by projects like OpenStack, OpenFlow and Open Compute. At this point in the maturity cycle of cloud technology, there is strong momentum and investment in these directions. The early pioneers on a different technology base are going to be marginalized into niche market segments (at best) and OpenStack, like the Linux OS, or IP networking, will become the standard “open cloud” technology direction that will dominate the industry. It’s not a difficult prediction to make at this point, but if a CSP isn’t going that way yet, it’s time to try a new approach.
(Excerpted with permission from GigaOM Pro.)