By Robert Machin, Comptel

‘Cloud’ services offer great revenue potential for Communications Service Providers (CSPs) – but their success is likely to depend on how well they can leverage their network assets and turn them into a real differentiator in what will be a highly competitive market.

Background: a great idea, in theory…

Cloud services - broadly, the provision of computing on demand across the internet - have the potential to create a whole new line of business for communications service providers (CSPs) - one that could bring them very significant new revenues on the back of their existing network assets and business position.

CSPs, particularly the incumbent PTTs, are undoubtedly serious contenders in this new market. Typically, they are a trusted brand, already have a strong relationship with a large, addressable customer base and, commonly, own the lines of communication to customer premises which will make the difference between guaranteed levels of service and the largely ‘best efforts’ or limited leased VPN coverage which non-telco providers can offer.

The CSP’s key strength and unique proposition is their command of the communications network - being able not just to offer IT services, but to blend these with communications offerings such as Voice over IP and Unified Communications, and to control and guarantee quality of service between the customer and Cloud servers through private wire, VPN or QoS prioritisation across multiple access networks. Being able to blend outsourced IT with communications flexibility and guarantees is a serious differentiator, one which could overcome the concerns of many potential customers, particularly with regard to performance and resilience.

Non-telco Cloud providers can offer leased connections between servers and customer, but only a carrier will be able to monitor, vary and guarantee levels of service across a wide network domain – a capability which will become increasingly important as mobile broadband becomes more pervasive and Wi-Fi hotspots more widespread, and customers increasingly expect to access their IT platforms from a wide range of fixed, wireless and mobile locations.

So the Cloud services market increasingly seems like one in which CSPs can compete. Arguably, it’s also a market in which they must compete. If they decline to do so, they will leave the playing field open for IT and internet giants who will not only take revenue

…but not without its challenges…

For CSPs, there certainly appears to be a big market out there, and plenty of incentive to address it, but is there a profitable business? How challenging will it be – how different from the communications services that they are familiar with? Will they be able to control it in a way which exploits their communications expertise without threatening revenue from existing services? And at the end of the day, do these Cloud services offer a margin which will make the effort worthwhile?

The challenge for telcos is to create an efficient and integrated platform for the delivery of Cloud services which will allow them to easily blend their communications strengths with new Cloud services from a quite different domain – and then deliver those services to customers with minimum human intervention, maximizing their margins in what will inevitably be a highly competitive market.

As a fundamentally different line of business - with different services, service environment, customers, users, perhaps even a whole different business unit within the telco or an outsourced relationship with an IT services partner - it will be vital for the platform to be dedicated to Cloud services. At the same time, however, it must provide dynamic linkage with the communications side of the business. Key capabilities of the Cloud services support platform will include: