Smaller Telcos Can Be Cloud Players Too

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In my last blog post, “Race to the Cloud,” I talked about cloud strategies for Tier-1 telcos. Essentially, they’re big enough to be able to take the risk of hosting their own cloud data centers (telco’s “private cloud”), while gradually climbing up the cloud-chain from IaaS-provider to PaaS-provider to SaaS-broker/communication-and-collaboration-as-a-service provider. But, what about the smaller players? They must be shying away from hosting cloud data centers (otherwise they would have been in the news) because of the kind of investment they need to set up the cloud infrastructure. However, they can’t ignore the fact that the cloud-model is knocking at their door and they really can’t afford to lose the business opportunities.

For telcos who cannot setup their own cloud infrastructure, the path forward is to join hands with the SaaS provider in the cloud business. The trick is to open up the telecom network and offer “connectivity” and “communication” as service capabilities. For starters, this enables high value applications in the cloud. It also allows telcos to monetize the service capabilities they offer. If the consumers are not helping telcos increase the ARPUs, then telcos need to explore avenues that generate revenue from the services for which the consumers are willing to pay (i.e. cloud services). There is no reason why cloud providers will not be willing to share this revenue, especially if “communication” and “connectivity” are offered to them as differentiated service capabilities, which would allow them to improve the end-user experience.

Let’s first talk about “connectivity” as a service capability. Today, the quality of experience of all public cloud applications is as good as the quality of the telcos’ “connectivity” service. A telco’s “connectivity” does not provide a different experience for bandwidth and speed-hungry, delay and packet loss sensitive, and jitter-intolerant cloud-based applications such as gaming and business-critical or multimedia-centric cloud applications. Instead of offering raw connectivity only, they ought to offer policy and QoS differentiated connectivity to the cloud applications. It is a win-win situation for both the cloud application provider as well as the telco. The cloud application provider benefits because the cloud experience is never complete without “quality of service” differentiation for a range of services. The telco benefits because they monetize their “connectivity” by selling QoS as a service.

“Communication” applications within a telco network have a huge cloud potential if they can be packaged as service capabilities that enrich cloud applications. Telcos have a bouquet of “communication” applications such as audio-video calling, multimedia conferencing, application-initiated calling, call-back, short messaging, and multi-media messaging. Along with this, the telcos’ communication applications track the user’s presence, availability, status, location, and address list through their devices. When these communication applications are repackaged as communications service capabilities they get transformed into a powerful set of tools that can enrich cloud based applications by providing them the power to communicate. Just think about a connected world where you can right-click on any cloud-based application to communicate with all human and machine touch-points of the application. The service capabilities exposed by the telco as network APIs will attract cloud applications because the ability to communicate is the most fundamental need of an application.

Offering “connectivity” and “communication” as service capabilities and providing them as network APIs are nothing new in the industry. This existed in the form of a Service Delivery Platform (SDP) exposed as Web Services/Parlay/OneAPIs. Some telcos have already embraced SDPs in pursuit of creating blended communication and collaboration applications. Others who have not adopted an SDP approach are those who do not see a business case to converge their different communication application verticals. With the emergence of the cloud opportunity, the need for an SDP and network APIs will be even more critical. I do see that there would be a renewed vigor to adopt the SDP approach and have a structured and unified way of delivering both “communication” and “connectivity” capabilities of the telecom network. In order to offer value added service capabilities Telcos will further enrich their SDPs to include additional capabilities around advertising, content management, user profiling, and portal management, which will compliment their core service capabilities to cloud applications. Telcos’ revenues are bound to increase as they elevate their position from a bit-pipe provider to a cloud-pipe provider embracing the SDP route.

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