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Journey to Cloud for Telcos

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The cloud is no longer a trend, it is the new normal and many industries have already started migrating towards it with successful results. For telecom it will be a longer journey but the outcome would be the same. Cloud solutions have gone beyond application hosting and storage. Telecoms players need to re-position themselves as solution providers, widening their portfolio with personalized problem solving for their enterprise customers. For many organizations, implementing cloud computing and getting value from it are not necessarily synonymous. The diversity of legacy estates, technical debt, and growing number of available cloud services and delivery options (public, private, hybrid) creates a level of complexity in decision-making and implementation that is challenging at best and presents a barrier at worst. In this paper, we have tried to identify the implications of cloud for the telecom industry in the future. We would also look how cloud may help identify new dynamic services and opportunities to use the cloud as a foundation for telecom business in future.

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Cloud Disruption

The Enterprise Cloud Market is growing faster than the economy itself. Gartner, estimates that Security & Management, SaaS, IaaS and PaaS to Enterprises will grow between 15- 20 % in 2018-2020, which means an opportunity of around 200 billion dollars for Telcos.

Though mobile consumer platforms and consumer based web market are heavily dependent on cloud, it is the Enterprise market which will be a profitable business for telecoms, especially in the private networking space. Since the telcos already have good relationships with enterprises, they can leverage them with cloud services of their own especially in IaaS. There might be areas where the distribute career cloud has benefits for delivering solutions such as security, content distribution and M2M communications.

Cloud Architecture

If we look at the cloud architecture, specifically, there are numerous challenges to meet like achieving efficiency while scaling the discrete service flows. They will require automation, integration which shall be programmable and at the same time open network and IT systems, which are not in the market currently. It may include NFV/SDN wherever required to maintain the flexibility, scalability and programmability that the cloud demands. A virtualized network would ensure that it provides services beyond connectivity which will be more cost effective as well. There will be services with features ranging from embeding dynamic telco functions into other’s digital solutions to self-provisioning and one click purchase.

Operations under Cloud

By achieving Automation and the super scalability of the IT cloud players, there would be a huge reduction of personnel cost of operations. A standard based and uniform IT platform will reduce capital expenditures to huge extent as well as would need and promote reduction and change of skillsets of the existing man power in operations. Telcos who would not want to shift to this route will find it extremely difficult to compete with telecoms with those who do, simply on cost of operations alone.

Services on Cloud

Switching on/off of discrete telco-based services may also be used upstream by applications on an on-demand basis. Services will turn into more dynamic, switching on/off as the upstream application requires. In coming time, digital solutions delivered on a mobile device, such as banking or healthcare services, may turn on specific network-based features without the telecom organization being part of the customer-facing transaction. In the era of M2M, the telcos may be playing a deep but nearly invisible role.

Emerging Opportunities

The different opportunities that the telcos could look forward to exploit three types of services :

  • Traditional operator based services for the enterprise
  • VIDS
  • Services reselling

Traditional Services

There are some key elements that a telco firm planning to offer cloud enterprise services should focus on:

It is impetus for any organisation to have the bandwidth/flexilibilty to accommodate any kind of enterprise user. This could be done in multiple ways, namely, simplified offers, low cost entry model with pay to play feature with unlimited scalability options and providing the enterprise with a range of cooncetivity services.

Collaborate or Partner to create a global brand of cloud services which can compete with the likes AWS etc.

Vertically integrated digital solutions(VIDS):

Many large telco firms , like AT&T, NTT DOCOMO have already announced that VIDS is the key to their future growth. In vertical markets like healthcare, banking and transportation,M2M and device interactions are huge. The carrier network plays a critical role in inter connecting devices, machines and sensors. Cloud will help in hosting platforms and applications to track, analyze and direct them, even in real time. Most of these requirements are extremely important and need around 100% percent reliability that is the capability of the carrier network not the Internet.

This condition offers an opportunity for the telco firms. Since the devices, machines or sensors are highly specialized to each vertical, open and generic platforms/applications are less relevant. The challenge is to integrate multiple specialized players in each vertical to create compelling enterprise solutions quickly. VIDS that can give an advantage to a company will tend to be more rapidly adopted. Despite the focus on standards in the telecom world, networking technology can still create product differentiation that can be monetized.

As telcos move their infrastructure to the cloud, NFV and SDN will enable dynamic capabilities that can be turned on and off by vertical solutions that run on top of them. There will be an intermingling of specific telecom capabilities with device, machine and cloud-based software to analyze and respond to sensors (for example, biometric scanners, gyroscopes, GPS, gauges) and other machine functions to create product differentiation, as well as value-added services that the service provider can monetize. As with other paradigm shifts of this magnitude, there will be a huge opportunity for different players to re-position themselves. We see a number of trends in the development of vertical cloud-based digital solutions:

In specialized vertical markets, partners are key. It may be your partner’s brand that is more important than your own. Being part of another brand’s winning solution is better than losing with your own.

Look for your best opportunities in the stack. Vertically integrated cloud, software and device-based solutions will provide many opportunities for success. The key is to know where you are adding the most value and focus on executing at that point.

Look for the development of hybrid private-public cloud solutions by vertical; for instance, clouds developed for the use of the finance industry that have higher security requirements, and transportation industry clouds that focus on ubiquity and reliability. These kinds of requirements confer an advantage to a telecom operator over the typical enterprise IT data center providers.

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