Telecom cloud services change hosting business model

If telecom carriers' cloud computing services are to be successful with the enterprise, platform security must be assured and customer portals must give a view into the network and make service change requests easy.

Continued from part 1, risks carriers face when offering cloud computing services.

When buying cloud computing services, enterprise customers will demand a high level of security and visibility into the network -- as if the carrier's hardware were in their own data centers.

"One of the critical elements of the new cloud services is to have … a very effective portal -- to bring up a service and ask for assets or reduce assets," said Gartner Vice President Alex Winogradoff.

In addition to its no-frills setup wizard to ease customers into the cloud, Verizon has also reassured its customers about the security of its assets. Global data centers are guarded 24 hours every day, said Mike Marcellin, vice president of global managed solutions at Verizon Business, and they use biometrics such as fingerprint scans for access.

"Where we really set ourselves apart is certainly the security elements," he said. "We have a network. We have data centers all around the world. We talk about a cloud, but this is not a cloud to us. It's sitting in our owned, operated and managed infrastructure."

 Pay-per-use model of cloud-based services upsets economic model

Cloud-based services can upset the economic model of hosting in a number of ways, but most troublesome to some carriers will be the shift from the predictable revenue streams of annual contracts to a pay-per-use model, according to Winogradoff's report.

"Carriers will be taking on greater levels of financial risk with cloud services. Cloud elasticity significantly disrupts the predictability of the hosting revenue stream," he wrote. "Although customers who procure large amounts of capacity are likely to have to sign a formal contract, there will still be significant, unpredictable variations in utilized capacity, and thus, less predictable revenue."

Before racing up to the cloud, carriers will have to carefully measure the scale of their deployment to make sure they can handle it, Winogradoff said.

"There needs to be -- for the next three or four years -- significant management and control over who [the carriers] bring on and what their needs are," he said. "If [carriers] don't manage this, then they're going to be in trouble, and once they're in trouble, customers will remember this and by word of mouth will kill you."

Back to part 1, risks carriers face when offering cloud computing services.

Let us know what you think about the story; email: Jessica Scarpati, News Writer

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