Despite carriers' best marketing efforts, enterprises still view them through the narrow lens of voice and data transport services, making it all the more difficult for telecom operators to stand out in a crowded cloud computing market. By offering telecom cloud services that do more than spin up servers and software, carriers can shed their reputations as slow-moving phone companies.
"The fact that we can provision a server in eight minutes is not what's going to be our differentiator," said Kerry Bailey, president of Terremark Worldwide Inc., a wholly-owned subsidiary of Verizon Business. "Our differentiator is going to be the fact that we ... make this an enterprise-class cloud."
Last week Verizon announced its joint telecom cloud services strategy with Terremark, the cloud computing provider it acquired for $1.4 billion earlier this year. Pure-play cloud providers have failed to offer the security, reliability and advanced services that traditional telcos have built their reputations on, Bailey said. Verizon can add that to Terremark's cloud services.
The fact that we can provision a server in eight minutes is not what's going to be our differentiator.
President of Terremark Worldwide Inc., Verizon Business
Bundling other managed IT services into telecom cloud services will help carriers stand out from the standard Infrastructure as a Service (IaaS) providers, according to Doug McMaster, vice president of data center services at NTT America, which announced the commercial availability of its NTT America Enterprise Cloud in April.
Both Verizon and NTT America also emphasized the need for telecom cloud services to differentiate through flexibility—that is, the ability to support hybrid hosting and hybrid cloud models.
"We're not just another cloud player. We're not just someone who has developed a cloud layer or an orchestration layer. We're somebody who can tie together all of these services," McMaster said. "Our focus in the months to come is certainly going to be on these additional services in the cloud space."
Telecom cloud providers improving cloud provisioning, governance
Hoping to attract large enterprise customers, Verizon is tying its network to technology it acquired from Terremark to make the security policies and provisioning processes for telecom cloud services both application- and network-aware, Bailey said. The Terremark cloud can automatically detect and apply policies for specific applications. It can also apply specific policies if a customer accesses telecom cloud services via Verizon's MPLS network rather than the public Internet, he said.
"You're going to see a lot more changes going on in that orchestration layer as we go forward. We're going to bring [in] much more of Verizon's network intelligence," Bailey said. "If it's an application that has high [rates of] transactions or it's an application that's very static in nature, there's a different provisioning routine that would happen all the way across from the network layer to the security layer."
But the platform itself is only the beginning. NTT America is focusing on advanced telecom cloud services around governance, migration and integration, which mark a "key opportunity" for differentiation, McMaster said.
"It would be too much to say we're doing all of that today, but we are doing some of it," he said. "We can obviously federate between our own offerings, but we don't have a platform to migrate from other companies' clouds into ours yet. But if you talk to us six months from now, it's going to be all around governance [of cloud services] or integration or migration—these brokerage services."
Other providers with large data center footprints, such as BT, are also looking at carving out their niche as so-called telecom cloud brokers, according to Amy Larsen DeCarlo, principal analyst at Current Analysis.
"I think where the major differentiation is [between carriers and pure-play cloud providers] is in scale," she said. "It's not necessarily network scale but data center scale because a lot of these global [carriers] have facilities in the U.S., in Latin America, in Europe and Asia, and there aren't a whole lot of hosting providers that have them [at the same scale]. For the most part, hosting and cloud providers do not have that reach."
Telecom cloud services augment security
Enterprises often cite security concerns as a barrier to adopting public cloud computing. Seeing an opportunity, Verizon has beefed up its managed security portfolio with technology that Terremark had used for its federal government and public sector cloud customers in its Culpeper, Va., and Miami data centers.
The traditional way to secure a hosted environment was to look for signatures of known attack patterns, Bailey said. Instead, Terremark's security systems constantly monitor a customer's environment to determine a baseline for "normal" behavior and identify attacks based on abnormal activity, he said.
"When we start seeing things like, all of a sudden traffic coming in from Bolivia when it's never come into that site, we ask, 'Wait a minute. That's a behavioral change for that customer. What is going on?'" Bailey said. "[Terremark has] a significant amount of intelligence around what we call zero-day attacks."
NTT America is trying to set its security apart from pure-play cloud providers by requiring every customer in its Enterprise Cloud to use two-form authentication and an enterprise-class firewall in its environment. On top of that, it also sells managed security, patching and monitoring services.
"Our target would be customers who perhaps do have applications running in the public cloud today and, basically, they're ready to graduate," said Craig Hurley, senior product manager at NTT America. "There are things they're not getting from their public cloud provider, so maybe there are denial of service attacks or [the providers] haven't managed to provide the full suite of managed services they need in terms of backup or security."
Carriers must overcome perception of telecom cloud services
A recent series of cloud outages, including the Amazon Web Services (AWS) and Microsoft Business Productivity Online Suite (BPOS) clouds, left enterprise IT organizations rattled and dispirited. It seemed the perfect time for carriers to flaunt their service-level agreements (SLAs) and concierge-style support.
But carriers first have to leap a huge marketing hurdle, according to Current Analysis' Larsen DeCarlo. Carriers have telecom cloud services that are equal or superior to Amazon or IBM, but they must still overcome their reputation as slow-moving and unimaginative telephone companies, she said.
Enterprises shopping for cloud services "tend to avoid telecom companies, even though [carriers] are trying to market themselves as providers of higher services," Larsen DeCarlo said. "Often, they're not the first, second or even third choice for a lot of enterprises."
That may be why Verizon is moving its telecom cloud services under the Terremark brand, but it doesn't mean carriers must acquire cloud providers to stay relevant, she said.
"I think it certainly helps to have some kind of independent entity that's known for managed services ... but it's still a learning curve, and it's too early to say that they can't [succeed without one]," Larsen DeCarlo said. "Look at Amazon. People still think of Amazon [as a retailer that sells] books, so if Amazon can go beyond that, I think anyone can capitalize on this demand."
Let us know what you think about the story; email: Jessica Scarpati, News Writer.