Telecommunications carriers will play an important role in the continued evolution of the cloud services market.
As cloud computing has become all the rage among SMB IT shops, it has attracted a bevy of potential service providers from a variety of technology sectors. One group, telecommunications carriers, seems to be in a strong position to deliver such services, and earlier this summer, a leading carrier enhanced its services in order to improve its market status.
Cloud computing differs from traditional technology systems because it treats tech resources as a utility rather than as a piece of dedicated physical infrastructure that must be managed and upgraded internally. Cloud computing fits well with small and medium businesses that do not have sophisticated in-house IT staffs. Also, the service model can be beneficial when new business requirements emerge, and a company needs to get an application up and running quickly. Cloud services require little to no upfront investments, which means a company can keep its money in the till rather than hand it over to a hardware supplier.
To improve its market position for exploiting the trend to cloud computing, Verizon Business tweaked its cloud services, so they are more secure and can be managed more simply. The company's Computing as a Service (CaaS) offering provides a virtual firewall and an audit trail for all system changes. Customers can also opt for additional security services, such as identity and access management, host-intrusion detection, application-vulnerability assessment, network-application assessment, and professional security services.
Verizon's services follow a pay-as-you-go model, which could help companies avoid buying new hardware. The Verizon CaaS package could also mesh with businesses whose IT needs vary widely over time, such as seasonal retailers. Rather than having to build a data center to meet peak traffic loads, a company can get by with less, ramp up when demand rises, and turn off the extra processing power once demand ebbs. To take advantage of that feature, a small and medium business has to pay a $250 monthly retainer-type fee and cover the cost of whatever extra processing power is used during the peak period.
In another change in its cloud service, Verizon now provides customers with access to a real-time, self-service portal that lets them dynamically provision and manage physical and virtual servers, network devices, storage, and backup services. The portal is accessed through the Verizon Enterprise Center, a one-stop resource for customers to manage all of their Verizon services.
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Verizon's moves underscore telecom carriers' desire to become more of a force in cloud computing, following AT&T's move into the market earlier this year. These companies have some potential strengths. Carriers are familiar with much of the infrastructure needed to support cloud services. Networking is obviously their forte, so they have the infrastructure and expertise necessary to deliver broadband services to small and medium businesses. Carriers' hosting services have proven quite popular, so they are familiar with many of the data center requirements that come with delivery of cloud services.
However, these service providers also face some challenges. Carriers will experience competition from high-profile cloud computing vendors such as Amazon and Google as well as newbies like Azure and Rackspace. These competitors may have more modern network and systems architectures and therefore be able to deliver cloud services at a lower cost than the telecommunications companies. Also, many other vendors have already been in the cloud computing market and have an advantage in understanding the underlying technology, delivering these services, and building up their customer bases.
In addition, carriers have a lot of other businesses that they need to manage. Their core telecommunications businesses are facing incursions on many front, including from cable company suppliers. The telcos are moving into video services and wireless communications continues to be a dynamic marketplace. Consequently, the carriers may not be able to give cloud computing area as much attention as it needs in order for them to be successful.
That's not stopping companies like Verizon and AT&T from trying, though. While not every telco's quest will be successful, their entry should benefit small and medium businesses. Traditionally these firms have done a good job understanding and responding to the business needs of SMBs. Also, increased competition tends to lead to more feature rich, affordable services. Telecommunications carriers will play an important role in the continued evolution of the cloud services market.
See more columns by Paul Korzeniowski.
Paul Korzeniowski is a Sudbury, Mass.-based freelance writer who has been writing about networking issues for two decades. His work has appeared in Business 2.0, Entrepreneur, Investor's Business Daily, Newsweek, and InformationWeek.
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