Telcos offer cloud alternative

Telecommunications companies are providing businesses with a credible alternative to established IT suppliers, according to analyst firm Ovum.

Telecommunications companies (telcos) are providing businesses with a credible alternative to established IT suppliers, according to analyst firm Ovum.

Large telcos are an increasingly attractive alternative for businesses looking for added value, high availability cloud services, said analyst Mark Giles.

"They are coming to cloud from a managed service point of view. They are making substantial investments in cloud, in building datacentres," he said.

In one of the largest deals, Verizon invested £1.4bn in IT services company Terremark Worldwide in 2010, in a drive to catch up with rival AT&T's cloud services.

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Verizon and other telcos are differentiating themselves from other cloud providers by offering to manage both cloud services and telecommunications for business clients, as part of a high-availability package.

"For larger players like Verizon and AT&T, it's the fusion between IT and telecoms. They want to move into managing some of the IT applications in the enterprise - managing IT and communications.

Cloud combines the two because it is very dependent on the network," said Giles, in an interview with Computer Weekly.

As part of the package, telcos generally provide monitoring services to give businesses feedback on the performance of their cloud service. This means clients do not need to invest in their own monitoring services, said Giles.

"They are working more robust service level agreements (SLAs) around cloud," he added. "They are more likely to provide customisation that might include public and private cloud, as well as consulting services."

The downside is that IT departments can expect to pay a lot more for a telco cloud service than for basic cloud services offered by Amazon, for example.

Amazon makes sense for organisations that want to use the cloud to develop IT projects. It allows them to ramp up or reduce computing capacity easily to meet their needs. But it lacks the robustness of cloud services offered by telcos, said Giles.

"For those with a test and development use case, a service from a telco is not so attractive. It is when you move into more business-critical applications, even some of the very data heavy mission-critical applications, that businesses require the robust service of a telco," he said.

Smaller regional telcos are offering add-on cloud services to businesses as a way of retaining customers. SFR in France, for example, has signed a partnership with HP to provide cloud services as an add-on, following competition from rival telco Orange, said Giles.

"The good thing about small to medium sized (SME) telcos is that they have strong relationships with their customers, and this is something they can leverage," he said. "Sometimes local experience and local knowledge can trump global coverage. You might see some regional players doing better in local regions."

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