How Mobile Operators Can Still Dominate the Cloud

Eduardo Mendez Polo, Head of IT Cloud & Low Cost at Telefonica

Telecoms firms may be arriving late to the cloud market, but it’s not too late for them to dominate the space and win business customers. While Microsoft, IBM and Amazon continue to lead the growth in cloud infrastructure services, mobile operators can still play an integral part in the arena if they take a managed services approach. In fact, if telecom operators provide managed services for communications, why not provide managed services for the cloud too? Furthermore, with the possibility of the death of net neutrality, operators could find conditions very favourable.

This is according to Eduardo Mendez Polo, Head of IT Cloud & Low Cost at Telefonica, who is speaking at Broadband World Forum, 21-23 October 2014, Amsterdam. He believes operators are late to the table but it’s because they have all had different priorities. “The cloud market is very complicated – there isn’t a single market and the tough fight is for telcos to provide a single solution that will lure businesses away from the internet cloud providers. Things are changing, though, and we are now starting to have a strong presence in the big enterprise.”

The managed approach

It seems that offering a managed solution will allow telco firms to adapt to the needs of their customers and build on the established relationship. Knowing about customer needs already puts telcos in an advantageous position compared with internet players and is the most important strength that mobile operators have in the arena. There’s no doubt that operators understand each of their customer’s business already and it therefore puts them in a great position to identify the best solution from the right service through to the right technology.

In order to dominate the cloud market, operators will need to look to collaboration – or indeed acquisition – as this can often be best for the business and customer. In Spain, Telefonica acquired Acens, a leading hosting services provider for SMEs, in 2011. The purchase signified an increase in the company’s ability to offer hosting and cloud computing services in the SME segment, reaffirming its commitment to meeting the needs and requirements of this highly dynamic market. Since the acquisition, Telefonica has been pushing cloud services for the mid-size business and residential market, which has contributed to the company’s growth.

Commenting on Telefonica’s experience, Eduardo adds: “Our own solutions can work, but going via a third party or acquisition might make more sense, and be more effective for other operators that may not have the capabilities themselves.”

At the end of July, Telefonica revealed its financial results for the first half of 2014. The statement showed that revenues from the cloud business continued growing at double digit rate – above 20% year-on-year in organic terms.

Key to Telefonica’s managed services offer is the notion that the service goes beyond simple speed, something that internet sellers rely on as their main selling point. The Telefonica offer highlights important factors such as security, service level and ability, as well as the provision to offer customers services above and beyond pure infrastructure. Such things are more important than speed and show that Telefonica can offer an end-to-end, whole-level service to businesses.

“Like us, telcos would do well to really shout about all the things they can offer in order to differentiate themselves from the competition. By highlighting the flexible, modular and adaptive cloud systems available, they can show that they are reliable, supportive and up-to-date.”

Death of net neutrality

On top of all this, the possible death of net neutrality could be a vital tool in the arsenal for mobile operators looking to take on the cloud environment.

The media has been rife with reports on the growing threat of internet service providers (ISPs) prioritising some internet traffic over others, mainly for commercial return from the prioritised party. Some suggest that the death of net neutrality will slow cloud adoption, but this could work in the favour of the mobile operators.

Interestingly, Eduardo believes the death of net neutrality spells opportunity for mobile providers. “The concern of moving data through the cloud can be addressed by providing an end-to-end solution without the internet. As an example, customers can connect to Virtual Private Networks without the need to go to the internet. With this approach, they can avoid risks of using a network that can be compromised or intercepted from third parties.

“Net neutrality is complicated and we don’t know how it will evolve in the next few years. It’s not a question of whether we lose trust from customers or not – if customers see a risk when choosing a cloud provider, they will come to telcos. That risk is converted into opportunity for mobile operators.”

Convincing CIOs

Mobile operators can create a strong platform and compete with the players like Microsoft and IBM, but the biggest challenge will be convincing the CIO, and there is still a way to go – for every cloud services provider.

We were talking about the cloud seven years ago but we are still seeing that many companies are not going ahead to cloud, or just pushing small pieces of IT to the cloud. Eduardo believes the job for operators is to convince CIOs and give them confidence that operators can be their first option. “As a communications customer, they already know they put responsibility in the hands of telcos, so why not with the cloud?”

Cloud opportunities for telcos and net neutrality will be high on the agenda at Broadband World Forum, and Eduardo will be discussing them in his session. Specifically, he will talk about how providing a managed services solution will enable telcos to dominate in the cloud market, and he hopes to convince other operators to use this model.

Broadband World Forum 2014 takes place in Amsterdam from 21-23 October 2014. For more information, visit: www.broadbandworldforum.com

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