Cloud computing is the new buzzword among telecom operators, enterprises and vendors. It can help enterprises achieve economies of scale by centralising the access server and thereby reduce IT hardware and software costs significantly. It also drives efficiencies via virtualisation and greater utilisation rates, which allow enterprises to scale up or down their costs depending on the usage and demand for cloud-based services.

Industry analysts are terming cloud as the new find and claim that it will bring the biggest shift in computing over the next two decades. It will, according to analysts, be the perfect medium to bring people, businesses and consumers together on a much larger scale than any single technology since the advent of the internet.

Defined in simple terms, cloud computing is a technology that uses the internet and central remote servers to store data and build applications. It allows consumers and businesses to use applications without installing them on their own machines. They can access their personal files using any computer that is connected to the internet.

Examples of cloud computing are Yahoo! Mail, Gmail and Hotmail, where the user does not have to install a software to access their accounts or have memory space to store emails. Enterprises all over the world are already using cloud applications like Google Docs.

Video chats on Skype or purchases on Amazon.com are again being done through the cloud. In a similar way, it would be impractical for an individual user to buy all the software and other materials required to run Skype had the service not been available through the cloud. Also, all the transactions taking place on the Amazon site need a huge amount of space to store information, which would be impossible to compute and store without the cloud.

The concept of the cloud emerged when businesses were trying to tap the potential of the internet to handle the increasing total cost of ownership, large-scale resource deployment and volumes of business data.

Today, the world, and particularly the telecom industry, is waking up to the benefits of the cloud. With the increasing overlap between the telecom and internet spaces, the potential benefits of cloud computing for operators are immense. Industry heavyweights like AT&T and Verizon are very positive about its prospects.

Telecom operators with a robust network and an established subscriber base are emerging as key players in the cloud value chain. Operators are being preferred as partners by cloud providers as they are trusted service providers for end-users. According to a recent study by research firm Ovum, 49 per cent of enterprise users rated telecom operators as credible suppliers of cloud services.

Opportunities

Rendering cloud computing services has a number of benefits for operators’ business portfolio. First, building the cloud infrastructure is not as expensive for an established telecom operator as it is for a non-telecom business firm. This is largely because connectivity, billing and data assets are already in place, giving them a headstart in providing cloud-based services.

Most of the incumbent operators possess large and distributed data centres that have been used for hosting and co-location services for many years. However, compared to cloud services, these data centres have generally been expensive and slow in service provisioning. Hence, most operators are now entering the cloud ecosystem that offers agility, self-service, pay-as-you-go and other distinctive features. This helps operators in cutting down their total operational costs by reducing the hardware and software requirements of their current networks and platforms. 

Currently, 35 million business owners in India spend a mere 0.4 per cent to 3 per cent of their total revenues on IT. Despite increasing capacity and technological requirements, the high upfront costs involved in procuring and deploying IT infrastructure have been cited as a deterrent to technology penetration, especially in the case of small and medium businesses (SMBs) in India. However, increasing awareness about the relevance and advantage of cloud-hosted solutions is making these SMBs adopt cloud computing.

Also, as enterprise businesses become more global with employees scattered across the world, web-based services and applications are rapidly gaining traction in the changing workplace. Cloud computing allows telecom operators to easily scale up their service offerings and infrastructure based on demand, and consequently improve their time-to-market.

Operators can offer bundling of various telecom and cloud-based services to their enterprise clients. Indian operators have for long been battling sliding margins. Cloud computing can improve efficiencies by offering a means of sharing resources like hardware, software and data-on-demand to users. Also, service offerings like infrastructure-as-a-service (IaaS) and pay-as-you-go can create additional revenue streams.

With established billing expertise and customer services, operators are ideally positioned to forge partnerships with companies wanting to deploy cloud. The trend of alliances between telecom operators and cloud providers is gaining ground as operators with a strong subscriber base act as the communication layer between the cloud provider and the end-user. Incumbent operators already have expertise in combining their network with managing data centres, and they already have the necessary experience when it comes to delivering infrastructure.

Cloud can also improve the capabilities and processing power of hand-held devices. Currently, there are more feature users than smartphones users globally. Feature phones, however, do not have enough processing power or memory to support huge amounts of data. Cloud computing can enable these feature phone users to have the same amount of data access like smartphone users, except that the users will not have their data stored on the phone. It will, instead, be stored on their cloud and be accessible to them whenever required. This extra advantage of cloud computing allows developers and mobile companies to start targeting a larger market.

Another area of growth will be mobile applications in the cloud. Mobile application developers are increasingly turning to cloud computing mainly due to the limited processing power and battery life of mobile devices. Moreover, creating mobile applications for different software configurations and handsets is extremely labour intensive. The applications must be downloaded and equipped with the capability of the specific handset to run well on low-power processors and bandwidth-challenged mobile devices. A better option is to develop the application in the cloud and then transmit the data to a handset’s browser, where most of the computing will take place.

Operator initiatives

The past one year has seen almost all leading Indian telecom operators entering the cloud computing space. For instance, Bharti Airtel and Savvis, a global provider of cloud infrastructure and hosted IT solutions for enterprises, have joined hands to launch a strategic managed hosting and cloud computing initiative in India.

Savvis will extend its infrastructure and service platforms in existing Bharti Airtel data centres throughout the country and establish local operations teams to support both local and global clients. The rollout of Savvis’s services is expected to begin through Airtel’s Bengaluru data centre, with future plans of expansion into other Airtel data centres located in Delhi, Pune, Mumbai and Chennai.

Tata Communications, in December 2010, announced a partnership with Google to offer a range of cloud-based applications, including email and presentation tools to Indian enterprises. The company has prior experience in the cloud services domain as it already offers cloud-based hosting and storage services to large companies using cloud storage and data management technology from NetApp. The tie-up with Google, though, will give it greater reach into the Indian business market.

Reliance Data Centre, a subsidiary of Reliance Communications (RCOM), has recently launched Reliance Cloud Computing Services – a hosted infrastructure service for its customers based on the Microsoft platform. Through this initiative, RCOM aims to provide enterprises and SMBs access to a variety of enterprise-scale IT solutions, applications and services on the pay-as-you-go model. These include infrastructure services such as server hosting, data storage and archival, as well as business applications like email, enterprise resource planning, workflow automation, document management, disaster recovery, firewall services and automatic security updates. Furthermore, with these services available on the pay-as-you-go model, businesses can address their technology requirements without bearing the costs involved in procuring, deploying and maintaining additional IT resources.

In August 2011, Aircel partnered with Virtela, an independent managed network and cloud services company. The two companies plan to offer cloud-based application acceleration services for enterprise users. The service can provide enterprises with 5 to 25 times faster access to their overseas business partners, branch offices and data centres. It can also provide access to a flexible, per-hour pricing model for enterprise network services that start at 50 cents per hour. Aircel will leverage Virtela’s enterprise services cloud and 50 local cloud centres in order to deliver end-to-end managed services to its 55 million subscribers throughout 190 countries.

State-owned operator Bharat Sanchar Nigam Limited (BSNL) has also got onto the cloud services bandwagon with an initial planned investment of Rs 2 billion. In November 2010, BSNL partnered with IT services firm Datacraft India to operate its six data centres. The operator planned to launch a range of managed co-location, hosting, disaster recovery and cloud services (on-demand computing, storage and network capacity) under the brand Onecloud.

Enterprise data services provider Tulip Telecom has also identified cloud computing as the key growth driver of its business. The company, in an effort to meet the rising customer requirements for managed hosting and storage, has recently acquired a data centre facility in Bengaluru at a value of Rs 2.3 billion. The new facility will be owned and operated by its subsidiary Tulip Data Centre. While all the three pillars of cloud, IaaS, software-as-a service (SaaS) and platform-as-a-service (PaaS) will expectedly be potential growth drivers for the company, IaaS has been slated as the immediate focus area.

Challenges

While the business case for cloud computing in telecom is very compelling, one cannot discount the risks and challenges associated with it. First, it needs sufficient bandwidth for functioning, which puts extra pressure on the already congested networks of Indian operators. Even though the 3G bandwidth would act as a cushion, bandwidth pressure is likely to remain. Only after long term evolution-based wireless broadband services are rolled out is the situation likely to ease as mobile networks will then have the ability to deliver cloud services in a better and faster way with increased bandwidth capacity.

Also, cloud can add fuel to the already dominant trend of operators becoming a network pipe for data services. While they would have to stretch their capacity to offer quality experience, the revenue proposition may not be very promising. Operators and cloud providers may face issues with respect to revenue sharing.

Security, which is a contentious issue in telecommunications, can get aggravated with cloud entering the picture. Security and data breach are key concerns for enterprises and with cloud, the chances of breaches, leakages and hacking can increase manifold. Currently, enterprises prefer private cloud and are wary of entering the public cloud services domain.

The way forward

All said, given the revenue pressures being faced by telecom operators, the cloud environment is set to receive a huge impetus as it offers prospective cost and capex savings. As virtualisation as a concept picks up, most operators are likely to move to cloud. Given the potential and positive business case for cloud, the concept will gain ground in the Indian telecom industry in the coming years.