My current role has brought what I call the Achilles Heal of cloud into full view. Experts agree telecom's should own the cloud outright. After all a cloud is predicated on bandwidth, latency and security so having the keys to the kingdom the telecoms are in the best position to take the throne. However to date no carrier has established a significant footprint let alone a dominant one. When people talk about cloud invariably they do not talk about AT&T, Verizon or CenturyLink despite each having multiple cloud solutions, many recognized by Gartner as Magic Quadrant leaders. I believe the primary issue is a lack of understanding in the market of the differences between mass virtualization and cloud. Mass virtualization in the form of servers and storage are of no threat to telecoms. Use fewer physical boxes, shift to virtual machines, buy capacity on demand. All of those are complimentary to the underlying business of a telecom: selling bandwidth. Cloud however is a threat because it's all about the applications and data, and the carriers want to provide the bandwidth to move and protect the data. Today at telecom's cloud is little more than a functionary to serve the sale of bandwidth to customers focused on mass virtualization and nobody has stepped out of line to focus on cloud. However we are on the brink of a tremendous shift in the bandwidth world with the advent of Software Defined Networks (SDN), and I'm beginning to believe its the game changer that telecoms wish they could avoid.
SDN virtualizes the network in a matter similar to server and storage virtualization. The goal is to ensure only as much bandwidth as needed is purchased and it can be controlled via automation. CIO's expect SDN will not only transform their data centers but transform their Wide Area Networks (WAN) as well. Through the tried and true mechanism of competition telecom's will be incented to provide SDN like features enabling companies to dynamically scale their network up and down and thus their ultimate bill. Will this generate the 70% savings common in the world of server virtualization? I don't think so, because most companies have already done the leg work to consolidate their telecom spend so there aren't circuits that are 5-7% utilized like we had with servers. In some situations companies are kidding themselves thinking they'll be able to save reams of money yet they are saturating their existing bandwidth and demanding more.
However there is a dark side here that either the telecoms don't see OR they see all too well. Once SDN penetrates the market the pieces will be in place to engender a completely new architecture. Combine the fault tolerance of cloud based applications designed to provide reliability on unreliable infrastructure with the cheap bandwidth of Cable, DSL, and other last mile technologies and you have a compelling option versus expensive telecom bandwidth. Instead of purchasing a 1Gbps ethernet connection why not purchase 20 x 50Mbps connections at a significantly lower cost. Yes you give up the robust management tools, reliability, and SLA's of the enterprise quality connectivity. You give up some ground in security. However with applications that assume the infrastructure isn't reliable, running on a distributed infrastructure, and leveraging encryption both at rest and in transit, what is the real downside? In fact there should be a benefit to having a more distributed network environment and as cloud adoption increases I, like many, expect there to be fewer and fewer large scale data centers and an increasing number of highly distributed micro-data centers. Owing to the adage "compared to the cost of moving data everything else is free" companies are incented to find new solutions to reduce the cost of bandwidth.
There are situations, such as high-speed trading and national intelligence, where such an approach doesn't make sense (at least not yet). However there are also numerous situations where such an approach makes more sense than shelling out the money for bandwidth of a higher quality and resiliency than is required.. If SDN makes using cheaper alternatives easier why would a telecom be interested in adopting SDN? Of course we know by the hundreds of examples the worst strategy is to fight change. Therefore at least one proactive option for mitigating the loss of revenue is to move up from mass virtualization to real cloud; focusing on the applications and data. Large carriers can build capabilities into their network to facilitate the collection, analysis and distribution of data at the point of collection, near the point of collection, or in a central repository. If carriers built solutions which automatically determined where an application should run, where the data should be collected and distributed, and did so in a secure manner I believe it would make a very compelling argument for their more expensive but more capable bandwidth.
Today the telecoms are going down a road of providing increasingly undifferentiated network services which puts them squarely in the dreaded commodity bucket. I don't see how the market doesn't find a way to negate the need for quality and reliability. It's simple economics at play and economics always wins!