Telcos could double their revenues through cloud services: Deloitte researcher

As mobile voice revenues begin to stagnate, experts say telecommunication companies will increasingly turn to cloud solutions to generate more income. “We are not making more phone calls, we are not making more long-distance phone calls, the number of corporations that are out there buying more lines for fax machines—that isn’t growing,” Duncan Stewart, Deloitte Canada director of research for technology, media and telecommunications, told The Wire Report. “When we talk about the three to five per cent growth that we expect to see in telecom over the next decade—that is coming from … cloud , or other kinds of networking data transmission. This is pretty much the only engine of growth that telcos have for the next decade.” Stewart said telcos could offer cloud services to businesses—like backing up data in the cloud or eliminating redundant files—as part of a bundle for an extra $20 per month. But that price could become $50, $100 or $1,000 if it includes other cloud services, like offering international customer services through the cloud. Stewart said he estimates that cloud services offer telcos a global revenue opportunity of $3 to $5 billion a year. But he said those numbers could balloon to tens or hundreds of billions per year if services are targeted at businesses that rely on providers to increase their connectivity. But the revenue opportunities presented by cloud computing depends on whether telcos move toward offering services instead of transporting information, he cautioned. “Even though they have the technology, they have the network, they have what we think would be a good leg up in that business, they haven’t been able to translate that into ‘let us take care of that service for you.’ But that doesn’t mean they won’t figure out cloud services,” he said. “If they can actually get really, really good at it, they are the natural providers of this, and it could be something … really big ... Effectively they could double their earnings if they get this right.” Ibrahim Gedeon, Telus Corp.’s chief technology officer, said the company is embracing cloud solutions. With the use of the cloud to store information, Gedeon said the Internet can become a “virtual, real-life, high-quality network.” “We’re definitely embracing it—if you look at the work we’ve done on TV, in terms of moving content around … if you look at the work we’re doing on telepresence internally and how we’re trying to expand it, and the first instances of virtual reality—we view the cloud today as the evolution of a lot of services,” he said. “It’s not connecting with a bank, it’s virtualizing the bank to , so you can bring the bank with you anywhere ... It’s not just connectivity, it’s changing the business model.” In a research note published last month, Mike Cansfield, principal analyst of telecom strategy at Forrester Research Ltd in the United Kingdom, identified cloud services are a growing revenue opportunity. “Telco management teams have a pathological fear of becoming what they term ‘the dumb pipe’ … and that fear is grounded in reality; transport prices continue to tumble, and customers perpetually request more for less,” he wrote. While Cansfield wrote that telcos might not be able to unseat information technology (IT) companies, they will play an important role in providing cloud services, particularly in secure, private network connectivity. “There are … parts of cloud solutions that lend themselves to network-based provision—such as security, applications assurance, and network management—that will represent attractive cloud opportunities for the telcos,” the research note said. Cansfield said in an interview that IT and communication technologies are merging, and that to make the move to cloud services, telcos need to make it clear they play a central role in the communications component of cloud solutions. “It changes the nature of the debate telecom companies can have with a particularly coffered enterprise client,” he said. “Storage is an IT-type service that you would have traditionally bought from an IT-vendor, but you can buy that now from ,” he said. Rogers Communications and Bell Canada were not available for comment. kfournier@thewirereport.ca

Telcos could double their revenues through cloud services: Deloitte researcher

Broadcast | July 5, 2010

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