Far from ethereal, cloud computing is attracting a solid following across all segments of the communications industry. In the enterprise space, for example, businesses of all sizes steadily are recognizing the performance and costs advantages of a managed-services model over a strategy based on the purchase and upkeep of premises-based equipment.
And as cloud computing gains further traction as a reliable and proved service-delivery method, industry experts predict it will attract customers from additional spheres of the communications industry, including service providers from both the telecommunications and cable operator realms.
“We’ve talked to several cable operators that are interested in augmenting their existing telephony services or launching new offerings with services derived from third-party cloud environments,” says Jim Bergamini, senior vice president/MSOs at GENBAND, a supplier of IP infrastructure equipment and applications for telecommunications and cable operators. “Operators that launched VoIP services several years ago see a cloud-based managed service offering as a cost-efficient way to enhance those services and as a means of generating new revenue or securing customer loyalty.”
Kicking The Tires
Cable operators, he adds, are kicking the tires of cloud-based managed service offerings for the same reasons as are enterprises. The list of cost and deployment advantages of a cloud-based model compared to the purchase of network infrastructure equipment is a long one — and equally applicable to enterprises and operators. Among the most prominent benefits on that list is the ability to move to a utility-based cost model, where the operator pays for only the resources it uses, as opposed to a large upfront capital expense commitment. Freed from the burden of having to maintain – and eventually replace –communications gear and other equipment, cablecos under a cloud-based model no longer will be saddled with aging equipment that prevents them from reaping the benefits of new technology introductions in a timely manner.
A cloud model also reduces the strain on internal resources, Bergamini says, by offloading the task of back-office integration to the cloud service supplier. A service-delivery model that calls for consumer and enterprise services to be hosted by a third party, rather than the operator’s network infrastructure, also helps mitigate risks to the operator associated with service introductions. Because new services are not associated with expensive infrastructure upgrades in a cloud model, operators will be more aggressive in rolling out new services and less hesitant to pull back recently introduced offerings that are not finding an audience.
While Bergamini says that all types of cable operators have shown some interest in a cloud-based relationship with their technology suppliers, the business model is particularly attractive to cable operators serving Tier 2 and Tier 3 service areas.
“These operators in particular have been in a bit of a holding pattern for the past couple of years,” he says. “They may have made sizeable investments in VoIP technology equipment a few years ago, trudging through the expense and difficulty of integrating the platform into their existing environments, and are now unprepared to make an additional investment in network resources. A cloud-based approach provides a service catalog refresh without the expensive of a major infrastructure upgrade.”
Buy As You Go
The “buy-as-you-go” nature of a cloud model provides operators with a rich selection of services from which to choose and to integrate into their service offerings, says Bergamini. Cable operators that have yet to offer telephony services to their cable TV and Internet subscribers can leverage the cloud for basic VoIP services. Operators already in the telephony business can supplement those services with such unified communications functions as IM or videoconferencing derived from the cloud. Even the smallest cableco, he adds, now can afford to offer multimedia services that leverage smartphone and other mobile devices and rival those available from the most advanced telcos or over the top (OTT) service providers.
“Adopting a cloud model to augment existing services will assist operators in reaching new segments of the market, such as small businesses, or defend their subscriber base from encroaching rivals,” says Bergamini. “The cloud approach provides an affordable solution for operators’ two most pressing challenges: generating new revenue and retaining existing customers. “
It’s a win-win for mid-sized and small cable operators, adds Bergamini, many of which already are familiar with the Software as a Service (SaaS) business model. In addition to enabling them to significantly enrich their services offerings to business and residential customers, pulling the trigger on a managed-service approach helps eliminate the need for costly infrastructure upgrades and associated back-office integration.
Though accusations of having one’s “head in the clouds” typically are cast at daydreamers and risk takers, the adoption of a cloud-based business model could turn out to be a cable operator’s most practical path to new sources of revenue and customer retention.