The Rise of Competitive Cloud

By: Scott St. John

Virtually every major communications service provider (CSP) around the world is clamoring for its piece of the cloud pie, and for good reason: key industry analysts are estimating the cloud market to grow at an extraordinary, almost alarming rate. Gartner has predicted it to reach $160 billion by the end of this year, and Forrester has proclaimed that it will expand to $240 billion by 2020. Meanwhile, IDC has predicted that the worldwide cloud-services market will surpass $100 billion by 2016. If none of that sounds impressive to you, consider that the global market for coffee was reported to be just over $70 billion last year.

Cloud evolution

The cloud we once knew may not be the cloud we will know as things continue to unfold in the years to come. To quote IDC chief analyst Frank Gens, “Cloud investment priorities will shift from simply improving IT operations to delivering business innovation. SMBs [small and medium businesses] will rise as a critical customer segment, providing the scale needed to bridge IT vendors from old financial models to the new.”

He couldn’t be more right. The cloud has been helping organizations of virtually every shape and size become more efficient, productive and collaborative, and behind the drive to the cloud has been a simple but consistent theme: as Microsoft Corp. so eloquently put it in a recent white paper, “Own less, do more.” But until recently the market has been rather fragmented, and cloud offerings somewhat obscure.

At one end of the spectrum, the largest players have tried to capitalize on virtually every aspect of the trend, taking it upon themselves, for the most part, to build data-centers, launch unified communications and collaboration (UC&C) offerings and even develop over-the-top (OTT) apps and content libraries. However, while these players remain the 800-pound gorillas, hundreds of smaller telecom operators serving local communities see the cloud as an opportunity to both innovate and expand their service portfolios. And it couldn’t come at a better time.

In the US rural incumbent local exchange carriers (LECs) are traditional phone companies that have largely sustained themselves on government subsidies by providing local telephony and interconnect services. These rural service providers have played an instrumental role in America’s heartland, providing critical services and connectivity and contributing to the rural and agricultural economy, all to the tune of about $35 billion.

However, if that model isn’t dead it certainly seems to be dying as the FCC continues to overhaul subsidies these companies have relied on for generations. “Over the last several years the rural telecommunications industry has faced a great deal of uncertainty as we stared down changes to the cost-recovery mechanisms that have supported universal telecommunications services for decades,” says Shirley Bloomfield, CEO of the National Telecommunications Cooperative Association (NTCA). “The network-support mechanisms upon which rural carriers rely have been placed under significant stress due to new cuts, caps and constraints adopted by the FCC, and the potential threat of more cuts only perpetuates regulatory uncertainty.”


Latest Updates

Subscribe to our YouTube Channel