Telco Cloud : looming over Africa

Slide1The recent emergence of cloud computing as a paradigm for economic development opens opportunities for African countries seeking to engage world markets despite lacking the traditional infrastructure used to facilitate trade. The arrival of several submarine cables at various landing points along the continental coastline has accelerated the rollout of African terrestrial and wireless networks

Cloud offers a unique opportunity to African Telcos to offer value added services like voice, video and collaboration on cloud platforms. As Telcos design their cloud strategy, they must think on how best to leverage their unique and trusted relationship with the consumer. They can monetise this relationship by offering competitive cloud-based services integrated in the devices supported by hassle free billing and reliable network connectivity.

Telcos today have only 5% of the public cloud market, according to analysts’ estimates. They could potentially increase their market share by going beyond the provision of connectivity to provide additional services, such as authentication, billing, systems integration and even professional IT services. While most telcos can’t match the IT expertise of IBM or HP, they have some advantages, such as long-standing relationships with both large and small businesses, well-known brand names and extensive customer care facilities.

Cloud offers a unique opportunity to service providers that want to offer value added services like voice, video and collaboration on cloud platforms, but success will come only with simplicity and a recognition that the economics of the cloud are very different than traditional telco models. In essence, recognition that cloud models have utilization patterns like airlines, which means they are capital intensive, meaning supply and demand differentiation will be critical to maximizing yields.

The BSS/OSS infrastructure combined with payments and settlement is the cornerstone of commerce in the Mobile Cloud. Fortunately most African telcos have already installed reliable mobile payment platforms that can be configured quickly to facilitate risk free payments for cloud services.

Mobile cloud applications are a sophisticated mish mash of applications that incorporate core mobile phone and Telco capabilities, like location, presence, phone calendar, address book, and cameras. A market for bundling basic connectivity (fixed or mobile) and communications (voice, messaging, data and video) with cloud-based applications is opened – and largely untapped – for telecom operators.

Telecom operators can offer business cloud services under a simple pricing structure that includes connectivity and devices, self-service provisioning, on-demand infrastructure hardware, as well as front- and back-office applications. They can also provide value-added services, including analytics and reporting, predictive capacity planning, and managed services.

For telecom operators offering enterprise cloud services, target segments can be based on enterprise size for horizontal applications, such as unified communications (UC) and enterprise resource planning (ERP), or it can be vertical market-based for industry-specific applications such as meter data management for utilities companies.

Telecom operators are highly dependent on third parties for cloud service delivery. This includes SaaS, infrastructure and professional services vendors. On average, an operator works with 16 partners to deliver cloud services, and some with double that number.

The potential power of Mobile Cloud Computing is best demonstrated when Hosted services (SaaS) are extended with NaaS features . A SaaS provider, for example SalesForce.com (and Force.com), sells as a subscription service, powerful Customer Relationship Management (CRM) and sales force management cloud services to enterprises via the Telco platform. Whatever the actual demarcation between SaaS/PaaS and ASP, users (whether individuals or enterprises) subscribe to the enhanced services and ultimately pay for them, either bundled into a subscription or on a pay per use basis.

With cross-network availability of all network capabilities (not just SMS) and of payments services, the same will be true of the mobile cloud and the underlying Telco’s Network as a Service ( NaaS). With standard ubiquitous access, Telco resources can be accessed on-demand via the Cloud and mashed-up with Web and device APIs to create or enhance almost any Web, device, enterprise or desktop application

For telecom operators offering enterprise cloud services, target segments can be based on enterprise size for horizontal applications, such as unified communications (UC) and enterprise resource planning (ERP), or it can be vertical market-based for industry-specific applications such as meter data management for utilities companies.

While monetizing the network assets is an important part of a Communication SP revenue strategy, it is not a strong growth strategy because network connectivity is being commoditized. The CSP’s greatest asset is their customer base. Growth strategies must start with monetizing the customer. This includes strategies focused on increasing the average revenue per user (ARPU), reducing churn and providing complete solutions that address all of the information and communication technology (ICT) needs of their customers.

With a culture of aiming for five nines (99.999% uptime) reliability, telcos are well-suited to the delivery of cloud services dependent on continual connectivity. Unreliable networks would undermine the entire cloud concept, so telcos clearly have a pivotal role in the Cloud value chain .

In addition to the services accessed by “traditional” means such as via mobile handsets or web browsers, there is huge potential for machine-to-machine (M2M) services availing of Mobile Cloud Computing. Recent forecasts suggest that there will be up to 50 billion mobile connected “machines” over the coming years, including appliances, smart meters, security systems, healthcare devices and many others – all of which can benefit from network capabilities accessed on-demand from the mobile cloud.

As providers of cloud services, telecom operators can manage connectivity, deliver cloud capabilities, and leverage network assets to enhance cloud offerings. Given their core competency, managing cloud connectivity appears to be the most natural value-adding activity. In delivering cloud capabilities, operators can deliver on-demand applications and computing capacity either through partnerships or on their own infrastructure.

By leveraging their network assets, operators add value by exploiting user attributes such as profiles and activities, making cloud services relevant and meaningful to users and providing the linkage between the upstream and downstream components of two-sided business models.

Sadiq Malik ( Telco Strategist )

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