Reports: Cloud Sourcing CSP Infrastructure on the Rise

In March two reports were published offering more proof that the telecom industry is embracing cloud solutions. Communication service providers (CSPs) are increasingly saying yes to cloud sourcing, not cloud building, when it comes to network evolution.

The reports are of particular interest to me as they support our vision of cloud-based solutions radically transforming service provider VoIP and unified communications in terms of economics, operations and service agility. The data from these reports indicate there is growing awareness and adoption of cloud-based evolution paths that obviate the need to purchase, integrate and run infrastructure.

Cloud Sourcing Infrastructure

In Oracle’s study, The Communications Cloud: CSPs Take On Tomorrow, CSPs around the world were interviewed to understand how initiatives such as network functions virtualization (NFV) and solutions like a “communications cloud” might help them overcome challenges and harness market opportunities. A communications cloud was defined as:

“a cloud service to which a service provider subscribes. Such a service, provided by a supplier, could be hosted in a public cloud or a private cloud, both of which could be extended to the service provider’s premises and network. The service may contain network functions and/or operational technologies”

The three most stand-out findings for me were:

  • 71% of CSPs believe that a communications cloud could simplify operations, speed time to market, and reduce overall effort.
  • 63% agree their company is confident they have the right people to embrace the communications cloud.
  • 44% would accelerate the use of communications cloud services (if NFV fails to meet objectives over the next two years)

While the study encompassed many applications not just voice, next-generation VoIP fits right in there as a collection of “network functions.” And it’s timely too. TDM networks are end-of-life and VoIP 1.0 and IMS systems are obsolete. Service providers are working on their network evolution paths now. In fact, according to the survey, improving the customer experience and keeping up with the pace of technological changes are the top CSP challenges. This broad support of using cloud jives with the Heavy Reading survey from last year where 83% of CSP respondents said they were “somewhat” or “very likely” to use a XaaS option for replacing or augmenting network infrastructure. Read more on that study in my blog post Heavy Reading: Cloud Defines a New Voice Strategy. In the Oracle study, CSP respondents also ranked opportunities to maintain or improve their competitive position with the top two being: implementing NFV and engaging communications cloud services. The Heavy Reading survey found a similar result in a question about voice network evolution. The top two choices were: build an NFV network and leverage a cloud voice platform.

Cloud Sourcing CSP Voice

A Frost & Sullivan survey more specifically looked at service provider interest in an “integrated SaaS cloud-based unified communications platform.” What’s an integrated SaaS cloud-based unified communications platform? None other than what we call a cloud voice platform (see my blog post Cloud Voice Platforms – What Exactly Are They?). Key report findings for me were:

  • 90% of telecom providers said that a turnkey cloud-based platform would speed their time to market.
  • 52% believe it enables them to transition from a CAPEX model to a more profitable SaaS OPEX model.
  • 45% plan to deploy a turnkey solution hosted and operated by a third party to improve their own ability to offer innovative solutions

Service providers are leaning in and have plans for adoption, either to replace their network or launch new services using the cloud as an overlay. It’s always made business sense, but now we are seeing more market awareness of this solution category. Another noteworthy point was that over half of respondents (55%) view the “integration of multiple vendor technologies to develop their own cloud platform” as a significant challenge. This is a point we’ve raised a number of times. IMS was difficult. Virtualized IMS is a nightmare (see the New IP Agency article Virtual Machines, Real Complexity).

Our Take

These new research reports provide the latest proof points that cloud sourcing is picking up steam. We know it’s a big mind shift for service providers that have built extensive voice networks. This research can provide some confidence to those providers that the cloud can be their next network as their peers also embrace this transformative approach. You can read our own take on the need for cloud voice platforms in our white paper Service Provider VoIP: Next Gen is the Cloud.