Service providers moving to private cloud

11 January 2012 | Kavit Majithia


Kavit Majithia examines the phenomenon of the private mobile cloud, and considers how service providers are increasingly moving away from the public cloud to better serve their specific business needs.

The cloud model at its most basic is a simple mechanism for the delivery of IT services. But in the face of strident demands for better integration of cloud-based services within the carrier ecosystem, the model is rapidly evolving well beyond the scope of this simple definition, towards the formation of separate private cloud solutions.

So what constitutes a private mobile cloud, and how accessible can ‘private’ be before it becomes ‘public’ again? On one level it is all relatively simple – public cloud is a virtual storage facility that service providers, enterprise companies and end users access for data storage, security, hosting and all things over the top. But its evolution is firmly in motion – vendor Cisco’s Cloud Watch report shows over 47% of all vertical and IT institutions surveyed believe private cloud will be the dominant cloud model over the next five years. Several drivers are behind the implementation of a private cloud offering, and given the potential advantage of a single elastic environment that supports internal transformation, it all depends on what strategy a service provider deploys to achieve this.

Differing cloud strategies

This strategy manifests in numerous ways. US operators Verizon and CenturyLink indicated intentions in the space early in 2011, through their respective acquisitions of IT solution companies Terremark and Savvis. Global vendor Huawei is deploying its own cloud solutions to cater to the needs of its customers as well as developing a service build. Major rival Alcatel-Lucent, however, has completely thrown the rule book out of the window. It has used its extensive R&D platform to creative an innovative solution named Cloudband – a dedicated cloud carrier platform that allows a carrier to access its own cloud environment through an external data centre, with its own ‘cloud’ deployed within its carrier network.

“We believe the carrier cloud, in all its forms, should be a holistic part of the network itself. It should not be accessed from a data centre through the internet – which is what we have developed through Cloudband,” says Dor Skuler, VP of cloud solutions at Alcatel-Lucent. “It is highly distributed rather than centralised and it has the capability to leverage different points of presence that the service has access to by the way of exchanges. This access has the potential to create mini data centres, or what we call cloud nodes to give the network a higher performance from multiple locations and optimising this carrier cloud for performance, latency and additional SLAs from higher availability and data security.”

Carrier network cloud

Announced by the company in mid-November 2011, Alcatel-Lucent’s move has already made market watchers sit up and take notice of what looks like a unique offering. “While other companies have leveraged different platforms through M&A activity, the advantage of an Alcatel-Lucent offering is the differentiations it can provide within architecture,” says Sandra Palumbo, research fellow at Yankee Group. “Of course, there could be some drawbacks with such a different offering and there is certainly nothing wrong with leveraging a public cloud platform. There are a lot of services going into the cloud, and there is a benefit of having commonalities across the platform.”

Alcatel-Lucent clearly sees the cloud developing differently, and claims such an offering is needed to take a lead in the next-generation cloud environment because the public cloud accessible today does not deliver everything enterprises need. While it may appear a buzzword, ‘end-to-end’ solutions is certainly an important part of any service provider’s strategy to cater to the growing amount of services a telco business needs to provide access to. Low latency, Quality of Experience (QoE), network reach and price of bandwidth must all be considered.

“Taking all this into account, in addition to the security available by going through VPN, and not the public internet, there is a certain level of necessity for such a solution in today’s market,” says Skuler. “The real differentiation of a private cloud offering, or a carrier cloud, as we have developed is the fact that a carrier can have multiple locations worldwide but to simplify the process, we can make a set of networking requirements go through one screen. In effect, all data can stay in the UK, but its network can be leveraged across the world.”

Public or private?

The spectrum that differentiates private and public cloud is certainly confusing for both carriers and technology providers alike, and it would be difficult, for instance, to define Alcatel’s latest innovation in the market as completely ‘private.’

The fact is, cloud computing is not a new technology, and there are a plethora of companies that identified its potential years ago. Many organisations have since turned from using a managed services platform to deploying cloud as a primary business segment.

One of these companies was technology solutions provider Rackspace, which adopted a dedicated hosting service that serves organisations with a mission critical requirement to be on net 24/7. Now only second to Amazon in the public cloud space, the company has started to develop an alternative private offering. “We found quickly that people valued the private cloud so we began to develop offerings in this context as well,” says John Engates, CTO at Rackspace.

With the roots of the company based around dedicated and private hosting, the separation of public to private becomes even more difficult, in addition to the demand drivers for such a service from existing customers. “We are only just beginning to blend together infrastructure on the private side, and with public cloud infrastructure in the hybrid, it’s a fine difference between what is public and what is private,” adds Fabio Torlini, VP of cloud at the company. “It all looks like infrastructure that is hosted by Rackspace, but a clear distinction occurs when a customer accesses a certain type of application that is constrained by regulatory requirements or industry mandates – this is where the private cloud becomes an accessible entity, even if it may sit within the public cloud context.”

Access indeed that is relevant to the enterprise sector, but how does this tap into a carrier’s cloud strategy? “Using a private cloud platform ultimately means simplifying the process. It took years for us to develop our original cloud software, but as was the state of the technology, commercial opportunities remained sparse. This is no longer the case, and you have to ask the carrier if they want to go through the process of rewriting their own software, and in effect, reinvent the wheel altogether?” says Engates.

The development of the Rackspace private cloud platform has been showcased through its Openstack product – a dedicated software service that was originally built as a storage service, but merged with US space station NASA’s cloud computer software to develop the Openstack offering. In effect, this platform is designed to provide an open source cloud community which enables companies to build a cloud base system on the Openstack technology.

Rackspace has already confirmed it has signed deals with some of the largest telecoms and ICT service providers in the world for these companies to develop private cloud offering, including NTT Communications, Korea Telecom, HP and Dell. Such investment in the private cloud is certainly a statement by Rackspace, but where does its long-running rival and largest cloud computing company Amazon reside within the ecosystem? “It’s still primarily all public from Amazon,” claims Torlini. “They define a certain differing capability as a virtual private cloud, but they still all exist in the customer premise, or within their own data centres which still makes it public.”

Organic build or M&A?

There is certainly a case for carriers to adopt platforms like Openstack and Cloudband, and it is widely expected that many Tier 2 operators as well as SME enterprises will look to access and deploy private or public cloud platforms hosted by such solution providers. But when it comes to the heavyweights in the telecoms industry, it is more likely they will use such sheer scale for either an internal development or engage in calculated M&A activity in the space.

Like with so many other service developments in 2011, the larger US providers have deployed a different strategy for the development of cloud solutions. Out of the nation’s two largest players, AT&T has seemingly made a lower investment than its largest competitor Verizon, which spent $1.4 billion on Terremark in January 2011.

According to John Potter, VP of as-a-service solutions at AT&T, it is really a case of identifying how important the cloud space is to your business. “We see cloud as a simplification of the IT delivery model through the private cloud, with three different models – public, private and hybrid emerging and providing increasing benefits of speed, agility and flexibility,” he says. “Cloud must be virtualised and connected off premise, and it must have the ability to automatically scale, which is a requirement underpinned by automation, and for enterprise, it must be a global model.” Opportunity for AT&T to further develop its IT offering through three cloud models is an apparent strategy for the telco, but Gregory Mooney, director of product management and development at Verizon Global Wholesale, says increased cloud capability can also serve as an enhancement of Verizon’s entire wholesale offer.

“We feel it’s imperative to leverage the wholesale carrier business model, and adapt it to one where the wholesale provider is focussed on delivering growth and profitability by adding customer value,” he says. “Through a portfolio of feature-rich cloud and managed service offerings, our global wholesale arm is driving these capabilities to our expansive global customer base of carriers, CLECs and system integrators.”

Mooney’s tone certainly suggests the company’s acquisition of Terremark has been made with an eye for potential growth, with further investments in mind to develop the advent of its own mobile cloud. “With mobile payments moving through the cloud, the tremendous growth in smartphone devices and M2M, the mobile/private cloud is viewed as a significant opportunity.”

Verizon’s M&A activity in the space is an apparent indication of the level of scale it has, but its major rival doubts that this is best way to approach the growing advent of cloud. Potter notes an organic build, which is what AT&T has developed certainly has its merits, specifically if there is a foundation of cloud services built for a number of years, and it is instilled within the carrier’s internal ecosystem. “What was Verizon’s position in the hosting and cloud space before acquiring Terremark? They did not have one – a few years ago Verizon were not even included in Gartner’s assessment of hosting and cloud services,” he says. “They did not have a viable play in either, and now it is simply an adjunct of their existing portfolio. Our cloud hosting business has been built organically, and one of the major benefits of that is there is a company drive to integrating the service as an extension of your own portfolio – players are still looking at mobile and fixed networks as two separate propositions, and strapping yet another one for cloud.”

The necessity of a private cloud

Strategising for the advent of mobile, public and hybrid cloud is something carriers and solutions providers alike have had to do, and in some cases the trend towards cloud has given such organisations access to an IT infrastructure that is becoming a real growth driver, specifically if they are looking to cater its service towards the vertical sectors. For Chinese service vendor Huawei, its push towards developing cloud solutions for carriers and service providers has become imperative to keep up with the growing pace of demand for carrier-based IT solutions – and the company is seeing an increasing trend from its customers towards carrier cloud over hosting. “Dedicated hosting in a data centre is basically moving your server from one place to another, but with a mobile cloud, or a carrier adopting a cloud service this process will be significantly quicker,” says Johan Strauss, director of IT solutions at Huawei. “If you consider the fact that the Chinese government wants 500 million new people to have access to the internet by 2020, there isn’t even enough time to deploy the necessary copper and fibre on networks – a lot of this will be through mobile, which will have to be supported by the advent of mobile and private cloud.”

Despite this, Strauss says Huawei is not in the market to develop a solution similar to Cloudband, and is committed only to maintaining its position as a service vendor that “develops relevant internal solutions that make operators successful”. For Ian Foddering, CTO and technical director at Cisco, companies tend to fail with their cloud strategy because they do not know if cloud is necessary or not. “I have seen organisations approaching cloud by claiming they need a cloud strategy, and once they have it they do not know where it fits in. You need to identify if cloud is necessary on a public, private or hybrid level environment.” Flexibility, a retention of investment, an apparent control of services offered, in addition to a level of global scale are all seemingly attractive factors for deploying a private cloud, but “leveraging a public cloud platform could certainly make sense too,” says Palumbo. “It depends on how much of the business a service provider wants to move into cloud – and what role a company wants to adopt in the growing cloud ecosystem.”