skip to main content
Close Icon We use cookies to improve your website experience.  To learn about our use of cookies and how you can manage your cookie settings, please see our Cookie Policy.  By continuing to use the website, you consent to our use of cookies.
Global Search Configuration

Straight Talk Telecoms

Ovum view

It hasn’t been an easy journey, but there’s a palpable sense that telecoms operators are growing into their role as cloud service providers. Ovum estimates that 400 telcos worldwide are now offering their customers cloud services. Although this often involves the low-margin reselling of third-party public cloud services, some clearer ideas are beginning to emerge about how telcos can carve out specialist roles that match their core competencies.

At the Telco Cloud Forum in London this week, Ovum lead analyst Camille Mendler put this optimism about future prospects down to three factors. First, telecoms operators are getting smarter at selling cloud services; secondly, the telecoms community is becoming more comfortable with cloud technology generally; and thirdly, a few operators are starting to see some pretty good payback on cloud services.

When it comes to how telcos sell cloud services, bundling is as important in B2B as it is in the consumer market. But this doesn’t mean that there’s a tried-and-test bundling approach. In the cloud market, bundles can include a huge number of different applications based on the size of the company or organization and the vertical in which it operates.

It’s become clear to many telcos that putting together a service bundle can play to their strengths around listening to customers’ business needs and introducing specific applications into sales conversations. But telcos have been less successful in designing “self-service” products (to compete with Internet companies).

Speaking in the opening session at the Telco Cloud Forum, Toby Ford (an AT&T VP who started his career with the US telco building a cloud marketplace) suggested that if telcos want to get better at self-service they may need to “get out of the way.” However, he questioned how far telcos might want to abandon the engagement model because this is where they can add most value.

It has taken some time for cloud technology and services to become embedded in the DNA of telecoms operators. The rate at which they are established is often dependent on how much backing there is from senior management. Ford commented that in his case the push into cloud services came from senior management. He added that sometimes the push comes before product and sales teams feel they are ready.

With the adoption of SDN and NFV architectures in telecoms operators’ core networks, familiarity with cloud technology and services is set to grow rapidly. Therefore, Ovum expects the operators that are taking the lead in SDN and NFV – the likes of AT&T, Deutsche Telekom, and Telefonica – to most aggressively roll out cloud services for enterprises. For these operators, cloud is becoming more about who and what they are rather than a specific suite of services that they offer to their clients.

The rapid turnover of senior executives within cloud divisions of many large operators over the last two to three years is a sign that revenues have not grown as quickly as expected. Telcos acknowledge the mistakes they made in the past such as competing with public cloud services, focusing on self-service, and lacking the necessary partnership ecosystem and sales skills. Many are now focusing on the hybrid cloud market and on SMEs, where there is the greatest untapped potential.

Cloud was one of the businesses incubated within the now defunct Telefonica Digital – and one of the few successes from that venture. Luis Pavon, global SaaS director at Telefonica, acknowledges that the company’s early revenue targets were over ambitious and that sales cycles can be slow, particularly in the SME sector, where the deployment of cloud services needs to be part of an overall modernization of IT and telecoms systems. In 2013 Telefonica embarked on an ambitious program to move all of its SME services into the cloud. This business now has 40%-per-year growth targets.

Ovum forecasts that telco revenues from enterprise services will grow over the next five years by 20% per year. Future success is not guaranteed and telcos must continue to grow their partner ecosystem as multi-cloud becomes a reality. But at least telcos are beginning to understand where they should play in cloud services and how they can use their legacy structures and skills to their advantage.

Straight Talk is a weekly briefing from the desk of the Chief Research Officer. To receive this newsletter by email, please contact us.

Recommended Articles

  • Internet of Things

    IoT Viewpoints 2018

    IoT Viewpoints explore the IoT opportunity in 2018 and beyond. Download our latest e-book to get our newest collection of thought leadership articles on the emerging IoT trends, technologies and opportunities.

    Topics IoT

  • Consumer & Entertainment Services

    US pay TV: Is it facing an existential threat?

    By Adam Thomas 28 Mar 2018

    With US pay TV having endured the worst year in its history, thoughts have inevitably turned to the future. The likelihood remains that the immediate future will remain highly uncomfortable for everyone except the scaled multinational digital platforms.

  • Enterprise Services

    5G: Another technology in search of enterprise use cases

    By Evan Kirchheimer 26 Apr 2018

    Service provider interest in justifying 5G investment through its potential to open new revenue streams from the enterprise segment is growing ever greater.

;

Have any questions? Speak to a Specialist

Europe, Middle East & Africa team - +44 (0) 207 017 7700


Asia-Pacific team - +61 (0)3 960 16700

US team - +1 646 957 8878

Email us at ClientServices@ovum.com

You can also contact your named/allocated Client Services Executive using their direct dial.
PR enquiries - Call us at +44 788 597 5160 or email us at pr@ovum.com

Contact marketing - 
marketingdepartment@ovum.com

Already an Ovum client? Login to the Knowledge Center now