Cable In the Cloud: Picking the Right BSS for the Business Market

Since at least 2006, the communications market’s best and brightest have predicted an epic battle between cable companies and telcos in the enterprise sector. 2012 may turn out to be the year that proves the soothsayers right, though not in a way anyone could have foreseen at mid-decade. An entirely new market – cloud computing – could turn out to be a major field where telecom and cable face head-on to win commercial accounts.

Last year, opponents fired the opening shots by acquiring or partnering with large cloud-computing companies. In the U.S., almost within the same week, Verizon bought Terremark and Time Warner snapped up Navisite. Not long after, CenturyLink purchased Savvis. Then Britain’s largest cable MSO, Virgin Media, partnered with CenturyLink’s Savvis to offer business-class cloud services up against its competitors, BT and Cable & Wireless…



These players are well positioned. According to a recent report on cloud service from TMF Insight Research, “CSPs have many strengths, such as a long history of selling services to enterprises, reliability and proven ability to scale services to meet demand." This record of success helps to build their credibility as providers of cloud services.

Illustrating what may lie ahead in just one market, a study by Bain & Company finds that North American cloud computing will grow nearly eight-fold from $20 billion today to $150 billion in 2014. To put the revenue upside in perspective, consider that, to date, a mere 10 percent of companies have driven nearly 50 percent of the North American demand for cloud services. Imagine the revenue potential that the other 90 percent of North American companies, and for that matter the rest of the world, might deliver.

It’s not hard to understand companies’ eager pursuit of cloud computing: lower TCO, reduced investment in IT and the ability to shift responsibility to tech innovation to IT leaders and focus on one’s own expertise are all contributing factors. The advantages are attractive to SOHOs, SMBs and enterprise customers, alike.

For cable companies, cloud computing could be a shiny new ticket to the red carpet of the business marketplace. Cable companies are clearly attuned to the business sector opportunity and its potential diverse new revenue streams. To name a few:

• Cloud computing is a natural extension of cable’s managed service product lines;
• Cable companies can leverage cloud computing services to move up the value chain and offer professional services;
• They could pursue a wholesale model offering a white-label cloud computing infrastructure solution to other service providers.

And, of course, cable companies themselves can benefit by running their internal systems in a cloud environment to reduce their own IT costs.

Not (pardon the pun) to rain on cloud’s parade, but while moving forward, cable companies also should heed possible pitfalls that could tie up their aggressive plans. One area where cable operators need to exercise care: business support systems. When looking at BSS options, or considering public cloud options that impact BSS, cable companies should pay attention to the following three issues:

• Security and privacy guarantees. With many vendors, guarantees are rare and vaguely worded. Why that’s a shortcoming: In some markets, the BSS vendor – and by extension the cable provider of cloud services – may be under legal and regulatory requirements to maintain the privacy of subscribers’ billing information. Strong privacy protection commitments are essential.
• Portability standards. While standard API definitions would allow BSS to be ported easily between alternative public cloud platforms, they are not yet widely used. To avoid being locked in, the cable operator should look for a vendor whose solution adheres to portability standards.
• SLAs for latency and availability. Be aware of the potential negative impact of public clouds on any BSS. Service-level agreements offered by public cloud service providers are often weak and offer little compensation for downtime. For mission-critical applications such as BSS, this is not acceptable.

Because cloud computing is still in its early days, cable companies should insist on future-proof BSS solutions that can accommodate change. New developments may arise such as “cloud brokers" that manage multiple cloud-computing options across different business environments. While at present these models are not yet mature, they may ultimately give cable companies a variety of cloud solutions to meet the diverse needs of business customers. Whatever BSS solution the cable company chooses must have the flexibility to evolve and support this or any business model that arises.

As cable operators go full-bore into cloud computing, they enjoy a unique competitive advantage in owning networks that give them control over quality of service and end-to-end SLAs. The inherent cost savings of cloud services will add a vital new dimension to cable operators’ business portfolios. With the right BSS they are assured of satisfying the sophisticated needs of commercial customers, and their own profit margin objectives.