Can OpenStack Transform Telcos Into Cloud Services Providers?

OpenStack, the open source cloud platform, continues to gain momentum with some cloud services providers (CSPs). But where do telcos potentially fit into the OpenStack conversation? Can OpenStack transform legacy telcos into modern CSPs?

In theory, OpenStack provides a standard platform that allows CSPs and enterprises to more rapidly deploy public and private clouds that are scalable. Moreover, OpenStack may allow customers to more easily move their cloud applications from one service provider to another, based on price, service level agreement or other business priorities.

The Search for Relevance

Telcos, meanwhile, are trying to figure out their cloud strategies. Some telcos are syndicating Office 365 — essentially reselling Microsoft’s cloud suite while adding some value-added services. Office 365 syndicators in the telco market include Bell Canada, KCN of the Netherlands, France-Telecom Orange, Telefonica, TeleiSonera, Telmex, Telstra and Vodaphone, among others.

Meanwhile, other telcos see OpenStack as a potential way to battle Amazon, Google and other cloud providers, noted Dana Blankenhorn back in May 2011. Telcos believed to be testing or deploying OpenStack include AT&T, NTT and Korea Telecom.

Weighing Their Options

Still, some telecom companies are embracing alternative strategies. Verizon’s buyout of Terremark and CloudSwitch essentially positions Verizon against OpenStack-focused service providers. Plus:

• hundreds of small telcos and ISPs have yet to say anything about OpenStack.
• thousands of small MSPs and VARs aren’t even aware of OpenStack yet, focusing instead on white label cloud services that can generate immediate recurring revenues to SMB customers.

So what’s the bottom line on OpenStack? Twilight in the Valley of the Nerds offers some timely perspectives and reality checks.

Talkin’ Cloud’s perspective: OpenStack offers risks and rewards to telcos. On the upside, OpenStack could allow telcos to more rapidly roll out cloud services. On the downside, OpenStack standards could allow end-customers to more easily migrate their cloud applications from one OpenStack telco to the next.

So far, we believe most telcos are taking a wait-and-see approach to OpenStack — preferring instead to huddle up and research the market at conferences like the Telecom Cloud Services Summit. But we’ll keep watching the OpenStack ecosystem for more telecom momentum.