Cloud computing, along with mobility-led increased broadband percolation, is aiding the creation of a networked society.

Moving towards a digitally connected world, telecom operators have an advantage of capitalizing on the growth of cloud services along with a unique opportunity to position themselves as both, service providers as well as adopters of technology.

With rising global competition, digitization and the spread of internet-based communication services, storage infrastructure needs have undergone a significant change. To rise over the challenge, telecom operators started leveraging the significant investment they have made in the already existing infrastructure.

With the success of cloud computing in the enterprise realm, telecom operators now seem contingent upon the cloud for reaping the benefits of economies of scale, cost-effectiveness and agility. As an additional advantage, it also lessens the dependency of telecom sector from traditional revenue streams.

In today’s day and age, data consumption is increasing exponentially and much of it is happening through applications, wherein the telecom sector has a critical role to play being the carrier partners for those applications. To understand the heightened traction, we can look at apps like Airtel One (comprising all apps by the provider under one umbrella) or aggregated applications like Tapzo that provides bundled services from various service providers.

With app consumption driving the trend, even the least usage consumer is a contributing entity in increasing the cloud consumption. This amplified consumption is helping telecom industry to achieve higher value in terms of customer experience. One example of a great end-user experience is the cloud leverage assisting in solving major connectivity challenges for field workers. Here, telecom sector connected the dots between diverse demographic dividends and the cloud amenities. Such instances further propel the digital economy.

Another significant trend that we can notice is technology upgrade to 4G – As per Indian Telecom Sector Report, all the providers are pushing for increasing the 4G penetration and significant investments have been seen in this direction. Few examples are: Jio deciding to invest 30,000 crores more into 4G in 2017; Idea raising 500 crores more to fund 4G expansion; Airtel under its LEAP program which was announced in Nov 2015, has already decided to invest 60,000 crores on 4G till 2018. With these trends dominating the telecom arena, we can easily look forward for further cloud penetration in the sector.

Adoption of Cloud in Telecom

Critically, cloud computing is revolutionising the way we provision ICT resources. Coping with the rising competition, over-the-top players are competing for streaming content directly to consumers 24×7. Such practices have increased their sectoral dominance along with increasing engagement in the core communication services.

As per an exclusive whitepaper by Frost & Sullivan on Industry Outlook for the Indian Telecom and Broadcast Industry, OTT players like Whatsapp, Line, Viber and Apple’s iMessage represent more than 80 percent of all messaging traffic. As cloud computing gains traction, more and more applications and data are being moved from user premises and equipment to the internet.

In fact, without access networks, services and data will not be available for the users, therefore being connected has become the need of the hour. Moreover, connectivity increases the value of access networks and provides network service providers with new business opportunities – justifying the adoption of cloud in telecom realm.

Within telecom sector, investments in software (SaaS) is rising significantly wherein SaaS enables consumers to use provider applications that run on cloud infrastructure. Reason for growth in this area is quite clear since this is a continuously evolving field with a huge scope for development in future.

Along with this, PaaS enables consumers to create and deploy applications onto the cloud infrastructure and IaaS enables them to access processing, storage, networks and other fundamental computing resources to deploy and run arbitrary software, including operating systems and applications. However, due to less opportunities, saturated growth and less scope of work, these services do not put together significant investment opportunities in comparison to SaaS based opportunities.

Customer Experience through Cloud Consumption

There is a rising demand for collaboration, cloud services and security solutions by telecom operators and to extract the same, there are opportunities for differentiation through geographic expertise, industry-specific solutions and quality. Telecom operators can therefore benefit from established customer relationships within enterprises that can be leveraged by providing cloud services. Few pointers supporting this fact are:

The explosive growth of mobile access into the cloud through smartphone applications plays strongly to operator’s strengths in enriching customer relationships even more.

Telecom operators can greatly benefit as users of the technology as many of their business operations can be streamlined through clouds to realise flexibility, faster time-to-market and cost savings.

They can also choose to manage good returns with opportunities such as outsourced billing for over-the-top (OTT) players,

Telecom players can benefit by becoming a vehicle for entering emerging segments like cloud-based machine-to-machine (M2M) platforms for industry verticals.

Operators should consider cloud computing as an integral part of their strategies. As they shift from selling communications services to servicing on-demand ICT capacities, an understanding of the evolving cloud ecosystem, partnerships and business models will be vital. Their networks, business processes, support systems and organisational structure must be optimised to facilitate the proliferation and consumption of cloud services.

The Road Ahead – Exponential Cloud Adoption

Since recurring revenue models are already changing the status quo of traditional solution models, therefore for cloud consumption in the telecom arena, few expectations soon could be:

Consumers of the cloud subscription & consumption of cloud models will continue to grow.

End users will focus on perpetual licensing with low focus on hardware.

As per a noted industry report – Telecom Industry Trends 2020, the next major trend in telecom will be the explosion of connected devices. There can be an addition of billions of new connected data sources globally by 2020.

Consumption model will replace subscription billing because it’s efficient and profitable for businesses.

Cloud monetization will pave the way for better solutions.

According to the Global telecommunications study: Navigating the Road to 2020, M2M connections are forecasted to reach 1bn by 2020, representing 10 percent of all mobile connections as the Internet of Things (IoT) takes shape, while enterprises are already adopting cloud services in ever greater magnitude.

In the times to follow, telecom industry will continue to be the epicenter of innovation, digitization and disruption facilitated by newer technologies. Cloud will get further embedded in the present societal fabric, giving further momentum to the cloud consumption upsurge in telecom sector.

As penetration expands, and smartphone prices drop, connectivity will proliferate beyond urban and suburban subscription bases and the number of connected entities will continue to grow. Eventually, the contribution of cloud in the growth of telecom sector or vice-versa, these dynamics will continue to revamp the industrial landscape.

Snehashish Bhattacharjee, global CEO and co-founder, Denave