Cable Operators Explore Cloud Options

Far from ethereal, cloud computing is attracting a solid following across all segments of the communications industry.  In the enterprise space, for example, businesses of all sizes are steadily recognizing the performance and costs advantages of a managed services model over a strategy based on the purchase and upkeep of premises-based equipment.

And as cloud computing gains further traction as a reliable and proven service delivery method, industry experts predict it will attract consumers from additional spheres of the communications industry, including service providers from both the telecommunications and cable operator realms.

In fact, GENBAND’s MSO team has talked to several cable operators who are interested in augmenting their existing telephony services or launching new offerings with services derived from third-party cloud environments. Operators who launched IP cable services several years ago see a cloud-based managed service offering as a cost-efficient way to enhance those services and as a means of generating new revenue or securing customer loyalty.

Cable operators are kicking the tires of cloud-based managed service offerings for the same reasons as enterprises. The list of cost and deployment advantages of a cloud-based model over the purchase of network infrastructure equipment is a long one -- and equally applicable to enterprises and operators. Among the most prominent benefits on that list is the ability to move to a utility-based cost model, where the operator pays for only the resources it uses, as opposed to a large upfront capital expense commitment. Freed from the burden of having to maintain – and eventually replace –communications gear and other equipment, cable operators under a cloud-based model will no longer be saddled with aging equipment that prevents them from reaping the benefits of new technology introductions in a timely manner.

A cloud model also reduces the strain on internal resources by offloading the task of back-office integration to the cloud service supplier. A service delivery model that calls for consumer and enterprise services to be hosted by a third party, rather than the operator’s network infrastructure, also mitigates risks to the operator associated with service introductions. Since new services are not associated with expensive infrastructure upgrades in a cloud model, operators will be more aggressive in rolling out new services and less hesitant to pull back recently introduced ones that are not finding an audience.

While all types of cable operators have shown some level of interest in a cloud-based relationship with their technology suppliers, the business model is particularly attractive to cable operators serving Tier 2 and lower service areas.

These operators in particular have been in a bit of a holding pattern for the past couple of years. They may have made sizeable investments in VoIP technology equipment a few years ago, trudging through the expense and difficulty of integrating the platform into their existing environments, and are now unprepared to make an additional investment in network resources. A cloud-based approach provides a service catalog refresh without the expense of a major infrastructure upgrade.

The “buy-as-you-go” nature of a cloud model provides operators with a rich selection of services to choose from and to integrate into their service offerings. Cable operators that have yet to offer telephony services to their cable television and Internet subscribers can leverage the cloud for basic VoIP services. Operators already in the telephony business can supplement those services with unified communications functions, such as IM or videoconferencing, derived from the cloud. Even the smallest cable operators can now afford to offer multimedia services that leverage smartphone and other mobile devices and rival those available from the most advanced telecom operators or over the top (OTT) service providers.

Adopting a cloud model to augment existing services will assist operators in reaching new segments of the market, such as small businesses, or defend their subscriber base from encroaching rivals. The cloud approach provides an affordable solution for operators’ two most pressing challenges: generating new revenue and retaining existing customers.

It’s a win-win for mid-size and small cable operators, many of which are already familiar with the Software as a Service (SaaS) business model. In addition to enabling them to significantly enrich their services offerings to business and residential customers, pulling the trigger on a managed service approach eliminates the need for costly infrastructure upgrades and associated back office integration. 

Though accusations of having one’s head in the clouds are typically cast at daydreamers and risk takers, the adoption of a cloud-based business model could turn out to be a cable operator’s most practical path to new sources of revenue and customer retention.