The Rise of Cloud Computing in Telecommunication Industry

Introduction“There was a time when every household, town, farm or village had its own water well. Today, shared public utilities give us access to clean water by simply turning on the tap; cloud computing works in a similar fashion.” That was the analogy used by Vivek Kundra, Federal Chief Information Officer (CIO) of the United States Government to depict the use of cloud computing in today’s society. As the corporate world has embarked on the interactive platform of Web 2.0, some companies are progressing one step ahead to experiment data communication with cloud computing. What is cloud computing?

According to Mache Creeger in the article “Cloud Computing: An Overview”, cloud computing refers a model of shift in the delivery of architecture of information services and data for economic reasons (Creeger, 2009). In this paper, I will present a brief overview of how cloud computing operate, the role of cloud computing in telecommunication industry, the advantages and challenges involved in its implementation.

How does cloud computing work?“Cloud” technically refers to the data center hardware and software used in providing a pay-as-you-go data service to the public. The term “private cloud”, on the other hand, is used by organizations to refer to their internal data centers (Armbrust, et al., 2010). Cloud computing can be divided into three types of services, namely software-as-a-service (SaaS) for WAN-enabled applications, platform-as-a-service (PaaS) for new applications, and infrastructure-as-a-service (IaaS) for computational and storage infrastructure (Creeger, 2009).

Armbrust, et al. April 2010. [Main components of cloud computing]. Retrieved from “A View of Cloud Computing” Journal Article. Sometimes, cloud is claimed to be nothing new in data services. Chris Rose, author of the article “A Break in The Cloud? The Reality of Cloud Computing”, suggests that cloud computing is the merging of existing technologies like networking and virtualization to provide new services that charges by usage (Rose, 2011). Fundamentally, the point of storing data in the cloud, compared to conventional data management, is its high accessibility from a shared andcentralized hosts and low cost for the same reason. Not only that, it enables opportunities for enhanced collaboration on a shared common platform (Creeger, 2009).

What does cloud computing mean to telecommunication business? Google, Amazon and were among the earliest companies to set their footsteps in by building data architectures using cloud technology to support their applications. Following that was an increasing number of telecommunication companies around the globe such as KDDI, China Mobile, SingTel that were grabbing their pieces of the pie by joining the pioneers in delivering data services using cloud (Tobolski, Greenway, & Tucker, 2011).

For these companies, they foresaw cloud services as a lucrative loophole from traditional telecommunication. An article by Accenture entitled “Six Questions Every Telecommunications Senior Executive Should Ask about Cloud Computing” reports that “worldwide cloud services revenue was projected to surpass $56.3 billion in 2009, a 21.3 percent increase from 2008 revenue of $46.4 billion, according to Gartner, Inc.

The market is expected to reach $150.1 billion in 2013.” (Tobolski, Greenway, & Tucker, 2011). Those figures are huge enough to boost revenues for the telecommunication players. Additionally, Tobolski and other authors points out in the same article that cloud computing allows companies to save cost by bypassing most expenses in installing and maintaining their own local data centers (Tobolski, Greenway, & Tucker, 2011). These are among of the reasons more telecom companies are investing in the development of cloud technology. However, there are other reasons that make cloud computing an ideal option.

For instance, the common application platform used in cloud allows sharing with third parties, hence allowing telecommunication companies to deploy services that either extend their services to or operate independently in cooperating with third parties (Creeger, 2009). They would enjoy a lot more flexibility and less rigidity in their operations with the advantages offered by cloud.

Another article, “Privacy, Security and Trust in Cloud Computing, The Perspective of the Telecommunication Industry” also highlights that telecommunication industry is at a unique position to integrate and promote new cloud-based services by making use of its existing relationships with customers (Martucci, Zuccato, Smeets, Habib, Johansson, & Shahmehri, 2012). Such effort would encourage more participation in cloud computing that helps it to grow immensely and gain trusts from more customers.

Furthermore, their expertise in building and managing complex networks is another plus point to adopt cloud computing in meeting some industrial needs that traditional data technology was unable to provide (Tobolski, Greenway, & Tucker, 2011). In another word, cloud computing can make up to what was previously lacking in the industry. From a technical stand, Internet Protocol (IP) infrastructure owned by telcos also lends itself well to cloud services compared to enterprise infrastructure (Gubbins, 2009). All these instances have proven that cloud computing is a good fit for the telecommunication industry in increasing revenues and efficiency as well as lowering operational costs.

Advantages of Cloud Computingi. Economic Advantage/ Cost efficiencyAs mentioned previously, the application of cloud computing in managing data saves cost for telecommunication companies. How and how much do they save? According to Mache Creeger again, sharing resources and purchasing power of very large-scale multitenant data centers in using cloud can result in an obvious cost cut, from paying as much as $3.75 per month for a gigabyte of managed storage reduced to as low as only 10 to 15 cents per month with cloud storage (Creeger, 2009). For companies that are constantly allocating a huge chunk of expense on keeping their data, cloud computing seems exactly like the great solution to saving on that.

This difference in price essentially owes it to the lower physical space of only about 1,000 square feet required in a cloud data center that uses virtualization, instead of 35,000 square feet for a conventional data center. Yet compared to server utilization of between 2 and 3 percent on a usual data center, the one in cloud with virtualization can go up to 80 percent (Creeger, 2009).

Another economic benefit for using cloud is in giving small and medium-sized businesses (SMBs) the affordability to invest in a disaster recovery cost. Again using virtualization, disaster recovery mechanism is more cost-effective by requiring 1.05 times the cost of the infrastructure itself, instead of double of that cost if using typical disaster recovery (Creeger 3).

Therefore, not only companies get to save on paying for the storage, they even get to pay a lower price to keep their data safe just because it’s a better technology. Additionally, there are other expenses involved in the operation of telecommunication data business that can be significantly reduced. Using the concept of economies of scale, operating on large-scaled cloud data centers at low-cost locations can produce a factor of 5 to 7 decrease in cost of electricity, network bandwidth, operations, software, and hardware (Armbust et al. 3).

Armbrust, et al. April 2010. [Main components of cloud computing]. Retrieved from “A View of Cloud Computing” Journal Article.

ii. Flexibility and Shift in ControlBesides saving costs, shifting to cloud-based data services results in a certain level of flexibility and technical advantages to the companies. In contrast with traditional data services, cloud capable of being turned on and off as needed and easily expandable by attaching more servers (Joe Tobolski et al. 4). Hence, cloud is more customizable with better control to cater to the needs of different companies.

Moreover, Creeger mentions in his article that the increased automation used in cloud computing is another advantage by eliminating the need for on-call system administrators (Creeger, 2009). This means the operation of data service under cloud computing are programmed well in advance without relying on manpower. The shift to a new technology that it is so flexible and cost-effective is almost similar to the technology shift from analog to digital signals. Therefore, it is not surprising if most of the telecommunication and data management companies decide to adopt cloud computing in the near future.

Risks and ChallengesIn spite of all the benefits that cloud computing bring to the telecommunication and data industry, it is not without risks in its application. In fact, there is a list of challenges posed by cloud computing that different parties are debating and companies are seeking for solutions. In dealing with data, especially sensitive and confidential ones, security and control have always been one of the major concerns. According to the article “Privacy, Security and Trust in Cloud Computing,

The Perspective of the Telecommunication Industry”, In cloud computing services, telecommunication providers in have to share customers’ data with cloud computing providers in providing cloud computing services so the challenge is in ensuring they do not lose control over the customers’ data and identity (Martucci, Zuccato, Smeets, Habib, Johansson, & Shahmehri, 2012).

However, Creeger provides a different stand in addressing this challenge in his article. According to him, trusting information assets to a recognized and established cloud service provider could increase the security of customers’ data. Also, many data centers would continuously research and develop better ways to secure their infrastructure and data processed (Creeger, 2009).

While no major data breaches cases involving cloud were heard of up to this point, telecom companies simply cannot afford the risking their customers’ data before assured that cloud computing services are at least as safe and stable as the traditional data services. Standardization is another challenge faced by companies in delivering cloud services. There is currently a lack of standardized interfaces for cloud computing and telecommunication services to integrate and it seems that the developers are only interested in making the components cross-compatible between different platforms (Martucci, Zuccato, Smeets, Habib, Johansson, & Shahmehri, 2012).

It may sound like a temporary solution and as the technologies mature, they will decide if standardized interfaces are necessary after all. This is just part of the lack of measurement standards that make evaluating the performance of cloud-provided services less possible at this moment. Besides security and standards, transparency of the cloud market could be a challenge if telecom companies are smart enough in maintaining good relationships with customers.

Cloud computing services would be portrayed as the same as any Internet services and hence when the services go down, people would blog, post and tweet about it and share with people around the world. For example, a service outage that cut 14 percent of Google users from services in 2009 caused an outrage on social media channels (Tobolski, Greenway, & Tucker, 2011). Consequently, this would negatively affect the reputation of the service providers.

Therefore, aside being its part in avoiding service failures, telecom companies have to take part in social media and respond to customers’ feedbacks and complaints. These risks and challenges are not impossible to overcome but require time and collaborations between cloud providers and telecom computing to produce more promising security and standard.

ConclusionEven with a relatively new emergence, cloud computing has a sophisticated and established infrastructure, ready to provide data services for the next generation of service providers. Cloud computing is a technology created to stay in the industry and continue to grow as telecommunication and other corporate companies jump on the bandwagon to benefits from it. While the advantages of implementing cloud computing seem appealing in terms of cost and technical flexibility, companies should always consider its drawbacks and understand the risks before proceeding with the adoption of this technology.

With cloud computing becoming part of the telecommunication industry, it brings a new hope to the companies in generating more revenues and overcoming the weaknesses of traditional data services. Hence, it would also improve the quality of service in delivering and managing customers’ data


Armbrust, M., Fox, A., Griffith, R., Joseph, A. D., Katz, R., Konwinski, A., et al. (2010, April). A view of cloud computing. Communications of the ACM, 53(4), pp. 50-58. Creeger, M. (2009, June). Cloud Computing: An Overview. Queue – Distributed Computing, 7(5). Gubbins, E. (2009, May). How Telcos Could Conquer The Cloud. Telephony, 250(5), pp. 34-35. Martucci, L. A., Zuccato, A., Smeets, B., Habib, S. M., Johansson, T., & Shahmehri, N. (2012). Privacy, Security and Trust in Cloud Computing:

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