Will the CSPs of Today Become the Telcos of Tomorrow?

10 September 2020 | Posted by Nick Oldham

The only way to successfully run an enterprise is to leverage the power of cloud computing. The cloud is as central a feature of operations as the internet and the telephone before it. This raises an interesting question: will the cloud service providers of today become the telcos of tomorrow?

The answer is yes. And the signs are already here.

Yesterday’s Innovation Is Today’s Utility

But first, some background. On April 6th, 1875, Alexander Graham Bell's U.S. Patent 161,739 "Transmitters and Receivers for Electric Telegraphs" was granted. 

Two years later, Bell founds the Bell Telephone Company, now AT&T, one of the telco giants alongside Verizon and T-Mobile. Within ten years there would be a telephone exchange in every major city in America.

The ubiquity of the big telcos has made them as essential to operations as power and water – telecoms have become a utility.

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What Does It Mean To Be A Utility?

Utility companies provide commodities to communities that are in general demand. Water and power are obvious and in the 20th century, telecoms became a third. The networks they control underpin economic infrastructure in the same way that power grids do. Businesses need networking, buy line rental, and are charged as part of a service.

To an enterprise’s finance department, telecom bills are no different than any other utility bill – they’re regular, they’re paid forever, and they’re never going away.

Technology Companies Don’t Like Being Utilities

Even though line rental and domination over the market help telcos make money hand over fist, they don’t like being thought of as utilities. Why? Because it isn’t sexy.

Telcos see themselves as technology companies. And in today’s competitive tech landscape, they’ve identified an opportunity to help customers with their connectivity needs.

With the arrival of the Internet of Things, more devices than ever have SIM cards that transmit data, which is managed by your telecoms service provider. Try as they might, they’re utilities in all but name.

Cloud Services Are The New Enterprise Utility

The 21st century has brought us a new utility – the cloud. We see the adoption of cloud technology into businesses as no different than that of telecoms. Like the telephone, the cloud has changed the way businesses work forever. And if you want to compete, you need to be leveraging its power.

Like telecoms, we already have a few big players that provide the same basic thing. Amazon Web Services (AWS), Microsoft Azure, and Google Cloud Platform (GCP) provide remote computing power to businesses with very few differences.

Their control over cloud computing power is very similar to the telco’s control over our phone networks. They maintain the hardware, customers use the service that hardware provides.

Today, we pay subscriptions or a pay-as-you-go billing model. But when does “subscription” just become “monthly bill”? For organizations already three or 4 years into their public cloud journey, that day is today. Their cloud service provider (CSP) provides them with a service they rely on to do business that they can’t do without.

The finance department treats cloud billing the same as telecoms, power, and water. It’s a regular bill they’ll pay forever, and since they can’t do business without it, that bill isn’t going away.

Why Should Enterprises Care?

It won’t be long before your cloud bill starts to look like your utility bill and carries all the same problems with it – a lack of visibility, complex billing structures, and hidden, spiralling costs.

We’ve been helping enterprises with their utility bills for 25 years and when we started managing telecoms billing ten years later, we saw the same problems.

We predict that enterprise cloud billing will become exactly the same. All the complexity and no cost optimization we see in telecoms will hit enterprises just as hard.

Tracking all the data of a million-dollar-a-month cloud bill is a huge undertaking, but understanding it is key to ensuring optimized and cost-effective management of your cloud costs. And with that cost optimization comes visibility of your environment, improved processes, and operation efficiency.

Enterprises that are still on their cloud journey won’t benefit from these cost savings today, but setting up powerful cloud cost management processes and relationships as you grow will put your cloud costs in a position of optimization from day 1. And we know this because of our experience in telecoms.

Ten years ago, when smartphones were running consumer mobile technology, it opened the door to data usage on a scale never before seen.

A Nielsen study back in 2011 revealed that Blackberry data usage was far lower than that of popular new devices. At the enterprise level, telecoms billing was working to billing models designed for the limited data capacity of Blackberrys.

If you don’t adjust your cost management to match today’s environment, you’re going to be paying far more than you should.

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