Rural Telcos Not Content to Be Nostalgic

Good Reasons Why Small to Mid-Sized Rural Telcos Are Embracing Data Center Options

Why are small to mid-sized telcos gravitating towards data center services? The answer is simple: That’s where the money is!

A recently published report, The New Telco Data Centre — Pricing for the New Telecoms Data Centre – 2014 to 2019, states that telcos are expanding into colocation hosting and tradition Cloud services. This move is a necessity for generating more profit out of their existing investment from all those copper and fiber lines running past neighborhoods and businesses.

Precedent has already been set. Analysis of the report’s data identified that there are 2,200 telecom provider data center facilities with approximately 2.9 million square meters of space available. In addition, the report further states some telcos are now spending between US$100M and US$300M developing large campus-based data center facilities.

There are 2 glaring reasons why rural telcos want to transition into data centers:
1. Competitors are embracing data center services with technology that streamlines and simplifies network deployment and management. New technologies such as Service Defined Networks (SDN) and Network Function Virtualization (NFV) are enabling service providers to roll out new revenue-generating services much quicker while also allowing carriers to offer value-added Cloud services such as storage, processing, and data disaster recovery.
2. Compete with Over-The-Top (OTT) providers. OTT providers such as Amazon.com, Google, and Microsoft run their own data centers, making it hard for small to mid-sized telcos to compete if they do not have data-center offerings. To effectively compete, these telcos need to optimize their network services to handle more data as well as honor Service Level Agreements (SLAs) established with enterprise customers.

The importance of SDN and NFV can’t be overemphasized. To underscore the point, by 2020, SNS Research expects operator network investments in SDN and NFV to reach $21B from $2.3B today. This growth, coupled with the TCO (total cost of ownership) savings provided by SDN and NFV, reinforces the importance of deploying these new technologies alongside legacy OSS/BSS networks.

Retooling the Telco
A traditional telco IT infrastructure runs operational and billing support systems (OSS/BSS) applications that track provisioning and large numbers of network assets. However, as networks transitioned to smart devices, the OSS/BSS processes were integrated with network operations centers (NOCs) to control the network. Although this is progress, these models are not viewed as optimal for the data center evolution to cloud services.

OTT content providers such as Google, Netflix, and Apple are coming to take over local rural telecommunications markets. Rural telecom companies, if they wish to compete with these giants and maintain their customers, will have to band their tradition services together. They will need to find ways to bundle the voice, video, and data services driven by the automation and scalability of existing OSS/BSS systems, and offer turnkey managed services, home security, greater bandwidth, and of course, an "App for all that."

Indeed, now is the time for rural telecoms to diversify and transition into data centers to help offset declining video and voice revenue. In addition, new data center services will help rural telco customers manage their interconnected homes and businesses, which in this day and age are often the same place. Large enterprise organizations have been outsourcing their IT infrastructure and management for nearly a decade. Now, the economy of the Cloud has made it affordable for small businesses and even family residences to take advantage of the same services.

The good news for the rural telcos is that they are often the trusted or homegrown communications provider that local residents and businesses prefer to work with; expanding services is always easier when a company is part of the same community. In addition, most businesses prefer to keep their data local, rather than stored across the country. These 2 facts work to a rural telco’s advantage over larger or OTT providers.

No Nostalgia Here
In 2014, AT&T claimed that 75% of its entire global network would be virtualized by 2020. In order to accomplish this feat, AT&T needed to embrace SDN and NFV, alongside traditional OSS/BSS, to become a data center provider — including central offices.

Today the rural telcos need to follow suit to become more agile through software, making them look less like typical service providers and more like Cloud data centers. In the same manner as the music CD became an MP3, and the MP3 became a service, all rural telcos will transition into data center services. If not, they will be tucked away in the nostalgia archives along with the Walkman, the VCR, and the dial-up modem.

For more information about the report The New Telco Data Centre — Pricing for the New Telecoms Data Centre – 2014 to 2019, please visit http://www.datacentre.me/downloads/Documents/The%20Telco%20Data%20Centre%20%202014%20to%202019_Promotion.pdf.

For more information about the report The NFV, SDN & Wireless Network Infrastructure Market: 2015 – 2020 – Opportunities, Challenges, Strategies and Forecasts by SNS Research, please visit http://www.researchandmarkets.com/reports/3711910/the-sdn-nfv-and-network-virtualization and http://www.businesswire.com/news/home/20150114005768/en/Research-Markets-Service-Provider-NFV-SDN-investments.