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Big Telcos Divest Cloud Assets, Aim to Focus on Complementary Offerings

By Paula Bernier February 02, 2016

Amazon Web Services pioneered cloud services, and although the tier 1 telcos invented and have a great history in networking, they have been struggling to catch up on this front. As a result, some of the largest and most well-known communications service providers are working to turn the ship so they can complement – rather than directly compete with – the likes of AWS.

“Carriers such as AT&T and Verizon are moving away from the public cloud business due to their inability to gain market share against established competitors such as Amazon Web Services,” says Technology Business Research senior analyst Chris Antlitz.

Indeed, in December it was revealed that IBM would take over these AT&T assets. Around the same time there were reports that CenturyLink no longer wants to own data centers, despite having invested $2.5 billion in Savvis just a few years ago. And just last month Verizon put its data center assets (including 48 locations) on the block in what it hopes will yield $2.5 billion.

At the same time CSPs are seeking new efficiencies by migrating to more software-centric networks via the adoption of network functions virtualization and software-defined networking technologies. These technologies are expected to be beneficial to carriers due to their ability to reduce equipment costs, power consumption, and free CSPs from vendor lock in.

AT&T, Verizon, and other CSPs, Antlitz explains, will instead focus on delivering network connectivity and value-added services related to the offerings of leading cloud service providers. (And CSPs will forge leases with data center providers as opposed to investing in new facilities on this front to enable that, Antlitz suggests.)

AT&T’s NetBond is an example of such a complementary CSP solution, Antlitz says. According to the AT&T website, AWS, Box, CSC, Equinix, HP, IBM, Microsoft, Salesforce, SoftLayer, and VMware are or have been among the users of NetBond.

“The performance and network-based security of AT&T NetBond will make it much easier for us to adopt cloud services so we can stay ahead of the technology curve for our customers,” says DuPont CIO Phuong Tram. “We’ll be able to connect to top cloud providers like IBM, Microsoft and Salesforce to enable end-to-end interoperability using the strength of AT&T’s network.” 

Edited by Kyle Piscioniere

Executive Editor, TMC

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