Cloud has silver lining for telcos
Uptake of cloud services by Telstra's customers is accelerating, iiNet is about to add additional cloud capacity and Optus is gearing up for increased demand.
Telstra now has 20,000 cloud customers, up from 16,000 in February. When announcing the company's half-year results in February, CEO David Thodey said of the 16,000, 3000 had been added in the previous six months. "Cloud computing is no longer a gleam in our eye, it is actually a very critical part of our business," he said.
Telstra is two years into a five-year $800 million cloud investment that includes services for large enterprises, in addition to small business bundling of cloud apps through T-Suite. It reported a 25 per cent increase in cloud services revenues in the half-year from the corresponding period in 2011.
Telstra's director of cloud services, David Riad would not comment on current growth rates, but the 4000 customers added in the three months since suggest growth is accelerating.
Smaller ISP iiNet announced its Business Cloud offering in November 2011 aimed at small businesses and offering cloud computing from infrastructure-as-a-service to application hosting.
Kevin Clark,iiNet's hosting manager, said the original facility in its Perth data centre was now almost full. "I am weeks away from announcing the completion of the expansion in Perth and availability in our Canberra data centre," Mr Clark said. He said the Canberra site, built by TransAct, now an iiNet subsidiary, is "a tier-four ASIO-certified data centre. It is one of the best that we could put our cloud facility in."
Telstra and iiNet are both planning to expand their software-as-a-service offerings. In April iiNet announced a hosted Microsoft Exchange product and is expected to follow with Microsoft Lync soon.
Telstra is moving to exploit synergies between cloud-based applications and the network over which they are delivered. Mr Riad said it was working towards application-aware networking where the performance of the network is adjusted according to the application. For example, a high-definition video conference could be allocated greater bandwidth and a low latency route.
"You will see some announcements over the next couple of months on this. We are looking to continually roll out further intelligence into our networks because they give us a definite advantage."
AAPT, too, promotes its network as a key feature of its cloud offering. But unlike Telstra, CEO David Yuile said he did not believe AAPT should be in the software business. "Our role is having a super high-speed network that seamlessly connects together all the data centres and all the enterprises so they can access the right apps from the right people," Mr Yuile said.
Optus made its debut in cloud through its IT services subsidiary Alphawest in September 2010 with Optus Elevate, an infrastructure-as-a-service offering. This month, the company announced a major restructuring that will see Alphawest and the Australian arm of NCS combined with Optus Business, and a cloud computing and data centre "centre of excellence" created.
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Frequently Asked Questions about this Article…
Yes. The article says recent forays into cloud computing by Australia’s big telcos are paying off despite the arrival of US cloud providers — with accelerating uptake at Telstra, iiNet expanding capacity, and Optus preparing for increased demand.
Telstra has about 20,000 cloud customers (up from 16,000 in February). It is two years into a five-year, $800 million cloud investment program and reported a 25% increase in cloud services revenues in the half-year versus the same period in 2011.
Telstra offers services for large enterprises and small-business bundles of cloud apps through T-Suite. It is also moving toward application-aware networking — adjusting network performance by application (for example allocating more bandwidth and low-latency routes to high-definition video conferencing) to exploit synergies between cloud apps and its network.
iiNet launched its Business Cloud in November 2011 offering infrastructure-as-a-service through to application hosting. The Perth facility is nearly full and iiNet is expanding capacity, while a Canberra data centre (built by TransAct and now an iiNet subsidiary) is a tier-four ASIO-certified site. iiNet has also announced hosted Microsoft Exchange and is expected to offer Microsoft Lync.
Optus debuted in cloud via its IT services arm Alphawest in September 2010 with Optus Elevate (an infrastructure-as-a-service product). The company recently restructured to combine Alphawest and the Australian arm of NCS with Optus Business and created a cloud computing and data centre 'centre of excellence' to gear up for growth.
AAPT promotes its high-speed network as the key feature of its cloud offering and, unlike Telstra, its CEO David Yuile said AAPT should not be in the software business. AAPT focuses on providing seamless, fast connections between data centres and enterprises so customers can access apps from the right providers.
The article cites Telstra’s 25% increase in cloud services revenues in the half-year versus the same period in 2011 and reports accelerating customer additions (Telstra grew from 16,000 to about 20,000 cloud customers). iiNet’s near-full Perth facility and planned capacity expansion also signal rising demand.
Investors should monitor metrics highlighted in the article: cloud customer growth (for example Telstra’s customer numbers), cloud revenue growth (like Telstra’s 25% half-year rise), capital investment in cloud infrastructure (Telstra’s $800m program), data centre capacity and certifications (iiNet’s tier-four ASIO-certified Canberra site), product rollouts (hosted Exchange, Lync, T-Suite), and strategic moves such as Optus’s centre of excellence and network-based advantages.
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