There was an article the other day by Jeffrey Kaplan on Seeking Alpha, asking the question "Can Telcos Dominate the Cloud Computing Industry?" The question was prompted by a blog post from an AT&T exec. My gut reaction to that title was "Hell no". There are good reasons why few if any telecom carriers are in the dedicated server business, and why there is a huge difference between telco colocation and carrier neutral colocation. Processing bits and transporting bits are very, very different businesses; only a company like AT&T (NYSE:T, news, filings) that never saw a vertical it didn't like would think they fit together well.
But I then realized that it is perhaps more complicated than that. Why? Because cloud computing is the buzzword du jour, and not an actual product or line of products yet. Cloud computing is not an industry, not yet anyway. It is nothing more than an umbrella phrase for an emerging blend of new technologies powering the next generation of infrastructure that will do what we already know how to do but let it scale. So whether telecom companies might one day 'dominate' it depends on what it really turns out to be good for. I still think it is silly to expect telecom to start selling cloud services based on stockpiles of servers like a Google or Amazon or Salesforce.com. Where the hard part is storage and processing, the owners of the pipes will not be a factor. Where transport and delivery are the hard part, telecoms have a chance to dominate - but of course no guarantee.
Yes, that means CDNs. The first step in entering the cloud is leveraging it to help you do what you do better, and CDNs can be seen as the way to do that for bandwidth providers. Content delivery networks leverage scalable computing power and sophisticated caching algorithms to help deliver bits faster and more reliably than ever all over the world than carriers can do otherwise . That's what the cloud is already bringing to telecom. The carriers have a chance to make major inroads there because the tasks being optimized are already ones they are good at. The idea, however, that telecom carriers are going to start building new datacenters and stockpiling servers to sell storage or utility computing or hosting or whatever - that just isn't going to happen. Telecoms would just rather sell to those guys, because the more applications that are run in the cloud, the more data will need transporting to and from that cloud. It's less about access to customers and culture and all that, and more about the actual tasks an organization is geared toward providing.
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