Telco cloud risk shifts to NBN: Alcatel

Telstra is better off selling cloud services on the National Broadband Network (NBN) than through its existing copper network, as much of the risk for providing the services will shift to NBN Co, according to Alcatel-Lucent.

(Clouds image by Karin Dalziel, CC2.0)

Earlier this month when Telstra announced it was investing a further $800 million in cloud services for businesses, CEO David Thodey pointed out that telcos were best-placed to implement cloud services as telcos are used to managing risk.

"Telcos, like IT providers, have to run at a very high availability," he said at the time. "When you start looking at shared infrastructure for computing ... it's just in our DNA. It's just part of what we do, it's all about managing risk."

Now that Telstra, NBN Co and the government have reached a definitive agreement to shift customers over to the NBN as it rolls out, Telstra is facing the prospect of no longer bearing the responsibility for much of the infrastructure it will use to deliver cloud services to its customers. According to Alcatel-Lucent Australia's director of innovation, Geof Heydon, that can only be a positive for the telco giant.

"Those agreements [with NBN Co] are very formalised. The NBN is going to deliver a certain performance which Telstra, Optus and others will have guaranteed to them," he said, adding that apart from the physical infrastructure transferring to NBN Co, the product on offer wouldn't be very different.

"They're outsourcing the access network, but in terms of their ability to offer that end-to-end service, it actually doesn't change it at all," he said. "In fact, in many ways, outsourcing that risk to somebody else means they can be tighter in the way they guarantee service."

One of the key reasons for the popularity of cloud services, he said, was the ability for companies to sue cloud providers in the event that something goes wrong, rather than sacking the IT department.

Alcatel-Lucent overnight announced the release of a new FP3 network processor to be included in its 7750 router portfolio from 2012 that can deliver 400Gbps of packet processing, with up to 50 per cent less power usage. According to Heydon, the predecessor to this — the 100G processor — will be deployed for use in the service routers used by NBN Co at each of the 121 points of interconnect. If NBN Co seeks to upgrade to this faster processor, it would be a simple matter of swapping it in, Heydon said.

Telcos would also need to implement the newer equipment to get the full benefit. The additional processing power, and the ability to guarantee certain levels of service for certain types of data, would help telcos offering cloud services to better manage the availability of the service, Heydon said.

"They can offer their business customers and even high-end consumers, a different kind of service because they can guarantee the traffic," he said. "With this sort of processing they can see what is going on and they can manage it better."

Optus also launched its cloud services offering in October last year, and Heydon predicted that more telcos would join in as they looked to make the most out of their networks.

"It's one of their key differentiators. They need to find ways to start monetising networks because the internet has shifted a lot of revenue away from telcos towards others," he said. "So they're saying 'what are we going to do to bring value back to the network?'"