ChannelVision March-April 2017

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buried within the per desk,
per user or per instance
charges paid to use any sort
of cloud service.
All that noted, Gartner
forecasts suggest that U.S.
businesses are spending less
money on telecommunica-
tions than they used to, or
perhaps, will spend less in
the future than they do today.
According to Gartner, less
money will be spent in 2019
than was spent in 2013, for
example, on a global basis.
Consultants at Deloitte,
though, working from tier
one service provider annual
reports, estimate that U.S.
business spending on telecommuni-
cations services sold by the tier one
service providers actually is drop-
ping substantially.
That is not the whole story,
though, as some business spend-
ing on telecommunications, or on
services that could be provided by
telecom service providers, is shifting
to newer and non-traditional suppli-
ers such as Amazon Web Services
and Google, Zayo and others.
That said, customers are buying
more “next-generation” products
that arguably offer better efficien-
cies. BCG analysts suggest a
medium-sized retailer, for example,
could reduce baseline IT costs by
47 percent after replicating its exist-
ing IT stack in the cloud.
Still, one important change is
that “private global networks” now
have become truly significant. And
those new app and content provid-
ers do not buy as much wholesale
capacity from the public carriers as
they might have in the past.
These days it is a handful of
“enterprises,” namely big content
and app firms such as Facebook
and Google, that actually
build and operate their own
cable networks, essentially
removing as much as half
of all global long haul traf-
fic from carriage over any
public network through the
backbone.
“Content providers are
removing a large portion
of the customer base,”
says Brianna Boudreau,
TeleGeography senior an-
alyst. That “makes the rest
of the market extremely
competitive.”
So to answer the original
question, many enterprises
are buying less long haul
capacity than they used to. In some
cases, huge hyperscale app pro-
viders build and operate their own
private global networks.
Other enterprises and business-
es are spending more on mobility,
and less on other things. Where
those businesses buy managed and
cloud services, they pay only indi-
rectly for capacity services required
to deliver those services. And even
to support basic voice and data,
most businesses now require only
local Internet access connections,
not long haul capacity. o
Source: US Telecom; Well Fargo: Merrill Lynch data
Inhibitors to Cloud Computing
Source: 451 Research
Outsourcing Frequency: Disaster Recovery
Shared use
2.4 GHz global/5 GHz global
licensed
ectrum
88%
79%
5%
5%
80% 100%
80%
79
75%
2010
$1,515,000
$802,000
2015
Cloud Technologies Offer Huge Cost Savings
Source: BCG
-47%
48%
23%
13%
16%
41%
25%
11%
23%
Today Future
Network IT infrastructure IT software IT labor
ANNUAL IT SPENDING OF A MEDIUM-SIZED RETAILER
Companies
typically
reinvest savings
in cloud usage/
new services
Security
Control of Data Locality, Sovereignty
Budget/Cost/Pricing
Technical Migration/Integration
Compliance/Regulation
Internal Resources/Expertise
Process Integration/Governance
Change Management
Vendor/Provider Issues
her
7.4
6.9
6.9
6.4
6.3
6.3
6.1
5.8
5.5
3.9
Please rate how much of an impact the following will have on inhibiting your
organization’s use of cloud computing. Please use a 0-10 scale, where 0 is
‘No Impact’ nd 10 is ‘Massive Impact.’ (Mean)
0%
20%
40%
60%
44% 42% 42%
49%
36%
Percent of Organizations
Zettabytes
ChannelVision | March - April, 2017 40