Has Trump re-ignited CSPs’​ cloud aspirations?

Four years ago, we on CSPs’ opportunity in sovereign cloud. Essentially, this argues that local operators are well-placed to offer global firms sovereign cloud services. Global concerns should be less exposed to often vaguely defined, discretionary powers of national authorities looking to act against them on the grounds of national security, data sovereignty and privacy. Not only are national operators more answerable to the authorities, they also have greater influence in avoiding draconian measures.

Since then, the hyperscalers (AWS, Azure, Google and Alibaba) have continued to grow their volume of business across borders and expand their physical presence in more countries. Most telecoms operators have concluded that they should partner with the big guys in reselling public cloud to their customers, often as a managed hybrid cloud service. At best, this might include a private cloud element provided by the operator.

However, three factors are emerging that are leading operators to reconsider their future in public cloud services:

  1. The growth in demand for edge cloud. This is happening independently of operators and addresses un-met customer needs.
  2. Operators deploying their own distributed cloud infrastructure to support their increasingly virtualized networks. Although spurred by 5G plans, this is happening already on 4G and fixed networks. This supports operators’ edge cloud in two ways: underwriting the investment in well-connected mini-datacentres and providing compliant entry points to public networks that are physically closer to end devices.
  3. The global order that has allowed enterprises (including the big global technology firms) to expand their activities confidently across the world is unravelling. Foreign companies have always faced restrictions in some countries (most notably China and Russia). However, the Trump administration’s more recent actions has led to a wider shift in countries’ willingness to intervene in the previously unfettered digital economy.

Thanks in part to Trump’s overt use of targeted sanctions (e.g. Huawei) on the ground of national security in trade disputes, countries increasingly consider intervening in digital business as fair game. For example Uganda recently introduced a daily tax on using Facebook, Twitter and WhatsApp to curb that the government deems “idle chatter” (see Financial Times article in the link below). It has become harder for the USA to argue that countries desist from such actions when it is a very visible proponent.

Global businesses (and not only the tech giants) have become increasingly concerned about their ability to run applications and process data across jurisdictions in a flexible cost-effective way. Either they or their global technology providers are increasingly vulnerable as potential targets for unilateral action. For smaller cloud-based software firms looking to deliver services globally, this presents an even more acute challenge as they have few options. Telcos should take note and factor this into their thinking when it comes to their own edge cloud plans.