Tuesday, November 15, 2022

Why Telcos Might Use Public Cloud Even if it is Not Cheaper than Private Cloud

One reason enterprises might eventually rethink why, where and how they use public cloud--including access service providers--are the normal economies of scale that apply to enterprise computing at scale. In almost every case, small volume tends to support the economics of a cloud approach that comes with leased access to compute cycles. 


But in almost every case, very-high volume tends to shift economics back to ownership. In other words, pay-per-use is affordable at low use volumes but increasingly expensive as volume grows. At some point, as the number of instances, licenses, subscriptions or other usage metrics grow very large, ownership starts to offer lower cost.


Private Cloud, Public Cloud, On-Premises Stack Considerations

Issue

Private cloud

Public cloud

Public cloud on-premises stack

Financial treatment

Capital expenditure

Operational expense (opex)

Operational expense

Capital investment

Required

None (costs were opex)

Commodity

Operational expense

People, environmental, space, maintenance

Consumption-based

People, environmental, space, maintenance

Existing infrastructure

Sunk cost, repurpose

Excess

Excess

Consistent operations

High with control of hardware and software

Variability when using multiple public clouds

Variability when choosing more than one solution

People

High

Low/medium

Medium, depending upon support

Capacity provisioned/scaling

Provision to peak demand. Slower to scale beyond

Public cloud provider can absorb surge in traffic

Provision to peak demand. Could burst/ scale into public cloud.

Life cycle

Control selection and upgrades of hardware and software

Controlled by cloud provider

Controlled by cloud provider

Demand variability

Predictable, less variable demand; must plan capacity

Variable demand supported by cloud infrastructure

Less variable demand to fit capacity; could burst to public cloud

Cost per traffic volume

Cost per gigabyte can be lower for high volume

Cost efficient for low volume or varied traffic patterns

Cost per gigabyte can be lower at high volume

Application dependencies (e.g., multicast, real-time, network fabric, VxLAN)

Adaptable, customizable to meet complex requirements

Most are not supported. Standard compute, memory, storage, network. May offer telco services.

Most are not supported. Standard compute, memory, storage, network. 

Compute intensity

GPU, CPU pinning under control

Extra costs for GPU, no CPU pinning

Extra costs for GPU, no CPU pinning

Storage intensity

Control storage costs and performance

High cost of storage services

High cost of storage services

Data privacy and security

Control

Some providers may collect information

Some providers may collect information

Location and data sovereignty

Control

Country- and provider-dependent

Control

Regulatory compliance

Built to requirements

May not meet all requirements

May not meet all requirements

Portability and interoperability

High within private cloud environment

Lower when public cloud(s) used with private cloud

Lower when public cloud(s) used with private cloud

Intellectual property

Owned, controlled, managed. Can differentiate offers.

Subject to terms of service. Can add cost, limit differentiation.

Subject to terms of service. Can add cost, limit differentiation.

source: Red Hat 


The key, though, is whether the “owned” capabilities are functionally similar to the leased facilities. And that might be the key insight about access service providers using public cloud for their computing infrastructure. The advantages of using public cloud might, in fact, not be scale advantages at all, but the ability to take advantage of the most-advanced and up-to-date computing architectures. 


Flexibility and agility or skills availability might be cited as advantages for using a public cloud, but those same advantages might be attributed to sufficiently-large private clouds as well. The issue there is “might be.” If there are advantages to scale for cloud computing, then perhaps private cloud as built by an enterprise. never can approach the scale advantages of a public cloud supplier.


But again, scale advantages might not be the main issue. Even when reliance on public cloud costs more than an equivalent private cloud, the perceived upside of using public cloud might lie in its expected advantage for creating new applications and use cases at scale. 


In other words, customers might trade higher cost for higher agility. Those with long memories will recall the operational problems caused by many decades of accumulated proprietary telco operations support systems, for example. 


The shift to reliance on public clouds for OSS type functions is a move to eliminate the downside of proprietary approaches and legacy solutions.


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