The Downside to Cloud Services

Cloud_computing_icon_svgI have a client who has been buying a cloud service for about two years and has a number of reasons to be unhappy with the service. I’m not going to name the specific service because there aren’t many vendors in this particular space. But the issues my client is experiencing look to be common with a lot of cloud services.

My client buys this service to resell along with other services to his own customers. His number one complaint is that he never knows what service he is going to wake up to each day. The cloud software will be working great one day and then the vendor will implement a software change and all of a sudden he gets calls from his end-user customers that things have gone wrong. And inevitably the problem turns out to be something that the cloud service vendor has introduced into the service as a supposed upgrade or improvement.

This is not a new phenomenon and anybody that purchased a voice switch, a cable TV headend, or a complex billing system can remember back to the day when this same sort of thing happened all of the time. Carriers would shudder each time that they got a software update from a vendor because it often caused more harm than it did good.

And the industry learned how to deal with this problem. First, carriers started to insist that vendors build test labs and that they try out new software first in the lab rather than foisting it onto the lab of end users. Second, they insisted that software vendors update software in discrete releases so that each carrier could decide if they needed to install a new update or not.

I remember a time in the late 90s when CCG routinely recommended that our clients not install software updates. There were so many problems with new software releases that we found that it was better to let the update hit the world and to let other carriers debug each new software release. My clients would purposefully fall numerous software upgrades behind, but as long as they weren’t experiencing end-user issues they were happy.

But now my clients are starting to buy services in the cloud, and in doing so we have gone back to the 90s all over again. The biggest problem with most cloud vendors is that they only run one version of their software – the latest. The vendor will update the cloud software and every one of their customers will have the same version. This certainly makes life easier on the cloud vendor.

But unless the vendor has amazing software coders that never make mistakes (and that is never going to happen) then the vendor can release an update that has dreadful bugs in it and the test lab for these bugs become the end-user customers of the carriers. A carrier might not even realize there was a software update until they get complaints from their own customers. But now the situation is much worse than the old days, because one of the most common ways to fix this sort of problem used to be to reinstall an earlier version of the software that they knew worked right.

I guess that cloud service providers need to learn the same lessons that the other vendors in the carrier industry learned a few decades ago. Just because software is in the cloud doesn’t change good software practices – in fact it makes them even more important. A software vendor that uses end-users as his software testing lab is going to get a horrible reputation and in the long run is not going to keep customers in the carrier space.

And so I hope that software vendors would implement the same kinds of changes that the industry forced vendors to implement decades ago:

  • It should be the carrier’s choice about accepting a software upgrade. Updates should never be automatic. This means that the cloud vendor needs to keep multiple versions of their software available online.
  • Software vendors need to maintain a test lab of some kind. Most software ultimately controls hardware and the vendor ought to have a lab on which to make certain that changes in the software do what they are intended to do while not screwing up something else.

Three Years and Counting

2014_Rolling_Sculpture_Car_Show_67_(1969_Porsche_911_S)Today is the three year anniversary of this blog. I started writing this blog as a way to force myself to keep up with industry news. During the first month of writing the blog I worried that I would quickly run out of topics. But I underestimated then how dynamic our industry has become. The changes from just three years ago are amazing. Instead of running out of topics I often have to toss away topics because I can’t get to them fast enough.

I mostly write about the topics in the industry that I find most interesting, but I must be striking a chord because I pick up new readers to the blog daily. I now know that I am the only one writing daily about broadband and related topics and it makes me happy to see that others find these topics to also be of interest. Just since I’ve started this blog we’ve seen the following changes in the industry (and this is a short list):

An Activist FCC. The current FCC has waded into more new topics than any other FCC in my memory. The most significant one is the net neutrality decision that reclassifies broadband as a regulated service. But there have been many other rulings from this FCC. There was a time a few years ago when industry pundits predicted that regulation was dying, but it has done just the opposite.

Exploding Demand for Broadband. The penetration rates for broadband have continued to grow and in urban areas it seems like we are getting close to the time when everybody that can afford broadband has it. But there are still huge numbers of rural homes and businesses without broadband and they are starting to stridently demand it.

Growth of the OTT Industry. While Netflix has been streaming content a little longer than I have been writing this blog, the whole OTT phenomenon has really taken off in the last few years. Netflix now claims over 75 million customers and there is now a growing host of other OTT providers. Online video has completely transformed the Internet and video is by far the majority of online traffic.

New Products from the IoT. There are new products available to carriers for the first time in many years. I have a number of clients who are now successfully selling security and a number of them are getting into home automation and the many other related services associated with the Internet of Things.

Use of WiFi instead of Wires. It’s become recently obvious that the large ISPs have abandoned home wiring for delivering data. They now bring bandwidth into the home to a central WiFi router and don’t install wires to anything else. But a single WiFi router is already not sufficient for high-bandwidth homes and the next trend in this area is going to be the networking of multiple WiFi routers.

Services in the Cloud. More and more services are moving to the cloud. Carriers can buy voice and cable TV programming from the cloud today, something that was unimaginable just a few years ago. It was always assumed that expansive bandwidth made cloud cable TV impractical, but as bandwidth prices continue to tumble it makes more sense to buy programming from the cloud instead of building or maintaining a cable headend.

Public Private Partnerships. There were very few Public Private Partnerships a few years ago and now it’s something that everybody talks about. This is particularly relevant in rural America where communities are willing to kick in money to find a broadband solution. But we are even seeing this in urban areas, such as the deal just announced between Google Fiber and Huntsville.

Erosion of Landline and Cable Customers. Landline penetration rates are now under 50% nationwide and we are starting to see the erosion of traditional cable customers. The challenge for the next few years will be for triple play providers to find ways to replace these shrinking revenues and margins.

Massive Realignment of Rural Subsidies. We’ve seen subsidies shrink for small telcos. Access charges are being phased lower and the Universal Service Fund is being redirected from telephone to broadband. This has put a lot of pressure on some small carriers, but anybody who survives the end of this shift will probably be ready to succeed in the long run.