Telecom Firms Face Gridlock

CHICAGO Supercomm 2005 – Despite the hype surrounding grid computing, the telecom sector has reservations about using the technology, according to execs attending this week’s Supercomm show.

While enterprises appear to be embracing grids, telecom firms have been grumbling for some time about the lack of proven grid-based business models in their sector (see Keynote: Grids to Grow and Telecom Firms Grappling With the Grid).

It boils down to dollars and cents. Developing complex grids that can run customers' diverse applications across a carrier's server and storage infrastructure is easier said than done. Carrier grids must be large enough to support fluctuations in user demand, but still make a profit for the service provider.

On top of that, demand is iffy. “The seminal event that causes us to move to this environment hasn’t quite happened yet,” says Dennis Venerus, senior technology strategist at Bell Canada (NYSE/Toronto: BCE). Venerus says Bell Canada's attracted to the peer-to-peer networking of grid, and the carrier successfully ran billing records across a grid architecture as part of an experiment some years ago. But execs are still unconvinced there's a cost benefit to offering grid-based services.

One major telecom player currently evaluating grid technology is BT Group plc (NYSE: BTY; London: BTA). The carrier is examining a number of different business models as part of a strategy approved by the BT board last year (see BT Builds Grid Strategy).According to Frank Falcon, BT’s ICT portfolio manager, BT is now deciding how to combine the different “threads” of its strategy. While not offering specific details, he acknowledges the challenge of finding the right value proposition. “There has got to be someone who will make money out of it,” he says. “You have got to make sure that the business models stack up.”

Mark Linesch, chairman of the Global Grid Forum, says it is hardly surprising that telecom firms are “gun-shy” of grid technology, particularly after the tough economic climate of the last few years. Nonetheless, Linesch still believes that grid technology can play a part in the telecom sector’s long-term future.

Meanwhile, the going is slow. “We’re just starting to see enterprises realizing that there’s an opportunity for adopting grid within their architectures,” says one exec from a telecom player, who asked not to be named. “Whether they are willing to outsource that [to a telecom firm] remains to be seen.”

— James Rogers, Site Editor, Next-Gen Data Center Forum