Expert sees cloud billing opportunities for telcos

The billing complexities of utility computing create an opportunity for telcos to provide billing services to cloud players, and an additional opportunity for cloud trading akin to an energy commodities exchange, said a top executive with a billing technology vendor.

MetraTech CTO Doug Zone, said in an interview with ZDNet Asia Wednesday the charging model for a cloud utility service is similar to the metering approach used by telcos to bill customers. Telcos structure rates around peak and off-peak usage, resulting in a tiered billing method.

This need to implement variable fees brings about a great surge in data monitoring and crunching needs of the billing infrastructure, which now needs to monitor and report on a customer's usage in blocks of 15 minutes, compared to per day, said Zone.

"A billing system is a 24/7 system--you have to operate, run and check it, and it requires a lot of capital investment in hardware," he said, noting that an average, the usage report volume for a cloud user stands at about 10 times that of a mobile user, because of the number of transactions back and forth.

Additionally, new cloud models serve to provide an extra layer of complexity to billing structures. Aside from the "standard" IaaS (infrastructure-as-a-service) which bills for usage, new services-based PaaS (platform-as-a-service) models such as Microsoft's Azure make it less possible for businesses to "hop on and hop off", as they would Amazon's EC2, he said.

For instance, billing a business hosting its Exchange e-mail system on Azure involves incorporating the business' data and operational processes into the system, making it a more complicated process to detach from the cloud provider, compared to IaaS, explained Zone.

As such, the technical and cost challenges make it difficult for most cloud service providers to run their billing infrastructure in-house, he said, noting a growing opportunity for telcos to fill this space.

Analyst firm IDC, said in a June 2009 report, the worldwide telecom cloud billing investment is expected to grow from US$15 million in 2008 to US$350 million in 2013, driven by interest in tiered- and rate-driven billing provided by telecom billing vendors.

The complexities and investment required of telecoms billing technology, according to IDC, makes telcos and their billing partners "highly relevant" to cater to the cloud billing market. It cited customer care, promotions, payments and collections as some aspects needed by the cloud industry, and which currently exist in telecoms billing models.

Trading in cloud futures
Zone added that a secondary opportunity exists for utility computing in the cloud, in the form of a cloud exchange. Akin to an energy commodities exchange, the bourse would allow companies to pre-buy computing capacity to hedge against peak rates or an expected surge in demand during a high usage period, he said.

This trading market would likely appeal to big enterprises who are high-volume users of utility computing, and would also serve as an interface between companies and cloud providers, said Zone.

A Yankee Group vice president highlighted late last year a gap for such "trusted intermediaries" in providing an interface to handle cloud operations, including billing and reporting.

For smaller cloud players, an on-demand billing system will likely be more favorable to their business models, allowing them to offload the gamut of processing such as invoicing, reporting and call center support to the third-party billing provider, added Zone.