928RA — Bandwidth Limits and Pricing Effects Must be Accounted for in Cloud Plans

What is happening? — Based on US-based carriers’ actions and announcements in recent months, the era of one-price, all-you-can-use bandwidth is reaching its end. Saugatuck sees this as unsurprising, inevitable, and eminently predictable. The ungoverned, unrestricted use of any resource will increase its scarcity and its price over time.

What we do see as surprising is the number of enterprises small and large that have not yet accounted for the increasing, and increasingly variable, costs of bandwidth into Cloud IT and Cloud business plans, strategies, and spending.

Failure to account for bandwidth costs and failure to plan for bandwidth price variation will not cripple Cloud adoption, but it will unnecessarily increase the costs of managing Cloud IT and business. Interestingly, bandwidth pricing in the US could help to drive the expansion of Cloud IT and business services availability and use overseas.

Why Is it Happening? — The root cause of this (so far) US-oriented bandwidth crisis is a combination of market shifts, regulatory factors, and carrier business/operations planning.

It often takes 2 or more years for carriers or cell tower companies to obtain local regulatory approval (at the municipal or county level). The same processes can also slow down new terrestrial improvements – either for new towers, or for major upgrades. Most carriers in the US foresaw the need to build out more infrastructure as they saw growth in such consumer behaviors as video-on-demand and online gaming.

What none foresaw was the explosion of Cloud-oriented services demand and use by consumers and business, especially via 3G services. These networks (and the terrestrial back-haul networks supporting them) were designed, and mostly built out, based on 1990s-era cellular usage patterns; i.e., they were designed and built to support voice traffic. Even today, most of the backhaul uses T1, not Ethernet services.

The net result: Cellular/wireless traffic grew into broadband-hungry Cloud-based services and use far more quickly than carriers imagined, let alone planned and budgeted for; and the slow, grinding machinery of local regulatory and political process have so far failed to keep up with the carriers’ now-urgent requests/demands for new construction. Wireless and terrestrial networks, including 1990s-era network switching and management systems, are taxed to the max. And after significant build-outs and M&A/market consolidation in the 1990s, carriers have focused more on . . . Click Here to Read the full RA

Most research firms can explain what happened; some can explain what is happening. Saugatuck Technology excels at understanding both in order to explain what else is likely to occur, and to guide its clients toward the actions that deliver them the greatest business value while enabling the safest business path.
To accomplish this, and to continually improve the value of Saugatuck’s work to clients in a Cloud-obscured marketplace, Saugatuck SVP and Head of Research Bruce Guptill pushes his team to continually re-examine and re-invent the company’s research programs to focus more on the costs, benefits, effects, and value of an ever-changing mix of technologies and providers in different markets.
Guptill’s own technology and business background laid a solid foundation for such a flexible, yet stable, approach to IT research value for clients. His technology research work includes mobility, collaborative IT, telecom, data networking, web commerce, and electronic marketplaces; his research work for enterprise IT and business clients includes return on IT investment, total cost of IT ownership, and business planning for IT. His research and guidance on vendor channel management, market identification and development, and buyer behavior analysis has enabled hundreds of established and startup IT providers to find, enter, and profit from new and traditional markets, while helping to guide user enterprise leaders toward optimal IT procurement and vendor management.
Guptill’s research background includes several years as a VP and research director with Gartner, senior positions with TeleChoice and Robert Frances Group, and editorial work within the IDG companies, including four years as a writer and editor with NetworkWorld. His marketing business focus was honed as VP of marketing for firms ranging from custom development providers to non-IT firms in aviation and other industries. His sales and channel experience started by traveling with a sample bag, then working for IT VARs, then advising telecom and wireless carriers on partner choices, to developing partner programs for traditional and Cloud-based software development firms and ISVs.
Guptill holds an MBA in marketing and finance, and a BA in the psychology and business of mass media communication. He is licensed to fly airplanes, drive boats, and sell houses; he is also a certified baseball coach, serves on the boards of regional civic groups, and is a serial home renovator. Married with three children, Guptill resides on Cape Cod in southeastern Massachusetts, and is a lifelong fan of the Red Sox, Patriots, Celtics, and the University of Connecticut Huskies.

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