Yesterday, Verizon Business introduced an on-demand, “cloud-based” Computing-as-a-Service (CaaS) solution that will be an important indicator of whether telcos can succeed in the cloud.

Anyone who has followed my writings knows that my roots are in the telecom industry, having helped to launch IDC’s Communications Industry Research program in 1983 at the time of the AT&T divestiture.

I’ve watched the telecommunications giants make many failed efforts to penetrate the data center. In the late 1980s and early 1990s, they tried their hand at systems integration and IT outsourcing.  In the late 1990s, they aggressively provisioned fiber optic cables and built out showcase network operations centers (NOCs) to exploit the Internet explosion and capitalize on the over-hyped demand for managed services which never fully materialized.

After the telecom industry shakeout at the beginning of this decade, the telcos bought their way into the Application Service Provider (ASP) market. Verizon acquired Digex and Totality via MCI, and AT&T picked up USinternetworking. These acquisitions have produced limited success because the telcos still couldn’t convince their prospective customers that they fully understood their data center and application support needs.

Now, the telcos are trying to redirect their assets and energies to capitalize on growing customer interest in cloud computing. AT&T announced its cloud computing capabilities, called AT&T Synaptic Hosting, in August 2008. At the time, AT&T described Synatic Hosting as a “next-generation utility computing service with managed networking, security and storage for businesses.” Last month, AT&T rolled out a Storage-as-a-Service ‘cloud’ solution.

Verizon Business’ CaaS announcement is noteworthy because the company has pulled together a number of its corporate assets to address prospective customers’ varying cloud computing preferences. In addition to its data center and application management resources from the Digex/Totality units, Verizon Business has also included its professional services teams who will provide front-end consulting and project management skills during the CaaS deployment process. It has also added the Cybertrust Security Management Program to alleviate customer concerns about security and privacy.

In addition, Verizon Business has spent more than two years architecting and implementing a ‘next-generation’ data center to support its CaaS offering powered by an assortment of leading technology providers including HP, VMware and Red Hat.

The net result is that Verizon Business has built a cloud computing engine which isn’t aimed at dislodging Amazon EC2 as a low-cost alternative. Instead, it is a more holistic set of services aimed at addressing the varying needs of a wide array of enterprise and mid-sized organizations who would prefer to rely on a service provider they know and trust.

Verizon Business must now deliver on its promises in a cost-effective fashion and hope there is a sufficient number of enterprise and mid-sized organizations who are comfortable turning to a telco to meet their cloud computing needs.

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