That's especially troubling to carriers that have invested heavily in telecom cloud services to compete with the likes of Amazon. Verizon completed its $1.4 billion acquisition of cloud provider Terremark Worldwide Inc. last month. Verizon Business announced late last year that it will build cloud services in more data centers this year and add 5,500 server cabinets to cloud environments in Asia, Europe and North America; the expansion was part of a $17 billion capital expenditure plan for late 2010 and 2011.
Similarly, AT&T announced plans in 2010 and in 2011 to invest a combined $2 billion in business services, which include its cloud offerings, as part of larger multibillion dollar capital plans each year.
Neither carrier has publicly stated exactly how much of its business services cap-ex is being spent on building out telecom cloud services.
The rate at which pricing is being driven down by competition is also a concern, as it is "outpacing the technology value and efficiency you gain" from cloud computing, the Verizon engineer said.
"As a cloud industry, are we killing ourselves? Where [is] the profit in the future?" he asked.
Despite the hand-wringing over upfront capital investments, AT&T CEO Randall Stephenson remains bullish on telecom cloud services as a major revenue driver. The combination of telecom cloud services and Long-Term Evolution (LTE) will be "transformational" to the consumer and business markets, he said in a keynote address.
But that transformation is not going to be pretty.
"The next five years are not going to be planned and deliberate. The next five years will be characterized by chaos. All of the development will come faster, and lots of things [are] coming [that] we haven’t imagined yet," Stephenson said. "Plan to build a network to handle secure and reliable chaos where the most creative ideas flourish, where the customer determines the winners and losers, [and] where new ideas are seamlessly brought to market."