Cloud computing confronts critical crossroads

Net neutrality, Aereo, and massive price cuts: which of these factors will truly shape the future of cloud computing?

It’s been an amazingly busy period for the cloud computing industry. A multitude of powerful forces – both positive and negative – are simultaneously buffeting the industry, and their combined effects could dramatically affect the landscape for both consumer and enterprise users of cloud computing services.

Let’s start at the beginning.

Cloud Cost Cuts

Late last month, Google sparked a cloud price war when it revamped its enterprise cloud services – including significant price cuts across its storage, compute, and BigQuery analysis services. The cuts were designed to boost demand… and put new pressure on Amazon Web Services’ market-leading position. AWS immediately shot back with its own price cuts, though they still leave Amazon far more expensive than Google in most cases.

Price cuts are a good thing, of course, and the lower cloud computing prices go – and the lower customers expect them to go -- the more likely enterprises will be to rely on the cloud and avoid building their own data centers.

Court case could be "the end of cloud computing"

So far, so good, right? But the next high-profile cloud development pinned the needle on the doomsday hype meter. This week, the Supreme Court  heard arguments in a case regarding Aereo, a startup that records broadcast TV for consumers and delivers their content via the cloud. While the case may seem more akin to the videocassette battles of the 1980s, Aereo claimed that because it stored the programming in the cloud, a judgment against it could spell the end of cloud computing. The question of concern to cloud storage providers is who is responsible for the content they store:

…if this Court were to find that providing a consumer-selected video from a cloud storage source represents a public performance, as Petitioners assert, the ability of Dropbox to legally provide this teacher with access to her own files would—at the very least— be subject to serious question.

Whether Aereo wins or loses, I don’t think the case will broadly impact the cloud computing industry, but the uncertainty doesn’t help instill confidence in the cloud as a long-term alternative.

No one’s neutral on Net neutrality 

OK, so we’ve got one positive development – price cuts – and one negative issue – uncertainty around the legal issues of cloud storage.

Now comes factor number three, a new FCC proposal for net neutrality after an appeals court struck down existing rules in January. While the Commission says the new proposal “meets the goals of past efforts and does not destroy open Internet principles,” critics charge that provisions to “allow broadband providers to negotiate with content providers for preferential treatment” will inevitably lead to a two-tier system where wealthy services enjoy fast speeds and while startups and everyone else makes do with pokey, “baseline” services.

It doesn’t have to be that way, of course. Earlier this year, I ventured a thought that a similar arrangement announced by AT&T wasn’t the end of the world. The question, of course, comes down to just how “commercially reasonable” the baseline services and standards are and whether competitive pressures ensure acceptable speeds for those who can’t or wont pay extra.

Given the pitiful reputations of most broadband carriers (Comcast, for example, recently won Consumerist’s Worst Company In America award, and not for the first time) it’s easy to be cynical about this. Similarly, it’s hard to believe that the FCC and the courts are up to the task of making sure that "baseline" doesn’t turn out to mean “crappy.”

Three-way intersection of intrigue

So there you have it, cloud computing’s three-way crossroads of confusion. Lower prices for computing power meet extra fees to make sure customers have fast access to online services, topped with a sprinkling of uncertainty around the future of cloud storage.  

No one knows how this will all shake out, but here’s my prediction. Lower compute costs will roughly balance out higher net access fees for faster service. That means the rich will get faster, making it harder than ever for new online content services to break into the big time. The Aereo case, meanwhile, will turn out to be a tempest in a teapot, with a ruling in either direction having no noticeable effect on the cloud computing industry.

I could be dead wrong, of course. That’s the thing about clouds - they make it hard to clearly see what’s coming next.

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