Broadband companies can’t build out their networks, and it's hurting consumers

Google might have huge name recognition, but even it has trouble installing fiber optic internet lines. (image: Google)

You can’t get Republicans and Democrats to agree about much these days, especially when it comes to telecom policy. But one issue finds them on the same page for once: It’s too hard to build out broadband internet services.

The last three heads of the Federal Communications Commission — Obama’s picks, Julius Genachowski and Tom Wheeler, and President Trump’s chair Ajit Pai — all said as much.

Each advocated reforms to make it easier for new broadband service providers to attach their gear to existing utility poles, and to ensure that road and rail projects add infrastructure for broadband expansion.

And they were right. Deployment holdups have left markets dominated by at most two companies, or just the local cable operator, which ends up hurting consumers.

Strung up on poles

A conference in Washington held last week by the telecom trade association Incompas yielded copious testimony on this point.

John Burchett, head of public policy at Google Fiber, led off a panel discussion by recapping the setbacks that the Alphabet, Inc. (GOOG) subsidiary faced when installing its equipment on existing utility poles in Louisville and Nashville.

Traditional rules call for Google to get approval from every other company set up on poles it needs to use  — “no one does it in less than 60 days,” Burchett said — and then wait for each to send its own crew to relocate boxes as necessary.

The result? After 11 months of work, Google Fiber had 33 poles set up for its network — out of some 88,000 the company needed.

That and other obstacles like apartment and condominium building owners restricting access to their structures, a problem tackled by a recent San Francisco ordinance, can push a company to focus on the wealthiest potential customers, which only aggravates digital-divide issues.

Nashville passed a “one touch make ready” rule that lets a newcomer hire a contractor pre-approved by a pole’s owner to do all necessary work. AT&T (T) responded by suing the city, alleging that the new regulation violated FCC rules.  

Broadband providers are having trouble getting access to local utility poles across the country. (image: Thinkstock Images)

Building on other companies’ infrastructure can also come with outsized costs. Panelist Kurt Van Wagenen, CEO of FirstLight Fiber, called an unnamed electric utility’s quote of $80,000 a mile to build fiber on its right of way “pretty much triple what our average costs are to build fiber anywhere.”

Many cities and towns welcome competitive broadband, but you can’t assume a friendly reception. “Some localities look at you like a way to make money,” warned panelist Mary McDermott, general counsel for Lumos Networks.

Dig once, we must

The members of that panel did, however, all support “dig once” rules mandating that new infrastructure projects add conduits for future broadband.

Van Wagenen and Rocket Fiber co-founder and chief operating officer Edi Demaj said their firms had already benefited from local dig-once ordinances. Demaj’s company, for example, took advantage of fiber right-of-way prepared during a light-rail project in Detroit.

In an interview following the panel, Demja credited the Detroit’s dig-once rule and other moves with easing Rocket’s broadband buildout after a tough start.

“You had to go through like seven different departments to get a permit to cross the street,” he said of Rocket’s early permitting experiences before the city began streamlining things.

For a while, Rocket Fiber even found it advisable to keep its name off its trucks — Demaj said they instead featured a forgettable security-technology moniker — to avoid drawing the attention of incumbent providers or getting potential customers’ hopes up too early.

Demaj said outside Detroit the hassle factor — best understood as the risk of running out of money before you can sign up customers — is still a problem.

“We’re still dealing with the same issues we’ve been dealing with over a decade,” he said.

You’ve seen this movie before

The FCC recognized these headaches almost seven years ago in then-Chairman Genachowski’s National Broadband Plan, which endorsed make-ready rules and dig-once legislation.

Wheeler, too, backed those reforms, writing in a 2016 blog post that dig-once policies ”will speed up the deployment of broadband infrastructure to unserved communities.”

Pai, in turn, recommended pole-attachment reform and dig-once policies in a “Digital Empowerment Agenda” released last year.

So what’s the holdup?

A Stealth Communications crew installs fiber optic cable in New York City. (image: Wikimedia)

“Dig once, announce 20 times,” joked Blair Levin, who ran the FCC’s broadband initiative from 2009 to 2010. He said that at that time, people weren’t sufficiently aware of these issues — and once Google Fiber’s holdups became a news item, Tom Wheeler found himself preoccupied with topics like net-neutrality.

Incumbent telecom providers, meanwhile, don’t feel the same urgency to grease the skids for competition. Public Knowledge senior vice president Harold Feld observed in an e-mail: “As with many policies that make sense, there are a lot of people who don’t actually like it.”

A 2015 dig-once bill proposed by Reps. Anna Eshoo (D.-Calif.) and Greg Walden (R.-Ore.) never advanced through the House. A newer, mobile-focused bill from Sen. John Thune (R.-S.D.) encourages but not does not require dig-once provisions.

Feld’s colleague John Bergmayer separately pointed out that because states and localities make many of these decisions, Washington’s influence is limited. For instance, dig-once rules on federally-funded roads — mainly highways — “don’t do anything for last-mile competition.”

Hal Singer, a principal at Economists, Inc. and a senior fellow at George Washington University’s Institute for Public Policy, echoed those concerns. He added that while tax credits might coax existing providers to build out fiber, some — he named Verizon (VZ) in particular — are instead content to wait for 5G wireless.

Meanwhile, incumbent providers’ motivations to defend the status quo haven’t changed. As Google’s Burchett said in last week’s panel: “Every month they delay, that’s one more month when they have 90% of the market instead of 50% of the market.”

(Disclosures: I moderated a panel at Incompas’ 2015 conference in San Francisco, in return for which the group covered most of my travel costs. Verizon is buying Yahoo Finance’s parent firm Yahoo.)

More from Rob:

• Wireless carriers are fighting for your cash, and that’s good news
• How Verizon’s new ‘unlimited’ plan compares to the competition
• Study finds most people are scarred of being hacked, but don’t do much about it
• Why you can’t stream this year’s Oscar nominees on Netflix

Email Rob at rob@robpegoraro.com; follow him on Twitter at @robpegoraro.

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Posted byStefanie Ryan

April 28, 2014

5 Misconceptions About Cloud Computing:

There are always questions when it comes to new software or programs that promise to save you money, keep your data secure, and so on. Well, just as there are questions, there are answers as well. It’s time to prove these misconceptions about the cloud incorrect. Some of these misconceptions include:

The Cloud is Riskier

This could not be farther from the truth. Not only does the cloud protect you from viruses and theft, it can also ensure recovery of your data. Some may assume that the word “cloud” signifies that your data and files are floating around for the world to see – again, not true. The “cloud” basically represents the Internet, which is where you have access to your data and programs when you switch to cloud computing. Contrary to popular belief, this is actually an amazing backup plan. When your information is stored virtually, it is no longer connected to your office devices or network. Therefore, it cannot be harmed by physical disasters or emergencies that may affect your work place. The best thing businesses can do is to have a backup strategy, just in case an outage occurs. In the past, another reason for loss of data was because an organization lost their control over it. For example: How data was stored, shared, secured, etc. The cloud gives you back that control of your data, which means a significantly lower chance for it to be lost in an abyss. Just like anything in life, the cloud is not foolproof. But it is a very safe place for your data. While it may be easier to look at the cloud as unreliable and use that as an excuse to hold off, that just isn’t true. The cloud is the future, and it will keep your information safe.

Cloud Computing is More Expensive

This is also false. Although switching to the cloud may come with slight upfront costs such as installation or migration, in the long run, it will save you a lot of money. Cloud computing is known to reduce IT management costs dramatically. When you add up the cost of management, energy, hardware, software licensing, refreshes, storage space, and everything else that comes with managing your own software, you’re looking at a pricey per-year investment. Moving to the cloud makes it significantly more affordable because not only do you only have to buy a “piece of the pie” instead of the whole pie, but you also move your business model from CapEx to OpEx. More specifically, you simply use infrastructure that a provider purchases and manages, meaning you share resources while avoiding the costs of making these purchases yourself. Most providers also offer a pay-as-you-go plan that bills you based on your usage. Think of it like paying your electricity bill – you use what you need, and that’s all you pay for. This is a great way to control your spending. Avoiding cloud computing is the same concept as hiring someone to make your office’s pens for you when you could just get them at an office supply store; the latter saves time and money, just like the cloud does for your business.

You Can’t Increase Security

Cloud solutions already offer a high level of security, but just like you can add extra security to a home, the same can easily be done with cloud services. You can use behavior-based key management servers and encryption management keys to give your files an extra layer of protection. Like most things, the quality depends on the provider, which means you have to do your research. Find the provider that can guarantee the security of your corporate data, and ask them what policies and measures they already have implemented. The majority of companies trust the cloud enough to be switching over, as providers have been zeroing in on security over the past couple of years. Typical security measures should include exterior security systems, security guards, digital surveillance and recording and security scanners. Additionally, many cloud solutions can be further customized to fit your specific wants and needs as a business, including security. If you have compliance needs, make sure your provider can meet these standards. If you want additional monitoring and support for your system, just ask. There are numerous ways to boost security, so don’t be fooled by the misconception that it’s limited.

Cloud is Unreliable

Businesses that have a backup strategy in place, such as the cloud, prove to be more reliable than other types of infrastructure platforms. With cloud solutions, data can be backed up to multiple locations and services, providing an added level of protection. Again, make sure to do your research. Find a provider that makes it a priority to keep your business up and running. You need a reliable provider that will go above and beyond to ensure minimal downtime, great security and high efficiency – and these providers do exist! So maybe you’re wondering, what happens if your business loses connectivity with the cloud? We will automatically send you email updates of critical events that can be picked up from a mobile device, or you can access your information from the nearest location with Internet access. With the cloud, it’s easier than ever to have constant access to the information you need, no matter what happens to your business. With your data stored in the cloud, you can access it from any computing device and any location. So if you can’t get to your office desktop, it’s simple to grab your tablet or laptop and continue working away. This flexible quality of the cloud makes it the most reliable solution.

The Cloud is Just a Fad

Any organization that relies on web applications like Dropbox, Amazon, Gmail, etc. already uses and relies on cloud computing. Just as the idea of the telephone started with a wire and a dial wheel, the cloud is only beginning its evolution. Migrating to a new technology doesn’t  have to be scary and uncertain. More than half of businesses have already implemented the cloud in some way, and many of these are taking it slow. That’s okay! You don’t need to hastily decide, “We’re moving everything to the cloud, today!” Test the waters. See which parts of this new technology fit the needs of your business. It’s a flexible solution that can be customized for your organization, and that’s part of why it’s so amazing. Whether you need improved security, lowered costs, higher efficiency, a backup plan, or a mixture of these benefits, the cloud is the answer. One thing is clear: the cloud is not just a fad. It’s here to stay, and businesses need to decide if they want to keep up with these changes or be left behind.  Cloud computing for businesses has turned into a way of life, as well as a secure, cost effective way to manage all of their IT systems in one place. The cloud is now the most advanced and simple way to run a business’ IT environment.

Consumers concerned over Verizon, AT&T VoIP-only transition

March 19, 2014 | By Jim Barthold

Plans by AT&T (NYSE: T) and Verizon (NYSE: VZ) to shut down copper-based networks in favor of VoIP-only service are drawing concerns from consumers who worry that IP-only will interfere with services like burglar alarms, emergencies and fire alarm systems that depend on copper-based services. Some are even worried about losing copper-based Internet connections.

The Utility Reform Network (TURN) filed a complaint with the California Public Utilities Commission.

"Verizon is deliberately neglecting the repair and maintenance of its copper network with the explicit goal of migrating basic telephone service customers who experience service problems" to VoIP "often without the customers' knowledge or consent," TURN's telecom research director, Regina Costa, wrote in the complaint, according to a story in Computerworld.

TURN said it received complaints from Verizon customers who were converted to VoIP without their permission.

A Verizon spokesman told the publication via e-mail that the carrier is reviewing the complaint and planning a response to the CPUC.

"Where our all-fiber network is available, it provides a reliable platform that can support anything ranging from traditional telephone service to next-generation technology, depending on the customer's needs," Jarryd Gonzales wrote in the e-mail.

AT&T has run into some concerns of its own as it plans trials to phase out copper networks in Carbon Hill, Ala., and West Delray Beach, Fla.

The plan "has drawn fire from those who worry it leaves high and dry individual end users who rely on legacy copper networks, especially in rural areas, for both plain telephone service and copper-based Internet access service," a story in GCN stated.

AT&T, which has the backing of federal regulators, maintains that the transition will "ensure that Florida customers, and ultimately consumers and businesses across the country, can benefit from the latest communications technologies."

Windstream to ax 400 jobs, expects $20M in annual savings

February 24, 2014 | By Sean Buckley

Windstream (Nasdaq: WIN) is laying off about 400 employees by March in an effort it says will increase its operational efficiency as it continues to sharpen its focus on becoming a bigger player in the enterprise services space.

About 175 workers' jobs were eliminated through what it said was a "voluntary separation initiative."

"We continue to invest in our growth areas, primarily business services and consumer broadband, and at the same time we must maintain a disciplined approach to expense management," said Jeff Gardner, president and CEO of Windstream, in a release.

By making these job cuts Windstream expects to save about $20 million in annual costs. It also expects to incur a $9 million to $10 million charge in the first quarter of 2014 to pay severance to employees that were affected by the company's move.

This is not the only time the telco has had to conduct layoffs. In 2012, it cut between 375-400 management positions, which translated into almost 3 percent of its total 14,500 workforce. It also laid off 280 employees following its acquisition of PAETEC in 2011.

Regardless of this near-term setback, Windstream continues to make progress in growing its presence in the business services segment.

While it won't release its fourth-quarter 2013 earnings until Feb. 27, in the third quarter of 2013 business revenues rose 1 percent year-over-year to $916 million. IP-based voice and data, dedicated Internet access (DIA) and data center services were $407 million, up 5 percent year-over-year.

Ten reasons Google should own Verizon by 2017

February 20, 2014 | By Steve Donohue

I began contemplating the possibility of a Google (Nasdaq: GOOG) acquisition of Verizon's (NYSE: VZ) wireline business last September, after Verizon said that it would buy Vodafone's stake in Verizon Wireless for $130 billion. Google's announcement Thursday that it is looking at expanding Google Fiber to 37 additional cities where its primary competitors would be Comcast (Nasdaq: CMCSA), Time Warner Cable (NYSE: TWC) and AT&T (NYSE: T) left me wondering if Google could be on the path to buying not only Verizon's FiOS business, which doesn't operate in any of those 37 cities, but the entire company, including Verizon Wireless.

A Google-Verizon marriage would be the largest corporate merger ever. The companies had a combined market cap of $537 billion at Wednesday's market close. It would dwarf the $164 billion AOL-Time Warner Inc. merger in 2000, and the $183 billion acquisition Vodafone 

AirTouch closed that year of German telephone and Internet provider Mannesmann. There was buzz about a potential Google-Verizon merger in 2009, when the companies released a joint policy statement that detailed a shared vision for network neutrality. I have no idea if Google and Verizon are discussing a merger. But here are 10 points to consider, including reasons why the deal makes sense and signs that it could actually happen.

No Google Fiber-FiOS overlap
The cities Google said on Wednesday that is exploring for a Google Fiber expansion don't include a single FiOS market. If Google expands to all 37 markets, it would challenge Comcast and AT&T in Georgia, AT&T and Time Warner Cable in parts of Colorado and North Carolina, Cox Communications in Arizona, and Comcast in parts of California, Oregon, Tennessee and Utah.

Ubiquitous and affordable broadband
A Google-Verizon merger could help deliver affordable high-speed Internet service through both wired and wireless networks. It would help the United States keep pace with South Korea, Japan, and other countries where faster and more affordable Internet access is available. It would help President Obama achieve his goal of seeing affordable broadband access available nationwide.

Verizon already offers FiOS TV and Internet in 16 states, including parts of New York, California, Texas, Florida, Pennsylvania and New Jersey. Google could rapidly expand Google Fiber by upgrading the fiber-to-the-premises (FTTP) network that delivers FiOS. A merger would also appease consumers in dozens of cities that have complained about Verizon's decision in 2010 to halt its FiOS expansion.

Competition for Comcast, Time Warner Cable
A Google-Verizon merger could reduce concerns about Comcast's planned merger with Time Warner Cable hurting broadband competition. Overbuilds of cable operators by Verizon and AT&T haven't resulted in reduced broadband prices. But Google's announcement last year that it would expand to Provo prompted Comcast to offer faster Internet tiers with better pricing, including a $120 monthly triple-play that includes a 105 Mbps Internet connection.

In addition to offering consumers in the Kansas City area a $120 monthly pay TV and 1-Gig Internet bundle, or a $70 monthly 1-Gig standalone service, Google offers a free 5 Mpbs service to any consumer within its footprint who is willing to pay an installation fee. Google would likely agree to a merger condition that would require it to offer a free wideband Internet tier. And with Verizon's targeted advertising technology and wireless assets, it could make a profit from offering low-priced or even free broadband tiers.

Reduced programming costs
Google and Verizon wouldn't need to hammer cable networks and broadcasters for volume discounts in order to reduce the cost of pay TV programming packages. Instead, the companies could cut subscription prices by taking advantage of targeted advertising technology that would allow them to deliver relevant ads to viewers watching programming on TV, tablets, smartphones and other IP-connected devices.

In December, Verizon CEO Lowell McAdam predicted at a Goldman Sachs conference that some content owners would subsidize wireless data plans, similar to the way companies pay the costs of toll-free 800 phone numbers.

Earlier this month, we ran a story about a recent Verizon patent application that detailed how it may be able to offer subscribers discounts on phone and pay TV services, along with free pay-per-view movies, if they agreed to allow media buyers to deliver ads to the home screens of mobile devices. In 2012, we wrote about a Verizon targeted advertising patent application that showed how it could deliver ads to viewers based on information collected from infrared cameras and microphones in subscriber homes that could detect conversations, people, objects and even animals that are near a TV. Google and Verizon could make those next-generation concepts a reality. 

Improved home automation
It may only be a coincidence that a few weeks after Google announced a $3.2 billion deal to acquire home automation device provider Nest Labs, Verizon confirmed that it has stopped offering Verizon Home Monitoring and Control to FiOS subscribers. "We are revisiting the service to more accurately reflect our vision for the connected home," Verizon spokesman John Columbus said. Could that vision include the integration of devices from Nest?

Telemedicine and telehealth services
Verizon and Google have both expressed interest in offering telemedicine and telehealth services. A merger could move concepts that are currently being tested in laboratories into the homes of millions of Americans, and help President Obama achieve the goals outlined in the Patient Protection and Affordable Care Act of 2010, which is better known as Obamacare.

Virtual cable
Industry observers suspect that both Verizon and Google are preparing to launch virtual pay TV platforms. Google would benefit from Verizon's recent purchase of Intel's virtual cable technology, and Google has the Internet advertising capabilities to make the concept of a virtual MVPD (multichannel video programming distributor) profitable for both distributors and programmers.

Shared vision for network neutrality
Google and Verizon showed in October 2009 that they are on the same page when it comes to network neutrality when they released a set of principles for an open Internet. While Verizon sued the FCC after it implemented network neutrality rules, the company demonstrated in its policy statement with Google that it does support the concept of "new, enforceable prohibition against discriminatory practices."

Support in Washington
Under President Obama, the Department of Justice approved Comcast's acquisition of NBCUniversal in 2011. It also gave the green light to a spectrum, marketing and innovation deal that Verizon struck with Comcast, Time Warner Cable and Bright House Networks in 2011. A Google-Verizon merger could win support in Washington if the companies commit to offering affordable broadband and pay TV programming. The deal could make the United States the worldwide leader in broadband, and it would be part of the legacy of President Obama. Google and Verizon may have a better chance of wining approval for a merger under the current administration. That's why it would make sense to push for closing the deal before January 2017, when President Obama completes his second term.

Merger would drive needed consolidation

There's no doubt that a Google-Verizon merger would be controversial, and spark concerns about competition. But the deal could also rapidly accelerate major telecom consolidation that would make cable and telephone rivals stronger. A Google-Verizon merger could result in Comcast buying not just Time Warner Cable, but Cablevision and several other major MSOs. It could also spark mergers between other wireless carriers. The end result could be stronger wireless and wireline broadband providers who could drive broadband nationwide, and help the United States compete on a global basis.--Steve

FCC to rework existing net neutrality rules, won't appeal Verizon ruling

February 19, 2014 | By Sean Buckley

FCC Chairman Tom Wheeler plans to craft a new set of net neutrality rules that will prohibit broadband providers from throttling bandwidth or blocking Internet content from over-the-top providers like Netflix of Amazon, reports The Washington Post.

The regulator won't appeal the ruling by United States Court of Appeals for the District of Columbia last month that rejected a previous version of these rules. In its ruling, the court said that the FCC did not have the legal authority to implement the regulations it proposed in 2011, which were challenged in a lawsuit filed by Verizon Communications.

While the ruling was a loss for the regulator, it did give it the option to regulate broadband access under Section 706 of the Telecommunications Act of 1996. This would enable the FCC to develop rules on discriminating Web traffic while complying with the court order.

Another element that the FCC could enact is reclassifying broadband providers, which allows for regulating them similar to the way they regulate traditional telcos. According to the Washington Post's report, this reclassification would give the regulator the authority to put in place what policy experts say would be a "blanket ban on traffic discrimination."

Besides managing network traffic, the commission could use Section 706 to look into state-level laws that bar municipalities from building their own fiber-based broadband networks. A number of states, including Utah and Minnesota, have proposed laws banning community broadband networks.

VMware vCHS growth hinges on upcoming hybrid cloud services

Beth Pariseau, Senior News Writer

Published: 06 Feb 2014

VMware made its mark in technology history with server virtualization, but the company needs to catch up to cloud competitors with services beyond basic infrastructure to succeed long-term, industry watchers say.

VMware Inc. was the first to successfully virtualize x86 machines and has enjoyed a dominant position as a server virtualization vendor since then. Analysts estimate its market share at 80% to 85%, despite competition from Microsoft Hyper-V, which claimed it took server virtualization share from VMware last year.

As IT pros move from server consolidation to automation and cloud computing, VMware has also evolved into a cloud-centric company. It offers several on-premises cloud computing products bundled into the vCloud Suite, which includes vCloud Automation Center as well as server virtualization software. And last fall, it entered the public cloud with its vCloud Hybrid Service.

But VMware faces stiff competition as it looks to flourish as a cloud service provider. Amazon Web Services (AWS) is the 800-pound gorilla in cloud computing, with hundreds of thousands of customers, and there are a number of other prominent cloud providers in the mix.

VMware vCloud Hybrid Service (vCHS) has attracted some enterprise interest so far, but VMware's execution must be stellar to catch up to the rest of the market, IT pros said.

Specifically, VMware's execution is critical when it delivers on the Disaster Recovery as a Service (DRaaS) and Desktop as a Service (DaaS) offerings it revealed with the launch of the vCloud Hybrid Service (vCHS) in September.

Both offerings officially remain in beta, though VMware said on a Jan. 28 earnings call that DRaaS is about to enter general availability.

DRaaS: The best bet for vCHS

Last fall, VMware said the Site Recovery Manager (SRM) product still needs multi-tenancy capabilities to make DRaaS work, which has been completed on schedule. DRaaS will be available in beta in the fourth quarter, and according to one beta program participant, it works as expected.

"It's giving us the frequency of updates that we expect, and we can move things in and out of the cloud very quickly," said Darryl Dugan, manager of information technology for Nexon America, an online game publisher headquartered in Los Angeles. "Now we're just mapping out the regions that we want to use."

Dugan's company now has a Dedicated Cloud Core instance in VMware's Western Region and one in the Eastern Region, as well as a Virtual Private Cloud Core in the Western Region.

"The DRaaS with SRM is probably the biggest opportunity that VMware has right now," said Kyle Hilgendorf, an analyst with Gartner Inc., based in Stamford, Conn. "I don't think they can get there fast enough."

VMware will also offer DaaS on vCHS based on its acquisition of Desktone in 2013.

VMware avoids saber-rattling when it comes to AWS, but once the VMware vCHS DaaS offering leaves beta, it will be in direct competition with the public cloud giant. AWS has already built up a months-long lead in the market; the Infrastructure as a Service leader came out with its Amazon WorkSpaces product in November.

For now, vCHS customers are content to wait for a virtual desktop environment compatible with VMware's View VDI software.

"Desktop is something we're chomping at the bit for," said Shawn Wiora, CIO of Creative Solutions in Healthcare, based in Greenville, Texas.

VMware vCHS to-do list continues

As VMware looks to expand vCHS, it must also refine its cloud pricing model and undertake international expansion.

VMware's cloud pricing may still change as the company gains experience as a cloud service provider. For example, today there isn't compatibility between the vCloud Hybrid Service and the Cloud Credits Purchasing Program used to buy services with VMware Service Provider Program partners via an up-front purchase of pre-paid credits. VMware said it is exploring ways to integrate the programs.

While the current model of purchasing Core packages up-front suits the budget cycles of some early adopters, it remains unclear how successful it will be overall.

For example, some partners say their customers are confused by the pricing requirements and unclear how on-premises licensing translates into this model.

"We've had more help on [vCenter Operations Manager] and vSphere with operations management," said one value-added reseller (VAR) based in the Northeast who requested anonymity. "That's easier to get our arms around. The cloud is scary for VARs and a lot of salespeople. … We could definitely use more help."

International expansion is also crucial for VMware's cloud business. On the company's Jan. 28 earnings call, VMware CEO Pat Gelsinger said there has been beta availability of vCHS in the United Kingdom since December, with general availability expected this month.

"They really need to stand up data centers outside the U.S. before people can really see what the world thinks of it," said Bob Plankers, a virtualization and cloud architect with a major Midwestern university and a VMware customer.

Beth Pariseau is senior news writer for SearchCloudComputing. Write to her atbpariseau@techtarget.com or follow @PariseauTT on Twitter.