The recent Amazon outage started yet another debate on reliability, regulation, compliance, and efficiency. The supporters of Amazon Web Services (AWS), which accounts for 70 per cent of the cloud computing market along with Google and Microsoft, and clocked a revenue of $125 billion last year, contend that the outage was minimal, unintentional, and a simple backend mistake. The critics feel that while telecom services are prone to higher standards in case of disruptions, a giant like Amazon escapes the regulatory oversight, and is given a pass. A recent analysis by Strand Consult analyses the pros and cons of whether AWS needs to financially support more accessible, and resilient networks. Amazon says that if it allows competitors to charge network usage fees, as it does, it will devastate growth, and lead to doomsday scenarios. Critics say that if telecom is subject to high regulatory obligations, the same need to apply to cloud providers. At present, rules exist for the latter on paper, but are under a cloud when it comes to enforcing them.
Strand Consult states that AWS operates a parallel Internet, “with its own fibre-optic backbones, routers, switches, and interconnection points. There is a legitimate legal discussion as to whether these elements constitute ‘telecommunications’ under the US law, facilitating the transmission of data, i.e., the movement of information from one point to another without alteration.” However, the telecom regulator allows AWS to claim a self-provider exemption. “By contrast, countries like India have telecommunications laws to explicitly include hyperscale cloud providers such as AWS and their OTT services, though have yet to pull the regulatory trigger.” Thus, Amazon escapes any form of external regulation, as also mandatory obligations that help the customers, and inculcate transparency. Unlike telecom, where the consumers have legal options, the Amazon users are generally at the mercy of the giant, despite outages.
However, the fragility in cloud services stands in contrast to the situation in telecom. The US providers of essential services, like telephone networks, are classified as “common carriers.” Thus, they need to “serve any customer who made a reasonable request, provide service on fair and non-discriminatory terms, publish their terms openly, and submit to oversight in the public interest. For example, nations regulate the minimum backup power levels for mobile infrastructure, mobile providers, and emergency service providers. While the debate over whether cloud services should fall under such rules is far from settled, the logic behind these obligations helps us understand the problem at hand.” In the case of AWS, technical errors are not just about something that broke. They are about the fact that no backup exists outside the same ecosystem. This, in traditional terms, can be considered as a “failure to ‘serve upon reasonable request.’” It is about backup and backend.
Over the years, Amazon has targeted South Korea as an example where a nation having its usage fee regime reduces investment, security, innovation, and welfare. Thus, it advocates a single, free, and independent regime of cloud service providers. However, some experts feel that the situation in South Korea is the opposite of what is depicted by Amazon. The nation “remains a widely recognised digital nation, and leads in fibre and 5G broadband deployment, access, and digital skills. Indeed, policy-makers worldwide study the policy success of South Korea.” The fact is that the tech war has graduated from battles between the corporate giants, into a giant all-encompassing battle between the giants and nations, even continents. In both America and Europe, and in other nations, the Governments have taken on the Amazons and Googles. Officials feel that this is in public interest. Managers think it is corporate decimation.
Invoking regulation, states the Strand Consult’s report, does not imply that there are no costs, and they will not come without controversies. Regulation, as telecom history proves, has unintended consequences, which includes failures, and asymmetry. Telecom services imply reliable but basic services to customers. AWS provides more reliable or resilient services but at a premium, apart from tailormade solutions for some clients. Hence, backups are available in the latter case, but at a price. One can debate whether similar standards need to apply to telecom and cloud services. The fact remains that in a connected world, minor outages in Amazon can disrupt thousands of businesses across the globe. The problems are not region or sector specific. The impact is felt across sectors and
geographies. In fact, this may or may not be true about telecom. So, why hold telecom to higher standards
than cloud?
Regulations can foster collusion. In the last century, AT&T developed a cooperative relationship with the regulator in the US. It preserved the corporate monopoly for decades. Rates stayed high, and innovation slowed. The landmark breakup, states the Strand Consult’s report, of AT&T in 1984 was not just a reaction to excessive market power; it was a reaction to regulatory power being used to entrench incumbents rather than discipline them. “A similar dynamic in cloud services could create barriers to entry, protect dominant firms, and discourage experimentation,” stated the report. Cloud regulation, in any case, requires political will, political capital, financial resources, legal impetus, and credible opposition to the tech giants. They are in short supply, except for rare cases.
