They are leveraging their expertise in building and managing complex telecom networks (the dumb pipes) to offer differentiated, value-added cloud services to subscribers. And, to address services gaps, some are forming partnerships with others to pull together the missing components of a cloud infrastructure. These partnerships add the flexibility that is essential to compete in the fast-moving cloud marketplace. Others are becoming bandwidth specialists and providing a differentiated network service that connects users to the cloud with lower latency and better throughput performance.

Just as carriers see the value in offering cloud service, cloud providers understand that the cloud is only as good as the network that supports it. In addition to Google's efforts in Kansas City, Amazon Web Services has developed an on-demand, "Direct Connect" Ethernet network service with an ecosystem of partners.

IT services for computing, storage and some networking are also being offered out of uber-sized data centers owned by emerging cloud providers such as , IBM and . Oracle, HP and others leverage their integrated compute/storage/networking platforms inside their cloud data centers. Consumer oriented companies like Facebook and Zynga are building their own uber-sized data centers for their unique cloud-based , and rely on faster Internet, mobile and Wi-Fi network access for better performance.

The definition of what it means to be a service provider will continue to blur. In order to find new ways to compete in the cloud market, the New Service Provider will need to offer a range of smart network-based cloud services that best leverage its asset base, whether that is a rich fiber network, extensive data center footprint, unique network services or vertical industry specialization.