Telstra wants on-shore Office 365


news The nation’s largest telco Telstra has reportedly publicly stated that it wants to host Microsoft’s Office 365 software as a service suite from its own datacentre facilities in Australia, in a move which would finally put paid to data sovereignty concerns around the service.

The productivity suite is provided online from a number of Microsoft facilities located around the globe. Microsoft has never explicitly said where Australians access the data from, but it is believed that the company’s Asia-Pacific clients are serviced from datacentres in Singapore and Hong Kong. In Australia, Office 365 is provided to customers through a relationship with Telstra, or for some larger clients, directly from Microsoft.

However, a number of organisations — especially in the public and financial services sectors — have long expressed concerns around SaaS platforms hosted offshore, due to the issue of other organisations such as the US Government maintaining legal jurisdiction over their data. The Australian Prudential Regulatory Authority, which regulates Australia’s banks, is known to be concerned about the issue, as are central IT strategists within the Federal and State Governments. However, in a speech given yesterday at the Security 2011 conference in Sydney, Telstra chief technology officer Hugh Bradlow reportedly gave a signal that the situation could change.

“Our intention is to host the data in Australia,” iTWire has reported Bradlow as stating (click here for the full article), with the executive noting holding data in Singapore was only ever “an interim measure”.

The move comes as a number of other cloud computing and software as a service providers have recently signalled an interest in breaking their long-held approach to hosting customer data offshore and establishing their own datacentre facilities in Australia. and Amazon have both flagged interest in the area in recent months, and Oracle has taken things a step further — providing its CRM on Demand software from a datacentre based in Sydney through a partnership with local company HarbourMSP. Google remains one of the largest software as a service companies which has not taken a step towards establishing local facilities, with its Apps suite (including the Gmail email platform) continuing to be hosted offshore, with no sign of local infrastructure on the horizon.

I have absolutely no doubt that Telstra wants to host Office 365 from one of its Australian datacentres. And I have absolutely no doubt that Microsoft will fight it tooth and claw to stop this happening.

It’s not very visible to the public. But all of Microsoft’s global cloud computing and software as a service technologies are provided from its Global Foundation Services infrastructure. And when I say everything, I truly mean everything. This is a global infrastructure cloud which the company uses for everything from soup to nuts — Windows Live, Xbox Live, Office 365, etc. This infrastructure literally serves hundreds of millions (if not billions) of people every day.

Having established this incredibly impressive and powerful cloud, it would simply make no sense for Microsoft to hive off a portion of its infrastructure to Telstra to achieve a limited set of aims in a small market like Australia.

Having said that, the demand for data to be hosted on-shore in Australia is real, and I wouldn’t put it past Microsoft to eventually make moves in this direction. But I don’t expect it to be in the sense that Microsoft will establish an “Australian datacentre”, or similar.

Instead, what I expect could happen is that Telstra could take delivery and implement one of the Windows Azure appliances which Microsoft has been partnering globally with Fujitsu on. While not technically Microsoft Global Foundation Services infrastructure, these appliances will allow local partners to mimic much of the same functionality which Redmond’s global cloud provides.

Setting up such a system locally would allow Telstra to provide a limited set of ‘premium’ services to customers hosted locally, while providing most of the rest of the market with the standard global Microsoft offering. Having their cake and eating it too, so to speak ;)

Image credit: Nicolas Raymond, royalty free


  1. Don’t be surprised if Microsoft, along with the likes of Amazon announces a local datacentre or two.

    Singapore might be relatively close by physical proximity standards, but there’s a serious lack of connectivity between Australia and Singapore.
    Many of the ISPs route traffic via the US, the remainder using Japan. AFAIK There’s no direct cable connectivity, and the ones with the shortest physical routes are older/slower networks.

    It makes more sense to host stuff in US-WEST than Singapore for latency and sheer available capacity reasons.

    Microsoft are already using Akamai to get fast local content delivery, having compute resources in Australia will make more and more sense as they grow.

    Edit: Also, Google does have SOME kind of local compute resources. I know they’re peering with most of the major ISPs, but perhaps at the moment it’s only a CDN endpoint.

  2. If Telstra want to host Office365, then they’ll be building their own equivalent platform. There’s no way MS GFS will provide Telstra with their processes + IP for deploying Office365 infrastructure inside a Telstra data centre. And a Windows Azure Platform Appliance implementation is only going to provide Azure services, not Office365.
    Anyway, if MS GFS deploy a data centre into Australia to run Azure, Office365, Xbox, etc, then that data centre’s contents will still be subject to the Patriot Act anyway. The only way for this to be overcome is for MS GFS to license its data centre design and operations in a similar manner that ARM does for its chip design. That way Microsoft Australia could build, deploy and maintain an Australian data centre that’s subject to Australian law only and firewalled from any Patriot Act action.
    Fact of the matter is the various government agencies, AIIA and its members need to sit down together and work through this increasingly important issue.

    • Good comment, but I still believe MS’ Azure in a box platform could provide the underpinnings here. No doubt they are under similar pressure in a number of other countries to productise the whole Office 365 platform in this manner, and the Azure appliance would be a natural base.

      • Agreed. The shipping container (since when has a shipping container been called an appliance? Seriously?) with the server + network infrastructure that comprises the Azure appliance would be an ideal base for building a local Office365 node. But how many DCs in Australia are set up to take these containers? I honestly don’t know the answer, so this is a genuine question not a rhetorical one. Otherwise it’s a case of cobbling together the Enterprise components that comprise Office365 and advertising it as Office365-like.

  3. It’ll depend a lot whether Telstra is simply going to physically host and resell the Office365 environment (and MS will run it from afar). If that’s the case, then Patriot Act will still apply as MIcrosoft logically controls these assets from the US.

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