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Deutsche Telekom Wants ’German Cloud’ to Shield Data From U.S.

September 14, 2011

Sept. 14 (Bloomberg) -- Deutsche Telekom AG’s T-Systems information technology unit is pushing regulators to introduce a certificate for German or European cloud operators to help companies guard data from the U.S. government.

T-Systems plans to lure customers by emphasizing the security of its servers, over which it delivers its Internet- accessed computing services, Reinhard Clemens, the division’s chief executive officer, told reporters in Bonn on Sept. 12. This includes shielding clients from government access such as that allowed by the U.S. Patriot Act, he said.

“The Americans say that no matter what happens I’ll release the data to the government if I’m forced to do so, from anywhere in the world,’” Clemens said. “Certain German companies don’t want others to access their systems. That’s why we’re well-positioned if we can say we’re a European provider in a European legal sphere and no American can get to them.”

Deutsche Telekom and other telecommunications companies are promoting cloud-computing offerings as a safe way for businesses to outsource their data centers. A government seal may fence off the cloud offerings of T-Systems and European competitors such as Atos SA and Cap Gemini SA and give them an advantage over U.S. rivals such as Hewlett-Packard Co., Microsoft Corp. and International Business Machines Corp.

Some of the surveillance powers of the U.S. Patriot Act, passed after the Sept. 11 attacks, have been opposed by some lawmakers and outside groups, including civil liberties activists.

“A German cloud” would be a “safe cloud,” Clemens said.

U.S. Exit

Deutsche Telekom in March agreed to sell its T-Mobile USA unit for $39 billion to AT&T Inc. The German company is currently trying to salvage the deal after the Justice Department sued Dallas-based AT&T and T-Mobile on Aug. 31, saying a combination of the two companies would substantially reduce competition.

The global market for cloud services may surge to $148.8 billion in 2014 from $68.3 billion in 2010, according to researcher Gartner Inc. T-Systems predicts it will generate 2 billion euros ($2.74 billion) more in revenue between 2009 and 2015, mostly from delivering software and data storage to customers via the Internet.

A German certificate could be issued by the country’s Technical Inspection Association, based on guidelines developed by the Federal Office for Information Security, Clemens said. The office is in talks with European Union officials to develop common standards across the region, which may result in a European certificate, he said.

Reliability Issues

Telecommunications companies also need to convince clients about the reliability of cloud services.

In May, SAP AG’s head of global solutions, Sanjay Poonen, said an outage on Inc.’s cloud-computing services earlier this year, and a controversy around Google Inc.’s delays in providing e-mail services to 30,000 city employees in Los Angeles could make it harder for the software industry to convince clients to use cloud computing services.

In the U.S., a group led by and VCE, a cloud services provider founded by Cisco Systems Inc. and EMC Corp., sent a report to the government on July 26, urging it to accelerate government and commercial uptake of cloud technologies.

Apple Inc., aiming to capitalize on a shift away from personal computers, this year introduced the iCloud service that stores music and other files online and keeps devices synchronized wirelessly. The product will let users move their “digital life” from PC hard drives to remote data centers in the “cloud,” the company said at the time.

Talks About Standards

In the European Union, Commissioner Neelie Kroes, responsible for the region’s Digital Agenda, has asked providers and users of cloud computing to participate in talks about data protection and privacy as well as technical and commercial standards.

“The cloud is critical to Europe’s growth,” Kroes said in March. She said the European Union needs to develop the right legal framework, encourage more technology research and push the public sector to use cloud computing.

T-Systems’ sales from cloud products are increasing by 49 percent a year, Clemens said, without giving a total sales figure.

Companies that operate their own servers tend to run their systems at only as much as 68 percent of capacity because they need to provision for spikes in use, Clemens said. Capacity use in T-Systems’ cloud is higher, he said, declining to provide a figure.

--Editors: Simon Thiel, Robert Valpuesta.

To contact the reporter on this story: Cornelius Rahn in Frankfurt at

To contact the editor responsible for this story: Kenneth Wong in Berlin at

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