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Consumer demand fuels US wholesale growth
Consumer demand is fuelling optimism in the US telecoms market. At Capacity USA 2008’s executive roundtable in April, participants noted that new market entrants and increased consumer demand are shaping the US telecoms landscape.
“It is a time when it makes sense to step back and look at the baseline assumptions that are true no matter who wins and who loses in the telecoms market. We believe that the desire for bandwidth will just continue to increase,” said Craig Forman, EVP and president, access
and audience business group at Earthlink. “For telcos success is down to execution. They need to ask: ‘Do you have the right go to market strategy and is the strategy appropriate for consumers?’”
AT&T boasted of triple-digit growth in broadband usage from its consumer customers over the last two years with wireless data, primarily driven by consumers, quadrupling year-on-year. Kathryn Morrissey, EVP, wholesale, at AT&T Operations, said: “There is tremendous demand for broadband and content as well as wireless connectivity. It is all about mobility and content and how they are converging. Demand is really exploding on the consumer side and that
is really great news for us.”
Carl Grivner, CEO at XO Comunications added: “Life is good because of consumer demand. That is the difference between now and the hype of the mid 90s. We are seeing it from all fronts and IP traffic will quadruple by 2011, most of that driven by consumer video. Demand is not going to go away and that is why life is good from a wholesale perspective. In the US, the wireless networks are a little bit behind and they will begin to upgrade their networks and that will add to
this growth.”
These certainties about consumer demand were not echoed when discussing the future of regulation in the US market. As Democrats and Republicans battle for the US presidency, telcos are looking for more concise decisions to made under the new regime.
Grivner said: “There is going to be change one way or the other. Whether it’s the Democrats or the Republicans it really comes down to individual experiences and agendas that move the body of the FCC. More importantly the make-up of Congress will be an influence. Different individuals have led the charge in Congress and I view that as more important in the landscape of the regulatory world than anything else.”
Reliance buys Ewave in Wimax push
Reliance Globacom, the international arm of Indian operator Reliance Communications, has acquired a majority stake in Ewave World, a UKbased Wimax service provider.
Reliance said it is going to use Ewave to spearhead a $500 million investment in building and acquiring Wimax networks in emerging markets in Asia, Europe, Latin America and Africa. The plan is to establish Wimax operations in 20 countries within two years, and expand that number to 50 by 2012.
The company says it plans to focus on countries where fixed-line phone penetration is weak
or non-existent, and where Wimax might be a cost-effective method of providing broadband connectivity wirelessly.
Reliance Globalcom said Ewave already holds Wimax licences and has spectrum allocation in several countries across the world, and so is an ideal launchpad for building a global Wimax footprint. Ewave is also involved developing broadband services in China where it has built a
36,000km fibre-optic network in partnership with the government.
Punit Garg, CEO of Reliance Globalcom, described the acquisition of Ewave World in a statement as a step forward in the company’s global growth strategy to reach millions of new customers with a best-in-class, future-proofed last mile network. “A 4G Wimax network in 50 countries
would enable us to offer the most diverse and unmatched suite of services to over 75% of the global population in combination with our 115,000km fully IP-enabled optical network, spread across six continents,” he said.
“Readily available, reliable and affordable broadband service is critical to the development of any economy,” said Jay Metcalfe, chairman of Ewave World, in a separate statement. “Today many emerging markets are effectively excluded from the full benefits of the internet because of a
lack of broadband service. With the backing of Reliance, Ewave World will deliver broadband services to business and residential customers in numerous emerging markets.”
“Certainly Wimax will be one of the key technologies for enabling widespread internet access where there is no other infrastructure,” said Howard Wilcox, a senior analyst with Juniper Research. “It’s much easier to put in a wireless network than to build out copper, let alone fibre. But other options have a part to play also. There are lot of HSDPA deployments too in remote areas, even in developed economies like Ireland. The consensus I’m hearing is that all these different technologies – Wimax, satellite, HSDPA – are likely to prove complementary rather
than competitive. Telecoms operators need to consider all alternatives
when making an investment.”
Last year Reliance bought US-based Yipes for £300 million.
BT offers wholesale broadband services
BT Wholesale is offering next-gen broadband services on the company’s 21st Century Network.
Wholesale Broadband Connect (WBC) is a group of wholesale broadband products that will be
initially available to exchanges serving approximately one million homes and businesses in the UK.
The product set will include an end-to-end managed wholesale product called Wholesale Broadband Managed Connect.
Sally Davis, CEO, BT Wholesale, said: “In order to support the rising tide of new multimedia
applications and multiplay services delivered over broadband, communications providers require a new set of tools to enhance the broadband experience. Wholesale Broadband Connect has
been developed with this in mind, offering communications providers a wide range of
functions that will help set them apart in this rapidly changing market.”
With tiered quality of service, guaranteed service level agreements, the ability to trade
speed for more line stability, improved line diagnostics and sophisticated line management,
Wholesale Broadband Connect gives providers the ability to offer richer broadband services,
said BT.
BT will roll out the service across the UK with the potential to reach 10 million homes and businesses by the spring of 2009. Where end customers are connected to a 21CN broadband
enabled exchange, communications providers will be able to choose to supply them with services
based on this wholesale service.
BT Wholesale noted that the ADSL2+ equipment that Wholesale Broadband Connect
runs on supports a theoretical maximum speed of 24Mbit/s and end-customer lines will deliver the
highest possible stable speeds they can support. However, distance from the exchange, internal
wiring, interference from electrical appliances and other factors will continue to affect an end
customer’s broadband speed.
i3 Forum pushes for bilateral voice changes
A group of international carriers has launched an initiative to help speed the transition of voice
interconnection business models from TDM to IP. The International Interconnect Forum for Services Over IP or i3 Forum is aimed at shaping the development of IP services. Its first initiative will be to tackle the transition of bilateral voice agreements to IP.
“The industry lacks a clear and commonly accepted path to implement and migrate international IP-based voice interconnections,” said Philippe Millet of France Telecom, who is chairman of the i3 Forum. “The transition to IP-based voice services we know is happening. We believe that although there is no need to discard the TDM network we believe we should facilitate and leverage this move to IP.”
The i3 Forum was established in the third quarter of 2007 and includes AT&T, Deutsche Telekom, France Telecom Orange, Telefonica, Telecom Italia Sparkle, Telekomunikacja Polska, Teliasonera and Singtel. This group represents 40% of the global international voice market and accounts for
approximately one billion fixed and mobile customers in aggregate, in over 80 countries.
“These carriers share the same vision. They have international wholesale businesses and also serve a retail base. All the carriers involved with i3 have extensive international footprints and serve fixed, wireless and broadband customers. The founders of the i3 Forum – by their size,
expertise and global perspective of the market – can help the industry by proposing joint recommendations for international IP interconnections for voice and later for other services,”
said Millet.
i3 is not establishing standards, instead it is establishing a set of solutions that carriers can draw upon to help make the move to IP interconnections a reality. Each carrier can benefit from
the sharing of information and the development of a common approach to QoS parameters, accounting and charging capabilities, and testing processes. Millet said the forum will revisit the bilateral voice model and service definitions and look at what carriers can use in an all-IP world. Initially it will make sure that carriers that manage bilateral voice agreements can make a smooth transition to an IP-based model if they want to.
“We are laying the foundations and looking at the very basic elements of our businesses,” said Millet. “This is important now because we are reaching an IP tipping point. IP- based voice services are nothing new but on the transport level it hasn’t really touched our business
models so far. These services are becoming common and it is moving up the layers of the network. On the retail side our forum members are rolling out or thinking of rolling out NGN architectures and IMS architectures and this is all IP. If it is happening on the retail side we need to make sure that we are providing interconnections and establish a high quality of service.”
The i3 Forum has delivered a document of recommendations for the transition of interconnections to IP and members have committed to applying these to their businesses. Forum member representatives are: Eduardo Guardincerri, product and agreements marketing director Telefonica; Claire Paponneau, EVP international wholesale solutions Orange; Arturo Danesi, EVP wholesale services at TI Sparkle; Daniel Sjoberg, head of strategy Teliasonera; Adrienne Scott, VP global service provider management at AT&T; Claudia Buhne, EVP, product management
Deutsche Telekom; Bee Leng Lian, VP wholesale Singtel; Jaroslaw Starczewski, head of carrier branch at Telekomunikacja Polska.
Global Crossing upgrades partnership programme
Global Crossing has upgraded its Global Partner Program (GPP), adding a number of new elements.
GPP 2.0 makes a larger product portfolio available to the carrier’s partners, and expands the reach of the network they can buy capacity from. The US-based company says it has also enhanced cooperative marketing support and revamped its partner extranet.
Global Crossing’s IP VPN offer now features six classes of service, increased from three. Ethernet and VoIP services, as well as network integrity, provider edge router visibility and collaboration services are also added to the company’s standard list of offers.
A suite of professional services to support partners and end users is planned for the end of
Q2 2008, with the addition of hosting and security capabilities scheduled for the second half
of the year.
“GPP has always been more than just a reseller programme,” said Omar Altaji, Global Crossing’s senior vice president, worldwide carrier services and Global Partner Program. “They are a dime
a dozen. It’s about linkages with partners, and high touch daily engagement. We want to be part of the partner’s fabric, not just a pricing desk.”
Altaji said he believes that since the Global Partner Program was first launched in 2004, it has helped to shape the industry’s thinking on partner management: “There have been a lot of copy-cat programmes mimicking ours,” he said. “We felt that the next stage was to enhance
our offer further, hence GPP 2.0. We want to stay ahead of the pack.”
Partner reaction to GPP 2.0 has so far been positive, he claims: “Our existing base of partners has given us good feedback so far, and we’ve been approached by many others clearly dissatisfied with the programs they are in,” he said. “GPP 2.0 is well thought-out,” said Camille Mendler, VP of Yankee Group’s enterprise research group. “It offers a relevant service portfolio, sales and marketing support but also operational integration services. These aren’t trivial investments.”
Teliasonera develops eastern PoPs
Teliasonera International Carrier continues to grow its business in eastern Europe.
The company has established a PoP in Sofia, Bulgaria. Teliasonera’s customers will
benefit from the company’s IP services and the ability to connect locally to the company’s
IP backbone.
“The expansion into the Balkan area and Eurasia is an important strategic step in our ambition to become one of the three largest global IP carriers,” said Malin Frenning, SVP of Teliasonera and head of Teliasonera International Carrier. “Our Sofia PoP is a tangible sign of our belief in the eastern European market. Developing eastern Europe presence and delivering high-quality IP services locally and globally is the future for Teliasonera International Carrier.”
Bulgaria is one of Europe’s fastest-growing countries in terms of economic growth. The need for IP solutions is increasing as a result of rising internet usage.
In addition to its Bulgarian expansion, Telisonera International Carrier is celebrating its 15th year in the Russian market. Teliasonera first invested in the Russian market by establishing fibre from Finland to St Petersburg and later to Moscow. Telecom Finland was the owner, later renamed to
Sonera, and consequently the name of the fully owned company was changed to Sonera-
Rus. In April 2000 Teliasonera International Carrier Russia, a wholly owned entity, was registered in Moscow. When Swedish incumbent Telia and the Finnish incumbent Sonera merged in 2003, the Russian subsidiaries merged as one company under the name ZAO Teliasonera International Carrier Russia with offices in St Petersburg and Moscow.
During its 15 years in Russia, Teliasonera International Carrier has seen its asset value rise from $2 million to $50 million. Teliasonera International Carrier’s IP traffic has successfully grown in Russia – the growth was 22% more than the average growth for IP during last year.
Europe-India cable to boost capacity
A consortium of 16 telcos has contracted to build a 15,000km subsea cable system linking India with Europe via the Middle East.
The Europe India Gateway (EIG) will cost $700 million and add 3.84Tbps of capacity to a route dominated by the consortium-backed SeaMeWe 4 cable and Reliance’s Flag Telecom with its Falcon system. SeaMeWe 4 has recently been upgraded, while Falcon, currently running
between India and the Middle East, is shortly to be extended to Europe. The EIG consortium features players from the US, Europe, Africa, the Middle East and India – namely AT&T, Verizon, BT, Cable & Wireless, MTN, Telecom Egypt, Omantel, Saudi Telecom Company, du, Bharti Airtel, Gibraltar’s Gibtelecom, PT Comunicacoes of Portugal, Djibouti Telecom, Maroc Telecom, Libya Telecom and Technology, and Telkom South Africa.
Alcatel-Lucent and Tyco have been appointed to build the system, which is scheduled to be in service by the second quarter of 2010. Initial landings are in the UK, Portugal, Gibraltar, Morocco, Monaco, France, Libya, Egypt, Saudi Arabia, Djibouti, Oman, the United Arab Emirates and India. “The EIG cable system will provide much needed diversity for broadband traffic currently relying largely on traditional routes from Europe to India,” Telecom Egypt said in a statement.
At least two other new cables serving much the same route are currently being planned. Tata Communications is leading the consortium behind the IMeWe system, due to add another potential 3.84Tbps to the route when it goes live in 2009. Also backing IMeWe are Etisalat, France
Telecom, Ogero of Lebanon, PTCL of Pakistan, TIS Sparkle of Italy, as well as EIG investors Bharti Airtel, Telecom Egypt and STC.
Tata is also behind the TGN Eurasia Cable System, set to link Mumbai with Paris, London and Madrid via Egypt, with Seacom and Telecom Egypt as fellow sponsors. “It’s tough to gauge whether we’ll end up with too much capacity between Europe and India, because these
cables are set to land in different places,” said Alan Mauldin, research director with Telegeography. “But for sure, once all these cables are in place, pricing on the Europe to India route can be expected to come down fast.”
Published June 2008
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