Capacity Magazine

Business intelligence for the global carrier industry

Big interviewVerizon’s new president of global wholesale Eric Cevis

ITW 2014 reviewThe defining moments from this year’s event

VOL 14 ISSUE 4 JUNE/JULY 2014

capacitymagazine.com

Latency special report

In this issue:

Carriersdrivingin the

seat

Give your customers an economical way to scale server, storage, and computing resources based on day-to-day demands with Enterprise Cloud from Verizon Global Wholesale. Your customers will enjoy secure access to an extremely reliable infrastructure solution backed by our world-class global IP network, virtually anywhere at any time. Enterprise Cloud is designed to fit your customers’ operational budget with optional pricing models. And with the Customer Management Portal, they can track network performance 24/7.

Verizon.com/wholesale/globalsolutionsVerizon Global Wholesale serves: Carriers—Wireless Providers—ISPs—Cable Operators—Resellers

© 2014 Verizon.

capacitymagazine.com capacity

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CONTENTSCapacity magazine

ON THE COVERWhy has Formula One become a big opportunity for carriers? See inside Latency special report.

NEWS & ANALYSIS

04 VODAFONE PUTS M2M IN THE FAST LANE

CARRIERS AND VENDORS RAMP UP CYBERSECURITY INVESTMENT

05 LEVEL 3 REVEALS EMEA EXPANSION STRATEGY

SPECTRUM AUCTIONS SHOULD STAY

VERIZON EXPANDS CDN REACH

06 EUROPE

08 NORTH AMERICA

11 ASIA-PACIFIC

12 AFRICA & MIDDLE EAST

13 LATAM

15 LEVEL 3 MAKES ITS BIGGEST MOVE YET

STRATEGIES

16 THE BIG INTERVIEWEric Cevis, Verizon’s new president of global wholesale

19 MARKET STRATEGYThe global growth of MVNOs is bringing fresh opportunities for carriers to o er MVNE services

22 COMPANY STRATEGYGlobal Cloud Xchange explains how it hopes to use cloud to capture tomorrow’s digital stars

FEATURE

25 TOP 10 MOMENTS FROM ITW 2014Capacity loo s bac at the de ning moments from this year’s event

DATA SECTION

29 NEED TO KNOWDoes YouTube’s online video ad model, TrueView, o er opportunity to carriers?

31 AHEAD OF THE CURVEsia Paci c’s call for new rules of

carrier engagement

33 GEOGRAPHICAL FOCUSIndonesia

35 DATAGlobal internet trends

PEOPLE & DIARY

37 APPOINTMENTSAll the latest industry moves

39 CSRAT&T shares details of its Aspire programme, which aims to help at-risk students remain in school

41 MARKET WATCHImportant dates in wholesale telecoms over the coming months

THE BIG INTERVIEWpage 16Capacity speaks exclusively to Verizon’s new president of global wholesale, Eric Cevis

Latencyspecial reportafter page 28

i Regulatory controversy

v Formula One partnerships

ix O3B executive interview

Roaming and Voice Management Solutions

www.oculeus.com


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editor’s letter | 03

ManagementManaging DirectorRos [email protected]

PublisherPaul [email protected]

EditorialEditorAlex [email protected]

News EditorKavit [email protected]

Senior ReporterLaura [email protected]

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Director of Event Sales Alex [email protected]

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Directors Richard Ensor (Chairman), Sir Patrick Sergeant, The Viscount Rothermere, Neil Osborn, Dan Cohen, John Botts, Colin Jones, Diane Alfano, Christopher Fordham (Managing Director), Jane Wilkinson, Martin Morgan, Bashar Al-Rehany, David Pritchard, Andrew Ballingall, Tristan Hillgarth.

Printed by Stephens and George, UKNext publication date: September 1, 2014

How to contact Capacity magazineCapacity magazine is published by TelCap LtdTelCap Ltd, Nestor House, Playhouse Yard, London EC4V 5EXTel: +44 20 7779 7227Fax: +44 20 7779 7228www.capacitymagazine.com

Capacity (ISSN 1471-762X) is published 6 times a year by TelCap Ltd. Annual sub-scription €250, £210, $340. © TelCap Ltd, 2012. All rights reserved. No part of this publication may by reproduced, stored or introduced into any retrieval system, or transmitted in any form or by any means, electronic, manual, photocopying, record-ing or otherwise, without the prior written permission of the copyright owners.Although Telcap Ltd has made every effort to ensure the accuracy of this pub-lication, neither it nor any contributor can accept any legal responsibility what-soever for consequences that may arise from errors or omissions or any opinions or advice given.

Hosted in the most football-crazed nation on earth, this year’s World Cup has been big on passion, suspense and drama. The intense pressure on the tournament’s stars has also been felt on the nation’s networks, which handled 32 terabytes in the first

ten days of the event – a figure that surpasses the entire 2010 World Cup. Despite cynicism in the build-up to the event, the country’s networks appear to have stood firm. A fibre-optic network, deployed by Telbras, was used to transmit HD video and audio between the 12 football stadiums and the International Broadcast Centre (IBC) in Rio de Janeiro, with the Brazilian incumbent reported to have ploughed approximately $40 million into infrastructure for the event. Oi meanwhile expanded the coverage and capacity of its 2G, 3G and 4G mobile networks in the event’s host cities, also providing 700,000 public Wifi access points across the country. And it was not just networks in Brazil that were put through their paces. In the UK, for instance, EE saw a staggering 2,700% increase in usage of BBC iPlayer on its network. Unlike the football players, networks were offered no respite at half-time, when social media usage soared and the likes of Twitter, Instagram and WhatsApp saw usage increase by approximately 17%. As much of a major social media event as it is a football tournament, the traditional sports broadcasting landscape is virtually unrecognisable from ten years ago. Power continues to shift further into the digital world – and the carrier community will continue to react accordingly. Alex Hawkes, [email protected]

The most social

World Cup ever

june/july 2014capacity

04 |

As Vodafone continues to invest billions across the world in its mobile and cable TV network, its

been easy to overlook the small but signifi -cant advancements it has made to its M2M division.

Its announcement to acquire Italian in-car security and telematics company Cobra Automotive Technologies for $196 million may seem miniscule compared to the €7.2 billion it will pay for Spanish cable operator Ono, but Vodafone claims the tie-up will herald the creation of a new global provider of connected car services.

Cobra provides a range of security, telecoms and vehicle tracking services for the automotive and insurance sectors, with analysts tipping the sector to be the next big developer in M2M after energy solutions. Vodafone’s Will Cameron, senior communications manager, told Capacity that the deal “confi rms our strategy of expanding our M2M capability out beyond connectivity”.

He said: “We can see that with the number of high profi le manufacturers promoting connectivity in their vehicles, M2M is becoming embedded within the auto industry.”

Th e company was keen to stress its commitment to developing a range of new

applications in the sector, with a focus on establishing partnerships with other companies to support the innovations.

Research analyst fi rm Yankee Group said the decision to acquire Cobra fi ts that purpose entirely, considering both companies’ synergistic footprints.

Cobra has operations across Brazil, China, France, Italy, Japan, South Korea, Spain, Switzerland and the UK.

Ryan Martin, associate analyst at Yankee Group, said that the acquisition gives Vodafone access to a range of

companies to add to its M2M portfolio as a result.

“Th e carrier’s acquisition of Cobra has a lot to do with the target’s geographical footprint,” he said. “Automakers such as Audi, Bentley, Ferrari, Mercedes Benz, Nissan, Porsche and Tesia are just a few of the companies among the telematics vendor’s customer list.”

He added that the acquisition will be tailored towards increasing Vodafone’s market share in developing a suite of engineer to engineer (E2E) services to enable connected vehicles. “Focussing on core markets is one way the MNO may be able to achieve this without overinvesting or under delivering,” said Martin.

Th e industry and carriers on the whole has encountered a range of issues in developing M2M solutions, and Cameron said it was important to take into account the diff erences that exists in innovation between varying industries.

“It is important to understand the challenges facing each separate industry, and to appreciate how and where M2M and the Internet of Th ings can make a positive change,” he said.

“Understanding, partnership and delivery will form an ideal foundation for developing in this area.”

Carriers and vendors in the market have conceded to the growing threat of cyber-attacks as the

industry begins to plough billions to counter the problem.

Numerous operators, including Orange, BT, Telefónica, Cisco, Alcatel-Lucent and Nokia have made plays by either acquiring or striking partnerships in the space, as malicious threats to networks become commonplace in the market.

According to data from SNS research, global spending on mobile device and network security infrastructure, software and services will reach $11 billion by the end of 2014. And in the next six years, the research fi rm estimates that this will grow at a CAGR rate of 20%.

Operators in the market have seen the very real threat posed by cyber-attacks, according to analysts, and companies are investing in ways to make their networks more intelligent. “Cybersecurity is harnessing the latest information

technology tools, such as big data analytics to analyse multiple logs in near time to detect suspicious patterns and issue early warnings of potential incidents,” said Igor Faynberg, director at Alcatel-Lucent cloud services team.

Alcatel-Lucent is in the process of transferring its network security assets to cybersecurity fi rm Th ales, with a partnership agreement in place to allow for the French vendor to expand its commercial cybersecurity proposition.

Th is, in turn, allows Alcatel-Lucent to off ers customers an end-to-end network security solution.

Faynberg said partnerships between carriers and cybersecurity companies will be essential in coping against malicious data over networks.

“Th ere needs to be a commitment to build on existing public and private initiatives to develop threat informed risk management and mitigation methodologies to address the most

consequential risks to critical systems, assets and networks.”

Vendors Nokia and Cisco have opted to develop solutions within their existing capabilities, with the Finnish vendor running the unit under its mobile broadband business. Th e unit is designed to develop telecoms security as a whole, while off ering advice on processes, partnerships and guidance for product development. Marc Rouanne, EVP for mobile broadband at Nokia, urged the industry to share knowledge on security research, with security development key as broadband networks evolve towards the cloud. “We will continue to encourage industry dialogue and knowledge sharing in terms of security research.”

Faynberg told Capacity that the industry must now work towards establishing a set of standards towards the issue. “Security is a mindset,” he said. “Attention to security awareness must be drawn at all levels.”

VODAFONE PUTS M2M IN THE FAST LANE

CARRIERS AND VENDORS RAMP UP CYBERSECURITY INVESTMENT

2013 2014 2015 2016 2017

102030405060

Passenger vehicle telematics connections

Source: Yankee Group’s Global Media Forecast, Dec 2013


global outlook | 05

VERIZON EXPANDS CDN REACH

Verizon Digital Media Services (VDMS) and EdgeCast have revealed a rapid expansion strategy

that will see the CDN provider add an additional 20 PoPs to its footprint across major cities in the world.

Th e companies began an integration process in January after announcing Verizon’s $350 million takeover of the CDN company late last year, and they have worked for the past six months on a range of developments to beef up its operations in key markets.

It is launching new PoPs in a number of cities, including Warsaw, Stockholm, Milan, Vienna, Melbourne, Helsinki, Kaohsiung, Batam, Jakarta and Sao Paulo, while expanding its presence in London, Madrid, Paris and Amsterdam.

“Once Verizon Digital Media acquired EdgeCast network, it was important to start serving Verizon’s large global customers in addition to its extensive customer base,” said James Segil, CMO at

Verizon Digital Media Services.As part of the expansion, Verizon

picked out its carrier neutral colocation site in Sao Paulo, Brazil, as one of the most important developments over the past six months.

Its data centre, in collaboration with Terremark, provides the company with redundancy links across the Pacifi c and Atlantic oceans.

“Brazil is one of the largest markets in the world,” said Segil. “South America is now critical for premium content experiences, and providing a PoP has helped to dramatically increase delivery time and performance.”

As part of the EdgeCast acquisition, Verizon Digital Media also revealed exclusively to Capacity that it has completed an e-commerce solution for online retailers, to provide fast and secure engaging customer experiences.

A top consultancy fi rm has backed the validity of spectrum auctions, despite Capacity’s

recent Confi dence Innovation and Leadership (CIL) survey reporting that a staggering 60% of operators were losing faith in the process. Value Partners was Pakistan’s consultancy fi rm of choice for its 3G auction earlier this year and the company completed the process in four months following a range of delays and failed attempts in the past.

As one of the last sizable markets without 3G, Pakistan was in urgent need of a spectrum auction, which had previously been held back by regulatory issues and protests.

Value Partners was faced with a number of major challenges from initial market assessment through to auction completion.

“We had to design something that would accommodate the appetite for 3G, but also make an allowance for [Pakistan] to move to 4G without waiting another fi ve years to run another auction,” said Colin Brooks, managing partner at Value Partners. Brooks said he

was surprised at the high percentage of respondents that did not view auctions as the most eff ective form of spectrum distrubution.

Spectrum auctions have a chequered history. Th e 3G auctions in Europe, for example, were thought to have played a defi ning role in the 2001 telecoms crash, which led to some 100,000 jobs being cut in the sector in Europe. Brooks believes, however, that despite initial teething problems, auctions now enjoy a “better status”.

In developed markets with an optimum of three operators, there is an alternative option to off er spectrum at a set price, but this doesn’t allow for new players to enter a market. “Maybe there’s an evolution towards a diff erent mechanism, but I think it has to be on a country-by-country basis,” said Brooks.

He highlighted common fl aws in spectrum auctions in any country, including high prices, competitor collusion or processes not followed correctly. But added: “Without a spectrum auction, I’d be interested to know what the alternative is.”

Level 3 Communications is embarking on a network expansion project in July across

Western Europe, the Middle East, Africa and Eastern Europe, Capacity can exclusively reveal.

Th e company said it was focussing largely on its enterprise customers in key European markets, with the view of implementing VPN and Ethernet nodes in cities not covered by its existing footprint.

Th e network expansion will be deployed across the wider EMEA region, and is designed to provide connectivity to its global customers.

Th e move includes increasing density through adding more Ethernet and TDM local access nodes to buildings connected in the cities.

Level 3, which last month struck a deal to acquire tw telecom in the US (see page 15), is making an aggressive play across EMEA as it stakes further claims to become established as a truly global company. Tim Passingham, SVP

enterprise business, EMEA at Level 3, said the network expansion across the region is designed to make Level 3 a more eff ective competitor, with EMEA central to its global network strategy.

“Our network expansion plans to markets such as Budapest, Turkey and South Africa refl ects strong growth opportunity driven by demand for internet and communications services in those markets,” he said.

“It also shows increasing needs from our enterprise customers headquartered in Western Europe and globally to connect into these growth markets.”

Level 3 added that it is expanding network depth and breadth across new and existing markets.

Th is includes cities in Western Europe, such as Marseille, Lyon, Cologne and Hannover; Dubai and Istanbul in the Middle East; African markets such as Nairobi, Cape Town and Johannesburg; and parts of Eastern Europe, such as Moscow, Bucharest, Sofi a, Zagreb, Budapest and Warsaw.

LEVEL 3 REVEALS NETWORK EXPANSION ACROSS EMEA

SPECTRUM AUCTIONS SHOULD STAY, SAYS EXPERT

James Segil, CMO, Verizon Digital Media Services


06 | europe

has drawn criticism from all over the world for employing authoritarian censorship tactics.

TELEKOM AUSTRIA ACQUIRES BLIZOO MACEDONIATelekom Austria Group has completed the acquisition of Macedonian cable operator blizoo Macedonia.

Th e Austrian operator said the deal is designed to add to its convergence strategy, with blizoo off ering TV, broadband and fi xed voice services.

Telekom Austria will now off er bundled fi xed and mobile services in the country, which will complement the company’s convergence footprint in Austria, Bulgaria and Croatia.

“Th e takeover of blizoo Macedonia allows us to off er the full scale of communications services in the fourth country within our group and is a step forward in the execution of our successful convergence strategy,” said Hannes Ametsreiter, CEO of Telekom Austria Group and A1.

Telekom Austria already owns Vip Operator in the country, with the two companies now set to merge.

ZAYO TO ACQUIRE GEO NETWORKSZayo has further solidifi ed its presence in the UK after striking a deal to acquire London dark fi bre provider Geo Networks in May.

Th e deal adds over 2,100 route miles to Zayo’s European network, and adds connectivity to 587 on-net buildings.

Zayo’s acquisition of Geo is predominately intended to increase the company’s presence in the UK, adding 1,800 national fi bre miles and connections to 130 data centres, telehouses and internet exchanges.

It also provides direct access to major cities including Manchester, Birmingham and other commercial regions.

Geo’s fi bre is also intended to enable Zayo to establish a presence in Ireland through its diverse optical fi bre subsea system.

“Geo’s extensive fi bre and conduit assets complement our existing London footprint and bring an increased breadth to our UK network,” said Dan Caruso, CEO at Zayo.

“Additionally, diverse connectivity to Dublin is critical as it continues to develop as an international data centre hub.”

ALCATEL-LUCENT INVESTS IN MOBILE FRONTHAUL TECHNOLOGYAlcatel-Lucent has signed a partnership with EBlink which aims to tap into the potential of the mobile startup’s wireless fronthaul solution.

Wireless fronthaul is said to represent a major technological advance for base station deployment, eliminating the last few hundred metres of fi bre that are so costly for operators.

Th e agreement includes a €3 million investment in EBlink, which was founded in France in 2005.

EBlink’s wireless solutions are said to complement Alcatel-Lucent’s wireless LTE and small cell off erings, and the move is said to strengthen Alcatel-Lucent’s position in cloud RAN and 5G architecture.

“For EBlink, signing this partnership with Alcatel-Lucent reaffi rms the relevance of our technologies and will contribute to EBlink’s growth.

As part of this agreement, Alcatel-Lucent will address new market opportunities and distribute EBlink’s wireless fronthaul solutions to its mobile operator customer base worldwide,” said Alain Rolland, founder and CEO of EBlink.

TURKEY LIFTS TWO-MONTH YOUTUBE BANTurkey has lifted its ban on video-sharing website YouTube after the constitutional court ruled the ban to be a violation of the Turkish constitution’s freedom-of-expression clause.

Th e ban was imposed in March after a recording of a high-level security meeting discussing war plans against neighbouring Syria appeared on the site.

Th e government had also blocked access to social-media website Twitter on March 20, a week earlier than the YouTube ban.

Th e Twitter ban was imposed following the anonymous posting of a series of audio recordings which suggested corruption inside the Turkish government, but it was lifted two weeks later.

Recent domestic uprisings in the country have relied on social media and prime minister Recep Tayyip Erdogan

“Diverse connectivity to Dublin is critical as it continues to develop as an international data centre hub.”

EU AND SOUTH KOREA TO COLLABORATE ON 5G DEVELOPMENTTh e European Union and South Korea have entered into an agreement to work to together on the development of 5G standards and technology.

Th e two parties will collaborate to develop systems, set standards and ensure global interoperability through the harmonisation of spectrum bands.

An industry MoU was also signed between the EU’s 5G Infrastructure Association - members include vendors such as Alcatel-Lucent, Ericsson and Nokia, as well as carriers such as Deutsche Telekom, Orange, Telecom Italia and Telefónica

- and South Korea’s 5G Forum.Th e move could help the EU leverage South Korea’s expertise in next-

generation mobile technology. Th e country is set to invest $1.5 billion in the

deployment of a 5G mobile network, which is due to be operational in 2020. Th e nation is already home to some of the world’s fastest internet

speeds, as well as the fi rst implementation

of LTE-A.After fi nding itself

relatively left behind in the race to 4G, the EU has made clear that it wants to adopt a leadership position in 5G.


08 | north america

the internet to underdeveloped regions.In a statement on its website, Skybox

said: “Th e time is right to join a company who can challenge us to think bigger and bolder and who can support us in accelerating our ambitious vision.”

T-MOBILE US REVIEWING SPECTRUM OPTIONST-Mobile US is reportedly looking at alternative options for acquiring spectrum if its proposed merger with Sprint falls through. According to reports in the US, T-Mobile is strategising to acquire low-band spectrum from other smaller carriers in a bid to gain access to urban markets like New York City, where low-band spectrum is more eff ective in high-rise buildings and other built-up areas than high-band frequencies.

T-Mobile does not have access to low-band spectrum at the moment and has had to operate independently in the US market so far.

SoftBank-owned Sprint is attempting to secure a merger with T-Mobile US in a bid to become more competitive with AT&T and Verizon, but the proposal has been met by strong reservations from US regulators.

AKAMAI CONNECTS INTO AMS-IX NEW YORK EXCHANGEInternet exchange company AMS-IX has announced that Akamai has become the latest member partner in its New York facility.

Th e development builds on Akamai’s connections into AMS-IX internet exchanges in Amsterdam, Hong Kong and Curacao.

AMS-IX said the move will help Akamai optimise its services in the New York and New Jersey area, and claims it is Akamai’s fi rst live connection into an Open-IX certifi ed exchange in New York.

“It is great to welcome Akamai to AMS-IX New York. Akamai has been a longstanding member and customer of AMS-IX and it is very valuable to us and other connected parties that they are selecting our exchange in New York/New Jersey to expand in the US market,” said Job Witteman, CEO of AMS-IX.

Th e Open-IX Association (OIX) is an internet initiative designed to improve the landscape of internet peering and interconnection in the US.

TELSTRA GLOBAL EXTENDS CLOUD OFFERING TO USTelstra Global has extended its cloud infrastructure services to the US.

Th e node, which will be located on the east coast of the US, is said to strengthen the company’s virtual private cloud solution.

It extends Telstra’s cloud presence to seven locations, including the UK, Hong Kong, Singapore and Australia.

“When it comes to IT projects, we are fi nding that customers are increasingly opting for cloud-based services and with this expansion we are even better equipped to serve organisations with operations in the US - be it their long-term headquarters or a new market they are expanding into,” said Martin Bishop, head of network applications and services, Telstra Global. “On top of this, Telstra Cloud Infrastructure customers can rest assured that their applications are delivered over one of the world’s most extensive telecommunications networks that extends access to over 1,900 Points-of-Presence (PoPs),” Bishop added.

In January, Telstra Global announced the launch of four PoPs in Europe and the

US, in addition to a partnership with Infi nera to upgrade capacity on its three cable systems.

GOOGLE TO ACQUIRE SKYBOX FOR $500 MILLIONGoogle is set to acquire satellite company Skybox Imaging for approximately $500 million in cash.

Th e deal represents Google’s second high-profi le acquisition of an aerospace company this year, and the internet giant said it will utilise Skybox’s satellites for its online mapping services.

Google added that Skybox technology could eventually be used to provide internet access for disaster relief, and the deal builds on the company’s pledge to invest over $1 billion in satellite communications over the next few years.

Rival internet players Google and Facebook are investing in satellite and drone companies to extend internet access to untapped areas of the world.

In March, Facebook announced the launch of a “connectivity lab”, designed to develop satellites and technology to beam

“Nam nonserferia exeribeaquis net molo et ligenis sinvellibus atur saped molupta ecaeces estio”

INTEROUTE LAUNCHES VIRTUAL DATA CENTRE IN NEW YORKInteroute has announced the launch of a Virtual Data Centre (VDC) zone in New York, as the company attempts to expand its cloud services globally.

Th e European operator will utilise its VDC zones in London and New York to enable Interoute’s IaaS platform customers to benefi t from a globally distributed cloud platform at low latency. Interoute has VDC zones in eight countries across the world, with six in Europe, and the company said the facilities are built into the foundations of its MPLS and internet backbone. “European developers and businesses with their sights set on the US need more than just a data centre to eff ectively gain a foothold there. Th ey need a networked cloud to give them the speed and performance to compete,” said Matthew Finnie, CTO at Interoute.

“Interoute’s VDC provides cloud architecture globally, and we’ve

thrown in the network for free. Opening our fi rst US zone is part of Interoute’s expansion beyond our European base, following the launch of our Hong Kong zone earlier this year,” he added.

Matthew Finnie, CTO, Interoute

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asia-pacifi c|11

SINGAPORE COULD GAIN FOURTH TELCOTh e Singapore telecoms market looks set for a shake-up as a fourth telco is reportedly preparing for entry.

Th e existing market comprises SingTel, M1 and StarHub, but according to local reports, two-year-old local broadband services provider MyRepublic is preparing to launch mobile services in the country.

MyRepublic is allegedly leveraging island-wide fi bre connections for the launch, and is budgeting up to $250 million for the fi rst 12-18 months to deploy the network.

Th e network is expected to be based on 4G, but the telco will need to secure airwaves and roll out base stations before it can off er mobile services.

MyRepublic is expected to be welcomed by consumers and government alike, the latter of which has long tried to introduce more competition into the industry - its 4G auction in July 2013 being a prime example.

BHARTI AIRTEL SIGNS NETWORK MERGER AGREEMENT WITH LOOP MOBILEIndian operator Bharti Airtel has signed a defi nitive agreement to merge its operations with Loop Mobile.

Th e deal is designed to create Mumbai’s largest mobile network, and comes after Airtel announced a strategic plan in February which proposed the tie-up to cover the Mumbai service area.

Combined, the two companies will have seven million subscribers in Mumbai, and the transaction brings together Loop Mobile’s 2G/Edge network with Airtel’s 2G and 3G network.

Loop and Airtel have 2,500 cell sites and 4,000 cell sites in Mumbai respectively, and subscribers will have access to a wide retail reach of over 220 outlets.

Th e companies said Loop subscribers will now have the added benefi ts of access to Airtel’s product portfolio, including 3G, 4G, Airtel Money, VAS and international/roaming capabilities.

LEVEL 3 LAUNCHES VIDEO CLOUD SERVICE IN CHINALevel 3 Communications has expanded its video cloud services to China through an agreement with China Telecom Global.

Th e service - which was launched in April - combines Level 3’s content delivery, video broadcast and cloud storage capabilities to create a more scalable, secure and streamlined approach to global content distribution.

Th e move will provide Level 3’s customers with access to the Chinese market, while also allowing China Telecom Global’s content customers to distribute content and media services globally.

As part of the agreement, CDN nodes will initially be deployed in Hong Kong, before being rolled out further across the region.

“China is a signifi cant emerging market for content distribution, and China Telecom is an ideal network partner to assist in effi cient, high-quality content delivery across the region,” said Mark Taylor, VP of media and IP services for Level 3.

CHUNGHWA LAUNCHES 4G SERVICE IN TAIWANChunghwa Telecom announced the launch of 4G broadband services in Taiwan at the end of May, one month earlier than its expected launch date of July.

Th e company claims it is the fi rst to launch 4G services in the country, following the allocation of 4G licences by Taiwanese regulators.

A spokesperson for the company said that the launch places Chunghwa as more than just a telecoms company and it hopes to advance its service off ering in the coming months.

Chunghwa’s existing portfolio of services includes voice and high-speed internet and the company plans to extend this to include value-added services such as high-defi nition video, high-quality video, 3D navigation and cloud gaming.

Other winners of the 4G licences include Far EasTone and Taiwan Mobile, which have partnered with Ericsson and NSN respectively for their 4G roll-outs.

“Loop and Airtel have 2,500 cell sites and 4,000 cell sites in Mumbai respectively.”

TATA UPGRADES JAMVEE UNIFIED COMMUNICATIONS PLATFORMTata Communications has launched the latest version of its unifi ed communications platform, jamvee.

Th e upgrade is said to off er enhanced levels of interconnectivity and interoperability over a Tier-1 global network.

Th e platform aims to bring together any client software and device on a single platform, and is said to enable intra and inter-company collaboration via any combination of audio, video or messaging and share content in groups - across any device or through a browser.

“Delivering the ability to collaborate easily both internally and externally with customers and partners enables productivity improvements for businesses. Interoperability is key to this, and jamvee takes this to the next level,” said John Hayduk, president and CTO, Tata Communications.

Tata worked with technology partners including Acano and Synergy SKY to develop the new platform,

which includes a collaborative workspace where virtual teams can meet, share documents and show video in real-time.

John Hayduk, CTO and president, Tata Communications

june/july 2014

africa & middle east

RETRACTION:In the article entitled “Holding the key to the cloud” in the April/May edition of Capacity magazine, Capacity wrongly attributed comments regarding a cloud security product called DefensePro to Paul Nguyen, a spokesman for CSG Invotas.

DefensePro is in fact a Radware product, and Nguyen’s comments should have been shown in relation to CSG’s Security Orchestrator software. Capacity would like to take this opportunity to apologise to the parties involved.

Quo Vadis North American Peering?

The Internet was born in the US and settlement-free interconnection of ISP backbones was also introduced in the US in the post-NSFnet era. Traffic was peered in places like MAE-East in Virginia. After that came players like PAIX, and later Equinix and others that have since secured successful market positions.

However, no model has even approximated the popularity that Internet exchanges have garnered, which is a model that developed in the mid 1990s in Europe. Very early on, these players positioned themselves as member-driven. On one hand, this model drove the advantage of reasonable prices. On the other hand, the focus of this model was solely on the operations and expansion of the exchange. In addition, these exchanges were not only carrier-neutral but also data center-neutral. European data center providers like Interxion or Telecity and other leading exchanges like DE-CIX, have cross-pollinated one another over time. In this way, customers could always select the best data center operator for their business, while at the same time trusting that their favorite Internet exchange would have a presence in the data center.

It is exactly this model that has now arrived in the U.S. Motivated by their own clients or also by Open IX, an association that seeks to promote exchange alternatives in the U.S., European exchanges have begun operations in their U.S. exchanges in the recent weeks and months. It is interesting to see through detailed observation how these models differ from one another. While some of the new exchanges solely operate switches outside most carrier-dense data centers and therefore exclude “Top Dogs” like Telx or Equinix and a subsequent large number of potential participants, other exchanges are working hard to establish themselves in exactly these carrier-dense data centers.

It’s even more astounding that players like Equinix don’t tolerate any alternative Internet exchanges in its locations. It’s clear, however, that the distributed exchanges that are represented in a multitude of locations are leaking connectivity from the carrier-dense facilities to the competitive exchanges. It appears, though, that the industry has intentionally forgotten how well the European peering and exchange model operates, not only in Europe, but in the rest of the world as well. In fact, the global Number 1, Equinix, works together with Internet exchanges in Europe. At this point, I’d like to make an appeal to all market participants: support these new exchanges. Give yourselves a home in the form of affordable colocation. Connect your networks to the exchanges. It is only carrier-neutral and data center-neutral exchanges that will scale for the network of tomorrow. They are the last opportunity to cost-effectively steer traffic away from the Tier 1 oligopoly.

Author: Frank P. Orlowski, Head of Marketing, DE-CIX

TI SPARKLE LAUNCHES POP IN TANZANIATI Sparkle has launched a new PoP in Tanzania. Th e move will reinforce the company’s presence in south and east Africa, as it aims to become a leading IP gateway to the region.

Th e PoP will be established in Dar es Salaam in partnership with Tanzania Telecommunication Company (TTCL), which will deliver IP services in the region. TI Sparkle and TTCL will off er IP connectivity solutions to telecoms operators, ISPs and service providers that are connected to Dar es Salaam through major international submarine and terrestrial cable systems.

“Th e new partnership with TTCL and Sparkle’s recent developments in west Africa show how fast we are growing in Africa, a continent where we intend to continue to invest in terms of resources and in terms of commercial eff ort,” said Elisabetta Ripa, CEO at TI Sparkle.

ETISALAT AND TELEFÓNICA PARTNER FOR UAE CYBERSECURITYUAE’s Etisalat and Spanish operator Telefónica have signed a partnership for the delivery of advanced cybersecurity solutions in the UAE. Th e two operators will build a security operations centre (SOC) in the UAE, designed to provide advanced services to organisations of all sizes.

Abdullah Hashim, SVP of digital services at Etisalat, said that the SOC will off er 24/7 security, monitoring and access to advanced threat intelligence correlations.“Etisalat is devoted to meeting the ever-growing security needs of organisations in the UAE and helping them transform to a SMART environment,” Hashim said.

“Th is partnership with Telefónica will help deliver more reliable and intelligent managed security services and cutting-edge cybersecurity solutions to our customers.”

ZAIN KSA SIGNS SUPPLY CONTRACTS WORTH $1.2 BILLIONZain Saudi Arabia (KSA) is set to upgrade its network after signing infrastructure supply contracts worth $1.2 billion.

Th e company - Saudi Arabia’s third-largest operator - has reportedly signed agreements with numerous vendors for the upgrade, including Huawei, Nokia, NEC Corporation, Cisco Systems and Alcatel-Lucent.

It will use its own resources to fi nance the deal. Zain KSA is expected to now develop solutions across its mobile network to cater to growing demand across the Kingdom.

Saudi Arabia is opening up the market to more players and recently awarded an MVNO licence to UK-based Virgin Mobile Middle East and Africa.

latam|13

MEXICAN SUPREME COURT REJECTS AMÉRICA MÓVIL REGULATORY APPEALTh e Mexican Supreme Court has reportedly refused to hear injunctions from América Móvil and its mobile subsidiary Telcel, seeking to challenge a ruling by Mexico’s telecoms regulator.

Mexico’s telecoms regulator, Instituto Federal de Telecomunicaciones (Ifetel), has in place a “preponderant economic agent” ruling, which América Móvil and Telcel are thought to be looking to suspend.

According to local reports, out of fi ve justices in the court’s fi rst chamber, not one was willing to take on the appeals from the operator.

As a result, the injunctions will now return to a lower court specialising in telecoms and economic competition.

América Móvil, one of Mexico’s largest operators, is reported to have set up a committee to evaluate options in response to the ruling. Th e committee is said to be exploring structural, commerical and technological options.

PRIVATE EQUITY FIRM ACQUIRES GAS NATURAL FENOSA TELECOMUNICACIONESUK-based private equity fi rm Cinven Partners has agreed to acquire the fi bre network of Spanish utility company Gas Natural Fenosa for €510 million.

Th e deal for Gas Natural Fenosa Telecomunicaciones will give Cinven ownership of 30,000km of network across Spain, Central America, Panama and Colombia. Th e company off ers a range of dark fi bre, optical transport, co-location, satellite and IP services.

“GNFT is a well-invested fi bre business in Spain with strong cash fl ow generation. Th e company also has exposure to high-growth markets in Central and South America. GNFT has an excellent management team with a signifi cant track record in the telecoms industry with a combined 86 years in the sector and we look forward to working with them,” said Jorge Quemada, partner, Cinven.

GNFT is said to have recorded a 13% EBITDA increase CAGR between 2011 and 2013.

SATELLITE TAKES CENTRE STAGE AT WORLD CUPIntelsat has revealed details of the news and sports programmers using its global satellite services and terrestrial network to televise the 2014 World Cup in Brazil.

Intelsat’s global satellite fl eet will support contribution services within Brazil and distribution of the “World Feed” to the Americas.

Intelsat will also support the contribution, distribution and fi bre back-up demands of sports and news organisations in the Americas, Europe, Asia and Africa on an ad hoc basis. Th e satellite services are said to complement existing full-time capacity arrangements used by sports and news organisations for news coverage originating from the region.

Programmers have also committed to approximately 500MHz of capacity reserved on seven satellites for full-time services for the duration of the games, which will be used to distribute the World Cup matches throughout the Americas and Europe.

INTERNATIONAL TELECOMS WEEK 2014

10-13 May 2015, Hyatt Regency, Chicago

Thank you for your support. See you next year!

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analysis: level 3 | 15

LEVEL 3 MAKES ITS BIGGEST MOVE YET

company’s recent investments, Level 3 has not made an annual profi t since 1998, with rates continuing to fall for its traditional long-distance traffi c business.

It is also signifi cantly debt-laden, which is why Level 3 has opted for a signifi cant proportion of the transaction to be paid in the form of shares.

Th e fi nancial market too, appeared to react badly to the deal, with Level 3’s shares plummeting by 4.1%.

Patel tells Capacity that this was because of a rumour of the deal that broke before it was announced, causing shares in the company to rise rapidly before falling.

He commented that the company’s largest investors “are very enthusiastic about this transaction. It is an attractive deal from both sides, with the deal expected to cut costs by approximately $200 million a year”.

ATLANTIC-ACM’s Charlie Reed, director of quantitative analytics, echoes these sentiments, and goes as far as to predict that the synergies between the two companies could result in the creation of a new major player in the US telecoms market.

“Th e merger is not likely to decrease competition,” he said. “Given that Level 3 is historically priced very competitively, it may bring that perspective to tw telecom’s operating markets, driving increased competition.

Th e combined company will likely make stronger plays in bids for large contracts – placing competitive pressure on AT&T, Verizon and CenturyLink.”

Level 3 has made its biggest move to date. Will it pay off ?

It would be very easy for Level 3 Communications to rest on its laurels. However, the temptation to add tw telecom to its growing list of subsidiaries appeared too good to miss.

Th e company’s acquisition strategy has indeed been impressive over the years, with tw telecom now representing its largest deal to date.

It has now spent $25 billion in acquiring a string of companies and assets in a bid to establish competitive ground with both AT&T and Verizon.

As a result of these deals, many in the market credit the company for being one of the fi rst US telcos to prepare its network for the video content revolution gripping the world’s operators at the moment.

Level 3 has already seen its stock price double over the past two years, after investing heavily in its network to become a major player in the US and across the world. It is already strongly positioned in the infrastructure space, so how will the move for tw telecom enhance this?

Level 3 is splashing out $5.7 billion in a cash and stock deal to snap up the metro provider, in what seems to be a direct response to the aggressive consolidation strategy the US is seeing from the incumbent telcos and cable companies. Both AT&T and Comcast are also in the

process of completing multi-billion dollar consolidation deals in cable.

And it appears Level 3’s CEO Jeff Storey is keen to follow suit. He confi rmed after the tw telecom tie-up that Level 3’s “primary competitors are now the very large companies, whether they are incumbents or cable providers”.

Acquiring tw telecom builds on Level 3’s acquisition of Global Crossing, secured in 2011 for approximately $3 billion, which again was intended to beef up its backhaul off ering and connect local networks across the US.

Level 3 has positioned itself as the middle-mile provider between the large ISPs and content-heavy OTT players, and has been actively seeking ways to counter the loss of its shrinking wholesale business, with a specifi c target on corporate and government customers.

“Th is deal brings together the global reach of Level 3’s internet backbone with the US metro focus of tw telecom at a time when traffi c from streaming videos through Amazon or Netfl ix and use of sensitive corporate data is increasing around the globe,” said Richard Karpinski, senior analyst at Yankee Group.

Th is certainly appears to be the strategy, however, the deal actually only gives a combined Level 3/tw telecom entity a 6% share of the fi xed corporate communications market in the US. AT&T, Verizon and CenturyLink combined have 59.8%.

Th is could be set to change. Analysts claim Level 3’s growing IP backbone could prove invaluable in tempting corporate customers that require links to Europe, Asia and Latin America. Sunit Patel, EVP and CFO at Level 3, spoke to Capacity a day after announcing the deal and outlined the company’s intentions to gain additional corporate customers through the tie-up. “Our market share in enterprise is still in the single digits, but with this tie-up, we will have nationwide networks in all the key cities and markets in the US providing connectivity in and out of the country, which should prove attractive to potential customers.”

On the whole, the acquisition appears to be a shrewd move. However, despite the

With this tie-up, we will have nationwide networks in all the key cities and market in the US.” Sunit Patel, EVP and CFO, Level 3

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Level 3’s acquisition of tw telecom will allow it to fi ll the gaps in its US coverage


Eric Cevis, Verizon’s new president of global

wholesale, has been tasked with leading the struggling

segment back to growth. Is he up to the challenge?

Kavit Majithia reports.

Three months into the role, and Eric Cevis, Verizon’s new president of global wholesale is already implementing his vision that he hopes will see the

unit return back to growth. Cevis, a company veteran for over

27 years, has only served in the wholesale sector for the last three, but entered into the segment at a critical time for the industry.

“When I came into wholesale we were dealing with a lot of market competitive price pressures as technology evolution was coming forward, and the biggest task was moving people over from TDM to IP. Now, as head of this business, I have to ensure this migration is a profitable one.”

Cevis was formerly in charge of Verizon’s global wholesale unit in the Americas, before being promoted to run the sales domestically and internationally. He was eventually named as the man to replace Mike Milligan, who retired earlier this year after 33 years at the company.

Cevis has big shoes to fill, with targets to meet that will ultimately shape his tenure as Verizon’s global head. One of

those will be identifying a strategy tailored towards integrating a range of services on the vertical and enterprise side within the company’s wholesale offering, which could ultimately swerve a negative financial position into a positive one.

“We have publically recorded negative growth year on year, and I have had the pressure over the past three years to bend that curve,” he says. “It’s now important to make the right choices in global wholesale to help the transition from TDM to IP and develop strategic offerings around cloud, security, mobility and professional services. That’s how I will get us back to growth.”

Ringing in the changes Cevis is adamant that his plan will bring Verizon’s global wholesale business back to the black and has a multiyear goal to achieve his targets.

He says he has put a challenge on himself and his organisation “to be the first in the sector to be back towards positive results”.

With the company reporting a Q4 2013 revenue service decline of 7.8% to $1.63 billion, it is already a tall order, and his first three months in the hot seat have been busy to say the least.

“From March 1st, my first task has been to move the trajectory here on the path to profitability,” he says. “One important thing we have done is assess our roll-out of fibre to the internet and find a way to white label what we offer. This means Verizon is now providing internet access to our customers, who are then able to service and compete against the growing MSO threat in a major way.”

Verizon rolled this out in April as an internet access arrangement, and Cevis says he will look to evolve the offering to include a similar voice service as a double play by 2015. In effect, Cevis is taking Verizon wholesale back to basics. “This is plain vanilla internet and voice access – there are no emails, bells or whistles,” he says. The strategy of white labelling and reselling services is now being extended towards a range of other assets at the company’s disposal.

Cevis tells Capacity that it makes logical sense for Verizon, a global behemoth, to leverage its existing capabilities and execute a plan that sees the company become a larger distribution channel.

“I am targeting this resale environment,” he says. “This extends to our cloud assets in the data centre and we are looking to give our global carrier customers the

16 |

Reversingthetide


the big interview: eric cevis | 17

1986

2006

2003

2012

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Staff supervisor, government systems division, Bell Atlantic

VP business channel development, Verizon Retails Markets Group

VP, Verizon Enhanced Communities

VP for sales, Americas, Verizon Global Wholesale

President, Verizon Global wholesale

Leveraging M&A Reselling and white labelling services appears to be Cevis strategy on the road towards short term success, but he is clearly aware that Verizon must innovate to ensure future success in the business.

This, he says, will come from the execution of a strategy that revolves around how the company will leverage cloud, its network and mobility to fuel innovation.

Luckily for Cevis, in the short term, he will not have to deal with finding target companies that befit his needs, because Verizon already has these at his disposal. Late last year, the company snapped up CDN provider EdgeCast in a deal worth $350 million as it looks to ramp up its content services offering.

A year before that, it made an aggressive play into the M2M market by acquiring Hughes Telematics in 2012 for $612 million and has developed cloud solutions with Terremark for over three years since acquiring the company in 2011.

Cevis says the time has come for the company to now “get the full alignment out of the M&A activity we have already done to date and execute these moves”.

And with EdgeCast in particular, Verizon has been quick off the mark. Last month, it announced the launch of 20 additional PoPs to add to its footprint with the CDN provider (see page 15). It is also strategising to utilise EdgeCast’s vast presence in Latin America to establish a gateway into Brazil.

Cevis claims it is now time for Verizon to now understand what its exact strategy is with peering and its carrier partner ports to fuel further growth. “This is the only way we will know exactly how to leverage EdgeCast assets and ensure it is the growth machine that we want it to be.”

Cevis is also set to place a big emphasis on cloud and M2M, with Hughes Telematics key to that growth. The automotive technology company provides a range of products in GPS tracking, communications and safety features in cars, and Cevis says Verizon is focussed on “working its way up the food chain in the M2M market through this acquisition”.

He says: “There is tremendous opportunity in the transportation vertical and we are looking at this, healthcare and the financial sectors as a way of pushing product innovation in the market.”

For cloud and M2M to succeed on the whole, Cevis believes the wholesale community must look at accommodating global networks with a certain level of QoS. “My priority lies around network excellence, and pushing product innovation and service improvements will be dependent on this.”

This strategy places an increasing focus on the application side of the business, and Cevis says it’s important for Verizon to take different pieces of the puzzle to carve out the opportunities that exists in wholesale.

“We don’t know yet if we are missing something in the cloud space, but we are trying to revolutionise the way people think about these verticals,” he says.

“We don’t have all the answers on the application side but we do know how to take care of a network – the next piece requires us to add applications to allow us to monetise this for the industry.”

Beating the competition The rising threat of the MSO is a “challenge” says Cevis, and allowing his customers to resell Verizon services has been one of his first competitive moves against the cable segment.

“No matter what I do in any part of my business there is always somebody else that is going to try and be better,” he says.

Cevis is relying on his strategy, and the fact that the entire ethos of Verizon is built on the premise of reliability as a way to counter the threat.

“Will customers want to deal with a reliable player in the market that is priced competitively, or a new entrant that is coming into the space and attempting to win wallet share?” he asks.

Cevis says the company is also looking at how to bundle several services, and is in the process of rolling out a project to look at its strategic services, whether its in the cloud, Ethernet, IP, fibre or mobile, and give customers a discount for taking those services in a package based on the growth it provides for their business.

This, he says, is an incentive for companies to take additional share from the MSO players and help aggregate their volumes.

“These are the kinds of things I am looking to implement to push these cable companies to the side,” he says. “We are getting creative because we have to. With MSOs and others in the market, we cannot sit still any longer.”

capability to package that and take it to the wider community.”

Cevis claims this is an attractive proposition because it gives customers the ability to bundle solutions and pass it off as their own, giving the companies stronger brand recognition.

Verizon is now pushing out such a strategy on its data centres across the Middle East, Europe, Africa, Latin America and Asia-Pacific. “We are really pushing the conversation at the C-Level suite and looking at how we leverage data centres and our cloud assets to help other providers jump into the marketplace faster and stronger, allowing us to monetise from that partnership.”

This is just one of the several strategies he has for growth on the international stage. He says it was important to take a step back and look at the fundamentals of “how to run a global organisation”. Partnership will be a key theme for Verizon Global Wholesale under Cevis’ reign, with the company’s recent acquisitions likely to play a part in the company’s international growth.

“We need to identify how we partner because I am big on accepting partnerships across the world,” he says. “Collaboration is going to be my road to growth.”

Collaboration is going to be my road to growth.”Eric Cevis, president, global wholesale, Verizon


market strategy: mvne |19

I n January this year, China issued 11 MVNO licences to private companies looking to resell services from China’s

three state-owned operators. In March 2014, Virgin Mobile acquired a MVNO licence from Saudi Arabian regulators, and later the same month UK operators BT and EE announced an MVNO agreement.

Th ere has been a signifi cant growth and birth of new MVNOs worldwide, which is expected to present lucrative opportunities for all players involved.

Th e growth in MVNOs has led to a need – as well as potential revenue opportunity – for a tailored solution to manage the process.

Enter stage right, the mobile virtual network enabler (MVNE).

Potential in the marketAn MVNE is a service orientated towards MVNOs looking to enter the market quickly. It allows companies, both inside and outside the telecoms space, to launch an MVNO in a streamlined fashion, without a large investment.

Communications service provider Amdocs launched its MVNE solution in 2007 when the company fi rst spotted potential in the MVNO market. “We identifi ed a signifi cant increase in MVNO activity globally, but especially in Europe and the US,” says Kfi r Dan-Ari, director of product marketing at the company.

Dan-Ari believes that instead of developing their own home-grown solution, or customising their retail business support system (BSS) to run MVNOs, mobile operators and carriers will reap the most benefi t from a dedicated solution.

“[Th e Amdocs MVNE solution] helps customers to easily expand their business to wholesale by quickly getting MVNOs onboard their network, and off ers a full end-to-end operation, from customer relationship management (CRM) through to ordering, full rating and billing,” Dan-Ari says.

Th e benefi ts are clear but can be narrowed down to three key elements.

Th e fi rst is a reduced cost to market. Th e MVNE model is opex-based without the need for high upfront investment costs. Th is means the MVNO can cut initial costs by operating with a BSS tailored specifi cally to meet its needs.

Th e second benefi t is speed to market. “Some MVNEs claim they can get an MVNO up and running in four to six weeks,” says Carrie Pawsey, senior analyst of industry, communications and broadband at Ovum.

Not only do MVNEs claim to launch the MVNO in a shorter timeframe than a customer would be able to do itself, but Dan-Ari says that the Amdocs MVNE solution also “empowers MVNOs to generate business processes and services on the fl y, as well as change existing ones within hours, instead of weeks or months”.

Lastly, MVNEs are said to remove the technical complexity for MVNOs, which

is important if the MVNO does not have any previous telecoms experience.

Th is factor seems to have struck a chord with Spanish operator Telefónica Global Solutions (TGS), which launched its own MVNE solution earlier this year.

An operator’s approachTGS’s MVNE has been created with those outside of the telecommunications world in mind.

Th e service is designed to act as a centralised and managed solution within the TGS wholesale portfolio, allowing a quick launch with no need to develop costly systems.

“Th is means that the customer can focus on their main business and leave the technical aspect in expert hands,” the company claims.

TGS’s interest in MVNEs is rare for a carrier. Traditionally, MVNE players have been platform providers specialising in billing and CRM systems, through one of two business models.

Th e MVNE Th e booming mobile virtual network operator (MVNO) market is creating fresh

opportunities for carriers to off er mobile virtual network enabler (MVNE) services.

Laura Hedges reports.

movement


20 | market strategy: mvne

“Th e fi rst is partnering with an MNO as an exclusive deal, providing the technical implementation expertise but not being involved in the wholesale airtime part of the deal, so there is the three-way relationship between the MNO, the MVNO and the MVNE,” Pawsey explains. “Or, some have chosen to be MVNAs (mobile virtual network aggregators) whereby the MVNA has purchased the airtime, run the MVNO platform at an arm’s length from the MNO and therefore the MNO and the MVNO have had no direct relationship.”

TGS’s MVNE move could see other mobile operators follow suit, particularly given the industy thirst to combat declining margins with new revenue streams.

“Th is has resulted in some operators creating their own in-house MVNE solution to host MVNOs, usually through the acquisition of an MVNE, or by partnering with various technology vendors to create an end-to-end MVNE solution,” Pawsey says.

“Th is is diff erent to the original MVNE business model where the MVNE was the ‘middle man’ between the MNO and the MVNO; here, the MNO retains control of the MVNO and also generates revenues through the enablement services, not just providing connectivity.”

On the technology side, MVNE services have traditionally been reserved for Tier-2 and 3 vendors, as well as smaller solution providers.

Major Chinese vendor ZTE, however, has also moved into the market, launching ZSmart – a cloud-based MVNE platform

designed to host MVNOs in Europe – in May 2013.

Like Amdocs’ solution, ZTE’s service off ers quick service roll-out, fast time-to-market and low upfront costs, enabling MVNOs to innovate in a secure environment.

“We have seen unexplored business opportunities for telecoms operators to target niche markets through deep segmentation, and we believe our ZSmart MVNE solution is well-positioned to meet these demands and allow MVNOs to capitalise on value-added services within their networks,” says Ivan Cairo, business development director at ZTE.

Th ere are, however, several other approaches to the MVNE model. CSG International’s billing system is an example. Although not an MVNE solution per se, CSG off ers billing systems and managed services that enable MVNOs to operate.

“What we’re fi nding in many situations is as well as the MVNE allowing MVNOs to use their network, MVNEs can use our software to provide the back offi ce and billing software solutions that the MVNO needs as well,” says James Kirby, executive director of managed services at CSG International.

Kirby explains that CSG’s solution is well suited to the MVNE environment, as it provides a turnkey solution for operators. “An operator can use our software on-premise, via the cloud or as a managed service where we can manage the MVNO on behalf of the MVNE,” Kirby says. “So if the MVNOs have any problems with billing or associated CSG

solutions, they contact us, rather than contacting the MVNE itself.”

CSG claims to support operators and their MVNO activities across the globe. It is through these relationships, says Kirby, that he has noticed a lot of developments in the space.

“We are seeing a lot of innovation worldwide and it is accelerating as data and high-speed internet over mobile is becoming more widespread,” he says.

Asian accelerationSo with Spain’s TGS, Missouri-based Amdocs and CSG in Colorado making strides in the MVNE spaces in Europe and the US, where next for the MVNE boom?

“I think to a certain degree Europe and North America are reaching saturation point in terms of MVNO activity,” Kirby says. “Asia is defi nitely a more up-and-coming market.”

Pawsy agrees, adding that any “markets that are opening up to wholesale off er the greatest potential for both new entrant MVNOs and MVNEs looking to service them”.

“Th at would include Latin America and parts of Asia, particularly China,” she says.

Lansdowne Consulting also expects market liberalisation in Latin America in 2014-2015, largely driven by Brazil and Mexico.

“Unlike the MVNO growth in Europe during the last decade, growth in the fi rst phase will not be driven exclusively by so-called ‘low-cost’ providers,” the report forecasts.

“Value propositions based on ethnic groups, immigrant populations and high value-added applications will contribute to more sustainable growth then even Europe has shown.”

Dan-Ari says that “frozen” MVNO markets in South American could soon open up: “When it comes to frozen MVNO South American markets, we believe that changes in regulations would soon push forward heavily-regulated countries such as Chile, Colombia and Brazil into more MVNO activity within the next few years,” he says.

Africa could also become an important MVNO market. Earlier this year, CSG signed an agreement with MTN South Africa and Kirby believes that the African market is becoming more established in terms of its MVNO activity.

“Asia is defi nitely becoming more prevalent and I think Africa will go that way as well,” Kirby says. “In the African market we’re seeing MVNOs starting to gain traction.”

MVNE solutions are evidently having a global eff ect and Pawsey concludes: “We certainly see MVNE solutions as a revenue stream for operators.”

Projections of MVNO/Es growth by region

MVNO growth markets with >50% CAGR (2013–18)

MVNO growth markets with >100% CAGR (2013–18)

Source: Lansdowne Consulting


22 |

I t’s rare to read or hear anything about the cloud without it being accompa-nied by the word “enabler”.

For carriers, there is increasing evidence that cloud truly is an enabler. It is enabling them a direct shot at new revenue streams from the enterprise and OTT segments, without having to stray too far from what they know best: building and operating networks. In the last few months, the likes of Telstra, NTT Communications and Level 3 have all made major announcements in the cloud space.

However, if one company is to encapsulate the growing industry faith in cloud, it is Reliance Globalcom, which stated its intentions in the market by rebranding as Global Cloud Xchange (GCX) in March. Th e company, which is led by former Pacnet CEO Bill Barney, is embarking on an aggressive network expansion before it deploys a new cloud platform designed to tap into the global demand from enterprise and new media organisations.

FLAG reborn GCX presently has two major network expansions on the way. Th e fi rst is a new trans-Pacifi c cable linking Tokyo to Silicon Valley in the US, which was announced in March. Th e Pacifi c Cloud Xchange (PCX) cable will be a four-fi bre-pair system deployed with 100G technology and is expected to be ready for service in 2015.

In June, it also revealed plans to deploy a new direct route between Mumbai in India and Singapore. Th e route is designed to bypass outage-prone terrestrial routes between Mumbai and Chennai. It will again comprise a four-fi bre-pair system with 100G technology, and will interconnect with GCX’s Falco, Hawk and FA-1 systems, providing connectivity on to the Middle East, Europe and to the east coast of the US.

Vendors and additional partners for the ICX subsea cable are being fi nalised, with the supply contract expected to be awarded by the third quarter of 2014.

GCX CEO Bill Barney describes both projects as “fi lling gaps”. Once both are complete, he says the company will join a select group of carriers able to off er a complete ring around the globe. Ultimately, he says the original vision of FLAG (fi bre-optic link around the globe) has been reborn.

Th e diff erence between FLAG and now, says Barney, is that the operator has moved to more of a UNITY-style model, after the trans-Pacifi c cable launched by a consortium of carriers and Google in 2010.

“You build fi ve fi bres and sell three off . Perhaps to non-telcos,” adds Barney.

Telco and tech territory Th e infrastructure deployments are essentially completing a footprint for GCX to implement the second phase of its strategy. GCX has revealed exclusively to Capacity that in September it will launch three pilot cloud platforms in Europe, Asia and the US. Barney describes the pilots as essentially being “mini ecosystems” that will initially enable up to 60 cloud providers to connect through Ethernet or MPLS services.

“From a wholesale perspective, it is interesting as it creates a new ‘meet me room’ for large wholesalers. It’s a new way to build an ecosystem. In the future we won’t be just doing IP transit,” says Barney. “I think it’s about how you build the ecosystem for the wholesale providers,

and how you take advantage of that with the retail guys.”

Barney estimates that 40% of the company’s revenues will derive from cloud by 2018. His confi dence in cloud comes from a strong belief that it does not belong solely in the hands of the tech companies. It is in equal measures a telco play: “Th e bricks and mortar behind how you actually execute a cloud strategy is simple telco stuff , wrapped around a user interface. It’s not radical,” he says. “If you get it right, you go head-to-head with the likes of Dell or Amazon, without having to do much.”

He believes cloud is essentially made up of four ingredients; software, fi bre, power and space. “If you can play in two of those spaces you are in a good spot. If you can fi nd a way of orchestrating the other two,

then you can make it work,” he says.

New media, new customers But while capturing the enterprise segment through cloud is becoming a familiar story in the carrier segment, GCX’s pursuit of

the up-and-coming stars of the new media world is not.

Barney has targeted the “guys that don’t know who they are going to be in a few years’ time”. In other words the OTT players whose traffi c could explode exponentially.

So where do you go about searching for the next Facebook? Th e most obvious place is Silicon Valley, which is precisely where Barney spent two years researching potential customers.

As a result, Barney is able to off er a fascinating insight into some of the upcoming trends in the OTT segment. Enterprise tailored social media, for example, is an area he predicts will experience signifi cant growth over the coming years. “How do you create social

Capturing tomorrow’sReliance Globalcom made its intentions clear by rebranding to Global Cloud Xchange. CEO

Bill Barney explains how cloud can help carriers capture the next generation of OTT players.

The one thing about telecoms companies is we destroy tech companies.”Bill Barney, CEO, Global Cloud Xchange

digital stars


company strategy: global cloud xchange | 23

media within an organisation, but not release confi dential information out into the network? Th e next-generation starting at companies do not want to use an email system; they want to be able to communicate in a more collaborative way,” he illustrates. “What we are seeing therefore is the development of the private social network. Twitter, for example, is looking at a closed group option.”

Be it an enterprise-grade Dropbox or Twitter, businesses today essentially want to have tailored versions of everything the consumer has, says Barney. Th e enterprise software space meanwhile is exploding with cloud startups looking to capture the SMEs market and ultimately take the fi ght to the likes of SAP and Oracle.

“We can help facilitate these guys [the cloud start-ups]. I can make it inexpensive for these companies to operate in Hong Kong or the Middle East, where they can go to test the market,” says Barney.

Barney believes it will be a mix of partnerships with the existing major OTT players, the likes of Facebook and Google, as well as capturing the booming startup market that will bring carriers success in the cloud space. He recounts a period at his former company Pacnet, when the carrier became one of the fi rst to partner with Google in Asia.

“We sold Google their fi rst circuit [in the region]. And then essentially we sold them everything we had in Asia for fi ve years. It does work. You have to put yourself in that stream of new companies coming out and you have to be relevant to them,” he says. “We need a lot of

companies to be successful, and build up that next-generation of tech startups. We would love to be their facilitators, and grow alongside this next generation.”

Barney concedes that for every success, there might be two or three failures. But, he says, that is simply part of the excitement: “If you get a few right, they love you for looking out for them. You have to take risks.”

Accept carriers are not tech innovators Growing alongside startups is also GCX’s policy when it comes to the technology behind its new cloud platform, with the company investing in an undisclosed cloud technology startup to develop its cloud platform. If history has taught the telecoms industry anything, says Barney, it is that carriers owning technology companies is not always conducive to innovation.

“In the asset heavy industry of telecoms everything is structured. We are a factory: we build and deliver bandwidth. It slows you from an innovation standpoint,” says Barney. “Th e one thing about telecoms companies is we destroy tech companies. Th is was one of the mistakes telcos made during the dot.com boom.”

Instead, he says, it is about establishing eff ective partnership models, which is why the focus of GCX moving forward will be on developing an ecosystem.

“We deliver bandwidth but we are not necessarily set up to do the type of things that cloud-based applications want. As we continue to play in this space, it will be more about developing an ecosystem,” he says.

“We are going to buy shares in a lot of these companies, as for us, if we control them we know we won’t necessarily make them better.”

GCX will also need to strengthen its data centre footprint to accommodate the global roll-out of its cloud platform. Unlike Barney’s former company Pacnet, which has invested heavily in its data centre presence across Asia-Pacifi c, the company is looking to cast its net wide.

“We are buying assets globally,” he says, before confi rming that the company is exploring many options. “We are not going to be a big player in the data centre space. We are looking to work with the small data centre guys, and bring network to the companies which don’t have networks,” says Barney.

Expanding its presence globally is critical to the company’s plans to support companies in emerging markets, where he sees fi erce potential for cloud: “Emerging markets are where I believe cloud will be most eff ective. Th e average user in these emerging markets does not have a high income, so cloud is how you sell them computers, e.g. low cost tablets. Shops in places such as Lagos in Nigeria will be able to run IT infrastructure 80-90% cheaper.”

Following the launch of its three pilot cloud ecosystems, Barney reveals the company plans to add another 17 by the end of 2015. It will be a quick turnaround, but one that he believes refl ects the growth of the market: “To be a fi rst mover in cloud in emerging markets is all going to come down to execution,” he says.

Global Cloud Xchange’s PoP coverage worldwide, including its latest cloud nodes

GNOC

CLOUD NODES

CLS/TxPOP

IP POP

KEY


top ten: itw highlights | 25

THE MOST IMPORTANT EVENT OF THE YEAR FOR WHOLESALE TELECOMS WAS HELD IN MAY. CAPACITY LOOKS BACK AT THE DEFINING MOMENTS FROM ITW 2014.

ITWmomentsTop 10

from 20141 / A MESSAGE FROM THE FOUNDER OF THE WORLD WIDE WEB

2 / THE CHICAGO AGREEMENT

3 / CONFIDENCE, INNOVATION & LEADERSHIP TAKE CENTRE STAGE

With the future of the internet never looking more uncertain, it was fi tting that ITW 2014 was opened by a keynote address from the founder of the world wide web, Sir Tim Berners-Lee.

In 1990, Berners-Lee identifi ed the three technologies (HTML, URI and HTTP) that laid the foundations for the modern internet. Since then, the web has continued to become faster, more accessible and incredibly powerful, none of which could have been possible if it was not maintained as an open platform.

“Most of the web, to this day, has been

kept open for people to contribute to its growth,” he told Capacity. “Th ere is a good foundation to stimulate economic growth, to encourage startups, and most crucially, it has been important to maintain democracy.”

During his speech, delivered to a packed Crystal Ballroom at the Hyatt Regency, Berners-Lee paid tribute to the wholesale community for playing a pivotal role in the development of the web.

With the web now in its 25th year, he also warned that its open platform principle is coming increasingly under

threat. A “battleground” is emerging to control the internet, he said, with governments taking a larger role in how people access the service.

Th e fi rst day of ITW 2014 saw Orange, Ooredoo and Bharti Airtel sign the landmark Chicago agreement.

Th e pioneering agreement will see the three founding carriers work together to

On day one, Capacity also revealed the results of its seminal Confi dence, Innovation and Leadership Survey during a summit. Th e annual global research study monitors the most important issues aff ecting senior executives within the international wholesale telecoms market.

Th e report found 77% of wholesale chiefs to be bullish on the prospects for the market, and a statistically relevant proportion of senior executives have moved from being “confi dent” to “very confi dent” in the past 12 months.

Meanwhile 82% of all wholesale chiefs view the over-the-top segment as an

and nomadic communication usages growing more than ever,” said Alexandre Pébereau, EVP international carriers at Orange.

Orange, Ooredoo and Airtel were all keen to stress the importance of developing robust global networks, with a specifi c focus on quality voice and data services for retail and mobile operations.

As part of the agreement, the operators will also strategise to tailor the collaboration towards combating fraud, by sharing best practices and available tools between them.

were also key areas of discussions. Ex-FBI agent and current president of CrowdStrike Shawn Henry claimed there was a growing disconnect between the two in the industry, and said that security is an issue which needs to be addressed at board level by carriers.

address areas of interoperability in roaming, signalling, transport, SMS and IPX. Th e news was exclusively broken by ITW Daily, which is produced by Capacity .

Th e move will also see the companies partner for international voice services and develop solutions for voice minutes to be routed on the shortest possible path with the highest level of quality.

“Th is initiative is an answer for our industry to an increasingly complex ecosystem; driven by the IP convergence, which sees international

opportunity rather than a threat, but 69% would still like to formalise a relationship through some sort of revenue-sharing model. Th is set the tone for the Confi dence, Innovation and Leadership Summit, which was presented by the acclaimed documentary host, producer and broadcaster Bill Kurtis. Th e panel also included high-profi le representatives from the carrier, vendor and OTT communities.

Th e panel agreed that OTTs are driving new consumer behaviours, which are expected to generate more messaging and voice trends. Fraud and security concerns


26 |

4 / A SEMINAL YEAR FOR IPX

5 / REDEFINING CONTENT AND CARRIER RELATIONS

6 / ONE-YEAR ANNIVERSARY OF VODAFONE CARRIER SERVICES

If any further evidence was required to show that IPX has gained serious momentum in 2014, it was provided at ITW, where a number of Tier-1 carriers made high-profile announcements.

Telefónica Global Solutions began proceedings by launching its IPX suite on day one. The IPX Suite is designed to allow customers to share interconnections between multiple services, and will also deliver extensive quality and security features. Customers are expected to benefit from reduced costs as the amount of interconnections needed to acquire different services is minimised, as is the time-to-market for the implementation of new services. Services in the IPX portfolio include VoIPX, SIGTRAN signalling and GPRS/GRX, with next-generation IP services such as LTE Diameter and LTE

data roaming. Other services include data roaming management and optimisation, as well as enterprise services such as A2P SMS.

The following day, Middle Eastern operator Etisalat signed an agreement with TI Sparkle to interconnect their global multi-service IPX platforms.

Subscribers from both companies are now said to have the capability to seamlessly roam between international operator networks.

Also on day two, Hutchison Global Communications (HGC) announced IPX agreements with both Taiwanese operator Chunghwa Telecom and Japanese carrier NTT Communications. The partnerships are designed to

establish multi-service IPX peering interconnections. All three carriers will now have the ability to deliver greater reach to more mobile network operators and the agreement is designed to ensure that end customers can roam seamlessly across IPX platforms. IDT also announced that it was integrating IPX into its global network. Its offering includes a packet voice internetworking exchange that has been designed to meet i3 Forum and

GSM specifications. The moves highlight

how LTE roll-outs globally are driving demand for IPX, particularly in service areas such as LTE roaming. A battle is underway between carriers for space in this market.

Net neutrality again came to the forefront on day two, during a lively conference session focussed on “Redefining content and carrier relations for mutual benefit”.

Panellists including senior representatives from Facebook, datamena, HGC and NTT Communications agreed that over-regulation on the net neutrality issue could hinder OTT and carrier

At ITW 2013, Vodafone officially launched its wholesale unit, Vodafone Carrier Services. Capacity caught up with CEO Brian Fitzpatrick during ITW to learn how operations have evolved one year on. He said that besides exceeding all its financial commitments to the Vodafone Group, the integration process has overall gone much smoother than he anticipated.

“Prior to forming Vodafone Carrier Services, we were really operating as 27 independent companies, each buying and selling; similar to what we do now, but on their own,” said Fitzpatrick.

“I expected bringing those companies together to be a challenge, and in some cases we found some issues that we were not expecting, but the teams have come together very fluidly.”

“Both sides – OTTs and carriers – are investing in network infrastructure separately. Instead, we need to partner to come up with a solution to cope with increasing traffic volume together,” Ahmad said.

Kwok said HGC is looking to co-operate with OTTs to generate revenue together, by creating a revenue sharing model. However the company acts cautiously and even hesitantly when setting up partnerships with OTTs for fear of breaking net neutrality rules.

NTT Communications’ EVP of global IP networks, Michael Wheeler, reiterated Kwok’s message, adding that “too much regulatory involvement can create a cumbersome environment”.

to a fully IP-intelligent routing platform. This is a major move: Vodafone handles upwards of 60 billion minutes of traffic per year. As well as bringing far greater control and efficiency to its network traffic, Fitzpatrick also hopes it will lead to the highest quality of service at the lowest cost.

“Historically, each one of our companies had control of the routing of the traffic, so we’re bringing this all together and creating one interconnected IP infrastructure that will have one software control worldwide,” said Fitzpatrick.

Work on the intelligent routing programme will commence in the coming months.

relationships. Panellists said both OTTs and carriers need to start working together on a solution for coping with increasing traffic and improving the end-user experience. Andrew Kwok, president of international and carrier business at Hutchison Global Communications (HGC), said the company is now past blaming revenue losses on OTTs. “We need to move on and instead start focussing on how can we work with OTTs and how they can help us get more business,” he said.

Najam Ahmad, director of networking at Facebook, argued that net neutrality regulations can prevent innovation, as companies are wary of inadvertently falling foul of legislation.

On the infrastructure side, Vodafone Carrier Services has spent the last 12 months reviewing its capabilities. Described as “almost an inventory check of our own assets”, it included analysing everything from the company’s subsea cable capacity through to its long-haul or local loop access in particular countries. As well as providing a clear overview of its global infrastructure, the review has also allowed Fitzpatrick to put in place some new initiatives that are now “fully funded and endorsed” by the Vodafone board. He exclusively revealed to Capacity that over the course of the next 12 to 18 months, the company will migrate all its voice minutes


top ten: itw highlights | 27

7 / AMÉRICA MÓVIL SIGNALS ITS AMBITIONS IN EUROPE

9 / PLENTY OF ACTION ON THE EXHIBITORS’ FLOOR

8 / ASIAN OPERATORS STEAL THE HEADLINES

Could 2014 be the year América Móvil makes it mark in Europe? A wholesale partnership with the Telekom Austria Group – which will see the creation of one of the world’s largest fi bre networks – seems to suggest so.

Announced at ITW, the move will see the two companies interconnect their networks to off er voice, roaming data and mobile solutions over a network that will run between Miami in the US and Vienna in Austria, connecting a total of 47 countries.

“Th e common infrastructure throughout 47 countries will be one of the largest worldwide, therefore we can

provide our customers with high-quality data services,” said Stefan Amon, head of wholesale at Telekom Austria Group.

Th e Telekom Austria Group is also one of the fi rst providers to use América Móvil’s Latin American voice hub in Miami, which is designed to process all of the company’s voice traffi c in the future.

“We are happy to be working together with Telekom Austria Group and thus benefi t from the excellent technological and local know-how of the company in CEE,” said

Domingo Asiain, head of wholesale at América Móvil.

Following the move, América Móvil’s $2 billion off er to acquire the remaining shares of Telekom Austria received regulatory approval in late June. Th e Austrian fi rm told reporters that América

Móvil’s off er for the shares it does not yet own was now mandatory, following a shareholder agreement with state holding company OAIG. “Th e off er is being converted into a mandatory off er as of June 30, 2014,” Telekom Austria said.

10 / ANOTHER RECORD-BREAKING YEAR A record 6,039 delegates attended this year’s ITW, which included representatives from eight new countries, including Myanmar, Nicaragua, Niger and Sudan.

Delegates at ITW also enjoyed a signifi cantly improved free Wifi network. Sponsored by Mobily, bandwidth was fi ve times higher than 2013, with traffi c peaking on the third day of the event at an impressive 272MB.

Finally, a huge well done to all the runners involved in this year’s 5K charity run. Nearly $12,500 was raised for charity Télécoms Sans Frontières by about 100 runners. Winning the 5km race in an impressive 18 minutes 14 seconds was Sprint’s Paul Joseph, closely followed by Ken Robinson of RouteTrader Exchange and Chris McKee from GTT. Th e team prize was scooped by Telekom Austria.

Th ere were 117 exhibitors at this year’s ITW, many of which used the event to showcase new solutions and services.

Switzerland-based Ascom announced the addition of a web portal service for carriers using its B2BSimpleX platform. Th e web portal will allow carriers to conduct business with other providers outside of the B2BSimpleX platform.

Telinta launched a solution to enable providers to access the GSM mobile roaming market. Th e solution, named

TeliSim, combines VoIP switching, billing SIM cards and roaming agreements with over 600 mobile operators worldwide, with free roaming in over 150 countries.

Carrier-grade solutions provider Alaris Labs launched the Alaris LCR Engine routing system, which has the ability to process both voice (VoIP and TDM) and SMS-traffi c. Th e system is designed to

maximise the profi t for each call or SMS processed by the network and has a high traffi c-processing capacity.

iQism launched the iQism R250, its mobile robot for mobile automation applications. Th e R250 is designed to provide an unattended and automated test and script execution platform in a GSM/3G/4G mobile environment.

Th e front pages of ITW Daily were dominated this year by announcements from Asian carriers. Hutchison Global Communications made four major announcements on day two, signing IPX agreements with Chunghwa Telecom, NTT Communications and Etisalat Group respectively [see “A seminal year for IPX”], as well as an MoU with Qatari operator Ooredoo Global Services (OGS).

Th e MoU with OGS – the wholesale arm of Qatari operator Ooredoo – will see the two operators extend

co-operation in areas such as global capacity, infrastructure and data services. “Th is not only enhances HGC’s capability to deliver solutions that require high bandwidth, such as 10Gpbs, but also further extends HGC’s MPLS network reach in the Middle East,” said Andrew Kwok, president of international and carrier business of HGC.

On day three, PCCW Global made the headlines with its group framework agreement for voice interconnection with Etisalat Group.

Th e agreement will allow for voice interconnection through PCCW Global’s international IPX network to provide end-to-end delivery of voice and mobile data services. Th e agreement extends to more than 50 destinations over a managed IP network, across the largest IP backbone in the region. “Th is agreement will reinforce our already-strong relations with the Etisalat Group by putting more focus on Etisalat’s African and Asian operations, while demonstrating our determination to turn customers’ business goals into reality through communications technology,” said Emmanuel Bain, PCCW Global’s VP for voice services in Middle East and Africa.

10th Annual Global Carrier Awards 2014

ENTER NOW AT:

The Global Carrier Awards have become the biggest and most prestigious awards event of the wholesale telecoms calendar. Last year’s event was oversubscribed with over 118

companies representing 26 countries.

For general information, sponsorship & table prices contact:Michael Broughtont: +44 (0) 20 7779 7282e: [email protected]

Special Guest Speaker Announced

Ben Fogle: Broadcaster, traveller and adventurer.

LEAD SPONSOR:

www.capacitymagazine.com/Global-Carrier-Awards

Celebrating vision and excellence in global wholesale

Location: Hotel Okura, AmsterdamDate: 4 NovemberDress code: Black tie

Making the Deal JustGot Easier in Dallas!

For more information go to comptelplus.org, email [email protected] or call 202.296.6650.Follow us @COMPTELPLUS.

October 5-8Gaylord Texan, Dallas, Texas

You Spoke and We ListenedWe’re making changes – big changes to enhance theCOMPTEL PLUS experience. When you attend orexhibit this Fall, you'll experience the difference:enhanced session content, greater salesopportunities, lively entertainment and a moreproductive networking environment. If it has beenawhile since you were at COMPTEL PLUS, you mustreturn and experience the difference. If you're abroadband, cloud, satellite, over-the-top (OTT) orwireless provider, or one of their strategic partners,the COMPTEL PLUS Fall 2014 Convention & EXPOwill deliver: Unprecedented access to key decision makers. Extensive networking opportunities. An ideal environment for meeting existing clients andnew prospects. Our innovative, interactive Business PLANner forscheduling meetings. Foresight into new trends and challenges. Strategic insights into potential policy reformimpacting the industry.

Exciting New Features Central EXPO activity hub and stage offering uniqueadvertising and sponsorship opportunities. A more comfortable environment. Join us in theCOMPTEL member VIP lounge and all attendeesmay enjoy complimentary lunch on the show floor. Focused exhibition hours with no other scheduledactivities for a more robust selling environment. Pre-show selling tools, including webinar andmarketing advice. Networking and just plain fun at our after-hoursTexas-style party, complete with live band andwestern-themed activities. More educational and policy sessions on topicsimportant to your business and the industry and, asalways, free to all exhibitors. More exhibitors and attendees!

Register before July 18, 2014 and save more than 25% offthe regular registration fee. Use code CP101 when youregister.

COMPTEL PLUS Fall 2014Convention & EXPO

Featuring FCC Chairman Tom Wheeler

as keynote speaker.

29 | need to know: trueview

TrueView: big opportunity?What is it?

TrueView is YouTube’s online video ad format which is based on an interactive model. The service allows the viewer to skip the advertisement, or select to watch an ad from a choice of different ads. The company is only charged if the viewer watches the video ad.

The TrueView ad format offers three main types of ad placements:

TrueView In-Stream gives viewers the option to skip the ad after 5 seconds.

TrueView In-Display ads appear as a thumbnail and text on YouTube watch pages in the right-hand pane of suggested and recommended videos.

TrueView In-Search ads appear in a special promoted section of the video search results pages on YouTube and in Google Video search results.

Tech analyst and partner at Kleiner Perkins Caufield Byers (KPCB), Mary Meeker called the service a “game-changer” in her annual trends report released in May this year. She argues that skippable ads will actually accelerate the monetisation of video. “Skip option keeps users happy, encourages marketers to make their ads entertaining, and lets advertisers only pay when their ad is actually watched,” she says.

YouTube owner Google maintains that because viewers can skip or select the ads they want to watch, the advertiser saves money and reaches a more targeted audience. According to Google 15%-45% of YouTube viewers let the ads play.

Why is it important?

Online video advertising has been earmarked for big growth as OTT video content is increasingly driving network traffic.

According to Media Research Group (MRG), video on demand subscription will grow to more than 120 million subscribers by 2017. As the popularity of online video content increases, marketing companies are turning their attention to online video ad opportunities. “The popularity of digital video viewing is helping to drive the expansion of the online video ad market,” market research company eMarketer wrote in a report.

The Global Entertainment & Media Outlook 2014-2018 report also predicts that online video will be the fastest growing of all forms of advertising.

What does this mean for operators?

Online video consumes massive amounts of bandwidth, requiring telecoms operators to invest in network upgrades in an effort to keep up with the additional traffic.

However, operators often miss out on revenues created by OTT online video content and are looking to create new business models which will allow them to generate revenue from content providers.

As online video advertising grows it is critical that operators should leverage their assets and capabilities and collaborate with OTTs to capitalise on the trend, according to a report by consulting firm Booz and Company released in November last year. Some operators are beginning to generate revenue streams from online video ads by creating new services such as data analytics, which they can sell to businesses on a wholesale basis.

What opportunities are there for operators?

Big data is central in making online video advertising successful, says Video-Nuze, an online publication for the online/mobile video industries.

Operators have a strong retail network, with the ability to reach millions of subscribers, according to Booz and Company’s report “Enabling the OTT Revolution: How Telecom Operators Can Stake Their Claim”. In addition they have the ability to collect location, behavioural, and usage information about their customers.

The consultancy expects there to be an increase in interest among marketers for big data. Data provided by operators will allow companies to better understand customers and improve marketing efforts through location-based video ads and personalised campaigns.

In early June this year, AT&T announced plans to launch a new service which allows businesses to access the operator’s network data to confirm a customer’s location. The location information services capability is designed to notify businesses when participating customers travel internationally.

Initially designed to improve security for credit card companies, such a service is also very useful for marketing, and could be used by companies for more targeted online video advertising.

The new service is enabled through an application program interface (API) and is part of AT&T’s Mobile Identity API Toolkit, which launched in December 2013.

“Companies want to get ahead of customer expectations, offer new ways to solve challenges and differentiate from their competitors,” said Laura Merling, VP of business digital experience at AT&T.

Verizon Wireless too offers a service to marketing companies that provides real-time location of specific audiences, including where the users are and what they do, online and offline.

The number of operators looking to collaborate with OTT’s to provide service offerings which bolster profits for both companies is increasing and the growing online video advertising market provides many opportunities for operators.

capacity june/july 2014


sponsored interview: bevan slattery | 30

MEGAPORT MAKES TRACKS IN ASIATo mark its fi rst year anniversary in Australia,

Megaport is now taking its innovative

interconnection services to Asian markets.

CEO and founder Bevan Slattery shares all the

details with Capacity.

Australia’s Megaport – which provides carrier-neutral network-interconnection services – is

aiming to make a splash in Asia by bringing in services that are new to the region. Th e company’s real-time interconnection off ering will build on the success achieved in its fi rst year of operations in Australia, where it launched the country’s fi rst network-as-a-service (NaaS) platform.

In January, Megaport announced that it would launch services in Singapore, including the roll-out of a 100G Ethernet NaaS platform and a high-capacity fi bre network that off ers access to dark fi bre services. Th e company plans to introduce its service there in the next couple of months, followed by Hong Kong in September. Megaport is set on further expansion in Asia, but has not yet detailed where this will take place.

CEO and founder Bevan Slattery emphasises that the company brings something totally new to the Asian market, where he says there has so far been “no interconnection in real time”. He explains that with Megaport if you want to order an initial cross-connect, you can order it to start in 15 minutes. You also don’t have to sign a long-term contract and can access an integrated cloud-provider platform with connections to partners and services such as Amazon Web Services. “It’s true network-as-a-service, off ering colocation on demand,” Slattery says. “We always planned to go into Asia. We developed a ‘cookie cutter’ for deployment and we’re at the right point to go in.”

In other words, Megaport will be able to use its Australian roll-out as a template on which to base upcoming deployments, thus helping to drive more rapid traction in new markets. Slattery says the

company’s key learning has been its experience integrating with partners on a technical and software basis and in promoting and engaging with them on its network.

Major milestonesMegaport has passed what Slattery refers to as a number of “pretty big milestones” over the last year, including establishing network coverage in multiple data centres in Brisbane, Melbourne and Sydney, connecting most major Australian data

centres with dark fi bre and launching its Megaportal NaaS self-service portal. “Th e main achievement has been taking the concept from an idea to a live service,” says Slattery. Th e company has also gained more than 100 providers on its network and has in excess of 200 ports that customers can connect into, achieving the critical mass that Slattery says has turned Megaport into a default option for interconnection services as “the easiest and fastest way to connect to cloud providers in Australia”.

In addition to its direct-connect deal with Amazon Web Services (AWS), he says Megaport is close to announcing deals with two global cloud platforms: “You can slice and dice connectivity into diff erent channels with our service.”

Linking up AsiaSlattery says that the company’s focus in the next 12 months in Asia will be on creating an interconnected ecosystem of enterprises, carriers, and cloud and content providers, as well as promoting understanding and engagement with the service: “It will take a while to form ecosystems, but once that’s done it will rapidly take off .”

He adds that the company’s content and international-carrier partners were keen for the model to be taken into Asia, where no similar concept has previously existed.

“Customers can have immediate access to providers in our ecosystem in Singapore for as short as a day or as long as a year,” says Slattery of the company’s fi rst Asian market.

Before, he says, companies had to contend with a much more time-consuming and costly process by striking long-term deals with each individual partner for carrier services. Over time, he expects companies to be ever more attracted to Megaport’s Asian services, as they increasingly take on board the concept of infrastructure-as-a-service and seek cost reductions and the removal of other barriers to connectivity.

Megaport is meanwhile running its dark fi bre services using a managed platform that it has placed into a separate company, the name of which it will shortly announce. Slattery says the purpose of separating this is that Megaport wants to emphasise to existing and prospective customers that fl exible interconnection remains at the core of its off ering.

“We’re not a fi bre company, but an elastic connectivity platform,” he says. “We provide on-demand network-as-a-service connectivity and want to be very clear about that to our customers.”

Bevan Slattery, CEO, Megaport

You can slice and dice connectivity into diff erent channels with our service.”Bevan Slattery, CEO, Megaport

june/july 2014capacitycapacity

ASIA’S CALL FOR NEW RULES OF CARRIER ENGAGEMENT

markets are China (including Hong Kong), followed by Japan and Singapore.

“Of the three largest, Singapore has grown the fastest over the past fi ve years,” explains TeleGeography’s Williams. “Th is is unsurprising since the traffi c of many of the hottest markets in south east Asia pass through it. However, falling prices and slowing growth are making business more challenging.”

According to Williams, prices for transport are falling across the region, while overall IP traffi c has also slowed in recent years, making price declines more troublesome for sellers.

“Price declines are ‘normal’ for the telecoms market (or at least expected), but to really measure their impact, you have to take into account the capacity sold. If you had a 33% price decline and a 50% increase in volume, you’d be making less per unit, but would make the same amount overall. However, prices have continued to decline and volumes have not made up the diff erence.”

Epsilon’s Hipp, for example, has witnessed the “huge shift” from traditional TDM to Ethernet or IP-based services, and believes that because new technologies such as Carrier Ethernet are typically touted as being cheaper, price erosion is inevitable.

“A lot of expensive SDH is being cancelled and replaced by cheaper Ethernet services and the problem is that you get far less dollar per megabit than in the past,” he says. “Everyone has big issues in defending margins and market share, while dramatic price pressure remains.”

Shifting focusUp until recently, the emphasis for Epsilon had been on getting people on the ground at the main exchange hubs – namely Singapore and Hong Kong. Now it is looking to go deeper into the countries of Asia-Pacifi c to off er services on a local basis. Epsilon’s strategy is being shaped by the need to better support enterprise services. Although it does not sell to enterprise customers directly, it has a strong focus on providing global last-mile solutions for carriers so that they can in turn off er this connectivity to their domestic or enterprise customers. Indonesia has been its

T he Asia-Pacifi c region continues to prove an eclectic mix of opportunity and risk. Th e opening of Myanmar’s

telecoms market to foreign investment captured headlines worldwide last year, as did the dip in India’s economy, which exposed some of the region’s shortcomings.

“Myanmar garnered a lot of attention, as it was perceived as the last “gold mine” of Asia-Pacifi c,” says Andreas Hipp, CEO, Epsilon. “A lot of attention and investment has gone in and fi nally the mobile licence has been issued. But looking at how long that took to unfold and given it’s not so easy in the execution, there’s still a lot of work to be done.”

Hipp expects things to slowly start to fall into place for Myanmar. However, he believes the economic situation in India, coupled with a 2G licensing dispute, has meant investors are now a little more sensitive to risk: “India took a hit and it has certainly put more caution into everyone’s mind – especially on the infrastructure side. But the whole investment mood in the industry is a little more dampened, and we are not seeing the type of big announcements we’ve seen before.”

Boost to potential capacityCapacity build-outs in the region have continued nevertheless, with a number of proposed submarine cables making progress. Construction of SEA-ME-WE 5 started in March, with the system expected to enter

service in 2016, while the Bay of Bengal cable connecting India, Malaysia and others should enter service by the end of this year. Th e Malaysia-Cambodia-Th ailand cable is expected to enter service in 2015, and the Asia-Pacifi c Gateway (APG) cable that runs from China to south east Asia is planned for service in 2015.

“Not all of the cables planned will end up being built, but there seems to be plenty of interest,” says Cody Williams, research analyst at telecoms market research fi rm TeleGeography. “Th ere are also several planned cables in Oceania, and on the trans-Pacifi c route, which hasn’t seen a new cable build since Unity in 2010.”

Pacnet claimed a fi rst for the region with deployment of an optical mesh network with 100G technology on its EAC Pacifi c system in January this year. Th e carrier has also launched the Pacnet Enabled Network (PEN) – a fully automated software-defi ned network (SDN) in data centres across Australia, Hong Kong, Japan, Singapore, and the US.

Many markets in Asia-Pacifi c are expanding connectivity simply to get more people connected to the internet. Th e region now has 307 million broadband subscribers and a household penetration of 31%. Growth in bandwidth usage stood at 44% over the past fi ve years according to TeleGeography, with the fastest-growing markets being Myanmar, followed by Cambodia, Sri Lanka, Indonesia and Nepal [see graph below]. Th e largest

Fastest growing IP markets in Asia

Myanmar Sri LankaCambodia Indonesia Nepal

50%

150%

100%

200%

Com

poun

d an

nual

gro

wth

(200

9-20

13)

Source: TeleGeography (www.telegeography.com)

31 |


In collaboration with

ahead of the curve: asia-pacific | 32

about this article or Renesys, contact Bob Fletcher, VP of

worldwide sales, at: [email protected] www.renesys.com

For more information

Rank Network Service Provider Movement

1 NTT Communications

2 China Telecom 4

3 Verizon Business

4 Tata Communications 1

5 PCCW Global 4

6 Level 3 Communications 1

7 SprintLink Global Network 5

8 Deutsche Telekom

9 AT&T 4

10 Cogent 4

Asia wholesale rankings In the spotlight: The Asian wholesale ranking dynamics are once again dominated by Chinese internet growth. NTT Communica-tions retains the number one spot in Asia-Pacific, but China Telecom is closing the gap quickly, climbing from sixth to second in the last 12 months. China Telecom also moves closer to Tier-1 status, as Renesys reclassifies long-time transit provider Sprintlink as a China Telecom peer. China Telecom’s last tagged transit provider, Verizon Business, will likely face similar reclassification of what has become a very small, specialised transit relationship. PCCW Global had substantial customer wins in the last 12 months, picking up Vietnam’s Viettel and Vietnam Posts and Telecoms, and selling more transit to Japan’s NEC Biglobe and Korea’s Hanaro. AT&T is providing substantially more transit to China Unicom and Korea Telecom, and enters the Asia top 10 wholesale rankings at number nine.

main focus, with the next countries being Japan, Thailand, Malaysia and Australia.

“Our expansion has become more project-based, as the market is too uncertain to go and build a PoP without the additional business to back that up,” continues Hipp.

Pacnet has placed strong focus on meeting the compute, storage and connectivity demands of content, cloud and enterprise customers, with an expanding network of data centres across Singapore, Hong Kong, Sydney and mainland China. It also supports Amazon Web Services (AWS) Direct Connect, enabling customers hosted at its Tier-3 data centre facilities in Singapore, Sydney, and Tokyo to establish dedicated private network connections and build and manage hybrid cloud computing deployments. According to Cardi Prinzi, president of global markets at Pacnet, China is amongst the markets presenting the greatest opportunities for Pacnet over the next 18 months. Under a partnership with China Telecom, the company will establish PoPs in Pacnet’s Tier-3 Chongqing Data Center, CQCS1. It has also inked strategic partnerships with China Unicom and China Mobile.

“We are the only foreign-invested company to have been issued a licence to provide data centre network services in Chongqing, China,” says Prinzi. “The Greater Mekong Subregion also presents great opportunities for connectivity and service expansion for us, due to its growing demand for networking services.”

For those serving multi-national

corporations (MNCs) in Asia-Pacific, cloud and enterprise services are shaping up to be a key battleground moving forward, while Hong Kong and Singapore are currently hives of data centre activity.

Battle of the clouds“Asia-Pacific is one of the fastest-growing regions in the world, if not the fastest, and every MNC has an Asia-Pacific focus these days,” says Adrian Ho, principal analyst of enterprise telecoms, Ovum. “We have three of the top-ten largest economies in the world (Japan, China, and India), as well as some of the fastest-growing (Indonesia, Vietnam) so a lot of MNCs are investing here and enterprise services are growing across the board as a result.” The biggest challenge warns Ho, is that the region is “ferociously” competitive. Carriers are also now fighting against new types of competitor.

“Everyone is focussed on Asia-Pacific and you have to work much harder for your dollar, since all the global and regional players are competing for the same business. As carriers enter the ICT world, they are competing against major systems integrators who have more credibility, and a lot of best-of-breed vendors in the cloud services space.”

Andreas Hipp at Epsilon concurs: “I personally have never seen an industry changing so much in the space of 12 months, where industry players from other segments – be it software, data centres, or hardware – are all moving into a space under the cloud umbrella. Everyone is

forced to provide an end-to-end solution to the customer, so carriers are facing tough competition from major blue-chip companies that have a global offering and the scalability to compete.”

According to Ho, the key question carriers should be asking themselves now is whether or not they are innovating fast enough to compete aggressively on a level playing field with ICT service providers.

“Currently, the answer is ‘no’ – they are losing the game on almost any single major technology out there,” Ho says.

However, Ho highlights that most IT vendors do not own networks. With many enterprises wanting secure cloud services via VPN access, carriers do have an advantage. This has driven instances of partnering, such as SingTel and BT both partnering with Microsoft to offer cloud services, while Equinix has teamed with IBM.

“These are the types of opportunities that will start to evolve,” says Ho. “If you are entering into ICT, you need strong integration skills and strong professional services capability. Crucially, they need to recognise that the traditional telco rules of engagement don’t work in the IT world, which is all about channels to market. Right now, carriers need to change their mindset and ensure they have the ability to scale, and scale very quickly.”

RELATED EVENTCapacity Asia 2014, 18-20 November 2014, Bangkokwww.capacityconferences.com/Capacity-Asia

*These rankings were taken on June 1 2014 and indicate year-on-year change.


33 |

of implementing regulatory decisions,” a report from analyst fi rm BuddeComm reads. “At the same time, on a broader front, there is no avoiding the fact that Indonesia must also continue to deal with a range of social, political and economic issues that have proved problematic over the years.”

Corruption and government bureaucracy have long been factors deterring potential investors – with the risk of political insecurity also looming in the background – but it is now hoped to have reached a level of stability.

A sovereign state and the largest archipelagic nation in the world, Indonesia is the world’s fourth most populous country and – after a period of political instability – its developing telecommunications market is beginning to refl ect this.

PT Telekomunikasi Indonesia, or Telkom Indonesia, is the incumbent operator, with a number of subsidiaries in the country including Telin and Telkomsel; the latter of which has maintained a strong presence in Indonesia despite increased competition from secondary operators XL Axiata and Indosat.

Th e country as a whole has been placing a heavy focus on expanding and upgrading its infrastructure over the past 12 months, and although it is yet to implement commercial LTE services, operators are acting on the evident demand for connectivity and, more notably, data. Demand for data has been growing at a steady pace worldwide and Indonesia is no exception. Telcos across the country – including Telkom Indonesia, Telkomsel and telecoms tower provider Sarana Menara Nusantara (SMN) – have been cashing in on high-speed network upgrades and expansions in a bid to manage these demands.

In January this year, Telkomsel upgraded its nationwide 3G network in partnership with Finnish vendor Nokia Solutions and Networks (NSN). Th e upgrade was intended to deliver higher-quality voice and data services, as well as better network capacity, speed and coverage for Telkomsel customers. It followed an LTE trial in Bali, Indonesia, late last year, which demonstrated speeds of 70Mbps on the 1800MHz GSM band. Th e company is working on its commercial launch of LTE services, predicted for later this year, and as well as developing its network and presence in the country, Telkomsel is looking to enhance its off ering with the inclusion of machine-to-machine (M2M) services.

Last December, Telkomsel partnered with US-based M2M specialist Jasper Wireless for the delivery of M2M connectivity to enterprises in Indonesia. Th e deal followed a similar agreement between XL Axiata and Ericsson earlier last year for M2M services and Alfi an Manullang, GM for business development at Telkomsel, says that the Indonesian economy is becoming increasingly reliant on such advanced global technology.

It seems international investors are also starting to take note of these opportunities in Indonesia, particularly Telstra, which signed a memorandum of understanding (MoU) with Telkom Indonesia in January 2014. Th e MoU was non-binding, but promotes the aim of creating a joint venture in south east Asia to deliver network services to the region.

Terms of the agreement state that the joint venture will be sole provider of network applications and services (NAS) in Indonesia for both Telkom Indonesia and Telstra.

“Indonesia is a fast-growing NAS market and we believe the best way to make inroads is by partnering with a well-recognised and respected local carrier,” says Brendon Riley, group executive of global enterprise and services at Telstra.

As well as strengthening its international bonds, Telkom Indonesia has been upgrading its regional submarine cable architecture and in March, upgraded the PT Telkom 3rd Route Submarine Cable in partnership with Huawei Marine Cable. Th e PT Telkom 3rd Route is one of three existing routes providing capacity for growth in Asia-Pacifi c region, and the upgrade has enabled the implementation of eight additional 100G channels, as well as 800Gbps of capacity.

Despite evident potential in the market, analysts believe Indonesia has a number of challenges to overcome before it can really become a contender in the global telecoms market.

“Two of the more signifi cant challenges are the crowded operator market, especially the mobile segment, and the slow rate

Mobile, fixed line & broadband statistics

Economic indicators

2011 2012 2013 (e)

Fixed-line subscribers 38.6 million 38.6 million 41.0 million

Internet subscribers 4.5 million 5.5 million 6.5 million

Mobile subscribers 259 million 284 million 307 million

2010 2011

Telephone subscribers, total (per 100 inhabitants) 105.1 113.7

Internet users (per 100 inhabitants) 10.9 18

GDP per capita (current US$) 2952 3495

GNI: Gross national income per capita (current US$) 2869 3395

GDP: Growth rate at constant 2005 prices (annual %) 6.2 6.5

Source: TeleGeography

Source: United Nations Statistics Division (UNdata)

Indonesia


geographical focus: indonesia | 34

Source: Telegeography estimatesSource: Telegeography (www.telegeography.com)

Dial-up internet subscribers (millions)International internet bandwidth (Gbps)

Mobile subscriber growth (millions)COUNTRY INFORMATION

253,609,643 (2014 est) Population

50.7% Urban population (of total population, 2011)

1,904,569 km2Land and inland water area

$867.5 billion (2013 est)GDP

Jakarta Capital

Indonesian rupiah (IDR)Currency

Sources: CIA World Factbook

Sources: Operators

0

100

200

300

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Source: Telekom Indonesia, Telegeography estimates

Broadband subscribers (millions)

0

1

2

4

3

Q32012

Q42012

Q12013

Q22013

Q32013

Q42013

Source: Telekom Indonesia

Fixed-line subscribers (millions)

0

10

20

30

40

2008 2009 2010 2011 2012 2013

2008 2009 2010 2011 2012 20130

10

20

40

30

0

100

200

300

400

500

2008 2009 2010 2011 2012 2013

Source: Telegeography (www.telegeography.com)

International voice traffic(billions of minutes, total includes both TDM and VoIP)

0

1

2

3

4

6

5

2008 2009 2010 2011 2012

Total outgoing minutes Total incoming minutes


35 |

Figure 1: Global compute cost trends (cost on logarithmic scale)

Figure 2: Global storage cost trends (cost on logarithmic scale)

Figure 4: Average global smartphone pricing trends

Figure 3: Global bandwidth cost trends (cost on logarithmic scale)

GLOBAL INTERNET TRENDS

According to a Global Internet Trends report published in May by Mary Meeker, a partner at Kleiner Perkins Caufi eld & Byers (KPCB), global compute costs have declined 33% annually between 1990 and 2013. Th e decreasing cost curve is said to enable “computational power at the core of digital infrastructure”.

At the same time, global storage costs have declined by 38% annually between 1992 to 2013. Th e decreasing cost of digital storage is said to enable the creation of greater quantities of richer digital information.

Smartphone costs have declined by 5% annually between 2008 and 2013.

According to Meeker, the continuous decline of smartphone prices is increasing availability to the masses.

Bandwidth costs worldwide are said to have declined by 27% annually between 1999 and 2013.

Th e declining cost of bandwidth is said to enable the faster collection and transfer of data to facilitate richer connections and interactions.

Source: KPCB - John Hagel, Deloitte, 5/14


Source: KPCB - IDC, 5/14


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$1,2451 245$1,245$


data: global internet trends | 36

Figure 5: Objects stored using Amazon S3*

Figure 6: Global TV vs PC (desktop + notebook)vs mobile (smartphone + tablet) shipments

Figure 7: What connected device owners are doing while watching TV in the US

Figure 8: Global mobile share of online video plays and time

Consumer viewing habits are changing rapidly, as Figure 7 illustrates how 84% of 9,448 respondents use a tablet, smartphone or other streaming capable device while watching TV. Th is is double the fi gure recorded two years ago.

More and more video is being consumed on mobile devices, as illustrated in Figure 8.

Th e mobile share of online video plays and time has grown 22% between 2011 and 2013.

Th e increase of objects stored using Amazon Web Services (AWS) continues to illustrate the phenomenal growth of cloud.

In the Q2 of 2013, 2,000 billion objects were stored using Amazon S3.

*Please note: S3 is AWS’ storage product and used as proxy for AWS scale and growth.

Figure 6 illustrates how smartphone and tablet shipments have grown four to fi ve unit volumes above TV and PC shipments – in the space of ten years since their inception.

Source: KPCB - Nielsen Connected Devices Report, Q3-13

Source: KPCB - Ooyala Global Video Index

Source: KPCB - based on company data

Source: KPCB - TV unit shipments per NPD Display Search

(2004-2013) and Phillips (1999-2003). PC (laptop & desk-

top), smartphone and tablet unit shipments per Morgan

Stanley research

Niu

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r of A

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10%

20%

1,200

900

600

1,500

1,500

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Q42006

1999

TV PC (desktop & notebook) Mobile (tablet & smartphone) Smartphones Tablets

Smartphone Tablet

20072003 20112001 20092005 20132000 2008

Q4 2011

Q2 2012

Q1 2013

Q1 2012

20% 40% 60% 80%

Q4 2012

Q4 2013

Q3 2012

Q3 2013

Q2 2013

2004 20122002 20102006

Q42008

Q42011

Q22013

Q42007

Q42010

Q32012

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Q12012

Video plays

capacity

A life in the day of...

june/july 2014

37 |

BT has appointed Les Anderson as the company’s new VP of cybersecurity. Anderson leaves his role at GCHQ, the UK government’s signal intelligence and security agency, where he developed IT security capabilities.

Cyberattacks have been on the rise at large multinational corporations and BT is focussing on its security unit.

“Now, more than ever, cybersecurity needs to be firmly on the radar of both governments and boardroom executives. I am delighted to be joining a leading global communications company that has security at the top of its agenda. I am looking forward to joining BT and starting the next chapter of my career,” said Anderson.

Les Anderson

Belgacom has named Renaud Tilmans as EVP of customer operations and member of the management committee, effective immediately. Tilmans’ role will see him leading the new business unit customer operations, where he will be in charge of regrouping operational after-sales activities, which are currently spread among different business units, aligning processes and generating synergies in activities. The move is designed to improve Belgacom’s customer processes and to step up cost-effectiveness. He first joined Belgacom in 1993 and since 2012 has been leading the company’s customer operations division of the service delivery engine and wholesale business unit.

Mobile service provider OnMobile Global has appointed Rajiv Pancholy as its new CEO following the resignation of co-founder Mouli Raman earlier this month.

The appointment was effective June 2 and Pancholy joins the company with approximately 30 years’ experience in the telecoms industry. “Rajiv is a great leader and has done some outstanding work in the telecommunications domain,” OnMobile said in a statement.

As well as founding his own company, TTP Media, Pancholy has held high-level roles at TenXc Wireless, a company specialising in antennas, and Mitec Telecom, a designer and manufacturer of wireless network products.

The National Broadband Network Company (NBN Co) has named Stephen Rue as the new CFO, as part of CEO Bill Morrow’s plans to restructure the company.

Rue, who previously worked with News Corp Australia, will take up his role from July 1.

“Stephen is a well-credentialed senior finance executive who has managed a business through a complex and high-profile transformation. His transparent approach is welcome at a time NBN Co continues to accelerate on its delivery,” said Morrow.

The company also appointed Dennis Steiger as the new CTO, as of July 21. Steiger leaves his post as CTO at Canadian telco Shaw Communications.

Renaud Tilmans Rajiv Pancholy Stephen Rue

Compared to a billion-dollar multinational, progress and success is much more visible when working

for a startup company, says Chris Halbard about his recent appointment at Synchron-oss. Cloud solutions and software-based activation company Synchronoss provides innovative software to telcos, delivering solutions allowing operators to connect, synchronise and activate connected devices and services. Th e company has three product lines: a network services division which helps carriers with inventory, network simplifi ca-tion and service capability; an activation division, which off ers a combination of software and professional services, working with operators like AT&T who need to launch a new device or new network; and a cloud division, which provides operators with the ability to sync, store and share data, branded by the operator and allowing them to off er to add cloud storage and services to their portfolios. Synchronoss has been around since the early 2000s and was fl oated on the NASDAQ in 2006. Th e company already has close ties with companies like AT&T and Verizon in North America and Halbard is in charge of

mirroring that success internationally. Since becoming EVP and president of international since March this year, Halbard gets a thrill from tracking the results for the growing New Jersey-based startup. “If we can demonstrate that beachhead clients are scaling up with adoption of revenue, if we can add clients, if we can be more visible in the market, these are all things that easily prove that we are making real progress,” he says.

Halbard’s role is to grow the company outside of North America, where he is responsible for selling, building and delivering products and customer experience internationally. “We are not a standalone business internationally. It is our ambition to turn a Northern American business with some international beachheads into a global business,” he says.

Halbard’s role entails many diff erent responsibilities and he spends most of his time in airports and balancing diff erent time zones. “I hover between customer relations all over the world, development centres in Dublin and India, and reporting back to headquarters in New Jersey,” he says.

Th e $350 million startup is constantly on the lookout for innovation. “We are

not allowed to stop. We are NASDAQ quoted, so we have to keep hitting quarterly numbers,” Halbard says.

However, the company needs to balance making progress and change, without risking the business. “We need to ensure we know what the right amount of change is at the right time,” he comments.

Chris Halbard, EVP and president of international at Synchronoss

tell us your movecontact us to tell us about your moves or new [email protected]


appointments | 38

Ericsson has appointed Elaine Weidman-Grunewald to a position on the company’s global leadership team. The move also sees her named as the head of Ericsson Response, the company’s volunteer emergency response organisation.

Weidman-Grunewald joined Ericsson in 1998 and serves as VP and head of sustainability and corporate responsibility. She is responsible for several public-private partnerships which explore the use of Technology for Good.

“With the appointment of Elaine to our global leadership team we are reinforcing the importance we place on robust governance and processes in place to conduct business sustainably and responsibly,” said Hans Vestberg, CEO of Ericsson.

Telenor has appointed Michael Patrick Foley as CEO of the company’s Pakistan operations

Replacing Lars Christian Iuel, Foley assumed his new role on July 1 2014. Foley leaves his role as CCO of the Canadian State Lottery.“[Foley’s] knowledge and experience within telecoms, internet and mobile financial services make me confident that he will drive new innovation, quality mass-market services and strengthen Telenor Pakistan’s capabilities in delivering internet for all,” said Sigve Brekke, EVP and head of Asia at Telenor.

“With Michael’s leadership qualities and vast international experience I am certain that we will continue to see strong results from the Telenor Pakistan team going forward.”

Telekom Austria appointed Siegfried Mayrhofer as CFO on June 1, 2014. Mayrhofer, who will serve a one-year term, succeeds Hans Tschuden, whose contract expires on May 31, 2014. He joined the company in 2000 and has held several management positions in controlling and accounting. He is the present CFO of subsidiary A1 Telekom Austria, a position he will retain. “I’m very pleased that with the appointment of Siegfried Mayrhofer we were able to fill the CFO position from within the group. This underlines the current high level of managerial competency in-house and is a sign of continuity,” said Rudolf Kemler, chairman, supervisory board.

Custom Connect has named Rutger Bevaart as the company’s new CTO.

Bevaart has held positions with KPN Research, KPNQwest and CMG. In 2005 he set up his own consultancy specialising in helping enterprises solve global connectivity challenges, where he worked with companies including KPN Mobile, Tele2, Achmea, Heineken and T-Mobile.

“We have been working with Rutger for a number of years and, as an external consultant, he has helped design and implement some of the most innovative connectivity solutions our customers have ever seen, regardless of the network complexity involved,” commented Olav van Doorn, co-founder of Custom Connect.

ElaineWeidman-Grunewald

Michael Patrick Foley

Siegfried Mayrhofer

Rutger Bevaart

GasLINE has a Germany-wide fibre-optic cable network

of more than 10.000 km. More than 100 international and

national companies rely on this network which links all

major telecommunication hubs and connects telehouses

and POPs in more than 100 cities. The network is gradually

expanded in line with customer needs.

For international connections, the GasLINE network links

up with dark fibre networks in neighbouring countries.

This offers the opportunity to connect your systems with

capitals like London, Paris, Warsaw, Vienna and other

European cities.

GasLINE GmbH & Co.KG Contact: Susanne Wesselmann

P.O.Box 1119 Phone: +49 (0) 28 34 / 70 32 - 43 96

D - 47638 Straelen [email protected]

Germany www.gasline.de


39 | corporate social responsibility

AT&T: AspireQ&A with Nicole Anderson, executive director of philanthropy at AT&T

What are the aims of AT&T’s Aspire programme?

Launched in 2008, the Aspire programme is focussed on helping students to graduate from high school who are at risk of dropping out early, and to prepare them for college and future careers. Th e programme was initiated as a result of a direct request from CEO Randall Stephenson, who saw a need in the community to have more children fi nishing high school. According to reports, about one in fi ve students in the US does not graduate high school.

We need an educated workforce to be an innovative and successful company and there is a great need to push children to graduate from college and into careers.

We focus on students in the ninth and twelfth grade (children aged approximate-ly between 14 and 18). At the time of launching there was not a lot of corporate support for these ages in the US. Th rough Aspire, we have promised to invest $350 million in education between 2008 and 2016. Investing in education is one of the most important things we can do for a strong future and our goal is to get to a 90% graduation rate in the US by 2020.

How has the programme developed?

At the beginning, we engaged our employees by organising a one-day job shadow opportunity for children to see what a day as an AT&T employee is like. Th is has grown into the Aspire mentoring academy. Under the mentoring academy, we expanded the scheme to include online mentoring and have collaborated with non-profi ts targeting at-risk students to off er further mentoring opportunities.

We have more opportunities for our employees to engage face-to–face with a mentee or online, or have them come to AT&T offi ces. Th e Aspire programme now also provides many funding opportunities to initiatives, non-profi ts and charities linked to education.

What projects has Aspire been part of?

A big part of what we do is seek major change through technology and innova-tion. Last year, we collaborated with Georgia Institute of Technology College and an organisation called Udacity in order to build an online Master of Science degree in computer science. Th e whole masters is done online through a platform,

and the aim of this is to increase access to education, making it more inclusive for everyone. It is accredited through Georgia Tech and this is a great alternative to getting a low crust master’s degree.

Classes began in January and 401 students were off ered admission during the spring 2014 semester. We have also worked with an organisation called GameDesk, a Los Angeles-based non-profi t, which with the support of a $3.8 million dollar Aspire contribution has developed a platform accessible from everywhere called Educade.

Launched in September last year, Educade is a teaching portal which has all types of educational games to keep kids interested in school. Th e portal, which teachers can access through a website, embeds lessons on mathematics and science or socio-emotional learning through games and provides an online library of free lesson plans for a diff erent range of ages and subjects.

How important is it to get children interested in studying science and maths?

STEM education (the fi elds of sci-ence, technology, engineering, and math-ematics) is a priority for us as part of the Aspire initiative. We work together with a foundation called We Teach Science, an organisation which aims to inspire students to excel in maths and science. We have partnered with them to help deliver an e-mentoring programme which is designed to get children comfortable with maths and science. In addition, we are

tell us your storyShare your latest CSR initiatives by contacting: [email protected]

looking for initiatives that try to bring more girls into the STEM fi eld, as we know they are defi nitely underrepre-sented in these areas. Th ere is a general trend for girls to stop taking maths and science in high school and only a small percentage continue to study a STEM discipline in college.

Does AT&T off er similar programmes outside of the US?

AT&T has recently launched a similar programme in Europe. Th e Aspire initiative is very popular in the US and when those employees who have been part of the programme and had a great experience get international assignments they want to take that experience abroad with them. Aspire was launched for a domestic issue of graduation rates in the US and we have now made it fi t for what works in the international community.

Th e Europe initiative is more focussed on addressing unemployment rates among youth. Th is involves collaborating with local schools to help with résumé building and interview skills, or having the children spend a day with an AT&T employee abroad.

It has been exciting to see our employees embracing a local initiative and giving an international fl are to the programme.

AT&T’s Aspire programme helps at-risk students remain in education


41 | market watch

Satellite provider O3b Networks will launch four satellites on July 10, following the launch of a number of satellites earlier this year. The four satellites will be launched into the O3b constellation by Arianespace, in a circular orbit at an altitude of 8,062km. The July launch completes an initial constellation designed to connect those countries and people with poor quality or no internet services – hence the name O3b, which stands for “the other 3 billion”.

A consultation on proposals from UK regulator Ofcom – for further cuts to the country’s mobile termination rates – is set to close on August 13 this year. A new mobile control charge would apply to all operators and result in termination rates dropping to

less than half a penny, as Ofcom attempts to lower costs for consumers. Mobile termination rates in the UK have fallen rapidly since Ofcom first imposed a control on the rates charged to the four largest network operators in 2011. Industry rates have since fallen approximately 80%, from 4p per minute to around 0.8p per minute.

Brazil is set to hold another 4G auction in August this year. Existing spectrum in the country is occupied by analogue broadcast TV and the auction is expected to free it up for 4G services. The auction was approved in May this year and new rules could boost the minimum price of permits to between R$12 billion and R$15 billion ($5.2 billion and $6.5 billion) from R$6 billion. The auction could not be arranged

ahead of the FIFA World Cup being held in locations across the country this summer.

August looks set to be a busy month for spectrum auctions, with Thailand also planning activity. Thailand‘s telecoms regulator, the National Broadcasting and Telecommunications Commission (NBTC), has revealed that the first auction will be held in August for two 1800MHz licences, and a further auction will be held in November for a 17.5MHz licence in the 900MHz band. TrueMove and Digital Phone hold the existing 1800MHz licences, which are due to expire in September. Although the winning bidders would only be able to use the licence once its previous agreement expires, NBTC said it would grant equipment permits to allow the winners to start early network construction.

ACT LOCAL Tim Phillips

T he customer is truly always right,” says Jim Leach, VP of marketing at RagingWire Data Centers,

“Customer feedback through NPS is fundamental to our business planning.”

RagingWire is one of an increasing number of telecoms companies that measure what its customers think of it through the metric called Net Promoter Score, or NPS. At the end of 2012, it claimed the highest NPS (+59) in the whole data centre industry.

Customer satisfaction has been a long-term problem for many telecoms and technology companies. Th e American Customer Satisfaction Index, which tracks this for companies and sectors, shows that satisfaction with fi xed-line providers is 5% lower than the national average for all companies, and has been in long-term decline since the 1990s. ISPs and wireless providers have similarly bad numbers.

In the experience of Rob Markey, the head of Bain Consulting’s Customer Strategy & Marketing Practice, companies often ask too many questions – with the best intentions – and so measure their failures in detail without acting on them at board level.

“We all say we want actionable information,” he says. “But often that’s just a code for ‘too much detail’.”

Fans of NPS, which Markey helped devise in 2003, say it solves this problem. It is a one-number metric: you ask your customers or business partners how likely they would be to recommend you on a scale of 0 to 10. People who answer 9 or 10 are promoters, those who answer 6 or below are detractors, and you subtract the percentage of detractors from the percentage of promoters to get your NPS.

It has many advantages: the survey is quick to do, the score is easy to understand and can be built into a process of continuous improvement. Even though its job is to build and operate data centres, which seems light years away from the operations of companies like Lego and Chick-fi l-A, Leach claims the number is a useful device for creating improvement at RagingWire.

Th e telecoms industry, however, is fi lled with companies using misguided applications of NPS. While NPS is successfully used in some B2B environments (RagingWire is an example), the exact question to ask is often a

problem. Recommendation for a $10m contract is not the same as for takeaway chicken. Bain Consulting recommends alternative questions, such as “how likely are you to continue to purchase from us?” or “how likely are you to recommend to colleagues that we do more of our business with you?” as more useful measures for B2B NPS implementations. Also, having a single number can lead to executives trying to move the number in the short term, rather than improve the business process – especially if a bonus is attached to it.

But by far the largest problem is that NPS, used by thousands of businesses worldwide, is often considered the outcome of, rather than the input to, a programme of improvement. Markey says he often sees his innovation being used, and wishes they had just asked him how to do it fi rst. Th e biggest problem, he says, is that the measurement does not create an action.

“Th e same thing happened with six-sigma or re-engineering: people wish they could get strong just by measuring things, without closing the loop,” he explains. “No one has ever become stronger simply by measuring the circumference of their biceps.”

Satisfi ed customers?

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