The coverage to move you forward - PageSuite

VOL 17 ISSUE 1 DECEMBER/JANUARY 2017

Cover sponsor: SPECTRUM ENTERPRISE

Business intelligence for the global carrier industry

The coverage to move you forward Capacity

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Big interview Peter Bithos, CEO of Hooq, on ambitions to rival Netflix in emerging markets


Special report Subsea cables: including OTT projects, Marseille’s digital port and cable update

Capacity

capacitymedia.com

Capacity

| 01

CONTENTS

Capacity magazine, December 2016/January 2017

NEWS & ANALYSIS


Big interview Peter Bithos, CEO, Hooq, on ambitions to be the biggest OTT in emerging markets


Special report Subsea cables: Including OTT projects; Marseille’s digital port and cable update

32 THE BIG INTERVIEW

04 EUROPE 06 DE-CIX SUES GERMANY 10 MIDDLE EAST

IPX will be crucial to delivering the internet of things and machine-tomachine services, say carriers

11 G.FAST VERSUS FIBRE

DATA SECTION

12 NORTH AMERICA

57 SUBSEA CABLE MARKET ǯƤ on capacity and deployment of international subsea cables

16 MEXICO WIRELESS capacitymedia.com

ON THE COVER

17 LATIN AMERICA

61 IPX BIG DATA MARKET

18 ASIA PACIFIC

Subsea special report: Capacity looks at what’s going on below the waves for global carriers

19 ASIA PARTNERSHIPS STRATEGIES

The IFRS standard, coming in just a year, will radically alter the way carriers record revenues and leases


Peter Bithos is CEO of Hooq, a new Singtel-backed over-the-top movie and TV service for emerging markets

27 EXECUTIVE INTERVIEW

im

Rafael Arranz, COO of Telxius Cable, on BRUSA and other priorities for the Telefónica’s cable operation


MEF chairman Andrew Bud on the impact of OTT messaging on the SMS market for the industry

38

OTTs and their new subsea projects

42

GTT acquires Hibernia: interview with CEO

44

Marseille, France’s digital port

47

Ultra-low latency services from Omantel

50

The new subsea cable boom

57

Subsea market data

62 APPOINTMENTS

SPONSORS

63 A DAY IN THE LIFE OF...

40 OMANTEL Driving digital transformation

The industry’s latest movers

Captain Guillaume Le Saux of the Pierre De Fermat, Orange Marine’s ƪ

53 AQUA COMMS Transoceanic dialogue

64 ACT LOCAL

54 SEA-ME-WE 5 A state-of-the-art connection

Stan Hanks, once CTO at Enron Broadband, thinks capacity may still become a traded commodity

64 MARKET WATCH

What developments has the industry to look forward to in the early months of 2017?

59 CHINA MOBILE

INTERNATIONAL Boosting subsea capabilities in Asia

or change in 2 ef 01

7

T

New CCO Carl Roberts on what he’s planning to do at Epsilon

ROCCO’s numbers on which services ơ introduce in the future

PEOPLE & DIARY Capacity

21 MARKET STRATEGY

THE BIG INTERVIEW page 32

34 BEYOND IPX TO IOT

SUBSEA

special report after page 37

One stop solution for ALL your Global Voice Services. 160 countries available 144 ITFS originations capacitymagazine.com Contact us today on +44 (0) 1733 393 360 or 0800 376 0220 or email [email protected]

107 DID originations 22 Mobile originations

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Cover image by Gavin Brightman

08 AFRICA

Carl Roberts is the new CCO of Epsilon Telecommunications, and is planning an ambitious strategy

PRESENTED BY CAPACITY CONFERENCES & TELEGEOGRAPHY 3-4 APRIL 2017, NEW YORK AT THE INTERSECTION OF TECHNOLOGY AND BUSINESS

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• Build new business relationships with potential suppliers, customers, and peers. • Develop new perspectives on various fields of the service provider community. • Discuss and develop your understanding of common challenges. • Interaction between the providers and buyers. Capacity

I had a very good time at the summit. It was great to speak to other companies and exchange experiences. Looking forward to coming next year. Pascal Balzarini, Associate Director Global IT Network Services, ACTELION PHARMACEUTICALS

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editor’s letter | 03

Stretching global

communications T

he role of global communications – mostly in the form of social media – has been much discussed throughout 2016, particularly in the run-up to the US presidential election in November. We have been taking global communications for granted for a century and a half. We are used to getting news fast, thanks to the combination of telecommunications and your medium of choice – newspapers, radio, television and now the internet. Until a century and a half ago that was not the case: news travelled on land at the speed of the fastest horse – or the fastest ship across the seas. But 2016 was the year in which Europe and North America have been in continuous, unbroken communication by subsea cable for 150 years. After a couple of unsuccessful attempts, commercial service started on 28 July 1866 – and the link has never been broken since. Subsea cables have continued to transform the world throughout those 150 years. Those early cables didn’t last long, but before they went out of service new cables were funded and laid. Since then, Europe and America have never been out of direct contact; the subsea industry and its financial backers have replaced and developed and expanded the infrastructure – faster, at times, than was needed. Capacity Cables have stretched further: across the Indian and Pacific oceans, along the coasts of Africa and Asia, connecting Japan to China, India to Egypt, Australia to Singapore. The capacity of all these cables has increased enormously to cater for all. The instant international services that all these cables bring have transformed the world: not just the world of those of us working in big cities, but the worlds of almost everyone alive today. So, at the close of this 150th anniversary year of that great transatlantic achievement of 1866, subsea industry: feel yourselves heartily congratulated.

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Management CEO Ros Irving [email protected]

News and content editor Jason McGee-Abe [email protected] Twitter: @JasonMcGeeAbe

Business group manager and publisher Paul Collinson [email protected]

Senior reporter James Pearce [email protected] Twitter: @jamespearce87

Editorial Editor Alan Burkitt-Gray [email protected] Skype: alanbg Twitter: @alanburkittgray Managing editor Bill Boyle [email protected] Twitter: @williamhboyle

Freelance writers Guy Matthews Tim Phillips Sue Tabbitt Sales Sales director Gareth Morris [email protected] International sales manager Michael Broughton [email protected]

International sales executive Charles Newman [email protected] Events General manager, conferences Rhian Collinson [email protected] ITW event director Ross Webster [email protected] Production Production and research coordinator Natalie Bolger [email protected] Design Freelance designer Gavin Brightmam

Accounts Administrative assistant Chantelle Spicer [email protected] Subscription enquiries Customer services [email protected] tel +44 20 7779 8610 fax +44 20 7779 8602 Printer Stephens and George, UK Next issue February/March 2017 Published on 27 February Directors John Botts (Chairman), Andrew Rashbass (CEO), Sir Patrick Sergeant, The Viscount Rothermere, Colin Jones, David Pritchard, Andrew Ballingal, Tristan Hillgarth, Paul Zwillenberg

How to contact Capacity Capacity magazine is published by Telcap, a division of Euromoney Global Limited TelCap, 8 Bouverie Street London EC4Y 8AX, UK tel +44 20 7779 7227 (switchboard) fax +44 20 7779 7228 www.capacitymedia.com Capacity (ISSN 1471-762X) is published six times a year by TelCap. Annual subscription €250, £210, $340. © TelCap, 2017. 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, recording or otherwise, without the prior written permission of the copyright owners. Although Telcap has made every effort to ensure the accuracy of this publication, neither it nor any contributor can accept any legal responsibility whatsoever for consequences that may arise from errors or omissions or any opinions or advice given.

04 | europe

EC AND EIB ANNOUNCE €500M BROADBAND FUND

Günther H. Oettinger, EU commissioner: “I am grateful to our financial partners.”

T

he European Commission (EC) and the European Investment Bank (EIB) have launched a €500 million investment fund aimed at improving EU broadband infrastructure. The Connecting Europe Broadband Fund (CEBF) will target areas currently lacking in high capacity and will focus on between seven and 12 projects, investing between €1 million and €30 million in each between 2017 and 2021. The CEBF will be managed by Cube Infrastructure Managers, who will identify the projects. So far, German development bank KfW Bankengruppe, Italy’s Cass Depositi e Prestiti, and French institution Caisee de depots et consignations, have all agreed to invest, along with the EC itself which will

put forward €100 million from the Connected Europe Facility. The CEBF is expected to hit the €500 million mark during the first funding round, before investments can start being made from the fund. The Commission said the CEBF is expected to unlock more than €1 billion for investment in broadband deployment across Europe, to the benefit of more than 20 countries by 2021. In July, the European Union laid out plans to connect every citizen in Europe with at least 100Mbps broadband speeds by 2025. “I am grateful to our esteemed financial partners for the establishment of this broadband fund,” said Günther H. Oettinger, the commissioner for the digital economy and society. “It is an important development for smart and efficient funding of broadband projects, especially in underserved areas, in line with the spirit and the letter of the Investment Plan. It is a great step towards a European Gigabit Society for all.” Capacity Werner Hoyer, EIB’s president, added: “High-speed internet is fundamental to the success and development of businesses. Until today, smaller-scale broadband projects did not have easy access to funding and EU financial instruments did not exist.

TRANSTELECOM AND RETN LAUNCH NEW EUROPE-ASIA TRANSKZ NETWORK TO CONNECT WITH HONG KONG RETN and Kazakhstan’s Transtelecom have announced the launch of a new terrestrial network, TRANSKZ, to connect the RETN pan-European network with Hong Kong. The companies said this new network is one of the shortest to connect Hong Kong to the Russian border on two routes passing through Kazakhstan, via Almaty and Astana to Dostyk. Depending on which route is used, the round-trip time (RTT) can vary from 166 to 180ms. “The TRANSKZ network is definitely a success,” said Dmitry Samarin, CEO at RETN. “As a result of the geographical development of our network we can now offer our partners and customers improved connectivity and resilience to the Far East. “Thanks to the partnership which we have with Transtelecom, RETN has far surpassed the existing routes it has into the market.” The TRANSKZ network allows for the transportation of traffic from sub-1Gbps to n x 10Gbps between Europe and East Asia linking three of the world’s biggest financial centres, London, Frankfurt and Hong Kong.

EQUINIX WORKS WITH LLOYD’S ON CATASTROPHE MODELLING PLATFORM Equinix has announced a collaboration with the London insurance specialist Lloyd’s to develop and launch a catastrophe risk modelling platform, providing further choice and the potential for deeper analysis to insurers. The framework, which has taken six years to develop with over $4 million of investment, is hosted in Equinix’s interconnected insurance ecosystem and offers insurers access to a wider range of models from around the world. Oasis Loss Modelling Framework is fully open source, and has been tested inside Equinix’s London International Business Exchange data centre, LD5. Equinix’s partners Cinnober and Datapipe have also provided hardware for the system, which can model anything from wild fires in Australia to hurricanes in the Americas. “Equinix’s ability to interconnect businesses and partners has led to the launch of something that has the power to change how an entire industry works,” said James Maudslay, Equinix’s global

head of insurance. “As our business ecosystems continue to grow and more collaborations like this are formed across industry sectors, we will see more and more of this type of disruptive innovation – it’s a very exciting time for

Equinix and our customers.” The collaboration has involved data centre specialist Equinix, Lloyd’s of London and the Lloyd’s Marketing Association (LMA), along with 10 other managing agents.

Equinix is working with Lloyd’s to launch innovative catastrophe risk modelling platform december/january 2017

europe | 05

TELIA COMPANY REPOSITIONS TELIA CARRIER AND SCRAPS REGIONAL MANAGEMENT

T

elia Company has announced a restructure of its business that will see wholesale arm Telia Carrier moved into its newly created Corporate Holdings division. The reshuffle sees it scrap its regional management layer in favour of appointing individual country heads who will report directly to the group executive management (GEM) Telia Norway and Sonera in Finland will become separate units from 1 January 2017, with Abraham Foss heading up the Norway division, and Stein-Erik Vellan becoming CEO of Sonera. Vellan replaces Valdur Laid in the role, and both will become members of the GEM. Telia’s units in Lithuania, Estonia and Denmark will become a cluster organisation which will be led by head of corporate development Henriette Wendt. Corporate Holdings will be a newly created unit overseeing Telia Carrier,

along with Telia’s holdings in Turkcell and Megafon. It will be headed up by current head of region Europe Robert Andersson, who will remain on the GEM. It will also contain Telia’s Lavian operations, LMT and Lattelekom, which Telia Company does not have operational control of.

Foss: Will head up the Norway division

Capacity

UNIFI-IX LAUNCHES NEW INTERNET EXCHANGE IN EURO 600,000 DUBLIN INVESTMENT UNIFI-IX has launched a new internet exchange (IX) in Dublin, making it the fourth city to be connected to its 100G network. The company has invested €600,000 into the new IX, which will offer cloud, internet and content services. It offers switching capacity of 13Tbps and offers a range of speeds, from 100Mbps through copper to fibre 100G. UNIFI-IX’s network connects with four Telehouse data centres in London, an Equinix site in Manchester, and another data centre in Birmingham. The new

exchange will be used to link two Equinix’s Dub2 and Dub3 sites in Dublin. It is also set to go live in France, Germany and the Netherlands by the end of January 2017, with outlined plans to establish points of presence in New York, Dallas, North Virginia and Dubai by the end of May 2017. “Our new infrastructure will significantly reduce the number of steps needed to interconnect major cloud, internet and content services,” explained Tom Sanders, managing director of Unifi-IX.

EU APPROVES EC’S FAIR USAGE PLAN FOR CHEAPER ROAMING Wholesale data caps remains the last hurdle for the EU to overcome after member states approved a fair usage policy over European roaming proposals. The member states voted to approve fair use proposals put forward by the European Commission, meaning they can be adopted in mid-December. The proposals mean that consumers or businesses with unlimited data packages will face restrictions on how much data they can use while travelling within Europe. It was a key concern raised by figures within the industry. “This is an important step towards the end of roaming charges on 15 June 2017,” vice president Andrus Ansip and commissioner Günther Oettinger said. “Our work does not stop here. To definitively consign roaming charges to history, we now have to focus our efforts on the proposal on wholesale prices operators charge each other while consumers use their mobile phones abroad.”

TELEKOM AUSTRIA SUBSIDIARY A1 HITS 500MBPS IN PRE-5G TESTS Telekom Austria transmitted speeds of 513Mbps over its live A1 network using a mobile route, while it realised speeds of 463Mbps on a smartphone in tests carried out with Nokia. The trial involved triple carrier aggregation across the 2.6GHz, 1800MHz and 800MHz frequencies. This was combined with 256 QAM modulation, to boost speeds above those which are normally found when using LTE technology.

TELEFÓNICA COMPLETES MASSIVE MIMO TRIAL WITH ZTE Telefónica has completed its first massive multiple input, multiple output (MIMO) trial in Europe with ZTE as it continues to develop 5G technologies. MIMO technology increases the capacity of a mobile radio link by using multiple transmit and receive antennas to exploit multipath propagation. The trial was carried out in a lab at Telefónica’s headquarters in Madrid. ZTE said the test, the first of its kind to be carried out by Telefónica in Europe, had “exceeded expectations” by improving cell-edge data rate up to six times that of capacitymedia.com

traditional LTE solutions. During the test, the two companies ran a number of applications over the network including virtual reality and streaming 2K video content. Enrique Blanco, CTO, Telefónica group, said: “We are very pleased with the results of the Pre5G Massive MIMO live trial with our partner ZTE. “We believe Pre5G massive MIMO technology can solve the internet’s last mile problem by improving Internet access and therefore enhancing the user experience. Massive MIMO will be a

fundamental technological enabler for future 5G networks.”

MIMO test “exceeded expectations”

06 | news analysis: DE-CIX

DE-CIX SUES GERMAN GOVERNMENT OVER PRIVACY CONCERNS ǧ

T

he UK government recently saw the so-called Snooper’s Charter signed into law. It forces ISPs to hand over customer data to security forces if there is a potential investigation into terrorism. Though such orders already exist in German law, the German government is also trying to pass stronger surveillance laws. However, it is the existing law that DE-CIX is asking for clarity over, in a lawsuit that was filed in September. “We want to be clear [over data privacy], because the German constitution is very conscious about surveillance, partly because of our history with the Third Reich and partly from the Stasi in East Germany,” DE-CIX supervisory board member Klaus Landefeld said. Though only filed in September, the lawsuit had been several years in the making, Landefeld adds. Concerns first arose at the carrier in 2008, when DE-CIX received a request from the German secret service (the Bundesnachrichtendienst, or BND) to wire-tap its Frankfurt exchange.

An invitation to the chancellery After expressing concerns, representatives of the firm were twice invited to the German chancellery to discuss their reluctance to get involved. There, government figures assured them what the security specialists were proposing was acceptable under German law, Landefeld claimed. “We decided that, if the chancellery backed it and they said it was in line with German law, then we would comply,” Landefeld told Capacity. “We received some surveillance orders. We started receiving some of these orders, and we cooperated, as our only other option was to challenge them legally.” When former NSA contractor Edward Snowden leaked thousands of NSA documents back in 2013, Germany launched a parliamentary inquiry to

investigate the extent of foreign secret services spying in Germany. Landefeld, who appeared as a witness before the committee, says this was when the wider issue of surveillance in Germany became more recognised and played an integral role in spurring DE-CIX to submit its lawsuit. “That encouraged us to start the lawsuit as we felt we need legal certainty. So we filed it with the BundesCapacity verwaltungsgericht (the Federal Administrative Court) in Leipzig because it is their responsibility - this is the first place to submit a complaint on these constitutional matters. So we filed there with the view that they would refer it to the constitutional court itself. They would decide if they uphold that law.”

Interpret the law ‘generously’ Currently, the BND can take raw data streams from the exchange point and is permitted to search it for specific phone numbers or email addresses. In a damning conclusion, several critics claim the BND uses a “rather generous inter-pretation” of the law to access much more data. Landefeld agrees. “We are not allowed to look at the data that passes through our system unless our customers ask us to look at it. So we have analytics services which our customers sign into, for example, but we still don’t examine it any further – we do not analyse the IP address for example. Every carrier makes their routing system, so we cannot tell whether traffic is national or international.” The ramifications of the case could be significant. Should the court find that the G10 requests were unconstitutional, then every one of them could be thrown out, casting doubt on any court cases or investigations they have affected. For carriers in Germany which have cooperated with the orders, it may give them more authority to say no if a request appears to be contrary to German law.

Landefeld: The law has to be made clear

For intelligence services, too, there is a lot at stake. A change to the law that will give governmental bodies more ability to investigate data is under consideration in the Bundestag (German parliament). However, it needs to be officially signed into law. Should DE-CIX win, it will not only force the German government to reassess its current intelligence gathering laws, but it will also have to look at the proposed legislation too. DE-CIX’s lawsuit is not the only one that has been submitted against the G10 orders, as several more companies have filed against the government, including Amnesty International. None of these are telecoms companies, however, leaving DE-CIX as the sole combatant from the industry in a case that could have grave consequences for carriers and internet exchanges. december/january 2017

Capacity

08 | africa

LIQUID TELECOM WINS REGULATORY APPROVAL FOR TANZANIA ISP ACQUISITION

Nic Rudnick: Pleased with final approval

L

iquid Telecom has received final approval from regulators to become the largest shareholder in Tanzanian ISP Raha. The Tanzania Communications Regulatory Authority (TRCA) rubberstamped Econet Wireless subsidiary Liquid Telecom’s takeover, marking the pan-African carrier’s initial moves into Tanzanian territory. Raha is one of the country’s largest internet service providers, supplying fibre, satellite, WiMAX and Wifi solutions to

over 1500 businesses. The TRCA first notified Liquid Telecom of its approval on 8 December 2016. “We are thrilled with this approval and look forward to being part of a panAfrican connectivity movement,” said Aashiq Shariff, CEO of Raha. The move will give Liquid Telecom’s enterprise and wholesale base direct access to Tanzania, as well as eastern, central and southern Africa. Overall, Liquid’s fibre network stretches 40,000km across 12 countries. “We are very pleased to announce that this transaction has received its final approval. The agreement enables Liquid Telecom to expand its footprint into Tanzania, a growing and dynamic African country,” said Nic Rudnick, Liquid Telecom’s CEO. Tanzania is the latest market to be added to the Liquid group’s sphere, which Capacity already includes the countries of Botswana, DRC, Kenya, Lesotho, Mauritius, Rwanda, South Africa, Uganda, the UK, Zambia and Zimbabwe. Liquid Telecom joined a number of these markets through acquisitions. When it entered the Kenyan market, it bought ISP Kenya Data Networks. The company has also struck a deal to buy South African ISP Neotel, and has announced a joint venture with Botswana Power Corporation to launch a wholesale unit in Botswana.

ICASA APPROVES LIQUID TELECOM’S NEOTEL TAKEOVER WITH NO CONDITIONS The Independent Communications Authority of South Africa (ICASA) has approved Liquid Telecom’s takeover of Neotel with no conditions. Liquid will now take control of Neotel from Tata Communications during the first quarter of 2017 in a transaction which is worth approximately $429 million. To fund the deal, which was first announced in June 2016, Liquid Telecom partnered with Royal Bafokeng Holdings (RBH) which will now take a 30% stake in Neotel. The acquisition gives Liquid over 40,000km of cross-border, national and metro fibre networks. The deal also includes Neotel’s Tier 3 data centres in Johannesberg and Cape Town, which have a combined 1,700 square metres of rack space. Neotel’s network connects with SAT-3, SAFE, SEACOM, EASSy, and WACS cables, and is either an owner or landing partner on all of these cable systems. Nic Rudnick, group CEO of Liquid Telecom, said: “We will be able to offer African companies the very highest quality and most extensive connectivity on the African continent. “We appreciate the efficiency and speed with which this transaction has been dealt with by both ICASA and also the Competition Commission,” Rudnick said to Capacity. Liquid has also bought a large share Tanzania’s ISP, Raha.

TUNISIE TELECOM SECURES €100M LOAN FOR NETWORK INFRASTRUCTURE Tunisie Telecom has secured a financing agreement for €100 million from the European Investment Bank (EIB) to develop its network infrastructure. The deal was signed by Nizar Bouguila, CEO of the telecoms operator, and the president of the EIB, Werner Hoyer, at an official ceremony in Tunisia. “In view of the challenges currently facing Tunisia, it is our responsibility to act rapidly and decisively to restore the confidence of public and private investors,” said Hoyer. “This is why we have decided to step up substantially our activity in Tunisia from now until 2020, with an overall investment of €2.5 billion to support the public and private sector in key sectors of the Tunisian economy. This will include the arenas of private entrepreneurship,

sustainable infrastructure, social housing, energy, education and training of young people and also foreign direct investment and innovation.” The operator plans to use EIB’s loan to develop its landline and mobile high-speed networks by establishing 1,500 4G stations across the nation, and laying 2,000 km of fibre optic cable. Part of the financing will be used to modernise, including the national transport network, through the establishment of 100 Gbps and 400 Gbps links. The metropolitan collection network will also be upgraded by implementing, for the first time, the CWDM technology, to meet the growing de-mand for high-speed networks. According EIB’s Hoyer, the loan to Tunisie Telecom is to support the operator in the process it initiated in the past

months to revitalise its business: “This facility is, for us, more of a commitment that we will position ourselves more in Tunisia’s ICT market to improve internet across in the country, and in its remote areas particularly.”

Werner Hoyer: Challenges facing Tunisia december/january 2017

africa | 09

SOUTH AFRICA’S LINKAFRICA CONNECTING TO NEWTELCO DATA CENTRE IN MIDRAND

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erman-owned South African data centre operator NewTelco is to use LinkAfrica’s carrier-neutral fibre network in the Midrand region. LinkAfrica will terminate its fibreconnected residential and business customers at NewTelco’s data centre. LinkAfrica has already started its fibre rollout and a number of customers are already connected to the data centre. Eckart Zollner, head of new business development at NewTelco, told South African media: “We are excited to be a

part of LinkAfrica’s expanding network as a breakout point for any LinkAfrica fibre client in Midrand.” LinkAfrica’s special projects manager, Andre Hoffmann,Capacity told ITWeb: “The data centre offers all the benefits we look for in a data centre – good security, excellent cable management and maintenance standards, great uptime and availability, and peace of mind when it comes to power supply – an especially key point in a country not well known for its reliable electricity delivery.”

ZIMBABWE FINALLY TAKES CONTROL OF VIMPELCOM’S TELECEL OPERATOR The government of Zimbabwe has finally raised the money to buy out VimpelCom’s stake in Telecel, after a long-running dispute and many premature reports in the local press that the deal had been completed. In April 2016 VimpelCom said it still owned its 60% share of Telecel, despite a claim from Zimbabwe’s telecoms minister Supa Mandiwanzira that it had bought the stake for $40 million. Now VimpelCom has formally confirmed that it and its 51.9% owned subsidiary, Global Telecom Holding (GTH), have completed the sale for the reported $40 million. The deal is likely to make way for Zimbabwe’s plans to build a national fibre infrastructure and a shared mobile infrastructure. Telecel is now owned by ZARNet, the Zimbabwe Academic and Research Network, an internet service provider that capacitymedia.com

is wholly owned by the government of Zimbabwe through the Ministry of Information Communication Technology, Postal and Courier Services. The completion of the deal means that the Zimbabwe state now owns two of the three mobile operators in the county, Telecel and NetOne, leaving only Econet Wireless, which is owned by the same group as wholesale fibre operator Liquid Telecom, in the private sector. It also means that the country is more likely to go ahead with its plan to insist that all mobile operators share infrastructure. The Postal and Telecommunications Authority of Zimbabwe (Potraz) issued a statement in mid-November saying that it “shall exercise licensing and regulatory powers in respect of infrastructure sharing”, saying that plans could cut capital expenditure by up to 60% and lead to savings passed on to consumers.

DARK FIBRE AFRICA VIRTUALISES ITS OFFERINGS WITH CIENA SOFTWARE Dark Fibre Africa (DFA) is to deploy Ciena’s Blue Planet orchestration software, accelerating service delivery across the existing multi-vendor network. The open-access fibre infrastructure provider, which has close to 8,000km of fibre infrastructure across South Africa, will be able to provide for 500 more new services a month and allow its customers to enjoy new, virtualised add-on services. This will also help to improve South Africa’s ICT infrastructure, improving network readiness, increase competition and make high-speed connectivity more affordable. “DFA’s role is to enable access to efficient, effective connectivity. As we expand to provide more Ethernet and virtualised services, we are investing in technologies that help us streamline the process and make this change economical,” said CTO Andreas Uys.

ERICSSON AND QUALCOMM DEMONSTRATE GIGABIT-CLASS LTE RUNNING IN NIGERIA Ericsson and Qualcomm have demonstrated Gigabit-Class LTE for some Nigerian and other African mobile networks using licensed spectrum. The tests, an important milestone on the road to Africa’s first 5G networks, used peak data speeds of over 900Mbps and were carried out using Ericsson radio access network equipment and a Qualcomm Snapdragon X16 LTE modem James Munn, vice president business development, Qualcomm South Africa told Nigerian News: “This continent’s first announced demonstration of this technology using licensed spectrum makes use of the Snapdragon X16 LTE modem, which is expected in multiple devices during next year, and underlines Qualcomm Technologies’ commitment to African ICT development.”

James Munn: Commitment to African ICT

10 | middle east

DU TESTS NOKIA’S 40GBPS TWDM-PON TECHNOLOGY

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AE-based service provider du has tested Nokia’s Time and Wavelength Division Multiplexing Passive Optical Network (TWDM-PON) innovative fibre technology, reaching aggregate speeds of 40Gbps. TWDM-PON technology expands the capacity of du’s fibre access network by providing additional wavelengths over fibre. This delivers up to 40Gbps and enables significantly higher upload and download speeds. Du, which offers 1Gbps services in the UAE, can efficiently upgrade its existing GPON network to the next-generation with XGS-PON or TWDM-PON on a single fibre. “With the increased use of smart devices and bandwidth-hungry applications by our subscribers, the demand for an ultra-fast network also keeps increasing,” said Jasim Alawadi, vice president of network infrastructure and services at du. “Keeping our customers on the top of

Jasim Alawadi: Demand is increasing

our mind, we pioneer by introducing market-leading technologies to them. Our successful test of Nokia’s TWDM-PON is proof of this. We are confident that our cooperation will take the country’s journey toward IoT and smart cities to the next level.”

OMAN TO LAUNCH MOBILE CONNECTIVITY IN 410 VILLAGES The Telecommunications Regulatory Authority (TRA) of Oman has promised that it will install 312 new telecom stations which will provide mobile connectivity in 410 villages. The installations will take place across two phases and will be completed by 2017, TRA said, as it looks to expand mobile connectivity across Oman. The first phase will see 200 mobile masts installed, and is already underway with 138 installations complete. The rest are expected to be up and running by the end of March 2017. The second phase will see a further 210 built, according to the Times of Oman, although the sites have yet to be approved and will require construction permits. NRA is aiming to complete phase two by the end of next year.

Capacity

CELLCOM MOBILE ISRAEL SETS OUT TO LIQUIDATE OPERATOR GOLAN TELECOM Cellcom, Israel’s largest mobile-network operator, is aiming to liquidate Golan Telecom, claiming that the rival company owes it $156 million for using its network. According to Reuters, Cellcom submitted a request for an interim liquidator to be appointed urgently to Golan Telecom, to a Tel Aviv court in November 2016. Golan was launched in 2012 when the government decided to issue additional licences to encourage competition. It is owned by French businessmen Michael Golan and Xavier Niel, the majority owner of French telecoms group Iliad. Golan managed to carve out a 10% niche for itself in the Israeli mobile market by undercutting its big three rivals’ prices. Cellcom tried to buy Golan for $300 million in 2015. However, Israel’s regulators opposed the purchase, arguing

that the deal directly contradicted their attempts to introduce competition. Attempts to find another buyer have been unsuccessful. Speculation recently centered on Elco Holdings, together with former Pelephone Communications CEO Gil Sharon, but sources say that no purchase was in the offing at this time. Cellcom said it could not predict what the court would decide on its liquidation request, or how it would affect its efforts to collect the money it says Golan owes it. Golan rejected the company’s demand it pays the NIS 600 million on December 3, 2016, according to the SPA. In case such failures are not resolved shortly to Cellcom Israel’s satisfaction, it will continue the legal proceedings already commenced against Golan and may take additional measures, including filing a liquidation request against Golan.

Attempts to find another buyer for Golan Telecom have been unsuccessful

Oman regulators want to expand service

BEZEQ ‘TO SELL ISRAELI SATELLITE OPERATION’ TO CHINESE COMPANY Israeli operator Bezeq is selling wholesale satellite company Spacecom to a Chinese investor, according to space specialists. The company has been listed for sale on the market for at least three years. However the price is believed to have dropped after its latest satellite, the Amos 6, was lost in the SpaceX launcher failure in September. But recent reports say Beijing Xinwei Technology is close to completing its purchase of the operation, through Xinwei’s subsidiary, Luxembourg Space Telecommunications, based in the European grand duchy. The original price was believed to be $285 million, but reports say Xinwei has been able to knock a third off in order to complete the deal. december/january 2017

news analysis: g.fast | 11

G.FAST VS FIBRE – TWO TRIBES AT WAR THE PROBLEM WITH G.FAST IS THAT IT JUST ISN’T SHINY AND NEW ENOUGH FOR SOME Ǥǡ ǡ ǧ SPEED IS SUFFICIENT TO WIN OVER THE DOUBTERS

G

.fast is a digital subscriber line (DSL) protocol standard for local loops shorter than 500m, with performance targets between 150 Mbit/s and 1 Gbit/s, depending on loop length. High speeds are only achieved over very short loops. Although G.fast was initially designed for loops shorter than 250 meters, vendor Sckipio, in early 2015, demonstrated G.fast delivering speeds over 100 megabits over 500metres. Carriers cannot afford to be geeks about technology. Unlike other businesses which can afford to pick up a new technology only to discard it when it goes out of fashion, once a carrier has committed to a subsea cable, or fibre, and laid it in the ground, those are decisions it has to live with for decades. There are those purists who say that fibre is the only cable technology they would use. Going back to copper for these purists is just a step too far backwards. These people generally fall into the technology camp. They reel back in horror at the thought of giving their users anything that is not at the very cutting-edge. They also tend to see G.Fast as a shortcut or a bit of a ‘second-best’ when fibre is not an option. Then there are those who see the obvious benefits of G.Fast and the most obvious is that it is cheaper to purchase and deploy than fibre. And this is where the problems arise, because the second, pro-G.Fast camp, tends to emerge from the accounting divisions of carriers, while the geeks who love fibre tend to be the technologists. In other words, they come from two different tribes.

Faster than speeding fibre Until recently it has been perceived wisdom that fibre will, ultimately, be faster than G.Fast ever could. Now with ultra-fast G.Fast speeds beginning to emerge the purist arguments are being rolled-back. If the final G.Fast speed, which is what matters to users, can be incrementally hiked year on year then who cares whether it is fibre or something else beginning with a G? Carriers have to invest heavily in their networks so they try to avoid short-term investments. The networks have to be highly reliable, scalable and capable of long-term capacitymedia.com

Capacity

G.Fast vs fibre - some people think that G.Fast is just a bit retro

growth. So the likes of BT or Deutsche Telekom are not going to invest in G-Fast unless there are good reasons. Israeli chipmaker Sckipio recently announced a new G.Fast technology which delivers upload and download speeds of 750 megabits per second. This astonishing speed is a full fifty times faster than today’s average broadband offering. G.Fast is often thought of as a mature technology – but it is still evolving. BT’s managing director of strategy, service and operations Mike Galvin has called G.Fast a “game-changer”, and said its initial field trials matched the 300Mbps speeds obtained during pre-trial lab tests.

CSPS still showing interest Kouroush Amiri, vice-president of marketing at Ikanos – was talking at G.Fast events last year that speeds of 300Mbps were resulting in great interest being shown by telecoms firms, and also claimed that his CSP customers were asking how they could get to speeds of a gigabit. “Hitting that speed is very important to telcos, and they also want to address a larger portion of their network, from 100m and further out,” he said.

By the beginning of 2017 we could be seeing speeds far in excess of that. Sckipio has just announced G.Fast technologies which will reach 1.5 gigabits per second. It seems that the need for speed is insatiable. One of the problems that has beset G.Fast so far is that upload speeds have been consistently slower than download speeds. In a world of 4K video and TV that problem is no longer one users can live with and one which G.Fast has now solved with simultaneous super fast upload and download speeds. As Geert Fore, director capacity trading for BICS said at a recent event in Marseilles: “Every time we think, as suppliers, that there can be no more need for capacity something else comes along which stretches our ability to provide capacity whether that be 4K TV, You Tube or gaming. And who knows what new OTT services are being dreamed up.” Next year AT&T plans to start using G.Fast in conjunction with its DirecTV satellite service. With the technical problems of introducing fibre inside homes seemingly insurmountable, it looks like the G.Fast supporters tribe is coming out on top and it is not just cost which is the deciding issue.

12 | north america

ZAYO TO ACQUIRE ELECTRIC LIGHTWAVE FOR $1.42BN

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ayo Group Holdings has announced it is to acquire Electric Lightwave in a $1.42 billion cash deal to expand its fibre network on the US West Coast. Zayo expects significant revenue and more than $40 million in annual savings from the acquisition of Electric Lightwave, previously known as Integra Telecom, which provides infrastructure and telecoms services primarily in the western US. It has 8,100 route miles of long-haul fibre and 4,000 miles of dense metro fibre in Portland, Seattle, Sacramento, San Francisco, San Jose, Salt Lake City, Spokane and Boise. “Electric Lightwave provides us another unique and dense regional fibre network that advances our position as the only national independent infrastructure provider remaining in the US,” said Dan Caruso, chairman and CEO of Zayo. “Electric Lightwave has both strong metro fibre assets

in key West Coast markets and capacity and routes that will considerably augment Zayo’s intercity footprint.” This is just the latest merger to surface in the industry, which recently saw CenturyLink and Level 3 agree to merge in a $34 billion deal as well as Windstream and EarthLink agreeing to merge in an all-stock deal valued at £1.1 billion. “Approximately 40% of Electric Lightwave’s existing revenue aligns with Zayo’s infrastructure-focussed business segments and will be rapidly integrated into the core Zayo organisation, processes and systems,” a company statement said. “The remainder, which is a valuable and viable cash-flow generating business, has a customer base that aligns well with Zayo’s Canadian SME and voice businesses.” Zayo expects to close the deal Q1 2017, subject to regulatory approvals.

Electric Capacity Lightwave has both strong metro fibre assets in key West Coast markets” Dan Caruso, chairman and CEO, Zayo

Dexter Goei: Taking fibre into US homes

ALTICE TO ENHANCE US CABLE NETWORKS TO OFFER HOMES 10GBPS French group Altice is planning to upgrade the two US cable networks it bought at the end of 2015, under a project called Generation GigaSpeed. Altice bought Cablevision (now operating as Optimum) for $17 billion and Suddenlink for $9 billion and plans to enhance their networks to deliver 10Gbps. The company, now the fourth largest cable operator in the US, says it will build a fibre-to-the-home (FTTH) network in a five-year programme starting in 2017. “Across the globe Altice has invested heavily in building state-of-the-art fibreoptic networks, and we are pleased to bring our expertise stateside to drive fibre deeper into our infrastructure for the benefit of our US Optimum and Suddenlink customers,” said Dexter Goei, chairman and CEO of Altice USA. The company, founded by Patrick Drahi, said: “Altice USA will extend fibre deeper into its existing hybrid fibre coaxial network and leverage proprietary technologies developed by Altice Labs to create its state-of-the-art system.”

CONGRESS GRILLS AT&T OVER PLANNED $85BN TIME WARNER MERGER AT&T’s leader has faced a fierce grilling from US senators over competition concerns around its planned $85.4 billion bid to buy Time Warner Entertainment. Randall Stephenson, chairman and CEO, appeared alongside Time Warner chief Jeff Bewkes to answer questions put forward by the Senate antitrust commission over the proposed takeover, one of the biggest in telecoms history. The deal was announced in October 2016 but was immediately met with opposition. President-elect Donald Trump promised to block the takeover, although reports claim he has softened his stance since winning the presidential election. Senator Richard Blumenthal, a Democrat, challenged the two CEOs to address Trump’s threat to block the deal, with Bewkes and Stephenson both pledging it would not

influence the coverage by news outlets such as CNN, which is owned by Time Warner. Congress will not rule on the deal, as it will be reviewed by the Justice Department and possibly the Federal Communications Commission, but senators expressed concerns around the merged company’s ability to use its power to dictate rates and terms to other networks, by concentrating too much power into one company. “What this merger is not about is consolidation either in media or telecom,” Stephenson said. “Our intent is to disrupt the existing pay-TV model. We want to get the largest amount of content to the most people at the lowest cost. And we want consumers to pay for their content once and then watch it anywhere at any time. Every episode, every season on whatever device they choose.”

Stephenson: Disrupt the pay-TV model

december/january 2017

north america | 13

CANADIAN REGULATOR BACKS WHOLESALE ACCESS TO LASTMILE INFRASTRUCTURE

Blais: Australian and UK wholesale ideas

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he head of Canada’s regulator has waved the threat of structural separation at the country’s three big operators if they resist wholesale access by competitors. Jean-Pierre Blais, chairman of the Canadian Radio-television and Telecommunications Commission (CRTC), pointed towards Australian and

UK solutions that allow competitors equal access on a wholesale basis to last-mile connections to homes and businesses. “If the winds of change blow too hard and they refuse to bend in the wind, the tree may break at the trunk rather than lose a few leaves,” Blais told Bell, Rogers and Telus in a speech at the annual conference of the Canadian chapter of the International Institute of Communications. Blais invited the industry “to look abroad”. He said: “In Australia and the UK, for example, consumer pressure and government policy has resulted in, or is seriously contemplating, the structural separation of broadband providers between wholesale and retail.” In Australia the government-backed National Broadband Network has taken over Telstra’s last-mile network and provides equal access to all operators. In Capacity the UK, BT subsidiary Openreach has a similar role, which is being strengthened after a review by the regulator, Ofcom. In Canada, “large companies will have to share their fibre networks with competitors, in order to give Canadians more choice of faster internet service that will power the broadband home and business of the future,” said Blais.

FCC ACCUSES AT&T AND VERIZON OF VIOLATING NET NEUTRALITY RULES The Federal Communications Commission (FCC) has sent letters to both AT&T and Verizon expressing concerns they may be violating net neutrality rules. The FCC expressed concerns that zero-rating offers from both companies could be in violation of rules that prohibit carriers from favouring their own content by offering free data services. AT&T launched a free data package that allows it customers to stream DirecTV over its network without using their monthly data allowance in September, but made the service free to all of its customers. In a letter to the telco, which was published by Ars Technica, the FCC warned that preliminary investigations into the service found AT&T’s practices “inhibit competition, harm consumers and interfere with … the benefits of the Open Internet”. The regulator has now demanded that AT&T provide further information ahead of a final decision. “These are incredibly popular free services available to millions of customers,” AT&T said in a statement defending its offer. “Once again, we will provide the FCC with additional information on why the government should not take away a service that saves consumers money,” the company added.

VERIZON SELLS 24 US AND SOUTH AMERICAN DATA CENTRES TO EQUINIX Equinix has announced it will acquire 24 data centre sites and their operations in the US and South America from Verizon for $3.6 billion. The acquisition brings Equinix’s total global footprint to 175 data centres in 43 markets. The 24 new sites consist of 29 data centre buildings across 15 metro areas, and 250 employees will transfer to Equinix when the deal is closed. Steve Smith, president and CEO of Equinix, said: “This unique opportunity complements and extends Equinix’s overall strategy to continue expanding our global platform. It enables us to enhance cloud and network density to continue to attract enterprises, while expanding our presence in the Americas.” Equinix said that the deal increases its interconnection in the US and Latin America and opens three new markets – in Bogotá, Culpeper and Houston. It increases Equinix’s penetration of the enterprise and strategic market sectors, capacitymedia.com

including the government and energy, said the company. However, Verizon has not sold all its data centre business. The company pointed out: “This transaction aligns with Verizon’s strategy to focus resources in areas that will help drive digital transformation for enterprise customers, while providing world-class service. The sale does not affect Verizon’s managed hosting and cloud offerings, or its data centre services delivered from 27 sites in Europe, Asia-Pacific and Canada.” The list of Equinix’s acquisitions shows two data centres in South America – Bogotá and São Paulo – and the rest in the US, in places from Santa Clara and San Jose in California to Miami, Chicago and Boston. Smith said: “The new assets will bring hundreds of new customers to Platform Equinix while establishing a presence in new markets and expanding our footprint in existing key metros. The deal will also

Steve Smith of Equinix: Enhancing cloud and network density simultaneously

provide significant value for shareholders as the proposed transaction is expected to be immediately accretive to our adjusted funds from operations per share upon close of the deal.”

14 | north america

NTT COM AND RAGINGWIRE ANNOUNCE NEW $160M VIRGINIA DATA CENTRE

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TT Communications has announced subsidiary RagingWire Data Centers will invest $160 million to build a new data centre in Ashburn, Virginia. The new Ashburn VA3 data centre will be at the heart of the so-called “Data Centre Alley” in Virginia and will sit on RagingWire’s present 76.5 acre Data Center Campus. VA3 will comprise of a 245,000 sq ft site with 15MW of power, with NTT Com aiming to launch by the end of 2017. It will join RagingWire’s VA1 and VA2 data centres on the Ashburn site. “The Ashburn VA3 Data Center raises the bar for data centre colocation in the largest data centre market in the world,” said George Macricostas, chairman, CEO and founder of RagingWire Data Centers. “VA3 offers mission-critical performance, flexible configurations for hyperscale cloud and enterprise deployments, exceptional customer amenities and global integration with NTT Com’s growing portfolio of over 140 data centres around the world.” Combined, RagingWire will own a data centre footprint of more than half a million square feet and 44.4MW of power on the Ashburn campus once VA3 goes live. It also owns three sites in northern California and TX1 in Dallas. Vaults on

RagingWire’s Ashburn VA1 data centre

offer will be in increments of two to four megawatts, while the campus has three fibre entrances and carrier neutral network connectivity services. “NTT Communications is proud to be investing in RagingWire’s VA3 data centre and Ashburn Data Center Campus,” said Tetsuya Shoji,Capacity president and CEO of NTT Communications. “Virginia is the top data centre market in the world and a strategic location for NTT Com as we expand our data centre capacity. RagingWire’s VA3 data centre will be a key platform for the NTT family of companies to deliver global information and communications solutions that enable our customers to digitalise their businesses.”

CANADA’S IRISTEL SEALS DUAL OPERATOR ACQUISITION Iristel, a Canadian competitive local exchange carrier (CLEC), has announced the dual acquisition of telecommunications firms Trutel in Toronto and Montreal-based Exelia. Although terms of the deals have not been disclosed, Trutel president Frank Auciello will be joining Iristel as VP of networks and infrastructure, and Exelia founders Dimitri Stathis and Harry Villeneuve come on board as VP of enterprise strategy and operations and VP of enterprise sales, respectively. “Iristel is committed to providing Canadians with the most advanced internet-based solutions that deliver reliable and cost-effective voice and data services and both Trutel’s suite of products and services and Exelia’s excellence in serving the SMB market enhance our ability to do so,” said Iristel president Samer Bishay. Auciello added: “My team and I are excited to be joining such a forwardlooking organisation.”

Bishay: Acquisitions enhance our ability

UNIFI SEALS WIS TELECOM BID TO BOOST ITS GLOBAL CARRIER BUSINESS

Adrian Shatku: Highly synergistic

International wholesale voice carrier UNIFI Communications has acquired 100% of WIS Telecom from Orascom TMTI (OTMTI) to accelerate the growth of its global carrier business. The New York-based carrier, which provides internal voice traffic and telephony solutions with more than 22 points of presence (PoPs) and over 250 bilateral interconnects, has bought WIS Telecom S.p.A. and its subsidiary WIS Telecom S.A. from Libero Acquisition, an investment vehicle majority-owned by Egyptian Naguib Sawiris, who is chairman of OTMTI. OTMTI’s portfolio companies cover telecom infrastructure, cloud computing, digital content and services, technology development and hosting. “This acquisition will be highly synergistic for us,” said Adrian Shatku,

UNIFI’s founder and CEO, “because UNIFI and WIS have similar core businesses, networks, geographic complements and customers, and combining the two will expand our footprint, yield operating cost savings and eable provision of higher quality services to the wholesale voice market. Overall, we think, it will greatly accelerate the growth of our business.” Rome-headquartered WIS, previously known as WIND International Services, has established 180 direct interconnections with mobile operators and Tier-1 carriers in 70 countries. UNIFI takes on WIS’s international backbone, which connects voice switches to major telehouses in the US, UK, Hong Kong, Italy, Greece, Germany, France and Belgium. WIS also owns a submarine cable between Italy and Greece. december/january 2017

Capacity

16 | news analysis: mexico

BANKS FUND MEXICO OPEN-ACCESS PROJECT W

hat is believed will be the world’s largest open-access wholesale network yet created is expected to go into service in Mexico in March 2018 with backing from international investors including Morgan Stanley and the World Bank. The Mexican government has picked the Altán consortium to build the $2 billion Red Compartida – “shared network” – that will cover 92.2% of the population of Mexico using 4G LTE technology on the 700MHz band. The consortium won a 20-year contract from the Secretariat of Communications and Transport (SCT) to build the wireless network, which will compete with América Móvil, controlled by Mexican businessman Carlos Slim, and AT&T, which has upgraded the former Iusacell and Nextel networks to 4G technology over the past two years. The contract will give Altán 90MHz of spectrum in the band. Eugenio Galdón, who has headed the consortium as chairman and owner of technological partner Multitel, said: “Everyone in the consortium is rightfully proud at being entrusted with this project, and are fully committed to fulfil Red Compartida’s mission to close the growing digital gap and to provide fast, efficient network access to all Mexicans.” Declan Ganley, an Irish businessman whose Rivada Networks project was excluded from the Red Compartida bidding only days before the decision, complained that “people of Mexico are being given a raw deal”, because “Rivada’s

coverage plan is significantly higher than the only opened bid [from Altán]”. Capacity Days later, news emerged that Rivada’s associate company Rivada Mercury has also been excluded from another project, FirstNet, that will provide nationwide coverage for US emergency services. AT&T is the only known remaining bidder for FirstNet. Rivada was excluded from the Mexican project when the SCT said its bid was invalid because it did not include a bond for one billion pesos ($49 million). Rivada said the money had been provided, but under separate cover, and in midDecember was threatening to contest the decision in the courts. The case is likely to go to the Mexican supreme court. Ganley told Capacity that Mexico has admitted receiving the funds from Rivada. “They have now acknowledged that they got the billion peso letter of credit on Oct 31st,” he said. Altán said it will be fully responsible for the design, installation, operation and upkeep of the entire wholesale mobile broadband network. The Red Compartida will be built through a public-private partnership that will generate investment in excess of $7 billion over the life of the concession. “This has been a very demanding and transparent tender process, in which Altán proved that it had the most solid and trustworthy bid, surpassing all the minimum requirements by a wide margin,” said Galdón. “Now it is time to draw upon our technical and management expertise to

give life to the project. We have the required industry experience, as well as the necessary financial and operational muscle. … Red Compartida will soon be a reality that will positively impact the daily lives of millions of Mexicans.” The project’s largest investor is Marapendi Holding, backed by Morgan Stanley Infrastructure, with 33.38%. The next largest is the China Mexico Fund, with a participation of 23.36%. This is a fund created to invest in and finance infrastructure projects in Mexico and is managed by the International Finance Corporation (IFC), a member of the World Bank group that backs private sector ventures. The IFC has its own 3.34% stake. The China participation clearly hints that much of the business may go to Chinese equipment companies, specifically Huawei and ZTE. Mexican telecoms companies Axtel and Megacable also hold a stake in Altán through a series of non-voting shares and without involvement in management. Each has a participation of 4.01%. Ganley said the Rivada bid would have given “high-speed mobile internet to millions of Mexicans, especially those in rural and poorly connected areas”, adding: “We want to be a partner in Mexico’s economic development and we have the technology and expertise to make Red Compartida a success”. He said: “It would be a shame if an initiative as visionary as Red Compartida wasn’t enabled with the technology and team that such vision merits.” december/january 2017

latin america | 17

LTE LAUNCHES IN FRENCH OVERSEAS TERRITORIES

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range, Digicel, Free and a number of other operators are now able to launch 4G services in France’s overseas territories.

Martinique set to enjoy delights of LTE

Arcep, the French regulator, yesterday officially granted LTE licences covering six French territories – Guadeloupe, Guyana, Martinique, Saint Barthélemy-Saint Martin, Réunion and Mayotte. Arcep said: “These decisions bring to a close the frequency allocation procedures in France’s overseas departments and territories that were launched by the government order of 29 January 2016.” Most of the operators will be able to start immediately, but the licence for Réunion in the Indian Ocean became valid on 1 December. Arcep first announced the winners in October. Orange won licences in all territories. Digicel, the Irish-owned, Jamaica-based operator, won licences for Guiana, Guadelope, Martinique and St Barthélemy-St Martin. The overseas territories are legally part of France and the European Union.

AMERICAN TOWER EXPANDS ITS ASSETS INTO ARGENTINA American Tower Corp (AMT) has struck an agreement to acquire a number of telecommunications assets in Argentina, adding to its 144,000-site portfolio. The deal will see AMT buy several wireless sites, equipment and fibre assets located on infrastructure owner by Argentinian utilities companies. It will also purchase several indoor wireless sites across the Latin American countries. In a filing with the SDC, American Tower said it expects the deal to close during Q4 of 2016, subject to approval from the necessary regulators in both countries. The deal will see AMT commence business in Argentina, adding to the operations already running in India, Peru, Chile, Colombia, South Africa, Ghana and Uganda. In 2013, it bought Global Tower Partners, which extended its reach to Costa Rica and Panama. It also agreed to buy BR Towers in Brazil in 2014.

VIACOM BUYS TELEFE FROM TELEFÓNICA CapacityFOR $345M Viacom has bought Telefónica’s Argentinian broadcasting arm Telefe in a deal worth $345 million. The US broadcaster, which owns the likes of Comedy Central and MTV, acquired the brand and assets from Spanish carrier Telefónica as it looks to expand its presence in Latin America. Telefe has around 26.8 million subscribers and reaches around 95% of all Argentinian Households. Its assets include

pay-TV service Telefe Internacional, which also broadcasts outside of Argentina. Bloomberg first unveiled the deal, which is subject to approval from Argentinian regulator Enacom, in early November. “Telefe is an outstanding broadcast and production business, and this acquisition will accelerate our growth strategy in Argentina, one of the most advanced and valuable media markets in Latin America,” Robert Bakish, president and CEO of

Viacom. This news comes as Telefónica is looking to offload assets in an attempt to alleviate a huge debt, believed to be around €50 billion. The company has already seen a deal for O2 UK fall through after the European Union blocked a sale to CK Hutchison. Telefónica also cancelled an IPO of its infrastructure arm, Telxius last month, citing very low interest from investors which made the flotation too risky.

US ‘COMES TO DEFENCE’ OF GUYANA TELECOMS MONOPOLY In a surprise intervention, a US embassy official in Guyana has called for telecoms liberalisation but said that existing contracts should not be violated. The move comes as the government of Guyana is expected to begin talks with Guyana Telephone and Telegraph (GTT) about ending the monopoly. The Republic’s government passed a law to end GTT’s position in July and originally said talks would begin in September. Terry Steers-Gonzalez, deputy chief of mission in the US embassy, said in a speech to the Georgetown Chamber of Commerce and Industry that the telecoms sector should be opened up to competition, but called on the government to respect “the sanctity of contracts”. GTT is 80% owned by Atlantic Tele-Network, a Nasdaq-traded US company that has telecoms investments in capacitymedia.com

Bermuda, the British Virgin Islands and the US Virgin Islands as well as Guyana, which is on the South American coast. The company is six years into a 15-year monopoly licence agreement on international calls. In a move seen as a defence of GTT, Steers-Gonzalez said: “We ask that you participate in the liberalisation of the telecommunications sector. Strong regulatory structures that protect both consumers and businesses are good for everyone, but remember that sanctity of contracts and respect for agreements are important for future investments.” GTT claims that it is losing heavily on international traffic because people are making international voice over IP (VoIP) calls from internet cafés. The country’s telecoms ministry is running a consultation on the new

legislation before it is activated. The president of Guyana has already signed it into law.

Guyana debate on liberalisation continues

18 | asia pacific

CHINA TELECOM AND NEPAL TELECOM DELIVER LOCAL IP

Nepal is looking for additional routes for connectivity

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hina Telecom Global and Nepal Telecom have reached a joint agreement for the delivery of IP services in Nepal. The two companies will use the newly launched terrestrial cable route which connects China and Nepal via the Jilong (Rasuwa) Gateway. The new China-Nepal route is a new direct alternative route for traffic demand generated from Nepal to all over the world, and provides high quality service and low latency for end users in Nepal.

GTT PICKS UP YIPES’ CUSTOMER BASE FOR $28M GTT has bought the customer base of the Ethernet-based carrier formerly called Yipes from Indian operator Reliance Communications for $28 million. Reliance Communications bought Yipes from its venture capital owners for $300 million in 2007 as part of a wide-ranging expansion beyond India, which had already seen it buy Flag Telecom for $200 million and then UK-based Vanco – then being restructured – for $77 million.

“China Telecom is dedicated to expanding our footprint by connecting with neighbouring countries,” said Ou Yan, executive vice president of China Telecom Global. Kamini Rajbhandari, managing director of Nepal Telecom, added: “Nepal Telecom would benefit from an additional route for connectivity. We are confident that China Telecom is capable of providing reliable service and are looking forward to Capacity establishing Nepal as a transit hub through this route.”

NEC COMPLETES CONSTRUCTION OF APG CABLE NEC has completed construction of the new Asia Pacific Gateway (APG) subsea cable which has been laid between Japan and Singapore. The 10,900km cable is owned by a consortium of members including Facebook, CAT, China Mobile, China Telecom, China Unicom, NTT Communications, and Global Transit. The newly completed cable has a

capacity of more than 54Tbps, delivering transmission capabilities of 100Gbps. It was first announced in 2012 and was officially launched by NTT Communications at the end of October. APG runs ShinMaruyama and Shima in Japan, plus Busan in Korea, to East Coast in Singapore, Kuantan in Malaysia and Songkla in Thailand. It has landing points in China, Hong Kong and Vietnam.

HOOQ CLOUD-BASED MOVIE SERVICE AIMS FOR 2017 EXPANSION TO MALAYSIA AND VIETNAM Cloud-based movie and TV service Hooq, which is majority owned by Singtel, is planning to expand to Malaysia and Vietnam in 2017 followed by the Middle East and other regions. Hooq already operates an over-the-top (OTT) service in five countries and it has more than three million registered users since starting in early 2015, CEO Peter Bithos told Capacity in an interview, but its target market is one billion people. The company uses Amazon Web Services, Akamai and Microsoft Azure for its movies and TV programmes, he said. The Singtel group has a 67% stake in Hooq and the other two shareholders are

Warner Brothers and Sony Pictures, splitting the remaining 33% evenly. The company was launched to compete against Netflix in the region. The company is already available to Globe Telecom customers in the Philippines, where the service launched in early 2015, and has since expanded to Telkomsel in Indonesia, AIS in Thailand, Airtel in India and Singtel in Singapore. Bithos would not give a date for the company’s expansion into Malaysia and Vietnam, except it would be “in 2017”. To find out more go to page 24-25 for Capacity’s big interview with Bithos

Osaka: powered by Infinera Cloud Xpress

YAHOO! JAPAN DEPLOYS INFINERA CLOUD XPRESS IN OSAKA Yahoo! Japan has deployed the Infinera Cloud Xpress to interconnect its data centres in Osaka. Infinera claims its data centre interconnect (DCI) solution, which has already been deployed by the Japan Internet Exchange in Tokyo, enables hyper-scale density, operational simplicity and low power consumption delivery of internet services. It will be used to address increasing demand for capacity across Yahoo! Japan’s metro network. “Yahoo! Japan’s data centres house a large number of servers so both space and power are limited,” said Yahoo! Japan’s Miyuki Tsunekawa. “The Infinera Cloud Xpress enables the easy deployment of 100Gbps capacity in a compact solution with low power consumption, ideally suited for our data centre environment.” december/january 2017

news analysis: capacity asia | 19

CAPACITY ASIA 2016 ENHANCES CARRIER CONNECTIVITY D

ecember witnessed over 600 delegates attend Capacity Asia 2016 in Hong Kong, bringing together representatives from more than 200 carriers, data centres and cloud service providers in the APAC region, to build new business relationships, unveil new projects and discuss key issues facing the industry today.

Superloop’s network goes live Superloop is becoming a true pan-Asian telecommunications company and after more than two years in the making, its Hong Kong core network was officially launched at the end of Day One at Capacity Asia. Bevan Slattery, its founder and executive chairman, spoke passionately at the official launch party of its advanced dark fibre network in Hong Kong. Superloop is “investing in the next-generation of infrastructure that will last a generation”. The company’s dark fibre terrestrial network and TKO Express represent a key milestone in achieving this vision. With the completion of the initial stages of the Hong Kong network, “Superloop is the first and only carrier with true fibre ownership across three major metro environments in Asia,” said Slattery referring to Australia, Singapore and Hong Kong. The 110km network, which is continuously under expansion, will connect over 30 high-value data centres and enterprise buildings. Work is also progressing on TKO Express, a component of Superloop’s total solution. TKO Express will be the first domestic subsea cable linking Hong Kong’s major finance and technology centres, Chai Wan and Tseung Kwan O Industrial Estate. The vision of the company is to become the leading innovative independent provider of interconnectivity services in pan-Asia-Pacific and this, Slattery added, can only be done through partnerships. “Hong Kong is a major international and regional financial centre. For businesses to succeed, it is crucial they have access to secure, reliable, high-speed infrastructure,” said Slattery. capacitymedia.com

TKO Express, in combination with the wider Hong Kong network, will meet the increasing demand for high-speed, consistent, connectivity solutions to take advantage of bandwidth-intensive apps, content and services such as video and the cloud, said the company. The 1,728 high-core count subsea cable has arrived in Hong Kong, while construction of the cable landing infrastructure is underway at the Chai Wan site. TKO Express is set to be commissioned in early 2017.

Chinese investment in Africa The conference also witnessed China Capacity Telecom Global (CTG) declaring it had selected Djibouti Data Center (DDC) to help facilitate its network expansion, colocation and submarine fibre cable access services in East Africa. DDC’s chief executive officer Anthony Voscarides told Capacity that CTG has just installed its equipment into its Djibouti facility, further signalling the intentions of Chinese companies investing in Africa. This is significant as it demonstrates the increasingly significant role Asia has to play in Africa, and more Chinese telecoms players going further into Africa, investing in technology and data centres to create a rounded presence in pan-Africa. “We have a number of Chinese

customers - including big blue chip companies such as PCCW Global, China Telecom Global and CDN player China Net Center – and it’s growing still,” said Voscarides. “Capacity Asia connects us to Asian carriers and further helps us to develop Djibouti as a key strategic hub on the data centre map.”

SDN power Zenlayer unveiled its global SDN platform at Capacity Asia and Joe Zhu, its founder and CEO, discussed the power of network virtualisation and the potential efficiency of next-generation software adoption to delegates. Yan Ou, executive vice president of CTG, described how the internet is becoming increasingly Asia-centric. “AsiaPacific IP traffic is expected to grow at 22% CAGR, the second-fastest in the world behind the Middle East and Africa,” said Ou. Since 2000, the number of Chinese internet users has grown by 2,200% and there are more than 750 million Chinese internet users. CTG currently delivers over 70% of Chinese online content and with 40-60% of enterprise data traffic migrating from WANs to the internet, CTG has selected Nuage Networks to build cloud-ready SD-WAN enabled VPN networks for global enterprises.

Bevan Slattery: “Superloop is investing in the next generation of infrastructure”

Capacity

market strategy: accounting | 21

Running up that IFRS hill

Capacity

NEW ACCOUNTANCY STANDARDS ARE BEING PUT IN PLACE THAT WILL RADICALLY ALTER THE WAY CARRIERS RECORD ASSETS. SUE TABBITT INVESTIGATES THE NEW IFRS RULES AND THEIR LIKELY OUTCOME

Image by iStock

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hange is a headache at the best of times, but in the telecoms industry new international financial reporting standards (IFRS) companies should be preparing for now seem to be causing paralysis rather than pain. Over the next two years, two adjustments in particular will have a substantial impact on telcos – one on the way they recognise and report revenues, and the other on how they account for leases – which could significantly alter their debt profile and perceived market value. Although it has been pushed back a year, buying operators a bit more time, the new International Financial Reporting Standard 15: Revenue from Contracts with Customers (IFRS 15), will be here soon enough, affecting financial periods beginning on or after 1 January 2018. Then IFRS 16 Leases, affecting the way that operators account for infrastructure capacitymedia.com

assets and other leased resources, will come into force a year after that. The aim of the new rules, which will enable considerable harmonisation with US’s generally accepted accounting principles (GAAP) – particularly in relation to how companies report revenues – is to make it simpler for global investors to compare businesses. For wholesale telcos, with complex supplier and customer contracts and extensive infrastructure investments, the changes have ramifications that are both wide and deep. So it’s rather surprising that companies aren’t very far along with their preparations. “We are already seeing that the new accounting guidelines IFRS 15 and 16 are having a significant impact on wholesale telcos,” says Greg Stinson, director of KPMG’s Accounting Advisory Services business. “New systems may be needed to report the new information. The terms of

new customer and supplier contracts may also need to be rethought,” he says. The new revenue accounting requirements may change the timing and amount of income companies can recognise, for example. “Revenue is less likely to reflect the cash received from the customer: rather the amount of revenue may be accelerated or deferred in relation to cash receipts. This could have knock-on tax implications,” Stinson explains. IFRS 15 is a bigger deal for consumerfacing telcos, which will need to break down items such as phone subsidies into their true cost. Given the vast spectrum of accounts and offers, across millions of subscribers, this is a gargantuan task. Although the original deadline of January 2017 has been pushed back 12 months, it’s still a lot of work to cram into a year. For wholesale telcos, the bigger worry is IFRS 16, which changes the way leases

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must be accounted for. It brings on to the balance sheet items which were previously not there. “IFRS 16 lease accounting changes mandates a lessee to show liabilities for certain lease contracts which were previously ‘off-balance sheet’,” Stinson notes. “Among other things, this will impact gearing, the profile of lease expenses and KPIs.” “IFRS 16 requirements will significantly alter the telco’s debt profile,” concurs Carl Roberts, who used to work for Verizon and has joined Epsilon after this interview (see page 32). “Until now, if you were looking at this you wouldn’t see operational leases, because historically these have been treated as an operating expense. But this has given a skewed view of the amount of debt a company has, given that operational leases are so significant in a telco’s business when building or buying the rights to infrastructure.” Trying to get telcos to talk about the provisions they are making is like trying to get blood out of a stone, whether they’re consumer-facing telcos or backhaul providers. “We don’t have any comments on this issue,” from Fernando Costantino, press contact for Global IP Network at NTT Communications, was a typical response. But behind the scenes, there are signs that the industry is finally developing a sense of urgency about all the work that lies ahead. “Wholesale telcos must reassess whether the transactions they are entering into meet the accounting definition of a lease – which has changed,” says KPMG’s Stinson, giving a sense of what will be involved. “Customers leasing access to a wholesale telco network may not want to report liabilities which were previously permitted to be off balance sheet. This may result in a time consuming and expensive exercise of restructuring contracts as service deals rather than lease arrangements.” For a wholesaler, the cost of complying with the new requirements may well run into millions, he notes. “Together with the comprehensive accounting analysis required, companies may be faced with the onerous task of gathering data from small disjointed systems and collating it in one place to accurately report financials.” This isn’t just an accounting adjustment, either, he adds. “Companies must recognise that the impact of the IFRS changes will have a much wider reach than just the finance department. Contracts, KPIs,

employee remuneration and taxes could all be impacted.” ERP system vendor SAP has seized the opportunity in providing new functionality and associated services to help telcos absorb the changes in as painless a way as they can. “If you’re a wholesaler with high dollarvalue assets, you’re going to be more exposed,” says Pete Graham, SAP’s director of finance solutions and mobility in the US. His remit includes leading SAP’s global activities on IFRS. He points to AT&T, whose balance sheet is thought to need $20-$30 billion of adjustments under the new requirements. (Verizon’s is estimated to be around $19 billion.) “The other factor is the number of leases involved,” Graham adds. “For example, if you’re talking about undersea cables, there could be lots of contracts.” So discussion will need to be had about capital structure and balance sheet ratios, he says. “The lease topic is a big issue keeping business leaders awake at the moment.” One of the challenges, seemingly, is that a lot of assets aren’t actually being tracked in sufficient detail, especially those with lower

are many good reasons for getting on top of the new IFRS reporting requirements now. One is the scope for piloting and refining, so that the data being output when the time comes is tip-top. Another is that early data will provide a meaningful point of comparison once the deadline has passed – so stock markets and investors can understand the context to the significantly altered revenue or debt profile once the adjusted figures are live. “This is an opportunity to get a good, clear and accurate view of the business, which brings its own opportunities,” Graham notes. “While a lot of telcos saw compliance as a big pain at first, they can now see there might also be benefits, once they’re better able to attach revenue to contracts, get a more complete view of costs, and see what the true margins are. Once they have a holistic view and a better set of trustworthy data, they’ll be able to see what other improvements they can make – not to mention improve fraud detection if data doesn’t align.” Another priority should be proactively talking to the market about the changes so that, once the new-look figures are published, they Capacity aren’t misinterpreted. “We encourage our customers to have the conversation with the analysts ahead of time, so Pete Graham, director of finance solutions and mobility at SAP they understand what’s suddenly value. “There are no systems in place to appearing on their balance sheet – ie, that track them, so there’s no real visibility,” it’s not a new cost, but something they’ve Graham claims. always paid,” Graham says. In comparison to B2C telcos, Graham “If they don’t do this education exercise, believes wholesalers have more of a grip on this could affect their share price and the scale of the endeavour in front of them. market value, and their ability to raise more “A couple of the carriers we’re working with debt in future,” adds Roberts. have pulled together their IFRS 15 and “Although some telcos have very engaged IFRS 16 projects, bringing the latter teams who are really driving this, and will forward so that they don’t end up with two be prepared, others will run into trouble separate work streams and two separate sets because they’ve waited too long,” suggests of costs,” he notes. “Last year it was more a Holger Forst, Ernst & Young’s global case of SAP selling the topic to the market; telecoms assurance leader, based in this year we’re getting a lot of calls as Germany. “Advisors and consultants expect companies realise time is running out. The a surge of demand for support early next final standards have been set out and the year as operators realise the extent of the aim now for many companies is to get the challenge and how much they’ve software this year with a view to underestimated it.” implementation next year.” The good news is that, as time ticks on, SAP advises firms to do a technical more solutions and services are emerging to assessment to identify which operational help with the new reporting challenges. systems will be affected, and which could contain contributing information – for • A 200+ page pocket guide to IFRS example relating to lower-value assets which standards can be found at http://www.ifrs.org/ aren’t currently being tracked adequately. Use-around-the-world/Documents/2016Doing this early on gives companies a pocket-guide.pdf). See page 182-3 for chance to assess and clean up their data, in requirements for IFRS 15 (revenue preparation for the new reporting. There recognition) and IFRS 16 (leases).

If you are a wholesaler with high dollar-value assets, you are going to be much more exposed”


I N T E R N AT I O N A L TELECOMS WEEK Capacity BOOK NOW

www.itw2017.com

#ITW2017

Dates: 14-17 May 2017

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Venue: Hyatt Regency & Swissôtel

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Location: Chicago, IL

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Getting broadband

customers Hooq’d Capacity

on OTT video in Asia

Singtel is the majority shareholder in Hooq, a cloud-based OTT movie and TV service designed to compete with Netflix in emerging Asian markets. It has high ambitions, CEO Peter Bithos tells Alan Burkitt-Gray

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n over-the-top (OTT) movie and TV service majority owned by Singtel is planning to expand to Malaysia, Vietnam, the Middle East and other regions, says the CEO. Hooq is already in five countries and it has gained more than three million registered users since starting in early 2015, says CEO Peter Bithos. However, its target market is more than one billion people. “We’re setting it up to be the largest over-the-top service for emerging markets anywhere,” he says. “We want to bring one million stories to one billion people.” The Singtel group has a 67% stake in Hooq – pronounced like “hook” – and the other two shareholders are Warner Brothers

and Sony Pictures, splitting the other 33% down the middle. “We have the best of Hollywood. We work with more than 100 content providers across the region and with Disney, Paramount, Miramax, DreamWorks and a variety of studios,” he says. But Hooq does not have its own servers in each of the markets. “As an OTT player we are very cloud-based,” says Bithos. “We use Amazon, Akamai and Microsoft Azure. We’re very cloud-first, so as we open new countries, we don’t have specific needs for infrastructure.” That’s the job of the cloud service providers. But there are needs for infrastructure to deliver Hooq’s programming to end users. “The year 2015 was the inflexion point for broadband access,” he says. The service is in five countries “and every market now has

4G and there are large fibre rollouts”. That means Hooq’s future expansion aims will have to accompany the rollout of fast, reliable broadband. “The quality of broadband service is getting better and better each quarter,” he says. “There’s a long way to go in many places, but the internet is getting better and better.” And when the mobile broadband can’t quite keep up, and there is no fibre to the home, “we offer offline download”. That means customers find a good Wifi hotspot and download from there to watch later. “We were the first in the world, before Amazon,” he says (though, I point out to him, the BBC in the UK has been allowing people to download content from its iPlayer service for later viewing for at least a whole decade). What Hooq doesn’t do is stream live december/january 2017

the big interview: peter bithos | 25

further countries in south-east Asia.” When? “Within 2017, and early 2017 would be great,” he says. Singtel has no direct interests in Malaysia or Vietnam; but it may or may not be significant that Maxis of Malaysia and MobiFone of Vietnam are both members of the Bridge Alliance, a partnership of operators in 36 countries, including Bharti Airtel, AIS, Globe, Singtel and Telkomsel. And Bharti Airtel’s operations in Africa are a major force across the continent. Is that on the schedule for Hooq? “Africa? We’d love to,” he says, not committing himself. “We have a great partnership with Airtel.” So does he have a map on his office wall, with pins showing Hooq’s expansion plans? “I have a map with five pins in it – but with many areas we’d like to go.” It takes a lot to set up a Hooq operation, he says. “We need partners and we will grow where we have good partners.” And local content, he emphasises again and again, is an essential ingredient. Bithos has long believed in the importance of content in driving broadband penetration. Three years ago he was Globe Telecom’s senior adviser for consumer business, working not only with Globe CEO Ernest Cu but also with Mark Zuckerberg, CEOCapacity of Facebook, in a pioneering project to offer the network’s customers free Facebook access.

content. “The linear experience is important for sport or news, but people want the on-demand experience. That’s the position right now and we’re happy.” So, movies, TV programmes and – from 2017 – TV mini-series. The operation is now live in five countries. “The Philippines was first,” says Bithos, “then Thailand, India and Indonesia, and now Singapore, where we are based.”

Searching South East Asia It is significant that all four Hooq markets outside Singapore are with associate companies of Singtel, in which the company owns shares: Globe Telecom in the Philippines, Telkomsel in Indonesia, AIS in Thailand and Bharti Airtel in India. The only other operation in the region in which Singtel has an interest is 100% owned Optus in Australia – but that hardly fits Bithos’s criterion for Hooq expansion: it is not an emerging market. “We’re looking elsewhere in south-east Asia, places such as Vietnam and Malaysia,” he says, “and then we’ll be looking at moving west, towards the Middle East, and capacitymedia.com

AIS, Globe, Singtel or Telkomsel. In India Hooq has a carrier billing arrangement with Idea, Vodafone and Reliance as well as Airtel; in Indonesia there are deals with XL, Hutchison 3, Indosat and Smartfren. Movies and videos can be downloaded only in a customer’s home country, but someone can download content onto a smartphone, tablet or PC before leaving and watch abroad. “Everything is available for phones or TVs or desktop. We support up to five devices [per subscriber], from small Androids up to TV screens and set-top boxes. We now have more than three million registered users, which is nearing four million now, and we’re growing extremely well.” In the Philippines, “the number of paid subscribers makes us the third largest content provider in the country, including pay-TV companies”. And just before we talked, Hooq Philippines announced its plans to produce the first original series for a video-ondemand service in Asia. Based on a 2013

Mixing Hollywood and local

We now have more than three million registered users, nearing four million”

For Hooq, content is king again. “We need great local content and great partners, and a great team in place,” he says. “We show the best of Hollywood and the best of local content. We have the largest catalogue of OTT local content in each market.” The mix is “roughly 50-50 for each of our markets”, he says. “Our content strategy is focused on a very deep blend between Hollywood and local. We have the largest catalogue in Indonesia, the largest catalogue in the Philippines, and so on. The role of local content is important to Hooq.” What’s the cost to customers? Cheaper in the first four markets than in Singapore, where services were launched in November. “We try to price the service for one month’s entertainment as the same as a trip to the movies, including tickets, popcorn and the trip home again.” According to the local Hooq websites, in US dollars Hooq Singapore charges the equivalent of $6.29 a month, while Airtel, AIS, Globe and Telkomsel charge around $3 or a bit more. The service is designed so that people don’t need credit cards: they can pay through a mobile top-up. “All the features that emerging markets need,” he says. But people can pay by credit or debit card to subscribe to Hooq, and that means they don’t have to be customers of Airtel,

movie by Erik Matti, OTJ The Series is starting production. The official trailer – available on YouTube – has three deaths by shooting in less than four minutes. “It’s an original production to the Philippines, six episodes directed by Matti,” says Bithos. Hooq is still only burning its $100m start-up, he says. “In late 2017 we’ll be looking for another round of funding.” Despite Bithos’s figures of three to four million customers across the five countries where Hooq is available, that is still only a small proportion of the available market. Bharti Airtel had 251 million customers at the end of March. According to Singtel, AIS had 39 million, Globe had 57 million and Telkomsel had 154 million. There are also two million mobile subscribers in Singapore, where Singtel has a market share close to 50%. Another potential expansion area is Bangladesh, but Airtel has recently sold its operation there and is now a minority shareholder in a company controlled by Malaysia’s Axiata. That means there’s an addressable market within the five countries currently offering Hooq of over 500 million customers, so there is a long way to go.

Peter Bithos, CEO, Hooq

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executive interview: rafael arranz | 27

SUBSEA CABLES, FLEXIBILITY AND THE ROLE OF SECURITY Bill Boyle interviews Rafael Arranz, chief operating officer of Telxius Cable, to find out what the Telefónica group’s infrastructure specialist considers its key priorities for the coming year as it works on the BRUSA cable, due to be finished by the end of 2017

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elxius provides direct connectivity to the internet through its state-of-the-art Tier-1 backbone, which can reach a capacity of over 8Tbps through its international coverage including 73 points of presence in 17 countries. It provides telecommunications services both to the Telefónica group and other fixed and mobile operators, internet service providers (ISPs) and international content providers. The company’s international fibre network is over 65,000km long and currently delivers more than 6Tbps of data traffic during peak load times. The service has been designed to provide key operators and ISPs with high-speed access to the internet via an efficient network in terms of technology, with the best service guaranteed and a flexible commercial package. The infrastructure assets which have initially been brought together in Telxius include approximately 16,000 Telefónica mobile telecoms towers in Spain and other countries, as well as the Telefónica group’s international network of 31,000km of subsea fibre cable, including SAM-1 and PCCS, two subsea cables that connect the US with central and South America, as

Facebook Live is now pushing more traffic at certain times than even YouTube” Rafael Arranz, chief operating officer of Telxius Cable well as Unisur, that connects Argentina and Uruguay. Arranz says: “It has been a busy year for us. After the hiatus of the flotation, which was put to one side [in September 2016] for reasons we made clear at the time, we can now focus on the business and the new investments in submarine cabling we are making in Latin America. We are laying our own transatlantic cable which will be finished by the end of 2017.” The company is laying the BRUSA cable capacitymedia.com

which is landing in Virginia Beach and going on to Brazil. “We are looking at new landing points and new connections for the cable as we progress,” he says. “We were on a road show recently and were frequently asked: how will it fare a few years from now? Will it be able to cope with the huge increase in demand which we see growing day by day? We build out the best technical specifications and load it up with the highest possible capacity. Once it’s in the water you can’t add anything else to it, he says. “There has been a huge increase in capacity. We expect a cable to provide optimum usage Capacity for at least 25 years to the market. That is only now looking a bit optimistic. No one will use less bandwidth in the future and we are already talking increases on average in capacity of 40% per year. In fact the growth in the next two to three years will surpass the previous 15 years.” Arranz says that we are now in the era of terabits per second. In Latin America the capacity increases are uneven across countries. “The US is driving the content tsunami and while all countries are catching up some are catching up faster than others. The Pacific is still behind the Atlantic but Peru and Colombia are rapidly advancing and Argentina and Chile are all pushing the traffic envelope.” He says that more localised content is increasing and more caching of content is taking place. Europe is also pushing content and he picks out Paris as an example. “Video and virtual reality gaming are driving content up. The interaction of people on games is driving the traffic levels up dramatically and we can see spikes of interactivity through individual multiplayer online games.” All of the subsea cables are seeing increased levels of traffic and content plus bandwidth and speed. Arranz says: “Facebook Live is now pushing more traffic at certain times than even YouTube, so we need even more bandwidth.” As well as focusing on these huge projects, Arranz says he has to ensure that

Arranz: We are now in the terabit era

the new Marea cable connects in time to Virginia Beach and Bilbao in northern Spain by the beginning of 2018. Bilbao also needs to be connected to other cables and to the PoPs in Marseille. He feels positive about the future and thinks that the OTTs will continue to value the carrier’s expertise and ability to manage their subsea and tower networks efficiently. “They respect the fact that we are not just dumb pipes. What we do takes time, expertise and management abilities they do not want to replicate.” He says: “Competition is very high but our performance is very good. I am optimistic about technical innovation and am very interested in new terminal equipment. The solutions from Ciena, Infinera, Alcatel-Lucent and others will help us ensure that we continue to improve network quality and speeds. How all these technical innovations will unfold fascinates me.” The recent internet of things attacks are a precursor of what the industry will have to deal with in future, he says. “Security is an ongoing concern and a driver of new business. We are in a prime position to help businesses to avoid and mitigate these attacks on their own operations and to protect their end customers. We are not just a dumb pipe we are one of the few parts of the industry which is thriving and can keep the industry healthy.”

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A2P is the

future of

SMS messaging MEF chairman Andrew Bud admits OTT messaging services are cannibalising the P2P Capacity SMS market, but tells James Pearce that the money is in A2P

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hen MEF chairman Andrew Bud says SMS still has an exciting role to play in the future of wholesale telecoms, it is difficult not to believe him. As the man who founded mBlox in 1999, and built that company into one of the most successful messaging aggregators in the world, he knows this part of the industry. SMS is under pressure, however. Juniper Research claims messaging revenues will decline by $600 million to $112 billion between 2014 and 2019. This is despite the fact that messaging traffic will almost double. So why is Bud, a veteran of the messaging industry, so positive? “A2P (application-to-person) SMS provides a huge opportunity for businesses to contact their customers, and because SMS is completely mainstream, it is the best means of communication for an enterprise,” he tells Capacity. Bud should know. Beyond finding mBlox, where he was CEO until 2004, he is also a founding member and chairman of the Mobile Ecosystem Forum (MEF).

In December, Bud was recognised for his contribution to messaging at SMS and Messaging World, picking up the Lifetime Achievement Award. Bud says he was honoured with the award, but adds that he, like SMS, is not done yet. Currently, he’s CEO of verification service iProov. A2P messaging, as opposed to personto-person (P2P), is on the rise, Bud explains. While the consumer focussed P2P services are being squeezed by the growth of over-the-top applications, such as WhatsApp and WeChat, A2P is another ball game Bud says. “The arrival of OTT services was very disruptive to P2P messaging, but less so to A2P. The error people consistently made was that SMS is about technology, when it was obsolete in the late 90s. It was always about behaviour, and it was about people’s relationship with the medium.” This, claims Bud, will be a key component in why OTT messaging apps do not have the same devastating impact on the growing A2P market as they have begun to have on P2P SMS. When SMS first became mainstream, people were discovering a new and

exciting way of interacting that had immediacy, simplicity and priority. That embedded behaviour from P2P messaging, - that if you got a text, it was valuable because someone had paid for it - meant it mattered, and that made it a priority. “Messaging in Europe used to be quite expensive so it reduced the amount of spam. That habit of mind continues today – if people get a message they look at it. But OTT’s are rapidly cannibalising the P2P business, leaving behind an attitude that what comes by SMS is important, valuable and urgent.” This is where the key opportunity lies for SMS carriers, Bud says. As messaging between consumers moves to a more IP driven solution, thus lowering the value of P2P SMS, enterprises can move in. Consumers are already used to opening and responding to texts, he adds, and that importance that has been built up in almost two decades of messaging growth will transfer to messages from businesses. Surely, though, Capacity asks, the OTT players will also come for a slice of the A2P pie if it proves to be so lucrative to SMS carriers? WeChat has more than 800 million users, so it can easily distribute december/january 2017

the big interview: andrew bud | 31

1999

Founded messaging aggregator mBlox, was appointed CEO

2004

Stepped down as mBlox CEO but continued as executive chairman for six more years

2008

Helped to found the Mobile Ecosystem forum, a trade organisation for messaging and mobile content community. Appointed global chairman

2012

Founded authentication firm iProov, appointed CEO

2016

CLX Communications acquires mBlox for $117 million. Bud steps down from the board

messages on behalf of enterprises? “As yet, OTT players have not demonstrated an ability to deliver high quality, reliable, enterprise to consumer messaging. Not because they are incapable, but because anyone who runs a messaging medium has a tremendous channel protection problem. “There are two ways you can protect the channel – either make it so expensive to send messages that it prices bad business models out of the channel. That’s what happened in Europe with the advent of AA19 (SMS protocols). Or have an extremely demanding compliance regime which needs to approve every single use case. One or the other. Or you get a torrent of spam, which destroys the quality of the medium.” It is for this reason that Bud fires off a warning to the mobile operators: don’t let SMS prices plummet to counter the threat of OTT’s, or you risk losing out on a huge revenue opportunity. “Bringing prices down could help the volumes shoot up but whether this goes up in a linear way. If you get down below a penny (per message), you get a wave of spam, and that will cause a crash. That will capacitymedia.com

lead the regulator to step in, because there could be privacy issues. I warned the industry against that having lived through it several times, and it is not good for a financial point of view. “We’re dealing with mobile operators, not economics. When demand for SMS was rocketing at the start of 2002, they put the price up, not down. It is up to them on the prices. If the cost of A2P messaging were to go down beyond a certain point, then you would begin to see degradation of the channel. That would risk killing the goose that has been laying the golden eggs.” What the operators and carriers should do instead, Bud claims, is spend more money marketing the benefits of A2P messaging. That, filtered down through the right channels, he suggests, could lead to substantial growth of the channel and keep SMS as a still-relevant and important core technology. “Messaging has never been sexy for telecoms companies. People in wholesale divisions watch their numbers go bananas but it is hard for them to get listened to. “This is about growing demand. The fallacy is that you grow demand by crashing price, but that’s not right. The industry through Capacity its competition, through its creativity and through its enthusiasm has grown demand. The industry has grown that demand because it is a very good mechanism. Another area offering big opportunities but is the burgeoning Internet of Things (IoT) market. Analysts predict there will be anywhere up to 60 billion connected devices in use by 2020, all embedded with SIM technology. This is a big openining for MSS providers, says Bud, but also poses numerous challenges. “mBlox started providing SMS-based condition monitoring for Volvo in 2001,” he explains. “There is an ever-growing demand for low data-rate, low power IoT connectivity, a demand that is being met by special networks like SIGFOX and by new 3GPP standards like LPWA. “SMS has advantages – ubiquitous, reliable operation in 2G coverage areas, a range of MNO providers, and flexible cost packages. But the terminal technology sometimes needs investment to keep up with the competition, and that remains a challenge.”

The question of SMS fraud In his role as MEF chairman, Bud is still heavily involved in the messaging market. MEF includes some of the biggest names in messaging and wholesale, from Turk Telekom International and Vodafone to Telefonica and BICs. One of its current initiatives is around A2P fraud, which MEF research found

costs the industry at least $2 billion a year, as well as creating a volvatile market. MEF splits fraud into 11 sub-sections: Spam, SMS originator spoofing, SMS phishing, SMS malware, access hacking, grey routes, map global title faking, SCCP global title faking, SMSC compromise fraud, SIM farms, and the artificial inflation of traffic. Bud admits that fraud is an issue for the SMS industry but says the solution is actually fairly simple – find and prosecute the offenders. “SS7 manipulation, which involves changing global titles, borders on the criminal – it’s a form of stealing. It upset me a lot when I first encountered it because we were getting bills for traffic we had never sent. “Operators and people in the industry need to take enforcement seriously against fraudulent messaging services. If you turn a blind eye, the threat grows. Operators should take a zero tolerance policy. “It’s quite hard work to track down where the signalling packets and systems came from, then go after the operator who did it and punishing them. But it costs money to keep a society healthy and

Messaging has never been sexy for telecoms companies” Andrew Bud, chairman, MEF

international SMS is a society.” However, Bud did defend grey routes. Operators often refer to use of grey routes – messaging services that do not use an AA19 protocol but not technically illegal in one or more of the areas the message is sent or received in – as a type of fraud. Bud disagrees, despite the fact that it is listed as part of MEF’s messaging initiative. Instead, he says they are part of the market, albeit one that may need to be dealt with to ensure the long-term health of the SMS ecosystem. “Telecoms networks are meshed with commercial relationships built into them. If there is room for arbitrage that isn’t wrong. Aggregators can legitimately use legal grey routes as they are not defrauding anyone, there’s nothing illicit about it. They are engaged in least cost routing. Obviously that’s not in the interest of the terminating network, so they will try to cut off those grey routes, “The long-term health of the business lies with the closure of grey routes. So long term, the interest of the business is sustaining the price level, but making sure it is accountable, so that bad behaviour can be stamped on.”

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Carl Roberts looking for

dynamic growth as Capacity

Epsilon’s CCO

Verizon veteran Carl Roberts became chief commercial officer of dynamic carrier Epsilon at the start of December. Days after the announcement Alan Burkitt-Gray interviewed him for Capacity about the ambitious strategy the company is setting out for him

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he news at the start of December that Verizon veteran Carl Roberts has joined Epsilon Telecommunications as chief commercial officer was a surprise to the carrier industry. He had worked for some of the giants of corporate America for 29 long years – IBM for the first 14 and then Verizon and its predecessors for 15 years until 2015. Hadn’t he become an elder statesman and decided to retire with a few consultancies? We at Capacity possibly helped in that – by giving him a lifetime achievement award at our Global Carrier Awards in 2015. That only happens when you’ve stopped, doesn’t it? But, no, he hasn’t

stopped – though probably he intended to, at least for a few weeks. “When I left Verizon after 29 years in corporate America I was looking to be able to step back a bit and get involved with projects that were looking for growth. But it was only a month before the phones started ringing.” He worked on projects for eight different clients – including Epsilon, following a conversation at International Telecoms Week in Chicago. And following that he has decided to accept a full-time role with Epsilon, playing a prominent part in what he calls “an ambitious growth plan”. Roberts says Epsilon is “shifting to a higher gear” following a decision by CEO

Jerzy Szlosarek and the company’s shareholders. “There were three reasons [for joining]: Epsilon has an ambitious growth path, there was a role for me, and the company has competent people I like,” Roberts tells Capacity.

Pressure on margins “The value proposition is that carriers are trying to figure out how to make things easier. But they are hard to move and there is a lot of pressure on margins. What Epsilon has is an ability to bring all this together in a software-defined environment.” Roberts was group vice president of Verizon Business until March 2015, december/january 2017

the big interview: carl roberts | 33

across Asia. The other shareholder is Michael Stone, a UK private investor who made his money in commodity trading. Epsilon is aiming to provide its customers with “the fundamental things they need in a simple way”, features such as being able to scale up and scale down connections at will, access to the cloud and SIP trunking, “all from a simple portal”, says Roberts. “That is what Epsilon is seeking to do. We have 500 operators connected to more than 70 points of presence, and we are investing. There will be more news on that in the new year.” Companies are wanting communications and ICT needs “and they will get them from Epsilon”. There’s competition, he admits. “A lot of large carriers are seeking to do that, but it’s hard. There is a role for Epsilon. And an increasing number of enterprises want to scale up and down from a fully automatic portal. That’s the consumption model for the future.”

Broad experience

having joined via WorldCom International as managing director of data centres in September 2000. He worked for IBM from 1984 to 1999.

WorldCom to Verizon In between he spent a year at GlobalOne, the ill-starred joint venture between Sprint, Deutsche Telekom and France Telecom (now Orange) that collapsed in acrimony at the start of 2002; Roberts escaped a good year or so before, to join Bernie Ebbers’s WorldCom, which became MCI, which then morphed into Verizon Business. Roberts will continue to be based in Dubai, but will spend time in London as well as at Epsilon’s head office in Singapore. “Epsilon has a big operation in the UK and a fledgling operation in the US,” he says. The business is privately held through a company owned by two main shareholders. One is the Kuok Group, a family conglomerate with interests in hotels, property and media – including the South China Morning Post – as well as beverages, food and commodity trading capacitymedia.com

Carriers that are already doing that “don’t have the broad experience of services that Epsilon has”, he says. And the team is right. “Leadership is Capacity good. Jerzy is a strong CEO,” says Roberts. Szlosarek has worked at Epsilon since 2003, initially as the CTO for more than nine years. In October 2016 the management team was strengthened by the arrival of Raymond Yeo as CFO; he had earlier had the same role at M1, one of Singapore’s mobile and fixed telecommunications providers. “There’s a dynamic board of directors in Epsilon who get it,” says Roberts. “It’s a solid company, a profitable company, and there’s an opportunity to contribute. I wasn’t expecting to be in this position, but I am delighted.” And the aim? A plan to scale Epsilon up, with a target of “double digit growth”, he says. “I do believe this is all about the future. This is very much about growth and taking an important position in the industry.” The management team has put the right elements in place for growth, overcoming “what you have in larger telcos, and I don’t mean bureaucracy”, he says. “When you have an ambition to grow at a much higher pace you have to do things in a different way.” But “we have the support of a very dynamic board” and “we are investing for the future”. Where? Earlier he mentioned “a fledgling operation in the US”. Does that mean there’s a specific ambition for growth there? “Unequivocally yes,” says Roberts. “The US needs more flexible, more dynamic providers. It is one

of the major markets where customers will welcome” Epsilon’s approach, he says. “We’ll be talking again in the coming six months about that geography,” he promises.

US and Europe opportunity The growth markets are in Asia and the Middle East and Africa, he says, “and a bit in Latin America”, while “the US and Europe are hard work, but that translates to opportunity, because people want to go up and down [in scale of services they take] and that’s the value opportunity Epsilon has”. The company “has an ambitious organic growth plan, and we are very open to consider inorganic growth”, he says. “If we see something that fits and is at the right price, we can talk, if the business case works.” There is a position in the market “for Epsilon to connect all the different activities and that’s what I find fascinating”, says

When you have an ambition to grow at a much higher pace you have to do things in a different way” Carl Roberts, CCO of Epsilon

Roberts. “It’s carriers, ISPs and enterprises of all sizes. All the above are under consideration for today.” Back in 2010, when Roberts was group vice president of Verizon Global Wholesale, Capacity described him as “a man constantly on the go”, someone who was “often reliant on his Blackberry, iPad and laptop to keep up to speed with his company’s global activities” We quoted him as saying: “I like to cram as much as possible into the day because I hate any blank spaces.” Then, as now, he used his Dubai base to keep in touch with the Asia-Pacific region during his morning commute to work before they signed off for the night and to turn his attention to Europe and then North America. At Verizon, Roberts spent between 90 and 100 days per year travelling. He told us then that flights were one of the rare periods of operational downtime during his working day, although much of his journey could be spent with his mind firmly on the job. Now he’s CCO at Epsilon, that lifestyle seems unlikely to change. Elder statesmen don’t retire.

34 |

ENABLING A MACHINE DRIVEN FUTURE Carriers providing an IPX service for their mobile operator customers say the platform willCapacity be crucial in shaping the Internet of Things. Guy Matthews examines the influence that IPX is likely to have on machine-to-machine development

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he Internet of Things (IoT) is fast picking up speed as a proportion of mobile network traffic, providing operators with both anxiety and hope. Making them anxious are concerns over their ability to profitably handle this upsurge in low margin, high volume traffic. Providing hope is the near certainty that IoT represents the cellular sector’s next wave of much needed growth, particularly in mature and heavily saturated markets. Machina Research, an independent provider of IoT market intelligence, recently calculated that some 7% of all last year’s roaming connects were not human but machine-led. It says machine-tomachine cellular connections grew on average by 30% last year across the 17 major operator names it studied. Growth in most other areas of operator business is at best measured in single digit percentages. Some 38% of US enterprises are actively using IoT solutions today, with 81% set to deploy by the end of 2018, according to Machina’s findings. Corporate spending on IoT solutions will comprise 43% of IT budgets by 2020, it

estimates. It seems, predictably, to be the larger more heavily capitalised operator names in the front of the queue to benefit from this bonanza. Machina Research picked out Vodafone as the number one global operator currently taking advantage of the IoT opportunity, followed by AT&T and a host of top tier brands including Verizon, Deutsche Telekom, Sprint, Telefonica, Orange and Telenor. But not all MNOs will have a watertight IoT plan yet, and many will be looking to carrier wholesale partners for support and answers. In particular they will want solutions that wean them away from a subscription-based billing model, where the principal engine of growth involves maxing the average revenue of individual users. An IoT world is about maximising economies of scale, which is where carriers and their IPX investment can come to the rescue. How IoT will affect IPX Mun-Kein Chang is vice president of advanced signal and network interoperability at mobile software and

services provider with Syniverse which operates an international IPX network with direct connections to over 140 LTE networks. He believes that IPX and IoT are sufficiently interlinked that we should not simply be asking how IPX will affect the future of IoT, but the other way around as well. “IPX has been a fundamental network component since the days of 2G,” he says. “Now with the growth of IoT and the roll-out of 5G in the near future, IPX remains a fundamental network building block for mobile networks globally. IPX will have a tremendous influence on IoT. The fact that IPX is a common building block for mobile networks makes it an essential element for IoT and M2M use cases, now and for the future. IPX has worldwide reach, and its ubiquity makes it a standard accepted by all global mobile players.” IPX offers not just the scalability, but also the signalling functionality to make cross-border IoT traffic manageable. It also comes with the sort of built-in security that a frictionless IoT world will depend on. Machines that rely for their very december/january 2017

feature: beyond IPX | 35

operation on connectivity cannot be open to hacks and denial of service attacks, particularly if they are cars or planes. IPX’s separation from the public internet gives it critical security credentials. Best efforts reliability is bypassed. IPX essential for serious mobile Christian Wollner heads up product management for mobile world at Deutsche Telekom International Carrier Sales & Solutions (ICSS), an important pioneer in workable IoT solutions. He sees IPX as a virtual no brainer for most mobile operators serious about IoT: “Many operators haven’t really needed to think too hard about the connection between IPX and IoT,” he says. “IPX is something they’ve already used for international roaming for several reasons – it is a standard, it is secure, and it has classes of service.” He believes that MNOs will be reassured by IPX, the track record of which has been established over time as something good and efficient for human traffic: “Now that machine traffic has come along they have just started to use IPX for that to as an efficient platform they already know well,” he says. “When you think of the properties of IPX that make it suited to IoT, the foremost is that it’s there already. Nothing needs to be set up. It offers ubiquitous international connectivity. It’s more secure and resilient than the public internet, it differentiates between types of service.” Wollner points to early signs that IoT will be a truly globe-spanning phenomenon, bringing into play IPX’s credentials as a roaming enabler: “There is a lot of international traffic now in the IoT space,” he says. “Human roaming is usually temporary, perhaps for a business trip or holiday. But much IoT roaming is

permanent roaming. As IoT grows, it will become more and more international, without a doubt.” Wollner is encouraged that much of the dialogue ICSS is having around IPX and IoT is not only with established ICSS customers but a broad range of interested stakeholders: “We’re seeing new use cases, as well as use cases among our existing customers,” he explains. “It’s not just about connectivity between mobile operators. There’s some pure IT connections in there too now.” He concedes though that much of the meaningful early IoT dialogue has been with the larger operator names: “For some of the smaller operators, it’s still too early for them,” he fears. “But it will come. The

connectivity platform,” explains Matthew Jones, head of mobile data at Telia Carrier. “It’s a repurposing of IPX where we segment the IoT traffic away from the standard connections. Traditional IPX relies on peering networks to reach the end point, but that’s not quite the same with an IoT application. Repurposing IPX works well, but just repurposing roaming networks within IPX is not a good solution. IoT is about time sensitive applications which human roaming usually is not. If IoT starts timing out you’ll soon get a lot of negative publicity.” Jones believes that 5G might prove a game-changer, perhaps even game-ender, for the role of IPX in the IoT space: “When 5G comes around, all of the content will probably need to be at the edge of the network, so IPX will not have the same relevance,” he concludes. For the short-to medium term, IoT is Matthew Jones, head of mobile data, Telia Carrier an IPX-driven opportunity that operators are flocking more developed connectivity markets are to grab a part of: “It is easy to think of the paying attention, Capacity because if you look at CSP as stuck in the old practice of selling the potential for growth in human minutes of use and data packages,” says connectivity, it’s very limited. I’ve got two Machina Research’s principal analyst mobile phones and a SIM card in my Godfrey Chua. “They are working hard to iPad, so what more do I need? When transform and are investing billions into machines are getting connected, there’s technology that enables them to have still vast potential. We’re only really at the discussions that focus on solutions to solve beginning. With more and more growth, customer business problems.” this market can only become more and Chua says operators may be at an early more interesting.” stage in this journey, but believes the potential to be huge and able to deliver a IPX partnerships potential tenfold jump in revenues Telia Carrier is another IPX provider and compared with ordinary human early IoT pioneer: “We recently formed a connectivity, given the power of the right partnership with Ericsson and their device carrier platform to support it.

IoT is about time sensitive applications which human roaming usually is not”

IPX and the move to new LTE services It is not going too far to say that IPX is a fundamental necessity for LTE as operators look to extend its reach globally and launch new high value offerings off the back of it. When domestic LTE deployments are backed by global IPX-enabled networks, it changes what is possible in the mobile market. The right world-class IPX provider is central to enabling the monetisation of LTE. And correspondingly, the success of LTE on a global basis is a core element of the wider move to an all-IP ecosystem. The success of each is critical to the other. It is not simply a matter of supporting existing services. IPX can play a part in opening up a wealth of new service opportunities, including high value ones

capacitymedia.com

like VoLTE, and in offsetting some familiar challenges. “The shift from circuit-switched traffic to LTE is a mix of the natural industry evolution but also, in part, due to the OTT threat,” says Frank Paterno director of, global carriers with PGi, a provider of collaboration software and services. “With consumer sales down, the need to bring high quality voice and data services to the table is critical for telcos who want to maintain relevancy in the space.” IPX, he says, will lead to a more standardized industry, and subsequently will create a more enhanced end-user experience, by enabling interoperability between carriers: “In terms of pressures that carriers are facing, developing new

strategies and acquiring new competencies are not only essential to protecting the existing customer base, but to also create new revenue opportunities.” The main challenge is that VoLTE is seen as the first true end-to-end network-based service, requiring flawless execution across all of an operator’s network domains - RAN, transmission and core network, believes Daniel Ramirez, head of planning products at optimisation vendor Teoco: “Before VoLTE, an operator could get away with one of these three domains having issues, but this is not the case with VoLTE” he says. “Operators are now being forced to re-think the current siloed mindset between their different network departments.”

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special report

SUBSEA CABLES

December/January 2017

CONTENTS 38 OTTs and their subsea projects What are the OTT providers doing in the subsea realm? James Pearce dives into their world

42 GTT acquires Hibernia Rick Calder wants to move fast on integrating Hibernia Networks into GTT

44 Marseille, the digital port Capacity

The French city of Marseille is embracing a digital renaissance. Bill Boyle reports from the port city

47 Omantel and ultra-low latency Sohail Qadir, vice president of wholesale, examines the demand for ultra-low latency networks

50 Subsea cable update Guy Matthews takes us through the current subsea boom as more cables are laid

57 Market data: subsea The newest figures from TeleGeography

SPONSORS 40 Omantel

Driving digital transformation

53 Aqua Comms

Transoceanic dialogue

54 SEA-ME-WE 5 A state-of-the-art connection

59 China Mobile International Boosting subsea capabilities in Asia

Sponsored by:

capacitymedia.com

Capacity

Image by iStock

special report: ott projects | 39

NEC, and went live in September, offering 60Tbps of capacity. Google itself took 10Tbps of that, while its partners – China Mobile International, China Telecom Global, Global Transit, KDDI and SingTel – shared the rest. The consortium extended the cable to Taiwan, the home of Google’s largest data centre, showing the influence which the search engine giant exerted on the project. Mauldin predicts the industry model might switch away from multiple wholesale carriers to multiple OTTs and one or two carriers. “We will see more new cables coming and the model we will see is one carrier partner teaming up with multiple OTTs which take an agreed number of fibre pairs. The carrier will deal with building and maintaining the cable, and then sell capacity into the wholesale market. However, that frees up the OTT player to have its fibre pair and operate it as it sees fit. That is what happened with MAREA.” MAREA is a planned transatlantic cable running from Virginia, US, to Bilbao in Spain. It is backed by Facebook and Microsoft, and will be operated by Telefónica’s infrastructure division, Telxius. It is set to be one of the highest capacity subsea cables ever built, at 160Tbps, and is due to go live in October 2017. One of the interesting things about MAREA is that it takes a less-used route to deliver data from the US to Europe. Most existing cable routes run from New York or New Jersey to the UK or France. When announcing its plans in May, Microsoft director of global network acquisition Frank Rey said taking this alternative route will help it and partner Facebook “ensure more resilient and reliable connections for our customers in the United States, Europe, and beyond.” Microsoft is also involved in the 13,000km North Pacific Cable (NPC) network between Oregon and China, Japan and Taiwan. The project involves a consortium compromised of China Mobile, China Telecom, China Unicom, KT, SoftBank and TE Subcom, and offers capacity up to 80Tbps. When the cable was first announced, Microsoft said it planned to use its fibre pairs just to carry data from its cloud services division Azure, showing how the OTT players can even direct individual services across one cable. Facebook also has other subsea investments underway in the Pacific. Along with Google, it has ploughed money into the highest capacity cable currently in development in the Pacific, the Pacific Light Cable Network (PLCN), which will run from Hong Kong to Los Angeles. PLCN is part of a project with TE SubCom and PLDC and will offer a capacitymedia.com

capacity of 120Tbps across a 12,800km route, set to go live in 2018. Speaking at Capacity Europe in Paris in November, Facebook’s network lead Amar Khan explained the social media giant’s reasons behind investing infrastructure projects. “We want every member of our community to feel like they are having the best experience, to be able to upload their videos or share their content. To do that we work with operators on different solutions,” he said. “We are investing in a project with Microsoft to build what will be the largest submarine cable in terms of capacity across the transatlantic. It is more capacity than you have combined across the Atlantic on a single system, while across the Pacific we’re working with Google to deploy what will be the biggest cable in the Pacific. “The numbers can seem mind-boggling, but when you have a community of 1.8 billion people, these are the types of partnerships you need and investments you need to make.”

Threat to carriers The question that often gets raised about Capacity these projects is whether they pose a threat to wholesale operators. Facebook, Google and others have the money to make a wholesale play if they wish and are already involved in infrastructure projects. So will they go down that route? TeleGeography’s Maudlin doubts it. “In the past, the OTTs were buying wavelengths from the carriers, but they do not have to do that as much. However, these guys do not go everywhere, so they still have to buy capacity in other parts of the world. The arrival of an OTT might lead to a reduction of wholesale revenues,

but they won’t build a submarine cable and rent out the excess capacity. They do not want to do that. Why would they?” In fact, many in the subsea industry see the entrance of these OTT providers as a real business opportunity as they drive more money into the sector.

Capital investment

At a Capacity roundtable on the future of the subsea industry, Mike Cunningham, chairman of the Ireland-France Subsea Cable, said: “From my perspective, there is an opportunity because there is a lot more capital investment going into subsea cables from OTTs and they do not want to incur the entire capital costs. So they want to partner with different entities to facilitate that.” It’s possible to make an independent business case to finance the non-OTT part of that capital requirement, he says, and that is an opportunity that would not have existed otherwise. “So from my perspective, it is a very significant driver in the industry, especially along long-haul routes. That is where they need to go, and there are fewer options available to them there to scale. They are also long in duration regarding mindset – they are looking at investing in a long life asset, and that makes a good partner, because they want to build it to last.” Alessandro Talotta, chairman and CEO of Sparkle, is a little more cautious. He says: “They can deal whatever they want, oblige you to the price they want and they have the power to decide. We are a follower in the negotiations and they are very good at making people compete against each other,” he says. “But on the other hand, the OTT is an important investment partner. If you are a strong partner then it can work well.”

Top five OTT projects currently underway MAREA OTTs involved: Microsoft and Facebook Length: 6,000km Capacity: 160Tbps Landing points: Virginia, US, and Bilbao, Spain PLCN OTTs involved: Google and Facebook Length: 12,800km Capacity: 120Tbps Landing points: LA and Hong Kong NPC OTTs involved: Microsoft Length: 13,000km Capacity: 80Tbps Landing points: Oregon, US, and

Chongming (China mainland), Nanhui (China mainland), Lingang (China mainland), Busan (South Korea), Toucheng (Taiwan) and Maruyama (Japan) HAWAIKI OTTs involved: Amazon Web Services Length: 14,000km Capacity: 42Tbps Landing points: Sydney, Australia; Auckland, NZ, to Hawaii and Pacific City, US MONET OTTs involved: Google Length: 10,556km Capacity: 64Tbps Landing points: Santos and Fortaleza, Brazil, to Boca Raton, US

40 |

DRIVING DIGITAL TRANSFORMATION WITH ULTRA-LOW LATENCY NETWORKING ǧ ǧ ǧǤ

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ew drivers and demands are transforming the undersea Delivering a ‘Best Effort’ service is not good enough anymore. cable market. Service providers and enterprises need As Cloud-based services are adopted globally, service providers undersea cable infrastructure that matches the solutions must find the lowest latency connectivity to connect the Cloud that they are developing and deploying. They need partners that and other demanding applications. can support them in new ways and create new value with For a service provider to be successful in today’s market, they undersea cable infrastructure. need to work with partners that can not only connect them from A to B but do it with the fewest hops in the shortest time. Over the last decade, Omantel has been developing unique Capacity and diverse undersea cable infrastructure to serve this emerging Milliseconds matter. demand. Its strategy has been to support its partners with not Omantel has recognised this evolution of the undersea cable just the best networks but the lowest latency infrastructure market and committed to delivering solutions that can meet these new expectations. It helps its service provider partners to around the world. efficiently extend their reach Omantel has used Oman’s unique geographic position in while gaining new diversity the Middle East at the nexus and reducing latency. This supports its customers with between East, West, North new reliability for sensitive and South to deliver ultra-low latency networks on a global applications and services and scale. It sits at the crossroads of greater QoS and QoE. It is a simple strategy that accelerates developed markets in Europe and Asia as well as some of its partner’s connectivity. the fastest growing markets A UNIQUE POSITION in the world. It has developed Omantel offers its partners a undersea infrastructure that unique geographic advantage. rivals any communications Oman is positioned facing the hub in the world through Arabian sea at the tip of the rethinking what is possible, Arabian Peninsula. This shaves developing diverse routes, and milliseconds of latency from strategically investing in high routes spanning the world. growth markets. Omantel is offering the fastest While Oman only has a Sohail Qadir: Once partners are connected to Omantel, they gain route between Frankfurt and population of 4.2 million, ultra-low latency access to more than 50 countries Singapore with a roundtrip of Omantel connects more than only 160 milliseconds (ms). 20 undersea cable systems Its diverse high-speed link between Singapore and Frankfurt uses out of 13 landing in Oman at five diverse landing stations in the Europe Persian Express Gateway (EPEG) and Bay of Bengal the country. Oman’s unique location and Omantel’s long-term Gateway (BBG) cable systems. Similarly, it can connect partners strategy combine to offer service providers and enterprises to key locations like Suez in 53ms and Djibouti in 27ms. infrastructure built to support their digital transformation. It has added to this advantage by developing five unique NETWORKING THE FUTURE submarine cable landing stations in Oman that offer further Growth in Cloud-based services and high-performance redundancy. These landing stations connect with terrestrial applications are driving demand for ultra-low latency networking networks and can seamlessly connect partners to hubs around globally. Enterprises want their services to be delivered with the the world via multiple undersea cable systems. This increases highest possible Quality of Service (QoS) and Experience (QoE) choice for partners and enables Omantel to consult with partners with no service disruptions. to develop solutions that meet their unique needs. december/january 2017

SPONSORED STATEMENT

Partners also have the option of using cross border terrestrial links to add further diversity to their networks. Oman has four cross border networks into the UAE, Saudi Arabia and Yemen enabling partners to interconnect with local, regional and global service providers. Oman is one of the most connected places on earth and Omantel enables its partners to take advantage of redundant, flexible and ultra-low latency networks. THE LOWEST LATENCY FROM CHINA TO AFRICA While offering partners the benefits of its home market, Omantel is also connecting new and underserved markets in Asia and Africa. Its investments in the Silk Road Gateway-1 (SRG-1) and Gulf to Africa (G2A) cable systems deliver diversity and new lowlatency options. SRG-1 will connect Oman to Pakistan with onwards connectivity to Afghanistan, China, Iran, Turkmenistan and Tajikistan. The system combines undersea and terrestrial infrastructure to deliver a new route from the Middle East to China. Omantel recognised the need for new connectivity but decided to invest in a route that would also include high-growth markets along the way. It will interconnect SRG-1 with G2A to give partners new options for connecting Africa and Asia. G2A connects Oman to Somalia via two redundant landing stations in Puntland (Bosaso) and Somaliland (Berbera). The system provides onward connectivity to Ethiopia and will connect Kenya, Somalia and Capacity Cable systems: Silk Road Gateway-1 (SRG-1) and Gulf to Africa South Africa in later phases. Its consortium partners include (G2A) Ethio Telecom (Ethiopia), Golis Telecom Somalia (Somalia) and Telesom (Somalia). The interconnection of these two systems accelerates access connections at Interxion’s MRS1 or MRS2 data centres. and delivers new redundancy. It promotes growth across Central AAE-1 adds to the density of Omantel’s undersea cable Asia and Africa and enables Cloud services and high performance infrastructure while growing its presence around the globe. applications to be deployed reliably in more markets. Omantel is supporting the truly global growth of Cloud and is removing DELIVERING TRANSFORMATION barriers for enterprises looking to deploy new and innovative Each of Omantel’s activities is part of a larger goal of enabling services around the world. its partners to deliver the services of the future. It is a committed Once partners are connected to Omantel, they gain ultra-low partner and is continuing to evolve its strategy for providing lowlatency access to more than 50 countries. There are no limits on latency networking globally. how and where service provider and enterprise partners can grow. Each of these milestones delivers new value for partners and removes barriers to growth. The combination of diverse routes DELIVERING DIVERSITY and a new approach to undersea cable infrastructure benefits Omantel has invested in the Asia Africa Europe-1 (AAE-1) the entire value chain, ultimately with end users getting the best undersea cable system to deliver new diversity around the globe possible QoS and QoE. and increase connectivity between three continents. AAE-1 offers Omantel is using its depth of undersea cable infrastructure to partners another diverse route from Asia to Europe, connecting help partners make digital transformation real in their businesses 20 countries in total. It will serve close to 50% of the world’s while providing them with a foundation for long-term growth. population spanning approximately 25,000kms with a design When partners choose Omantel they can accelerate how capacity of 40 Tbps using the latest 100Gbps technology. they connect and deliver new applications and services with AAE-1 connects Hong Kong, Vietnam, Cambodia, Malaysia, a trusted provider. Singapore, Thailand, India, Pakistan, Oman, UAE, Qatar, Omantel is delivering undersea cable infrastructure that Yemen, Djibouti, Saudi Arabia, Egypt, Greece, Italy and France. is unique and meets demands in a changing market. It has It includes a unique route connecting Hong Kong to Singapore invested for the long-term and is helping its partners to drive via a terrestrial link through Thailand. This increases reliability transformation and ensure that no matter what market a partner with a new and diverse route. operates in they can always benefit from the ultra-low latency The cable system marks a milestone for operators in the network of Omantel. Middle East as Omantel is the first GCC operator to land an undersea cable in Europe. Omantel is the only operator with two landing stations in two different countries on the system with one in Muscat, Oman and Marseille, France. Omantel offers onward connectivity across Europe to its communications and economic hubs including Frankfurt, For more information, please contact [email protected] London, Amsterdam, Paris, and Milan. It also provides cross capacitymedia.com

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One GTT

will from

emerge $590m

takeover of Hibernia GTT’s Rick Calder wants to move fast on integrating Hibernia Networks as soon as the deal is completed. And then he’ll be looking for the next big acquisition, he tells Alan Burkitt-Gray

G

TT Communications announced in November that it plans to acquire Hibernia Networks for $590 million, of which $515 million is cash. The deal, which should close in January 2017, means that GTT will be able to move much of its traffic to Hibernia’s network – which includes three transAtlantic cables, Hibernia North, Hibernia South and the ultra-low latency Hibernia Express. “Their fibre overlaps our highest density routes,” says Rick Calder, president and CEO of GTT. “It’s a new opportunity to consolidate.” GTT “provides secure connectivity to cloud service providers”, he explains. “We connect to the Microsoft Azures and Amazon Web Services of this world.” Hibernia will be fully integrated into the GTT brand and operations, though the team will stay on. “As we integrate, we’ll create one organisation,” says Calder.

Capacity

When GTT has made other acquisitions in the past “the objective has been to create one GTT, one organisation, one system”. The client management database will be integrated “and there are tremendous benefits from network integration”. And, he adds, “we really like the Hibernia team. They have the same values as GTT”. GTT was created in 2006 from the merger of a US company, Global Internetworking, with UK-based European Telecommunications & Technology. Both were virtual network operators, but GTT has been acquiring networks for the past seven years, including PacketExchange, nLayer Communications and then Tinet, bought from Inteliquent in 2013. Last year it bought MegaPath’s managed services business.

Hibernia is a historic deal Most deals were relatively small – a few tens of millions, far less than the sum

committed to buy Hibernia from its private equity owners. So this deal marks a major departure for GTT. “We’ve historically leased all our wavelengths,” says Calder. And it’s also a significant expansion of the business. GTT, quoted on the New York Stock Exchange since 2013, had a market capitalisation in early December of $995 million; Hibernia will add to that. “Moving to owned fibre makes sense,” he says. “Hibernia is a perfect overlap in terms of scope and scale.” The acquisition doesn’t, he says, change GTT’s “traditional capex-light model”, he insists. With Hibernia, the expanded GTT can increase its network by adding wavelengths. Will there be more deals like this? “We’re not interested in metro fibre,” he says straight away. That involves very high capex. But “as we think about our interconnection points with our major points of presence”, there may be some sense in “converting traffic that’s on leased fibre” into owned fibre. december/january 2017

the big interview: rick calder | 43

1981-85

Yale University, BS in electrical engineering

1988-90

Harvard Business School, MBA

1996

Divisional president

2001

President, business

and CMO, Winstar

enterprises, Broadwing

2004

President and COO,

2007

President and CEO,

InPhonic

GTT

“We would see ourselves extending our own fibre footprint,” he says. But there’s the Hibernia deal to complete first, with GTT needing approval from the Federal Communications Commission (FCC), the US regulator. “The FCC has put out a public notice and we expect approval in January.” And then, once granted, there’s the task of integration. “We have a proven approach to integrating rapidly,” says Calder, who has been CEO since May 2007, when founder and chairman Brian Thompson relinquished that position. Thompson, a telecoms veteran who was executive vice president of MCI in the 1980s, remains executive chairman of the board. “We usually take two or three quarters” to integrate an acquisition into GTT, he says, including integrating the organisation and the back office. Some mergers have been more complicated than others, especially when the acquired capacitymedia.com

company brings in an extra range of services. “Previous integrations had more services.” Hibernia’s service range is limited, but its revenue impact is major. The acquisition will introduce new skills into the company – handling optoelectronic infrastructure, for a start. “That’s new. That will be a key part of the team coming in.” There is “a lot of commonality in the infrastructure” between Hibernia and existing GTT, he says: both use platforms from Juniper Networks. On the optical side, though, Hibernia uses Ciena and Huawei kit, “both new to us”. Hibernia Express has Ciena optoelectronics, while the North and South cables across the Atlantic both have Huawei systems. There seem to have been a spate of mergers and acquisitions announced in late 2016 – Level 3 and CenturyLink; Zayo and Electric Lightwave; Windstream and EarthLink. “With some of those you can sense a degree of defensiveness,” says Calder. “On the GTT side our deal is offensive. Both GTT and Hibernia are great companies.” The two companies will come together and be stronger, he adds. “Hibernia’s Capacity shareholders wanted a significant stake in GTT as part of the deal.” They will end up with almost 9% of the merged operation. How did the companies come together? Calder first met Bjarni Thorvardarson, the CEO of Hibernia since 2004, in June 2007, only a month after he became CEO of GTT. So they go back a long way. “Hibernia engaged an investment bank and held a private competitive auction. That’s how we heard about it.” Who else was in the running? “We believe there was a combination of strategic players and private equity sources.” That’s all he’ll say. He maintains his appetite for more deals as soon as Hibernia is integrated. “We expect to identify a strategic acquisition, a big acquisition like Hibernia. We can integrate very rapidly.”

Emerging as a challenger So, given he aims for Hibernia to be integrated in two or three quarters after a completion date expected in January, when does that mean? “Potentially next year,” he says, speaking to Capacity in early December 2016. “We continue to emerge as the challenger brand.” In competing against companies such as AT&T, BT and Verizon, “we see tremendous opportunity,” he says. Despite what he says about waiting until late 2017 before undertaking another acquisition, GTT has been quietly doing another deal while at its busiest with Hibernia. At the end of November the

company spent $28 million buying the customer base of the former Yipes – an Ethernet networking specialist – from Reliance Communications’ Global Cloud Xchange (GCX). It was “a non-material acquisition of the customer base”, says Calder. “It was non-strategic, but an absolutely ideal opportunity to take their client base, giving us the opportunity to upsell and cross-sell to them.” The deal will provide “a very interesting funnel of clients,” he adds. “This was a great fit.” The purchase price was interesting, because back in 2007 Reliance Communications paid $300 million for Yipes, but that deal included the infrastructure, which remains with GCX. “We are going to migrate the clients over to our network infrastructure and consolidate them into GTT,” says Calder. “The big opportunity is to grow that customer base, and we’ve started that.” The former Yipes has a multinational

Hibernia’s shareholders wanted a significant stake in GTT as part of the deal” Rick Calder, President and CEO, GTT

client base “in a diverse set of industries”, predominantly taking Ethernet and virtual private LAN services. “There’s a real opportunity to sell them [the Yipes client base] a much expanded set of locations and product sets. We have some really interesting products.” Finally, back to the Hibernia deal. Once that is integrated into GTT, which carriers will find less business from Calder’s company? Of course, he doesn’t say which will be affected – except that they will be in the western European and eastern US markets, either end of the Hibernia cables across the Atlantic. “But those companies also serve us in other parts of the world.” And that’s part of the nature of the telecoms business. “When you make an investment [in infrastructure] there’s no way you can use it all for your own demands,” he says. “We’ve had a highly differentiated strategy for years. We are extremely different from the incumbents. We believe in simplicity, speed and agility, while incumbents see their networks as a cash cow. We’ve grown in scope, scale and stature.”

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PORT CITY WITH ATTITUDE SEEKS DIGITAL PARTNERS As Bill Boyle found on a visitCapacity to meet Interxion’s new digital partners, the port city of Marseille is swimming against the current of economic gloom with its strategy to become a digital capital

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uroméditerranée, a €7 billion joint investment initiative between the French government and local authorities is at the heart of why Interxion is investing in Marseille. The vast project preceded Interxion’s arrival in the city and is focussed on infrastructure investment to help improve the commercial attractiveness of Marseille. As the largest urban regeneration programme in Southern Europe, the French government contributed €1.4 billion to Euroméditerranée as an incentive for private investment. Global investors, including AXA Real Estate, BNP Paribas and ING, are amongst many that are capitalising on the favourable investment environment. In turn, this has led to a significant upswing in the local economy as projects such as Interxions are creating a real digital destination with a real heart, real energy, flexible public-private partnerships and the creation of long-term jobs. While other French cities are scrabbling to attract investment Marseille has built two skyscrapers, a theatre, commissioned dozens of multi-million euro works of art and is increasing its reputation as one of the movie-magnet cities of the world with

Netflix’s truly over-the-top box-set Marseille, starring Gérard Depardieu. Between the City of Marseille, the Marseille Provence Metropolitan Urban Community, the Provence Alpes Côte d’Azur Region and the General Council of the Bouches du Rhône, €600 million in taxpayers’ money was committed to the 25-year redevelopment project. Yet this offering was dwarfed by the €2.9 billion offered by private investors. Construction began in 1995, and within 10 years the programme had produced 4,000 new homes and hundreds of thousands of square metres in new and attractive office space, creating around 15,000 jobs. While phase one of the project began in the midst of a construction boom, phase two began on the eve of a global financial meltdown. EU authorities cleared act two of the Euroméditerranée regeneration project in 2007: they agreed to allocate substantial funding for the new development. In all, organisers raised an additional €3.5 billion. These funds allowed builders to extend the scope of the regeneration project by 170 hectares, creating 18,000 new housing units. The global crisis that ensued did little to halt the progress of

Euroméditerranée. By the time the regeneration programme ends in 2020, it will have created 24,000 new homes, one million square metres of office space and 150 acres of green space. Jobs for the jobless The developments have brought work to Marseille’s traditionally jobless youth. During phase one of Euroméditerranée, the city saw a 34% jump in employment by generating 28,000 jobs. These jobs were created by attracting 800 businesses to settle in Marseille, including big players like IBM, DHL and Expedia. Without the city’s bold construction developments, that simply wouldn’t have been possible. However, the city is nothing if not ambitious, so this was only the beginning. When Interxion CEO David Ruberg approached the local authorities with its proposal to build two brand new data centres, MRS2 and MRS3 to keep the original MRS1 company, he did so in the knowledge that the Marseille local government had much valuable experience working on massive infrastructure projects. He also knew that the local leaders had a very keen awareness of the need to build Marseille’s digital future and december/january 2017

feature: marseille | 45

could see the opportunities which Interxion could bring to the table. Very quickly Marseille showed its abilities. One of the problems Interxion faced in bringing the subsea cable AAE-1 from its manhole cover on the beach to its terrestrial landing in MRS2 was its location. The short journey involved multiple landowners and leaseholders. It was the ebullient deputy mayor of Marseille, Didier Parakian, who led the town hall team which navigated the reams of red tape and tied them neatly into a termination inside the echoing halls of the vast new data centre in the docklands area of the port of Marseille. One of the benefits that Marseille bestows upon the data centre industry is that it has multiple landing stations for cables covering over 50 kilometres of its coast line. The corollary to that is the complexity of getting agreement from all those whose land you have to dig up to locate the final termination in the correct place. Marseille also boasts three internet exchanges: France-IX; DE-CIX; and NL-IX.

the capacity of the market and been the midwife of emerging new digital markets.” Interxion intends to expand the capacity of the Marseille data centres to between 30,000 and 40,000 square metres within five years. “The best location in the Med is Marseille – it is the most strategic telecom gateway between the Middle East and Africa – and where we are building our three new data centres; MRS1, MRS2 and MRS3.”

and suited to house a secure data centre. Moreover, the best thing is that it is on the same street – just across from the second data centre MRS2. Talking of the journey Interxion has been on Coquio says: “The Germans didn’t have the planning laws in 1942 that we have now,” wryly alluding not only to the fact that the Germans put the building up without permissions but also to a few planning problems one of Interxion’s Paris data centres had recently. Why Marseille’s time has come “We have 42 data centres in thirteen David Ruberg, CEO of Interxion says cities but soon we will open up two new that Marseille is: “One of the fastestdata centres in one city.” growing internet exchange hubs in the The nearby emerging markets of Africa, world – there are 40 miles of coast capable India, the Gulf States, South East Asia of delivering submarine cables for mean that 4.5 billion people need market connection to data centres and internet data; entertainment; information; cloud exchanges. Incorporating them into the services, financial services and more.” data centres is made easier by the attitude Marseille is not yet a major data centre of the local leaders.” city. London boasts 600,000 sqms of Interxion considers this hub of enough data centre space and there are strategic importance to be building 50,000sqms in Paris. In the short term another two major data centres in the Port Marseilles will boast an addiitonal of Marseille. Its original data centre is in 20,000sqms and in the coming years there will be the need for 40 to 50,000sqms presently being built. Singing the same song Didier Parakian, the deputy The CEO of the Port of Marseille major of Marseille, and a truly Capacity Fos, Christine Cabau Woehrel great ambassador for the city, has declared a strong affinity with the worked tirelessly over the years to data community springing up in make the city’s public-private her Port’s midst: “Marseille has a partnerships work. strategy which fits with Interxion’s I talked to him in the Palais du – we want it to blossom from a Pharo where he says: “This Palace transport and data transit hub was built in 1858 by our Emperor into a content hub. In the digital Napoleon III for Eugénie de age, this is the future for the city Montijo. She only visited it once and its youth. We know that, and – she liked the Palace but we know we have to be flexible to Marseille was too windy for her ensure that when private industry and she gave the building to the Didier Parakian, deputy major, Marseilles at Interxion event comes to the city we provide it city and never came back. with the infrastructure, the Marseille was upset by this so we flexibility and the investment always want our visitors to come potential to flourish.” the middle of the city by a police station. back. Maybe we have a complex about it!” “I am a shipping person – that is my he exclaims loudly while smiling broadly. specialism but shipping and the internet Ideal geography “David Ruberg, CEO of Interxion is share the same basic tasks and values, and The two sites for the new data centres are visionary and he has invested for the that has been the reason for the success of located close to the submarine cables, at long-term – €250 million so far. So we say the projects we have launched in the entrance of the port: One site has two a big thanks to the company – together Marseille. Shipping moves people and warehouses which used to belong to the we have a powerful message. We are a cargo around the world, and the Internet company Foure-Lagadec, historically transit city and want to become a moves data and ideas. Marseille is the first dedicated to the transport and storage of destination city in less than five years. So port of France, the second largest in the goods. This was where the expertise of the we are going to give Interxion more help Mediterranean and the sixth largest port Marseille local authorities came in. Not and make essential permissions easy to in Europe – it is the key to the North only did they identify the second site but obtain. We are very flexible – so digital, so South flows of commerce from Asia to they also made available a third site which sunny, so funny!” Europe and Europe to then onto the would have been impossible for Interxion As I talk football with him he Americas via the Middle East. It is to have found itself. becomes more excited – there is not, he interesting to see that data flows in the It was a German submarine repair base claims, any football tournament that same paths as our port commerce. which, although built by the Nazis, had Marseille couldn’t host better than As Fabrice Coquio, managing director never been used for the purpose it was anyone else. Since the ball is well and France, Interxion says: “A boom in traffic built. The submarine base, a unique piece truly in Marseille’s play I have to agree capacity coinciding with a significant of monolithic concrete work made with a with him. It’s hard to imagine anyone latency roundtrip decrease between reinforced structure six metres thick in not wanting to return to this Port City, Marseille and Singapore, has opened up places, is perfectly located, constructed wind or no wind.

Capacity

opinion: omantel | 47

A new era of ultra-low latency networking beckons As the demands for ultra-low latency networks become more and more demanding, the planning and delivery of subsea cable systems is developing in complexity. Sohail Qadir, vice president of Omantel wholesale, provides some perspectives for the year ahead The need for ultra-low latency networking is driving the evolution of the undersea cable market. Connecting A to B is not good enough anymore. Enterprises and service providers are delivering cloud, content and nextgeneration communications services globally and that demands ultra-low latency networking. These applications and ecosystems are influencing the planning and delivery of new cable systems as it becomes increasingly important to cater to their needs. The value chain is more interconnected than ever before and that means new systems should be built to deliver these applications and ecosystems on a global scale. That’s a real opportunity as enterprise and service providers look for new routes to global hubs as well as high growth markets. The traditional approach to the undersea cable market has been to connect west to east and north to south, but that is not necessarily going to deliver the best possible latency to deliver next-generation services. There needs to be some new creativity in how cable systems are planned and developed.

MIXING AND MATCHING New cable systems are mixing both terrestrial and undersea infrastructure in order to find the fastest routes around the world and deliver truly redundant options. The cloud, content and next-generation communications services need maximum availability and cannot be rolled out globally unless they have reliable, unique and high performance routing options. At Omantel, we’ve invested in new cable systems such as the Asia Africa Europe 1 capacitymedia.com

(AAE-1) cable system, which runs east to west, but also other systems like the Silk Road Gateway 1 (SRG-1) and Gulf to Africa (G2A), which connects China to Africa via Pakistan and Oman. We are finding unique routes that connect global hubs but that are also Capacitymarkets with challenging and underserved ultra-low latency networking. SRG-1 connects Oman to Pakistan with onwards connectivity to Afghanistan, China, Iran, Turkmenistan and Tajikistan. These markets benefit from increased connectivity to adjacent markets but also around the world. G2A offers connectivity from Oman to Somalia and onward connectivity to Ethiopia then eventually Kenya and South Africa.

NO MORE STRAIGHT LINES Combined, these two systems support ultra-low latency networking between Asia and Africa and support trade and economic cooperation across the regions. They also provide a route between Asia and Europe that does not pass Singapore or the Indian Ocean, reducing the risk of cable cuts. We could see that AAE-1 and other infrastructure could be complemented with an “out-of-the-box” approach to building undersea cable systems. Similarly, we have invested in the Europe Persian Express Gateway (EPEG) and Bay of Bengal Gateway (BBG) cable systems, which connect Frankfurt to Singapore with only 160ms of latency. It adds yet another unique route to access Europe from Asia and vice versa. Spanning about 25,000km, the AAE-1 is the third longest submarine cable, connecting 18 countries across Asia, Africa and Europe via Oman. It provides an

OPINION

Sohail Qadir vice president Omantel Wholesale

alternative and low latency route between the east and the west. The company landed the AAE-1 cable in the French city of Marseille, becoming the first operator from the Gulf Cooperation Council to land a cable in the region.

HIGH-SPEED FIBRE The consortium behind the 8,100km BBG said in April that it was the first dark fibre system to be lit at 100Gbps. BBG uses high-speed fibre technology, dense wavelength division multiplexing, which allows the capacity to be increased at will without any additional subsea intervention. It has an initial equipped capacity of 9Tbps and design capacity of 55Tbps. The G2A system, announced in February, will offer connectivity from the Middle East to emerging markets in East Africa, and aims to support the growing demand for cloud services and applications. It will offer 20Tbps of capacity and will also use 100G technology. Omantel has a supply agreement with Xtera Communications and is building G2A in partnership with Ethio Telecom, Golis Telecom and Telesom Company. In Oman, the cable will interconnect to nine other subsea cable systems. In the undersea cable market, there are no straight lines anymore. Latency is key for next-generation services to go global. As we find new way routes to accelerate connectivity, we are supporting the global growth of these services. I see the undersea cable market changing dramatically as new systems are planned and come online. We are in the era of ultra-low latency and that is delivering new creativity in our market.

Capacity

Capacity

50 |

HOT SPOTS AND

HIGH SPEEDS

IT HAS BEEN A NOTEWORTHY YEAR FOR THE SUBSEA CABLE INDUSTRY. GUY MATTHEWS CONSIDERS SOME OF THE SIGNATURE LAUNCHES OF THE PAST 12 MONTHS AND LOOKS AHEAD TO ANOTHER TRANSFORMATIVE YEAR FOR THE GLOBAL SUPERHIGHWAY

T

he subsea cable sector continues to break vital new ground in terms of technical achievement as well as innovative and diverse routing. The past year has seen several significant new systems come online, and further landmarks look set to be reached over the next 12 months. The latest submarine launches demonstrate shifting patterns of user demand as much as they offer unprecedented levels of power and performance. Scheduled for launch towards the end of 2017, for example, is MAREA, the highest capacity subsea cable ever to cross the Atlantic which will boast a stunning initial design capability of 160Tbps. Running from Bilbao in Spain to Virginia Beach in the US, MAREA is the initiative not of a conventional consortium of carrier names but of Facebook and Microsoft. It is currently under construction by TE Subcom. TE Subcom has also been appointed to deliver what will be another of 2017’s signature systems, the hugely ambitious Asia-Africa-Europe-1 (AAE-1). This cable leverages a new generation of advanced 100Gbps optical transmission equipment and is backed by a diverse consortium of 19 global service provider names. When lit, AAE-1 will link South East Asia to Europe, taking in Hong Kong, Vietnam, Cambodia, Malaysia, Singapore, Thailand, Myanmar, India, Pakistan, Oman, UAE, Qatar, Yemen, Djibouti, Saudi Arabia, Egypt, Greece, France and Italy on its meandering 25,000km route. Rivalling it for importance is SEA-ME-WE-5, built by Alcatel-Lucent and NEC and stopping at

a similarly dizzying array of landing stations on its journey from South East Asia to Europe via numerous Middle Eastern stops.Capacity Asia is also the beneficiary of the 8,100km Bay of Bengal Gateway (BBG) cable, lit in early 2016 to connect India to the rest of world. It runs from the subcontinent directly to South East Asia and West Asia, then onward to Europe, Africa and the East Asia, interconnecting as it goes with other major systems. The consortium behind BBG includes Telekom Malaysia, Vodafone, Omantel, Etisalat, India’s Reliance Jio Infocomm and Dialog Axiata of Sri Lanka. Well worn routes are gaining from new investment that adds welcome diversity and a wealth of much needed new capacity. FASTER, the newest transPacific submarine cable, entered service in summer 2016. At nearly 12,000km in length, it is backed by Google, KDDI, SingTel, China Telecom Global, China Mobile International and Malaysian IP transit provider Global Transit Communications. First direct Ireland to US cable The Atlantic, oldest and best served of all the long haul crossings, has also been the setting for innovation and fresh investment. Ireland and the US have been linked by Aqua Comms, the Irish-based company behind America-EuropeConnect (AEConnect), the first modern subsea cable system running directly from Ireland to America. To build the system, Aqua Comms partnered with vendor Megaport to enable what they have called

‘elastic interconnection’. The basis for this innovation is Megaport’s investment in global software-defined network (SDN) technology the upshot of which, says Aqua Comms, is that enterprise customers can easily provision their own services, including direct cloud connections and point-to-point transport between Europe and the US. For the first time, it claims, businesses can directly connect to public cloud providers outside of their own region, on an on-demand basis. Some of the past year’s new cables have a more regional flavour. The Asia Pacific Gateway (APG) connects mainland China with Hong Kong, Taiwan, Japan, Korea, Malaysia, Singapore, Thailand and Vietnam. Although only recently lit, the NEC-built APG system was commissioned back in 2009. The market for wholesale capacity in South America will also get a shake up next year when new systems including Seabras-1 and Monet open for business. Seabras-1 will provide the first ever direct link between Sao Paolo in Brazil and the US. It will branch off to bring added capacity to economies as diverse as Argentina and Canada. Monet is similarly scheduled to carry over 60Tb of capacity between Miami in the US and Brazil. It is a collaboration between Brazilian telco Algar Telecom, Angola Cables, Uruguayan operator Antel and Google. BRUSA is another planned cable that will be nearly 11,000km long, linking Rio de Janeiro and Fortaleza in Brazil with Puerto Rico and Virginia Beach. “We’ve seen many major systems come into service this year, with more on the december/january 2017

special report: subsea cable projects | 51

way next year,” says Alan Mauldin, research director with independent analyst firm Telegeography. “With the Latin American systems in particular, it will be interesting to see how they affect the market and change pricing, which has already been falling pretty rapidly in anticipation of their launch.” Mauldin considers it noteworthy that the manufacturers behind these new cable designs have been able to push performance levels into a new dimension: “With the design of these new cables, capacity is really being pushed to extremely high levels,” he observes. He believes that this work at R&D level will prove vital with so many older systems now nearing end of life, even given the their upgrade potential. “We’ve been seeing over the past few years the ability of older cables – ones that have been in operation for 10 or even 15 years – to realise much faster speeds,” he points out. “We’ve seen that process realised, and now begin to slow. A cable that could do 64 10Gb wave scan now do 64 100Gb waves. The ability to go much beyond that appears to be limited,

although, of course, every single cable is entirely different.” Mauldin says that Telegeography is predicting that the share of lit capacity on older cables will finally start to rise. In other words, old cables that have been able to cope with high traffic levels with plenty of capacity to spare will soon struggle. “Historically, depending on the cable obviously, the share of lit capacity has not been a lot more than 20% to 25%,” he says. “As expansion potential begins to slow we’ll see fill rates begin to rise. There’s not going to be any kind of capacity shortage, but it does point the way toward investing in new cables.” Cable is part of the SDN world Liquid Sea, a wholly-owned subsidiary of Liquid Telecom, started a project to build a new subsea cable linking Africa to the Middle East and Europe. When finished, Liquid Sea will run approximately 10,000km from South Africa to the Middle East, linking to Liquid Telecom’s pan-African terrestrial network and providing affordable international connectivity to landlocked and coastal

Capacity

countries in Eastern, Central and Southern Africa. Subsea cables remain central in a world increasingly dominated by cloud computing, ever more powerful mobile devices, video streaming and the Internet of Things. Both operators and vendors are working on these challenging trends, developing network infrastructures that scale accordingly to ensure the expected quality of experience for end users. Collaboration between vendors looks set to become more important in achieving this: “As a truly intelligent internet takes shape over the next decade, we expect the growth and importance of submarine networks to continue,” says Brian Lavallee, director of portfolio solutions with subsea vendor Ciena. “We partnered with TE SubCom in an alliance that will advance open submarine cable network initiatives and adoption by combining TE SubCom’s wet plant designs and marine installation with our 6500 Packet Optical Platform. The goal is to create a powerful, flexible, and open undersea system that accelerates the transition towards a software-defined global infrastructure.”

Most Advanced Optical Solution on a Transatlantic Subsea Cable with the Highest Reliability and Diverse Terrestrial Route Aqua Comms AEC-1 (America-Europe Connect-1) & CeltixConnect

Capacity Aqua Comms’ London-Dublin-NYC direct wavelength connections provide unprecedented security and reliability. It has the shortest, shallow water length with full burial directly connecting the US and the UK, and the fastest provisioning times for on-net PoPs for 10G / 100G (by availability). z z

z z z

IRISH SEA: 2-Fully diverse cables: CeltixConnect / EirGrid with diverse landing stations in Ireland and the UK. SLA 99.9%: Fully diverse terrestrial routes in the US, Ireland and the UK with dual / diverse Irish Sea Crossings. Full optical protection on terrestrial and Irish Sea routes with the highest transatlantic SLA availability. Encryption: Wireline speed (100Gbps) encryption supported directly between data centres in North America and Europe. Growth: Latest subsea coherent equipment design facilitating unprecedented capacity growth at 15 Tbps/ fibre pair. Future upgrade ready for advanced modulations, e.g. 8QAM. Latency: 67.83ms Secaucus: Equinix NY5–Slough: Equinix LD6.

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Transoceanic Dialogue An Interview with Aqua Comms CEO Nigel Bayliff on AEConnect the mid-Atlantic ridge “Diversity is one of the key assets of our in a benign area, misses network. Customers want to be able to use heavy fishing areas in diverse crossings and dark fibre paths, and the Flemish cap and going into Ireland gives us that USP, because no lands in Killala, which is other cable travels the same route as ours does.” a very interesting That is the view of Aqua Comms CEO Nigel location. It has the Bayliff when we ask what benefits the security of being in America-Europe Connect (AEConnect) subsea deep water as much as cable brings to transatlantic systems. possible, that’s why “The whole communications industry is Ireland is good.” based around a basic human need to “It avoids the busy shipping channel in the communicate with each other, so it will always English Channel, Bayliff adds. “By its nature, it is attract people who want to do things more protected and provides direct connectivity to differently.” the digital economy of Ireland. Ireland has spent a AEConnect, spanning a 5,536 km route lot of time and money building that footprint and between Long Island in the US and a landing Aqua Comms is committed to supporting this station in Killala in Ireland, had its final splice in long-term strategy to service that market.” November 2015 and went live in January 2016. Upon launch, the cable supported 13Tbps per The US side sees diverse backhaul fibre in place to Points of Presence (PoPs) at 800 Secaucus, Capacityfibre pair, and was fitted with stubbed branch units for further expansion. It also has latency speeds 111 8th Ave, 32 Ave of the Americas and 60 amongst the lowest of those crossing the Atlantic – Hudson. In Ireland, it connects with all of the around 53.9 milliseconds. major data centres in Dublin, plus two diverse It has various optical client interfaces available, crossings in the Irish Sea, with diverse fibre with dark fibre services, coherent wavelength from Wales to London. services for 100Gbps and 10Gbps with OTU2, OTU4, Another key aspect to the route chosen by OC192, STM64, LAN PHY and WAN PHY interfaces. Aqua Comms is that the cable avoids waters Bayliff adds: “Since arriving, I’ve looked closely at that are fraught with fishing activities and other the asset and it is a very high quality asset with obstacles that often damage cables. AEConnect built-in potential for future expansion throughout also transverses the minimum length of shallow its life. It’s been built to the latest coherent water along the continental shelf on both sides technology and buried in the right places. It is over of the Atlantic while additional armoring and one year since the final splice and we’ve already deeper burial were obtained to further mitigate had a good operating year. It has performed well potential damage. This means AEConnect is less on both the physical transmission layer and Cienavulnerable than other transoceanic cable based optical network layer.” systems. And what’s next for Aqua Comms, now that “Our cable is interesting and unique in a AEConnect is live and in use? Bayliff says it will couple of aspects. Firstly, it is the only cable that continue to monetise the cable, while its next steps lands wholly on the coast of Ireland, and it has will be determined by customer demand. been a long time since that happened,” Bayliff To those looking at AEConnect as a possible explains. route, Bayliff adds: “If you have a problem, we are “From a diversity perspective, the route here to help. We’ve got capacity ready to connect. avoids all of the shallow water that it can, off We have a dedicated team of people who can the coast of Long Island and it goes straight out connect you quickly, because we have a very across the continental shelf and into deep efficient process to accomplish that.” water, which is safer for cables. It goes across

54 |

SEA-ME-WE-5: A STATE-OF-THE-ART CONNECTION FOR EMEA ǧǧ͝ ǧǧ͝ Ǥ Western Europe, SEA-ME-WE What is the market need 5 has 4-fibre pairs to increase the that SEA-ME-WE 5 has been flexibility of the system. SEA-MEdesigned to address? WE 5 is based on the latest 100 We live in a connected world where Gigabit Dense Wavelength Division the digital interactions of businesses, Multiplexing (DWDM) and governments and private citizens Reconfigurable Optical Add-Drop continue to grow exponentially. As Multiplexer (ROADM) technologies, such, we need a reliable international which offers full flexibility in backbone capable of meeting such using the capacity available in the needs efficiently. To this end, SEACapacity system. The system was designed to ME-WE 5 has been able to capitalise accommodate Digital Line Section on being the first mover in adopting of more than 60,000km, which the latest state-of-the-art subsea allows easy upgradability to 200G technologies for connectivity or 400G transponder technology in linking Asia, the Middle East, the future. Africa and Europe. The SEA-ME-WE 5 subsea system What will the launch of was designed from the outset to address Linette Lee: SEA-ME-WE 5 will offer a much-needed SEA-ME-WE 5 do for the shifting global demands primarily new capacity pool in the submarine capacity market economics of international driven by new emerging markets carriers and their with massive domestic growth. It will customers? connect the very fast growing Asian SEA-ME-WE 5 will offer a much-needed new capacity pool in market with Western Europe. Several factors fuel this the submarine capacity market. Consumers, who are actually increase in latent demand. China has entered a new phase of driving the infrastructure demand through the increased use of its development with massive domestic growth. Countries like business and personal applications and information, will greatly Bangladesh, Myanmar and Pakistan will benefit greatly from benefit from the completion of this system. With SEA-ME-WE SEA-ME-WE 5 as it provides a timely bandwidth solution to 5, we should see a marked increase in available bandwidth and these emerging markets. reduced prices per unit of the said bandwidth, thus facilitating The consortium aims to supply network capacity to the fastthe continued growth and sharing of information and data. The growing Middle Eastern region which has experienced a similar SEA-ME-WE 5 investors will be well-positioned to offer new explosive domestic growth. The completion of SEA-ME-WE 5 innovative products to their customers. will solve the lack of capacity in the Gulf. Last but not least, the system’s Djibouti landing will be the What landing stations does SEA-ME-WE 5 connect major gateway for connectivity between Africa to Europe, the and what facilities are available at those landing Middle East and Asia. points – and why were those landing stations In addition to providing connectivity across continents, chosen? SEA-ME-WE 5 has adopted a revolutionary investment model The SEA-ME-WE 5 route connects the Cable Landing Stations to ensure guaranteed availability of bandwidth on its core superhighway while allowing the tributary branches to grow at its (CLS) at Tuas, Melaka, Dumai, Medan, Pathein, Kuakata, Matara, Karachi, Qalhat, Kalba, Doha, Djibouti, Yanbu, own pace. This is one of its key differentiation from all the cable Hodeidah, Zafarana, Abu Talat, Marmaris, Catania and Toulon. systems traversing the same regions. In contrast with other submarine cable systems, the SEA-MEWE 5’s main endpoints are not just cable landing stations (CLS) What is the current design capacity of SEA-ME-WE but carrier-neutral, or open, points of presence (PoPs). The 5, and how is that likely to change over the years system is based on a completely new concept and the core does that the cable is in service? not connect CLSs to CLSs, but PoPs to PoPs, where the The design capacity of the system is 24 Terabits per second over full redundant and protected terrestrial extensions from the 3-fibre pairs on the Singapore to Egypt section. From Egypt to Ȁ͚͙͘͟

Capacity

Capacity

market trends: subsea | 57

THE INTERNATIONAL SUBSEA CABLE MARKET IN FIGURES 60

Lit capacity The lit capacity on major submarine cable routes continues to soar to meet rising demand requirements. On the trans-Pacific route, lit capacity more than doubled between 2011 and 2015. The pace of growth was even faster on other routes. Europe-Asia lit capacity increased more than five-fold between 2011 and 2015.

Trans-Atlantic

50

Lit Capacity (Tbps)

Trans-Pacific U.S.-Latin America

40

Intra-Asia 30

Europe-Asia via Egypt

20

10

0

Share of Potential Capacity that is Lit

20%

0% 2010

2011

2012

2013

2015

Capacity

40%

2009

2014

Europe-Asia via Egypt

60%

2008

2013

Intra-Asia

2007

2012

U.S.-Latin America

2006

2011

Trans-Pacific

2005

2010

Potential capacity

Trans-Atlantic

80%

2009

2008

2007

100%

2006

2005

Source: Telegeography

2014

2015

While the amount of lit capacity has increased on all major subsea routes, potential capacity is also growing, and a large amount remains untapped. Changes in potential capacity for a route can occur either when new cables enter service or when advances in optical technologies allow existing cables to be upgraded beyond the original estimates. For instance, the percentage of potential trans-Atlantic capacity that is lit decreased from 25% to 16% between 2006 and 2013, even though lit capacity nearly tripled during this period and no new cables entered service.


Cost of cable deployments

$14

Aside from a flurry of activity in 2012, there has been relatively little investment in new submarine cable deployments in each of the past five years. In 2012, 18 new systems costing a cumulative $3.3 billion entered service. By contrast, only three subsea networks worth $490 million were deployed in 2015. The next three years will not be so lackluster, as 42 systems worth over $9.5 billion could be launched.

$12

Construction Costs (USD billions)

Actual

Announced

$10 $8 $6 $4 $2

2018

2017

2016

2015

2014

2013

2012

2011

2010

2009

2008

2007

2006

2005

2004

2003

2002

2001

2000

1999

1998

$0


Asia

International deployments

Europe-Asia Latin America & Caribbean Middle East & Africa Oceania Other 2014-15 Trans-Atlantic

2016-18

Trans-Pacific $0.0

$0.5

$1.0

$1.5

$2.0

$2.5

Construction Costs (USD billions)

Source: Telegeography capacitymedia.com

A stark contrast exists between regional deployment activity seen over the past two years compared to expectations for 2016 through 2018. In 2014 and 2015, only the Latin American and trans-Atlantic routes had any significant subsea cable investment, due to the launches of the America Movil Submarine Cable System-1 (AMX-1) and Pacific Caribbean Cable System (PCCS) in Latin America and Hibernia Express across the Atlantic. By contrast, every global region is expected to be touched by new submarine cable investment in the next three years. The Latin American region will be injected with more than $2 billion in new cable networks.

Capacity

SPONSORED STATEMENT

| 59

BOOSTING CHINA MOBILE’S SUBSEA CAPABILITIES IN ASIA LI FENG, CHAIRMAN AND CEO, CHINA MOBILE INTERNATIONAL, DISCUSSES HOW CHINA’S BELT AND ROAD STRATEGY IS SIGNIFICANTLY BOOSTING CONNECTIVITY ACROSS ASIA AND PROMOTING TRADE LINKS WITH THE REST OF THE WORLD. We have seen With SEA-ME-WE 5 launching at the end of 2016, China Mobile what does this mean for CMI’s business within Asia International and across Europe? Will further extensions to your become involved network be possible? in a variety of SEA-ME-WE 5 (SMW 5) is a strategic investment for CMI. Together with terrestrial cables connecting China and Europe, subsea networks, CMI can provide completed diversified and low latency solutions including APG, SEA-ME-WE 5 and between Europe and Asia. the FASTER cable CMI will also build a European domestic fibre ring system. How have infrastructure which will further extend SMW 5 capacity to all these investments major European cities. After SMW 5 is launched, CMI’s Asia to changed the local Europe capacity will become more diverse. We are able to provide Capacity and international a low latency route via the China-Euro terrestrial cable, from market for northern China, and submarine cable capacity via SMW 5 from carriers and their southern China in order to form a protected ring between Asia customers? and Europe. Li Feng: SEA-ME-WE 5 is a strategic investment for CMI The SJC and APG In the new digital age, operators need to change systems are connecting traditional business models. How is CMI adapting Asia Pacific, while SEA-ME-WE 5 is running from Asia to Europe. to meet the new demands of customers? FASTER and NCP will be linking Asia with America. They are all part of the Belt and Road plan that is set to significantly change the As society as a whole picks up speed and moves into the digital age, telcos are confronted with multiple opportunities carrier market in central Asia, south east Asia, the Middle East and for development on all fronts. This includes data traffic eastern Europe. operations, broadband, fixed-mobile convergence and the Internet At China Mobile International (CMI), we are committed to of Things (IoT). Driven by increasingly popular 4G services and investing in both subsea and terrestrial cable infrastructure to an all-around penetration of internet applications, data traffic is connect various countries and many major global telecom hubs. poised for an explosive growth. The result will be significantly increased international internet The question of digital transformation is becoming especially capacity and further reductions in the unit cost. important for telecom operators. CMI has worked consistently Carriers and ISPs will be able to accelerate their domestic and relentlessly at giving its customers quality connections, and internet development, especially the mobile internet market expanding the depth as well as the breadth of such connections, which is growing rapidly in those regions. leveraging our cloud, channels, and terminals. End-user customers in the Belt and Road region will have As an operator, a three-dimensional approach for digitising better quality and lower costs of internet and telephony services. services and achieving coordinated development of international They will also get better pricing and increased availability. markets is important. Carriers will gain from better routing diversify and bigger The service range of China Mobile will go beyond its bandwidth, with 100G becoming the market norm. historical focus on channels toward platforms-as-a-service and vertical applications, such as IoT, Big Data and Cloud. It’s nearly been six months since a consortium of six companies, including CMI, announced that We will work on building up a carrier-class, end-to-end information infrastructure and content application systems. the FASTER cable system was ready for service. What has been happening? At the same time, network technology will be deployed to drive the IT transformation of networks, lowering network Many carrier and enterprise customers have been expressing interest in FASTER, as the cable can provide huge capacity and operating and maintenance costs and developing an end-to-end high-efficiency operating system. a diversified route between Japan and the USA. More and more customers have been asking for 100G circuits, and FASTER can support this as a standard solution. CMI has also invested in another Trans-Pacific cable, NCP. This provides further diversity of Trans-Pacific capacity on top of FASTER, and further direct For more information, please visit www.cmi.chinamobile.com connectivity to the USA. capacitymedia.com

Capacity

market trends: IPX | 61

THE IPX MARKET IN FIGURES The most offered IPX services IPX will continue to be the platform supporting current and future services. The adoption of IPX will accelerate, thanks to the demand for quality, flexibility and security coming from new services and applications, as HD voice and HD video, video over Wifi (VoWiFi) and VoWiFi roaming. Current services including LTE roaming, with Diameter signalling in particular, and Voice over IPX (VoIPX) have been fostering the migration to IPX; they are the basic IPX services in every IPX offering.

Diameter signalling SIGTRAN signalling Data roaming VoIPX VoLTE interconnect roaming HD voice HD video VoWiFi/VoWiFi roaming M2M connectivity IoT connectivity 0%

Source: ROCCO

IPX customers segmentation IPX providers are specialising in the markets they serve, including: mobile network operators (MNOs), mobile virtual network operators (MVNOs), mobile virtual network enablers (MVNEs), fixed network operators (FNOs), over-the-top providers (OTTs) and internet service providers (ISPs). For this survey, Roaming Consulting (ROCCO) asked nine companies to give details of their specialisations: BICS, Comfone, Deutsche Telekom ICSS, iBasis, Syniverse, Tata Communications, Telecom Italia Sparkle, Telia Carrier, and Transaction Network Services.

25%

50%

75%

100%

Most offered IPX services today Most offered IPX services in four years time

Capacity Comfone

85%

DT ICSS

5%

10%

80%

18% 2%

iBasis

100%

Syniverse

93% 3% 2% 2%

Tata communications

94%

Telia carrier

10%

Transaction network services

6% 10% 100%

Source: ROCCO

The IPX providers’ presence at the IPX peering points ROCCO asked the same nine IPX specialists about four main peering points: AMS-IX Amsterdam and Hong Kong, and Equinix Ashburn and Singapore. The company also asked about private IPX interconnects. These vary from fewer than 10 (Transaction Network Services) to more than 40 (Deutsche Telekom ICSS). All data from the IPX big data market intelligence report 2016, by Stefano De Zottis and Jason Bryan of Roaming Consulting Company (ROCCO) (www.roamingconsulting.com). © 2016 capacitymedia.com

32%

32%

AMS-IX Amsterdam AMS-IX Hong Kong Ashburn Equinix Singapore Equinix 7% 29%

Source: ROCCO

MNOs MVNOs MVNEs FNOs OTTs ISPs

62 | appointments

Kate McKenzie, Chorus Former Telstra COO Kate McKenzie has been named as the new CEO of New Zealand wholesale provider Chorus, replacing Mark Ratcliffe. McKenzie left Australian operator Telstra in July, having spent more than 12 years with the company. Former Juniper chief Robyn Denholm has recently been named as her successor. Ratcliffe became CEO in 2011 following its demerger from Telecom New Zealand. “I have admired Chorus’ rollout of very high quality broadband infrastructure and I look forward to playing my part in working with the rest of the telecommunications sector to make it as easy as possible for our customers to enjoy the benefits of this nationwide upgrade and all of the social and economic benefits that will deliver,” McKenzie said.

Peter Kaliaropoulos, Zain Saudi Arabia Zain has named telecoms veteran Peter Kaliaropoulos as CEO of its Saudi Arabia unit. He is replacing Hassan Kabbani, who has stepped down for personal reasons. Kaliaropoulos was previously general manager of Touch Lebanon, the telecoms unit managed by Zain on behalf of the Lebanon Telecoms Ministry. He left that role in June, taking on an advisory role to vice chairman of the Zain Group Bader Al Kharafi. Kaliaropoulos has held a number of senior roles in the telecoms industry. He spent 11 months as COO of Ooredoo in Kuwait, having joined from Batelco, where he was group CEO for eight years. He has also held positions with BT and Optus in a career spanning more than two decades in the industry.

Colt, TS Narayanan

Thaddeus Arroyo, AT&T Thaddeus Arroyo, CEO of AT&T Mexico, will take over as the group’s head of international and business operations on 1 January following the retirement of Ralph de la Vega. Arroyo has been with the AT&T group and its predecessors since 2001, when he was appointed CIO of Cingular Wireless, a mobile operator part-owned by Bell South, which merged with the old AT&T 10 years ago and adopted the name. A California-born mathematician and computer scientist, he moved to Mexico City at the start of 2015, following AT&T’s purchase of Iusacell and Nextel, wireless operations that it turned into AT&T Mexico. Arroyo will now run AT&T’s international carrier business and its enterprise operations from Dallas, the group’s headquarters.

Colt has continued its top level shake-up after naming TS Narayanan as its VP and chief information officer. Narayanan joins Colt after 17 years at Tech Mahindra, where he was most recently Europe SVP and head of delivery solutions. His role will see him take responsibility for Colt’s technical vision, overseeing its systems, applications and infrastructure. Narayanan said: “Colt has embraced an innovative approach to technological development and is arming itself to enable the digital transformation of business. I look forward to helping the organisation thrive in a future built upon gigabit speeds and high quality connectivity.” Colt has made a string of recent appointments adding a new CCO, VP of enterprise and partner sales, and VP of wholesale sales.

Capacity

Mehmet C. Toros, Türk Telekom International Türk Telekom International has appointed Mehmet C. Toros as its new CEO, replacing Cengiz Oztelcan who has left after four years. Toros has been with the carrier since 2003, and brings more than 28 years of telecoms experience to the role. His most recent position was as VP of Türk Telekom, overseeing sectoral relations and project management. He has experience of the Turkish operator’s wholesale unit, having served as VP of international and wholesale from 2007 until 2012. He was also MD of the space segment’s marketing and sales, including satellite networks and spacecraft operations.

Mark Chong, Singtel Singtel has named international CEO Mark Chong as its new group CTO, with Arthur Lang set to take over his current role. Chong, a 20-year veteran, will take over the technology role form Tay Soo Meng, who is set to retire at the end of the financial year after more than half a century in the industry. Chua Sock Koong, Singtel group CEO said: “Given our global aspirations and a fast evolving business, we are reinforcing our leadership team as we prime our enterprise for our next phase of growth.” Lang will join from CapitaLand, where he was chief financial officer for more than five years, in January.

Hakan Eriksson, Telstra Telstra has named Hakan Eriksson as its new chief technology officer, filling the vacancy created by Vish Nandlall’s acrimonious departure. Eriksson is an industry veteran, having most recently served as south-east and Oceania chief strategy office for Ericsson. “In his role as head of Ericsson Silicon Valley, he built strong relationships within the local ecosystem,” said Telstra technology innovation and strategy group exec Stephen Elop. “Håkan will bring significant leadership to the CTO role with his success in building Ericsson’s technology leadership, driving research development in the convergence of wireless and fixed lines.” He replaces Nandlall, who was sacked after it was alleged he had falsified his CV and plagiarised presentations, a claim he denies.

John Reid, Liberty Global Liberty Global has confirmed that John Reid, interim CEO of Cable & Wireless Communications (C&W), will continue in the post. Reid was appointed interim CEO in May 2016, when Liberty Communications completed its $7.4 billion takeover of C&W. Reid came into the C&W in 2015 when the operator bought Columbus Communications, of which he was president and COO. Reid has already began making changes at C&W, naming Garfield Sinclair as the man to head up its Caribbean business. Sinclair was most recently CEO of C&W Jamaica, where he spent seven years and saw its mobile base grow from 200,000 to almost one million subscribers.

Tell us your move

Capacity is keen to hear from readers about new roles and appointments in the industry. Send details to [email protected], with a high-resolution picture


Capacity

64 | market watch

ACT LOCAL

Stan Hanks last man trading

S

tan Hanks, once CTO of Enron Broadband, is still thinking big in an industry that often progresses by baby steps. As a new political administration in the US promises massive private sector infrastructure spending, he’s currently wondering if there’s an investor with the ambition to bankroll his dream of ubiquitous wi-fi. Hanks may be the last man standing from the late 1990s, when billions of investment dollars were being committed to projects like this. Today he is chief technologist at Columbia Ventures. It’s a different type of business now, he agrees. The dot-com bust 15 years ago killed off disruptive innovation on that scale, and many investors might argue that was a good thing. But Enron’s motto was “Think different”, and Enron Broadband was as audaciously different as it was possible to be: it wanted to create a market for trading bandwidth as a commodity. At one time it seemed plausible. Capacity Magazine was originally created to cover this nascent market. Hanks and his colleagues understood that, as had already happened with electricity and gas, the physical network was just the thing that made the market for trading the commodity possible. If there was enough physical network to make bandwidth a commodity, if there was growing and variable demand from buyers, and if the buyers could quickly switch between sellers, commodity trading would create a far more efficient market in bandwidth

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2017

Germany Connect 24 & 25 January Frankfurt Metro Connect USA 31 January & 1 February Miami Capacity Caribbean 7 & 8 February 2017 San Juan For full listings, visit www.capacityconferences.com

Tim Phillips

that could have driven prices down, demand up, and accelerated innovation. Three big ifs, though. In the late 1990s Hanks and his peers laid fibre hyperactively between metro locations, with a vision to create pooling points at which customers could select the best deal, week-by-week. “The problem we solved is that you spend an insane amount of money [to lay fibre] and justify it at the time against the price model that is probably wrong, because the price is declining more rapidly than you think it is,” Hanks recalls. Enron financed its builds by selling the fibre to competitors even as it was being laid, in the conviction that owning a commoditised asset was just as way to create the big show, which would be the trading platform. Enron crashed and burned. There are lots of reasons for this. Enron’s senior management decided to overstate its Capacity technical capabilities, pooling points were harder to build than expected, the VPs of engineering were harder to convince than the carrier CFOs, and a collapse in demand after the dot-com bust meant that no one went short of bandwidth for years. But, should we be re-evaluating what bandwidth trading might have achieved? Hanks sees it as a historical opportunity: “Carrier customers could have switched from provider to provider, and it would have enabled them to always provide the least-cost network,” Hanks says, “The bandwidth owners could have reached

further downmarket. Most of the business had been carrier-to-carrier, but with trading I could have sold to enterprises and aggregators month-on-month rather than decade-on-decade, so we could have brought more people into the market. Speculators inject money. If you have a futures market you can raise cash ahead of revenues, which makes the market participants willing to take risks that they wouldn’t do otherwise. Would it have prevented the meltdown? I believe the answer is: probably.” Fast forward to 2017. While ubiquitous wi-fi isn’t the same type of technical challenge, Hanks sees the similarity in the market it could create. In 1998 he wrote a paper predicting that each household would require 600 Mbits, and we’re more or less there today, but the cost and difficulty of rolling out physical assets like FTTH is killing competition in the last mile. Hanks has the idea that ubiquitous wi-fi could be built out and traded to create competition. “There are engineering problems in doing it,” he says excitedly, “but not laws of physics problems.” Hanks might be the last man standing who is still working in the carrier business, but many of the his colleagues from the era are still active in other industries. Hanks still believes that that some of them “still have one more really big play inside them, and there’s a real shortage of people with that kind of vision out there.” Does Hanks have one more play? “Absolutely. It really is possible.”

Market watch / January 2017 Donald Trump formally becomes the 45th US president on January 20, a date which will also see Tom Wheeler standing down from his role as chairman of the Federal Communications Commission (FCC). GTT’s $590 million acquisition of Hibernia Networks and Zayo’s $1.42 billion deal to buy Electric Lightwave are expected to both close in Q1 2017, subject to regulatory approvals and other minor conditions. Garfield Sinclair becomes president of C&W’s Caribbean

business on 1 January 2017 and will be responsible for the company’s strategy, financial performance and reputation. The 1,300km MalaysiaCambodia-Thailand (MCT) subsea cable system, which will have an initial capacity of 1.5Tbps, is expected to be in service by Q1 2017 Early 2017 will see AT&T start to trial 400 gigabit Ethernet (GbE) speeds for businesses. UNIFI-IX is set to go live in France, Germany and the Netherlands in January and is to

establish PoPs in New York, Dallas, North Virginia and Dubai by the end of May. The Commerce Commission (ComCom) is set to reach a decision about the proposed merger between Sky and Vodafone New Zealand deal on February 23 due to a large number of submissions from interested party. The initial launch of BT’s SD-WAN service, incorporating Nuage Networks technology from Nokia, is planned for rollout in early 2017.


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