|Topic:||Fibre networks – buy or build?|
|Title:||Chief Technology Officer|
Matthew Finnie, is the Chief Technology Officer at Interoute; he is responsible for the company’s advanced services strategy and product development. As head of the Enterprise Service Development Group at Vocaltec, Mr Finnie worked with European/US carriers and multi-national corporations to launch converged communication services. Mr Finnie was also the co-founder of US-based Internet start-up Insitu, which developed real-time IP collaboration tools. Mr Finnie has a BSc degree in electrical and electronic engineering from the University of Lancaster, and a marketing degree from South Bank University.
Europe is the world’s largest and fastest growing user of the Internet and broadband. Consumers downloading their own photos and videos to sites such as YouTube are driving growth. Internet service providers need more capacity, but the best way to guarantee their future needs is fibre, which is costly and risky to build. Wholesalers have little choice; install fibre or lose the market. Few service providers, however, will risk building fibre networks, so most will have to buy capacity from others.
For those of us that have been working for a decade or more, the speed and reliability of our Internet connection is now assumed. We want access to be ubiquitous and limitless. We no longer hunker down and dial into the Internet or marvel at a T3 transatlantic interconnect which speeds it all up. Europe – an Internet superpower The Internet was a North American invention, and for a long time America was the Internet. Now those days have gone. Europe is now the largest Internet presence in the world, and the fastest growing market. Recent data from telecoms analyst group Point Topic’s Global Broadband Statistics service showed that Eastern Europe was the only region to record more than ten per cent growth in the second quarter of this year. In March 2007, Romania passed the one million subscriber mark, which made it one of the three Eastern European countries in the ten fastest growing countries worldwide. Western Europe is also setting a fast pace when it comes to broadband growth. Greece had the best growth in terms of percentage in the second quarter, 27 per cent, and the leader among the top ten countries by number of subscribers was France; it achieved the highest percentage growth rate of 9.36 per cent in the quarter. As well as being the fastest growing region, Europe also has the highest number of broadband subscribers. A recent audit by Internet World Stats revealed America had 64.6 million subscribers and China had 48.5 million. The total number of subscribers in the nine biggest European user countries is 77.7 million, so Europe is clearly a long way ahead, even without including the rest of the continent. The increase in broadband subscription is being driven not by businesses, but by consumers and their relentless experimenting and evolving applications. The sharing of videos, photos, music and more on sites such as YouTube and Facebook, places enormous demands on bandwidth. The challenge for DSL providers of consumers’ access is that they aren’t sharing the content providers’ revenues. Given this, how do they maintain the investment needed to keep delivering service despite the decline of access prices on a per megabit basis? Perhaps, part of the problem is that many service providers have not embraced the connectionless NGN (next generation network) world where no one service provider ‘owns the customer’ – as with traditional telephony – and all the customer revenues. New applications are now being developed that take advantage of the widespread availability of broadband service. Internet service providers (ISPs) look to include TV and there are businesses that that have no networks, but depend upon the pervasive penetration of broadband for the functioning of their latest venture. The most bizarre turn in this trend towards almost universal broadband availability has led some mobile operators to offload traffic from their own wireless networks by placing femtocells on the consumer’s premises. When the consumer uses his cell phone at home, the femtocell intercepts the call. The femtocell then connects the call to the mobile operator’s core network by using the consumer’s existing, wired (DSL or cable) broadband service. This reduces the traffic on the mobile operator’s network and, as a consequence, lessens the operator’s need to invest in new network capacity. Bandwidth availability has hit a tipping point where people expect to see ever-increasing levels of service. One note of caution, most consumer broadband networks are horribly asymmetrical while bandwidth is going up there is still a bias toward download capacity making it unsuitable for many business applications that need upload capacity as well. The global business community is also demanding increasing volumes of bandwidth as more and more business critical applications move to the Internet. Business 2.0 Web 2.0 is a phrase coined to capture the collaborative nature of the World Wide Web. Now people are talking about Business 2.0 in the hope that some of Web 2.0’s social networking and agile application delivery will rub off in the corporate sector. This will increase the demands for corporate bandwidth. The practical needs of a corporation are less glamorous, but by no means less network intensive. The IT Director no longer has the luxury of time or resources to embark on a grand IT plan, spending millions for a promised brighter future in two years. IT Directors are talking about embracing a ‘service aware’ approach to developing IT applications that borrows much from the experimental evolution seen in the consumer Internet experience. The challenge for many is that, invariably, this approach is network centric, and requires a more iterative and agile approach to application development than customary in a corporate environment. The on-going migration towards collaboration and unified communications also places great demands upon corporate networks. Unified communications – the embedding of tools such as IM, presence conferencing and voice into one platform. Such an integrated communications platform enables corporate users to manage voice calls as easily and cost effectively as email, and without the need for complex integration or upgrades to their existing telephony infrastructure. With its recent launch of Office Communications Server (OCS), even Microsoft is looking to get into the unified communications market. Yet despite its strengths, OCS is only as strong as the network that carries it. Without a network provider to route the calls, the OCS does not achieve its objectives. So with the demand brought about by unified communications, combined with Web 2.0, and businesses running more and more applications over their networks, a clear picture emerges of the incredible increase in bandwidth needed to ensure the highest quality end-user experience. The demand can be met, but what is the best way for service providers to meet this demand? Buy or build? This demand for bandwidth will stretch many existing service provider infrastructures to breaking point, so what are the options available? DSL has traditionally been the preferred technology to deliver broadband services in Europe. It uses existing copper access networks and is well entrenched in Europe, but is struggling to cope with bandwidth demand now, and will be hard pressed to meet the growing demand. So service providers are looking at deploying fibre deeper into the network, even to the home or building, to meet future bandwidth requirements. Fibre is as future-proof a communications technology as we have today, and several service providers have already made a commitment to deploy fibre-to-the-node or fibre-to-the-home networks in the next three to five years. Still, is building new fibre networks a viable option for all? It is a difficult situation. The problem is that fibre is just so expensive to build from scratch, it is basically like real estate. The industry had well-documented problems with a number of carriers who built large fibre networks in the 1990s. They watched as the telco market dipped, the demand for bandwidth slowed and their businesses suffered. Now the telco market is booming again, demand for bandwidth is high, yet the best, and perhaps only, way to meet that demand is fibre. So for wholesale service providers, the only way to remain in the market is to face the risk and roll out fibre networks. In the wholesale market, if you are without the physical assets – the fibre, you are going to run out of capacity shortly. Even if you have some fibre, but only a leased pair or so, you will soon be buying more. A small, battle hardened, minority of carriers with multiple fibre backbones will become the dominant suppliers in the market place. Nevertheless, even owning fibre is not quite enough. Only an operation that understands how to deal with Europe’s different laws and regions can plan, build and operate the sort of network required. One such network connects 85 cities in 22 countries using 54 thousand cable kilometres of fibre with up to 48 fibre pairs. It has the capacity to carry over a petabit (a billion megabits per second) of traffic. This backbone, complimented by 19 deep city fibre networks, provides the necessary interconnections via a full range of access methods, and is an example of what is required to deliver 21st century telecoms Fibre is vital to business communications now and in the foreseeable future; it is the ultimate delivery medium. The harsh reality is that a service provider without fibre in the ground will not be able to satisfy the huge demand for bandwidth. The die is cast, fibre is the bandwidth technology of choice for the Internet, but building fibre networks is still too expensive for most, so the only real option for all others is to buy bandwidth capacity from someone who has it. There is a tipping point all technology passes through, when users, as a group, begin to understand the technology, the economics and the strategic imperatives and act accordingly. Bandwidth and the Internet have reached that point, and fibre is the only viable way to meet the demand.