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Change was top of the agenda at the fifth annual International Telecoms Week (ITW).
For the first time in the event’s history, ITW was held outside of Washington DC and moved to the Hyatt Regency, Chicago. The event’s association with the US capital dates back more than three decades, when it was formerly known as Global Telecoms Meeting (GTM).
Yet the decision to swap the home of the White House for views of the Magnificent Mile proved an immediately popular decision among delegates, who sent more than 20,000 meeting requests before the event had even opened – breaking last year’s record by more than 7,500.
Representatives from 1,730 companies from across the globe, descended on the city between May 14-16 to strike new and reaffirm old partnerships. Throughout the three days, a number of high profile partnerships and deals were announced, yet again confirming that it is the number one event for carriers to conduct business.
Likewise, the event’s conference sessions helped spark rich debate and discussion among carriers, touching on subjects as far and wide as the relationship between carriers and over-the-top (OTT) players, regulatory change, the impact of consolidation on the US market and the increasing need for tighter network security.
It wasn’t, however, just the location that changed this year. Realising the fierce challenges facing the wholesale telecoms industry, the founding members of ITW put together a new strategy designed to help carriers worldwide build towards a sustainable and profitable future.
The chairman of the ITW Founders’ Council and EVP of international carriers at Orange, Alexandre Pébereau, presented the strategy in front of a receptive audience during the opening plenary session.
Divided into three ‘cornerstones’, the strategy urged the industry to evolve and respond to changes in the market by embracing areas such as innovation, interoperability and quality of service (QoS). It also urged carriers to overcome networking issues in order to deliver value-added services.
This rousing message by the ITW founders set the tone for the rest of the event, which overall received a unanimously positive reception from delegates. The event’s successful transition to its new home also ensures ITW will return to Chicago next May.
What you might have missed at ITW 2012:
Some of the biggest stories and topics to come out of ITW 2012 as exclusively reported by the Capacity magazine editorial team:
Day 1
Sidera Networks chose the first day of ITW to announce its new low-latency route from the New York metro market to Toronto and London. The link is expected to provide further diversity to Sidera’s existing routes in both cities and add further resiliency for time critical financial platforms.
The move lines the company up to extend its Xtreme Ultra Low Latency Network internationally to financial services firms, exchanges and other high-bandwidth customers. “As part of Sidera’s strategic plan to grow our network, this addition of low latency routes to Toronto and London makes perfect sense,” commented Clint Heiden, president at Sidera Networks. Heiden also said that a larger network is becoming necessary because its platform already caters for trades “that roughly clear $7 trillion daily”.
Over in the conference hall, the opening plenary session prompted a compelling question and answer session regarding the role of partnerships in the wholesale telecommunications sector.
Michel Guyot, president of global voice solutions at Tata Communications, warned that carriers could no longer be “everything to everybody” and that the industry urgently needs to discover where it can add value to the wider telecoms ecosystem. He felt partnering with other sectors, in particular with retail service providers, could help lead large wholesale carriers to future success. This view was shared by Willem Offerhaus, CEO and president at iBasis, who added that partnerships can also help reduce some of the complexities involved in implementing new IP networks.
AT&T, however, wasn’t so forthcoming about partnerships. Adrienne Scott, AT&T’s VP of global service provider management, said that the company no longer even uses the term ‘partnership’ but instead refers to them as “co-marketing activities and alliances”. She pointed to the examples of China Telecom and América Móvil, where the company had entered into arrangements with strategic suppliers in an effort to deliver seamless global service for its customers, whether they are in China, Mexico or the US.
Also on day one, Global Capacity announced a partnership with Telx to provide its One Marketplace Access Exchange functionality within the Telx Connect Marketplace. The partnership will enable Telx clients to access Global Capacity’s online pricing platform, where they will be able to receive real-time pricing, place orders and track provisioning for access network services.
“The Telx Connect Marketplace now offers clients a real-time pricing tool that provides them competitive multivendor options for Layer 1 and Layer 2 access connectivity. These clients are now able to quote and order access solutions online, in real-time saving time and simplifying the process of designing and deploying end-to-end network solutions,” said Chris Eldredge, SVP of product at Telx.
Day 2
The biggest story of day two was the IPX interconnection agreement between Telecom Italia Sparkle and iBasis. Both companies heralded the agreement as an ‘industry first’, saying it will help service providers transitioning networks to IP, in particular supporting services such as LTE roaming, video conferencing and HD voice.
Ajay Joseph, CTO at iBasis told Capacity: “There are 800 plus operators across the world and there is certainly a need to sign relationships with other carriers, unless you really are a carrier that can claim to build it all out themselves, and expect others to come to them.”
He added that it would be increasingly difficult for carriers to claim dominance in one particular market, largely because new services like this will necessitate partnerships in the industry.
Hibernia Atlantic also announced that day that it has stepped up its New York to Iceland submarine cable project. The new route will utilise the existing Tele Greenland-owned Greenland Connect cable and could remove up to 1,100km from its length. Though still in the planning stages, new research gathered suggests a shorter optimal latency route will be the best option, and provide Iceland with much needed connectivity.
“Amazon, Google and Microsoft have all talked about using data centres in Iceland but the cost of connecting there has been the challenge,” Mike Saunders, VP of business development at Hibernia Atlantic said at ITW. “We know for a fact that financial institutions would also be interested in putting offshore connectivity, and even a back up recovery facility, in Iceland, in preference over the US and the UK, but there is not enough connectivity to stimulate that.”
Meanwhile, the Spotlight on the Middle East session drew one of the largest audiences of the event. With both the GBI and TGN Gulf cables having launched this year in the region, submarine cables quickly became a major topic of discussion from the panel, which featured representatives from du, Etisalat, Qtel, STC Wholesale, Vodafone Qatar and GBI.
One of the opening comments came from Mohamed Elagazy, SVP of business development and international relations at GBI, who said, to the amusement of the audience, that he was the only cable player on the panel.
This point was playfully refuted by John Maguire, head of wholesale services at Vodafone Qatar, who said that “We’re all cable guys, we all own some of it somewhere along the line – we are just not the private cable guys.”
Elagazy argued that prices for capacity were going down in the Middle East but the region is yet to experience a price war. In response Ahmed Al-Derbesti, executive director international services at Qtel, said that he believed two to three further new subsea cables were required within the Arabian Gulf in order to help bring down prices in Qatar, Bahrain and Kuwait. Maguire agreed with Al-Derbesti, also stating that carriers needed to do more to influence the price of capacity themselves.
Towards the end of the panel session, discussion moved to the role of OTT players and the danger of carriers becoming little more than dumb pipes. Maguire responded by criticising the negativity surrounding the term ‘dumb pipe’: “If you have a strategy that says that you’re going to make more money for less effort by being a dumb pipe, then being a dumb pipe is a good thing,” he said.
Day 3
The action continued throughout the final day of ITW 2012, starting with the Spotlight on North America session. Featuring representatives from CenturyLink, Sprint Nextel, XO Communications and Windstream Communications, the session focussed on the recent consolidation in the US market as well as ongoing regulatory issues.
During the panel session Bill Cheek, president of wholesale markets at Centurylink, said that it was interesting to see the effect consolidation has had on the price of services. He claimed that consolidation in the US market does compress margins and as that continues to happen companies must learn to respond quicker: “We have to be very judicious in how we approach it, but we have seen price compression in the space of consolidation,” he said.
Don MacNeil, CMO at XO Communications, commented that the focus in the US wholesale space is now turning more towards network consolidation, urging companies to consider the practicalities of integration.
Cheek later shared his view on regulation, stating that he feels the regulatory upheaval has upset the market in the US. “We are in an evolutionary time is the best way to put it,” he said, before continuing to say that regulation has forced carriers into making some tough choices, particularly with regards to access revenues.
He also highlighted the recent appointment of two FCC commissioners which may change the dynamic of the US regulatory environment. MacNeil added that future regulatory models must evolve to meet network neutrality and the role of OTT players.
The final day of the event also saw a flurry of last-minute announcements. Zayo revealed it would be implementing enhancements on its low latency service between the US cities of Chicago and Seattle for improved service for financial, content and carrier customers.
“Following the acquisition of 360networks, the route had been dormant for some time, which really served to pent up demand,” said David Howson, president at Zayo Bandwidth. “For us, it is important to provide access to the verticals from west to east, particularly with content, media and the financial sector.” The upgrade is due to be implemented in Q3 2012, which is also roughly the same time Zayo expects its acquisition of AboveNet to go through.
Perhaps the biggest news of the week, however, was TeliaSonera’s announcement that it will build and operate a European network for Facebook. The network will provide the social media giant with internet exchange points in multiple European cities, including within its data centre in Lulea, Sweden.
Ivo Pascucci, regional sales director Americas, at TeliaSonera, told Capacity magazine that carriers must now embrace content providers and supply necessary infrastructure: “Content providers now need solutions that can scale and handle multiple gig capacity, and we do believe this is the begging of a trend for the broader market.”
Pascucci believes the deal further quashes murmurs in the wholesale telecommunications market that the over-the-top content providers could eventually bypass the carrier networks and build separate infrastructure.
