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According to Infonetics Research, Latin America is estimated to represent approximately 10% of the global market for MPLS IP VPN and Ethernet services by 2015. Amounting to $7.8 billion, it illustrates why the region is experiencing such strong interest from the international carrier community.
Hoping to help serve this vast but addressable market is IFX International Carrier Services (IFX-ICS). Formed in April following a demerger from IFX Networks, the company concentrates on supporting international carriers looking to extend their enterprise customers’ networks into the Latin America region. Its customers include carriers headquartered across countries such as India, China, Australia, Europe and North America, which in turn support the needs of Fortune 500 or 1000 corporate customers.
Mateo Ward, CEO of IFX-ICS, explains to Capacity about the rationale for setting up an independent Latin American carrier’s carrier, and offers his views on general regional developments:
What factors led IFX Networks to implement the demerger?
It was getting hard to grow the [IFX Networks] business with it structured as it was. We needed to scale without losing any quality in our level of customer service. The demerged international carrier operation which I head will enable access to an extended network footprint and product portfolio enhancements representing the combined strengths.
We’re offering international carriers Ethernet Private Line, MPLS IP VPN and dedicated internet access services so that they can extend their network footprint into Latin America to serve their home country enterprise customers in a seamless manner.
To enable this, our investors have committed to significant additional investment in the company’s backbone infrastructure in order to upgrade core routers to the latest carrier-grade technology, and to hire additional resources in areas like engineering, operations, NOC technicians, project management and customer service. We’ve already hired eight new people since the demerger was completed, and will continue to add to our human resources over the next few months.
Which Latin American countries are generating the most business for IFX-ICS?
We have 13 on-net PoPs [Florida in the US, Mexico, Guatemala, Panama, Colombia, Venezuela, Ecuador, Peru, Chile, Argentina, Uruguay and two in Brazil]. The highest traffic markets are currently Brazil, Colombia, Mexico and Argentina. Brazil dominates a lot of the mindshare, there’s no doubt about that. We’ve got a new NOC for international carrier business, and everyone who works there must be trilingual – English, Spanish and Portuguese.
The heavy interest and demand in Brazil is partly related to its upcoming sporting events, which include the Formula 1 in São Paulo in November, as well as the 2014 World Cup and 2016 Olympics. The HD 3D television broadcasts planned for these events are driving huge capacity demand needed to carry these high-bandwidth signals from Brazil to the rest of the world.
Several new cable systems are also being announced in Latin America and this new infrastructure is very positive for our business since our international network is built on multiple subsea cable systems to ensure redundancy. The bigger the diversity of subsea cables, the more robust our network becomes.
This is one of our key differentiators, since we are a 100% neutral and independent carrier we build our Carrier Ethernet network on top of multiple incumbent cable systems, something that the major carriers can’t, or won’t, do since they need to amortise their own assets.
Are we seeing terrestrial network developments in Latin America to match subsea ones?
Yes, we are seeing significant national and international terrestrial network expansion, especially in the Andean region. We now have various subsea cables connecting the countries which gives us the ability to create a robust mesh network, however as more terrestrial connectivity comes online we will use that as well.
Terrestrial development has been lacking in the past, no doubt about it. Lots of network operators are seeing that now as an opportunity and we’re seeing lots of build out. It’s starting to catch up a little bit.
Can Latin America reduce its dependence on North America or Europe for international connectivity?
The simple answer is ‘yes’. But there are subtleties. Latin America is generating more and more local content and we have seen a marked increase in local peering to exchange that content between networks without going through the US, as well as some new cables being announced that don’t pass through stateside.
Most of the regional cables, however, pass through the US and there are significant continental communities of interest that unite Latin America with North America as well as with Asia, Europe and Africa, and we are really operating within a global telecoms market that Latin America is an integral part of.
Hubbing via the US is not all that counterintuitive in any case. The joke goes: ‘it’s useful how close Florida is to the US’. Everything is intertwined, with so many Latin American expats all over the US.
I think the regional integration trend will continue. As the business world globalises, I don’t think it matters much where traffic is flowing from.
