One of the biggest stories to emerge within the industry in the last month has been the rise of Telia Carrier in Dyn’s latest ‘Baker’s Dozen’ global rankings in IP transit.
The internet performance management company released its IP Transit Intelligence rankings in April and highlighted, in particular, the “meteoric ascent” of the newly re-branded global arm of TeliaSonera as it challenged the supremacy of its rival Level 3’s number one ranking – a position the latter has held since 2008.
The results revealed the significance of Telia’s climb: the company “actually surpassed Level 3 briefly in 2016 and is a fraction of a percent below it as of this writing, an achievement we never could have imagined”, said Dyn.
It is a feat that may have surpassed even the expectations of its New Zealand-born chief, now into his third year at the top of the company. Brendan Ives, CEO of Telia Carrier, says: “Like Dyn, until very recently we thought there was still quite a gap between number one and two. Of course we are very proud to be in our present position. This goes to prove that we have the right approach – focussing on customer excellence to achieve meaningful differentiation. So far, that seems to be working for us.”
Ives maintains his philosophy of “not striving to be number one for the sake of being number one”. He explains: “You have to be very careful about chasing market share. It is not necessarily the right approach – neither for the customer or our profitability as a company.”
Telia Carrier’s achievement is the result of a two-fold strategy. The first is ensuring that customers have no reason to leave. Ives is “extremely happy about the high retention rates”, though he declines to reveal the actual rate.
The second is winning the confidence of new customers in parts of the world where it does not yet have a strong presence. One example is in Asia where the carrier has made significant gains, with increases in transited prefixes from China Mobile and SK Broadband – something that is believed to have contributed to its strong position in the rankings.
As part of an effort to keep pace with the fast-changing market, the company unveiled a revamped name and purple logo in April, shedding its TeliaSonera International Carrier brand and renaming itself Telia Carrier. The move follows a proposal by its parent group to drop the Finnish part of its name, Sonera, from the overall TeliaSonera brand.
Ives says the group’s rebranding was an important move to emphasise its common purpose, culture and values. “It was an absolute no brainer to be part of that bigger change. We feel a great sense of duty to be an enabler of the new-generation telco that our group is striving to become,” he says.
Asked what it means to be a so-called new generation telco, Ives says it’s about conducting business in a way that customers want. “In the past we have been pushing products. In the future we need to focus much more on what customers actually want. From a group perspective, we have shifted a lot from a do-it-yourself company to building ecosystems and working within partnerships to deliver offerings and services that delight our customers. From a carrier perspective, that means we need to make it easier for customers to do business with us.”
WEST COAST EXPANSION
Ives is more motivated by his ambition to enable connectivity for companies across the world than he is with defending its position: fending off even its toughest competitors will not be enough to compete in the wholesale market, he asserts.
In April, the company reinforced that focus with a series of announcements aimed at meeting the demands of its customers. At the same time of the unveiling of its rebranding, the company announced that it was establishing a new presence in Montreal to provide wholesale IP transit, Ethernet and IPX services for carriers, content and cloud providers.
Montreal – its second hub in Canada after Toronto – is seen as a growing market in terms of local demand as well as an attractive drop-off point for international traffic into the country. Telia Carrier is said to be evaluating other Canadian cities for potential future expansion, with Vancouver also under consideration.
Two weeks after that, Telia Carrier followed up with another announcement that it was beefing up its West Coast network in the US, specifically in its Bay Area metro markets, to meet the needs of its content and entertainment provider customers.
Using Infinera’s DTN-X series of optical equipment, Telia Carrier will launch a Pacific Coast Highway route, deepening its 100G transport services between the San Francisco Bay Area and Los Angeles. The move is designed to enhance connectivity between the two major media, entertainment and internet hubs on the West Coast, as well as to clear an additional path for Asia-Pacific traffic entering and leaving the US via key submarine cable landing stations in Los Angeles.
The West Coast is “absolutely one of the most critical locations for us when it comes to serving traffic globally”, says Ives, adding that the market also serves as a key gateway to Asia Pacific. The growth it has experienced there left the carrier no choice but to increase diversity. “We were at a level of business in which the economics made sense for us to build an additional network, rather than continue leasing the capacity,” he says.
“This expansion was also driven by high demand for our 100G services across a wider metro footprint, and a desire to enhance performance both in terms of latency and redundancy,” he explains. In addition the route also provides more opportunities to develop existing relationships as well as extend its offering to verticals such as low-latency gaming, he reveals.
The last year has seen Telia Carrier launch a total of 14 IP and 19 DWDM PoPs, mostly in the US. Aside from its recent Montreal announcement, Ives maintains that in the short term its expansion programme has primarily been – and will continue to be – centred not so much on new markets but in metro areas within the US.
INNOVATING AROUND CONNECTIVITY
Telia Carrier will remain committed to its wholesale roots while maintaining a holistic view of connectivity in the changing market, says Ives.
The industry is shifting, he notes, as companies transition from manual processes to software automation. Ives says he is all too aware that many of its customers are at the leading edge of software technology. In order to remain relevant and competitive, the carrier will have to ensure that its new offerings are also meeting the demands of its customers in the emerging software-defined everything era.
“I use a catchphase internally: ‘We want to innovate around connectivity – not beyond it.’ We’re taking a closer look at the role we have to play in an ecosystem that relies on connectivity,” he says.
Ives points to the internet of things (IoT) as a strong opportunity to yield dividends for the company. “In a way, IoT is a natural extension of what we already do already. As applications are becoming more and more life critical, best effort is no longer enough. With a global backbone and a wide range of transport and mobile data services we believe we have a lot we can bring to the table,” he says.
Telia Carrier is presently working on a series of beta tests around the opportunity and gearing up to launch several commercial offerings later this year.
Then there is the Level 3 factor. “If Level 3 decides it is absolutely critical to hold on to that number one ranking, that’s going to be quite different than if they are looking at it the same way we are – which is first to be focussed on the customer experience and our own profitability,” he says. “We need to continually weigh up whether we want to chase market share. So far we haven’t.”
Another factor goes back to the industry’s accelerating shift to a software-defined world. “In time this will become a much more software-driven world. That places demands on our recruitment because there is presently very little software know-how in the carrier industry – at a time where our customers are becoming software-first,” he observes.
If anything is clear, it is that Ives will not be losing any sleep this time next year should Dyn choose to repeat its rankings.
“We will continue to focus on delivering an exceptional customer experience. We will look to increase our customer base. If the results gets us into a number one position, I’ll be extremely happy, but I won’t lose any sleep over it if they don’t. If our business is continuing to improve, I’ll be satisfied,” says Ives. “Put it this way – we have no intention of slowing down. The Dyn ranking is just the cherry on top.”
Amid such a backdrop, the newly rebranded Telia Carrier couldn’t have come at a better time for Ives and his team. “For me, this is really the beginning of the next stage of our journey.”
THE COLOUR PURPLE
There is that new purple logo. “But to make it really mean something, we need to give it substance. I am really proud with where we’ve left the TSIC name and brand in history. Now it’s about raising the bar even higher to give Telia Carrier an equally bright future,” he says.
There are challenges. The group’s own figures show that sales by the former TSIC went down about 6% between 2015 and 2016, measured in Swedish kronor, though earnings before interest, taxes, depreciation and amortisation (Ebitda) went up by 19.5% in the same time.
“Ebitda improved markedly driven by strong data growth and improved voice margins,” says Ives. “On the flip side the increased focus on margin led to a short term adjustment to net sales.”
Many companies in the industry, of course, face price erosion. Telia Carrier is not alone in this.
But Ives has a clear vision of what he wants his team to achieve by the end of the year. “My absolute number-one focus is to make step changes in the customer experience. What that actually means is getting to the end of the year and having customers say, ‘You’ve made our life much easier.’ That, for me, is the most important thing.”
