Big plans for Europe-Asia capacity supplier

11 Apr 2007

Russian wholesale carrier TransTelecom is expanding aggressively into Asia by teaming up with telecom carriers in China and Japan to tap the accelerating demand for Europe-Asia connectivity driven by the increasing cross-border business activities between Europe and Asia.

According to the Yankee Group, demand for Asia-Europe connectivity has experienced robust growth over the last few years and is still on rise. The research firm estimates that Europe-Asia capacity will grow 40% annually from 100 Gbps in 2006 to 397 Gbps in 2010, when total revenues for the Europe-Asia wholesale capacity market will reach $360 million. China is the fastest growing market with 50% annual growth, taking up 90 Gbps of connectivity to Europe by 2010, while the demand from Japan will grow at a similar rate and consume 79 Gbps of connectivity to Europe.

To take advantage of the growing opportunities in North Asia, Igor Kelshev, TransTelecom's SVP for international sales and marketing, says the company, which is 100% owned by Russian Railways, has established a point of presence in Hong Kong, linked with two STM-4s. The company also plans to launch a PoP in Tokyo by September, as part of its 'Eurasia highway' strategy.

The cornerstone of the strategy, he says, is the company's existing 50,000-kilometer DWDM terrestrial backbone network running along the tracks of the Trans-Siberian Railway. The network carries 50 Gbps and stretches across the Russian territory from the Sea of Japan to the Baltic Sea. It provides an alternative and the shortest route between the fast growing economies of Asia Pacific and economically established European Union, Kelshev notes.

'Our target is to become the major capacity supplier from Europe to China and Japan over the shortest terrestrial route via Russia,' he said, adding that TransTelecom is aiming for 12-15% market share of the total Europe-Asia capacity demand by 2010.

To do so, the company has entered into agreements with the four major telecom operators in China, namely China Telecom, China Netcom, China Unicom and China Tietong, to establish a redundancy ring between China and Europe.

In February the company also signed a deal with Japan's NTT Communication to build a 500-kilometre fiber-optic undersea cable from Japan's northern island of Hokkaido to Russia's Sakhalin. The cable, which will be completed by the end of this year, will carry 640 Gbps and connect to TransTelecom's DWDM network in Russia.

The cable will function as a rerouting network for the existing route that connects Japan and Europe, providing extra backup for the entire Asia Pacific in the event of a probable disaster like an earthquake, Kelshev says.

One of the key advantages of a terrestrial network, he says, is that it takes only about four hours to restore the connectivity if a cut occurs at any point. Compare that to the weeks or even months required to restore a broken submarine cable, such as those damaged by the Taiwan earthquake last December. Another advantage, he said, is its network latency of less than 200 ms of round-trip delay, which makes TransTelecom's Eurasia an appealing and uninterrupted route for sensitive applications such as banking services and TV broadcasting, he says.

The completion of this two-way expansion into the region will put TransTelecom in line with trans-US and Europe, Middle East and India routes, which are now serving as the principle traffic delivery channels between Europe and Asia.

'Currently only 10% of the total Europe-Asia wholesale capacity is transmitted through the trans-Russia route,' he says. 'We believe this will increase to up to 30% by 2010.'

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