The return of wholesale

13 Jun 2007

Hybrids are the way to go in the new bandwidth era, says Asia Netcom COO Mark Simpson

Telecom Asia: What's driving the pickup in wholesale business again‾

Mark Simpson: Most of the demand remains about IP backbone growth, which is also growing in complexity and how it's taken down. You look at how IP backbones are built now - they used to be STM-1 and STM-4, now they're STM-16 and 10-G wavelengths. The other critical part of IP transit is the content we can get through our peering and upstream providers as well. We've also seen strong growth last year and continuing this year in terms of the proportion of content traffic going into intra-Asia routes. The growth of content in places like China, and especially gaming content in Asia, means we're seeing a lot of content stay within Asia.

ANC says it planned EAC-Pacific cable as a "hybrid private/club cable" - what is that exactly, and why not stick to the private cable model‾

Having a private cable means the build is a more straightforward process because you have fewer people making decisions. But at the end of the day, none of us wants to be overbuilt and go back to where we were five years ago. So realistically a consortium of that cable makes more sense. So we'll go with a private structure to roll it out, with some financing from a few partners, and then go to a consortium structure once it is built so that others can participate.

With all the new cables planned for trans-Pac, some pundits worry we could see a new bandwidth glut. Valid concern or overblown‾

Well, there's always the risk of that. What's different now is that the cables that were built before were built with less reasonable expectations. Also the Asian market has opened up enormously - the entry of Chinese and Indian telcos into the market is bringing a lot of domestic demand. And I do have a reasonable amount of faith in our general rationality - not all of these cables will be built. But some certainly need to be. When you look at South Pacific and announcements from Telstra and Pipe Networks, there's some rationale for one or both of those being built, partly because the prices on that route are still extremely expensive. I can build networks for what Southern Cross charges for a 10-G [laughs].

How have things been for the company post-China Netcom‾

Well, our new shareholders have a more aggressive investment outlook, and also they own C2C, so that will help take us in new directions. We'll be integrating C2C this year, and from a pure asset play that leaves us with 12 fibers, a minimum of 10 terabits of potential capacity, and compared to Asia, we account for something like 50% to 60% of designed capacity that it's in the water. CNC remains a valued customer and we still work with them in China, but the difference is that we can now more easily work with other carriers there.

Best Wholesale Carrier
1st:Asia Netcom
2nd: BT Asia-Pacific
3rd: NTT Communications
Winner last year: Not awarded

At a glance
Financial: Wholesale capacity business up 25% year on year in 2006, with IRU sales up 32%; total revenue up 19% year on year
Core segments: IPLC, Internet backbone, wholesale MPLS, wholesale voice, service delivery and network operations

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