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Trends in Global Capacity Availability andTrading
Bruce GirdlestoneVP Network Trading Band-X
Topics
• The Trading of Bandwidth
• International Deployment of Capacity
• An imbalance in supply and demand
• A new model for Internet Trading
A quick History
• Deregulation
• Technology lift off
• International build
• Broadband – fixed
• 3G
• Global Players
Vertical Integration
•Switching •Wholesale transport•Network management•Hosting/Co-location
Horizontal Specialisation
•Mediation/Trading
Telegeography Finance
Agency Based Facilities Based
Switched
RoutedRecruitment
Co-location
Bandwidth
RoutedTrading of IP Transit based uponprice and quality executedthrough the Band-X IP TradingExchange Infrastructure.
SwitchedMinutes Exchange, TrafficManagement and facilitiesmanagement
RecruitmentHuman resources, skilled stafffor the telecoms industry
Co-locationSpecialist Telecom real estateservices.
NetworkOwned and managed circuitsand network infrastructure
Improves efficiencies in the market
or
Traditional model The Bandwidth Exchange
• A neutral and confidential Marketplace with absoluteintegrity
• Brings buyers and sellers together in most efficient forum,providing benefits to all parties
• Brings clarity in the complex comparison of quality,availability, contractual terms and price
Market reports and Consultancy
• Telegeography – Information Products• In depth reviews of market segments or bespoke research• Procurement Service Agreements: review of all solutions
and suppliers for a specific requirement (quality,availability, contractual terms, price)
• Market Briefing Service– Monthly updates and real time hot line for information
More than 20,500 members from a broad range ofplayers
• Carriers of all types
• Cable system operators
• Backbone operators
• Dark fibre providers
• Internet Service Providers
• Video streaming solutions
• Carrier Hotels / tele-houses
• Data Network Providers
Band-X in the world
x
xx
xxx
x
x
Price Band-X Bit Index
0
20
40
60
80
100
120
Oct-98
No v-98
Dec-98
J an-99
Feb-99
Mar-99
Apr-99
May-99
J un-99
J ul-99
Aug-99
Sep-99
Oct-99
No v-99
Dec-99
J an-00
Feb-00
Mar-00
Apr-00
May-00
J un-00
J ul-00
Wo rld Index
Euro pe Index
LA to To kyo
LA to HK
LA to Be ijing
NY Lo ndo n
Lo ndo n to HK
Lo ndo n to Sydney
Lo ndo n to Frankfurt
Price decline• Transatlantic STM-1 IRU 25 year term
– 1998 $12m+
– 2001 $450k
• Northern European STM-1 Lease– 2000 $50k per month
– 2001 $10k per month
Price
Cost
12 months or less?
Time
Val
ue
Sales Window
Challenge
New
System
Transatlantic Market
Date System GB/S1988 TAT 8 11991 TAT 9 21992 TAT 10 21993 TAT 11 21994 Cantat 3 51995 TAT 12/13 251995 Canus 1 51998 AC 1 1601997 Gemini 602001 TAT 14 6402001 FA1 24002001 Level(3) 1280
Total 4582
International Cable Deployment• Americas:
– 360Americas– South American Crossing– Emergia
• Asia– East Asia Crossing– FLAG North Asia Loop/Tiger
• Trans Pacific– Japan US– Pacific Crossing 1
• “Glut” on Long haul
• Local Connectivity via fibre is key– Telehouse interconnectivity
– MEA Clusters
– End User
• Everyone is bandwidth restricted – price v delivery
New Carrier Focus on Metropolitan Area
• Emphasis on fibre in city centres
• Capacity is scarce due to:– Practicalities of digging networks
• Access
• Local restrictions
– Cost• High per customer cost
• Restriction in capital
• Falling price of bandwidth
– Activity and Competition in the Long Haul
Telegeography Finance
Agency Based Facilities Based
Switched
RoutedRecruitment
Co-location
Bandwidth
RoutedTrading of IP Transit basedupon price and qualityexecuted through the Band-XIP Trading ExchangeInfrastructure.
SwitchedMinutes Exchange, TrafficManagement and facilitiesmanagement
RecruitmentHuman resources, skilledstaff for the telecoms industry
Co-locationSpecialist Telecom realestate services.
NetworkOwned and managed circuitsand network infrastructure
Peering Link
PeeringNAPPeering Link
Peering Link
Peering Link
IBP B(Tier 1)
IBP C(Tier 1)
IBP A (Tier 1)
Client ofIBP B
Client of IBPC
CorporateNetwork
(Client of IBP A)
Tier 2 IBP(Client of IBP A)
CorporateNetwork
(Client of IBPA)
Tier 2 IBP(Client of
IBP A)
New IBP/ISPNeeding IP
Connectivity
6723
6723
Peering will onlydeliver LocalRoutes
Transit Link
(paid for “private peering”)
PeeringNAP
IBP B(Tier 1)
IBP C(Tier 1)
Client ofIBP B
Client of IBPC
Peering Link
Peering Link
Peering Link
IBP A (Tier 1)
CorporateNetwork
(Client of IBP A)
Tier 2 IBP(Client of IBP A)
CorporateNetwork
(Client of IBPA)
Tier 2 IBP(Client of
IBP A)
New IBP/ISPNeeding IP
Connectivity
DNS Server
Mail Server
Access Circuit
The Seller Sales andmarketing information
Sales Person
Buyer Testing
BuyerIP Address Range
From Seller B
Seller A
Seller B
Seller C
Seller D
Traditional Transit
Band-XRouted
IP ExchangeAS12885
Stats Server
Trading System
DNS Server
Mail Server
StatsCollector
StatsCollector
StatsCollector
StatsCollector
Customer CCorporate
Customer Fshare trading
Customer EshoppingCustomer D
Portal
Customer BTier 2 ISP
Supplier A(Tier 1)
Supplier B(Tier 1)
Supplier C(Tier 1) Supplier D
(Tier 1)
BAND-X Supplier Connections
Customer AxDSL Provider
BAND-X Customer Connections
Fragmentation and Standardisation
• Half right• Increasing commoditisation of bandwidth• If bandwidth were a commodity it would have been a
financial market by now• Can it be traded – Interconnection of networks is key• Continuing lack of homogeneity validates the role of
mediator
Summary
• The increase in International Bandwidth availability –– Quality and reduced cost of Internet Transit
• Internet backbones connected at Telehouses– Getting on / off is the challenge
• Broadband access to end user is key
• Commoditisation of Bandwidth increasing but still not homogenous
• Where deregulated supply is high
• More Dynamic Trading of Internet traffic– A visible and efficient market