Capacity Magazine April / May 2018 by Capacity Media

VOL 18 ISSUE 3 APRIL/MAY 2018

Cover sponsor: OTEGLOBE

Business intelligence for the global carrier industry

Capacity

VOL 18 ISSUE 3 APRIL/MAY2018 VOL 16 ISSUE 5 AUGUST / SEPTEMBER 2016

Big interview CEO of Tofane Global Alexandre PĂŠbereau on his return to the wholesale community Business intelligence for the global carrier industry

Capacity

is the

industry ready for blockchain? Special Report Data centres Special Report Cloud capacitymedia.com

Capacity

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CONTENTS Capacity magazine, April/May 2018

VOL 18 ISSUE 3 APRIL/MAY2018 VOL 16 ISSUE 5 AUGUST / SEPTEMBER 2016

Big interview CEO of Tofane Global Alexandre Pébereau on his return to the wholesale community

NEWS & ANALYSIS

43 THE ROAD TO ZERO-

04 NORTH AMERICA WARNER TRIAL

Dynamic networks require full automation and ƪexible provisoning to meet the demands of futurist technologies

10 EUROPE

48 DATA CENTRE MOVES

14 ASIA-PACIFIC NEWS

Mergers and acquisitions in the data centre space hit record highs in 2017, Capacity looks at the key drivers of this growth

Business intelligence for the global carrier industry

06 AT&T AND TIME

Cover image: iStock

iiss the

industry ustryy for ready blockchain? ockcha k ain

18 LATIN AMERICA 21 RED COMPARTIDA

STIRS UP MEXICO’S 4G MARKET

Special Report Data centres Special Report Cloud capacitymedia.com

ON THE COVER

Does blockchain have the potential to create new revenue streams for carriers? page 34

25 MIDDLE EAST 28 AFRICA STRATEGIES

TOUCH

DATA CENTRES special report after page 47

Data centre moves afoot

Living on the edge: the new frontier

Towards the edge

51 LIVING ON THE EDGE:

The internet of things is driving data processing to the edge of the network

The big interview: Chris Sharp of Digital Realty

The big interview: Colt and Interxion

AFOOT

THE NEW FRONTIER

55 TOWARDS THE EDGE

What has been the impact of the move towards the edge and where Capacity 12 EXECUTIVE INTERVIEW is it heading next? Maxim Akinin, Rostelecom

CLOUD

65 CLOUD’S COMING IN

special report after page 63

Alexandre Pébereau, Tofane

Capacity explores how increasing cloud data will impact future data centre traƥc?

Cloud’s coming in to dominate the data centre

40 THE BIG INTERVIEW

68 MIXING IT UP

Brian Fitzpatrick, Vodafone Carrier Services

Why are an increasing number of enterprises adopting hybrid or multi-cloud approaches?

The big interview: Ian Massingham, AWS

Mixing it up hybrid cloud

Executive interview: Sebastian Krause, IBM

Designing the idiots out of cloud security

27 EXECUTIVE INTERVIEW Hany Fahmy Ali, du

32 THE BIG INTERVIEW

TO DOMINATE THE DATA CENTRE

THE BIG INTERVIEW page 32

56 THE BIG INTERVIEW

Alexandre Pébereau, CEO of Tofane, becomes a consolidator after acquiring iBasis and Altice’s wholesale business

Chris Sharp, Digital Realty

72 DESIGNING THE IDIOTS

60 THE BIG INTERVIEW Mike Hollands, Interxion, and Andrew Edison, Colt

Infrastructure, applications and people - the three areas of concern in cloud security

66 THE BIG INTERVIEW

74 MARKET DATA

Ian Massingham, Amazon Web Services

A snapshot of the latest trends in the cloud market

71 EXECUTIVE INTERVIEW

PEOPLE & DIARY

Sebastian Krause, IBM

FEATURES

OUT OF CLOUD SECURITY

78 APPOINTMENTS The industry’s latest movers

34 BLOCKCHAIN

79 A DAY IN THE LIFE

THE BIG INTERVIEW page 40

Is blockchain overhyped or the new must-have?

Magdalena Dudek, Tata Communications

Brian Fitzpatrick talks to Capacity about the Ƥve years since the launch of Vodafone Carrier Services

38 BLOCKCHAIN FOR

80 THE INNOVATION

Colt and PCCW Global trial blockchain for wholesale

The internet of farm machinery takes over the farm

WHOLESALE

REPORT

SPONSORS 22 CNT 30 A1 TELEKOM AUSTRIA 50 MAINONE 53 COLT DATA CENTRES 64 OTEGLOBE 73 VEON

Capacity

editor’s letter | 03

See you in Chicago!

elcome to the April/May 2018 issue of Capacity magazine, our ITW special issue. Next-generation technologies are altering the relationship between carriers and vendors as we all seek to reinvent ourselves along more automated and software-driven lines. Carriers are continuing to move beyond the traditional revenue streams and are developing a more comprehensive set of services for the digital world today, and our cover feature looks at whether the industry is ready for blockchain (see page 34). With 95% of global data centre traffic forecast to come from cloud services and applications by 2021, this issue takes a special look at data centres and cloud. We have a great mix of big interviews for you. Alexandre Pébereau, CEO of Tofane Global, speaks to Capacity about his return to the industry amid the buyouts for iBasis and Altice’s wholesale business. We hear from Vodafone Carrier Services CEO Brian Fitzpatrick about the UK-based operator’s wholesale business, five years after it first launched at ITW. Chris Sharp from Digital Realty and Ian Massingham of Amazon Web Services divulge thought-provoking insights in our special reports too. The editorial team continues to offer our readers access to top executives, news and analysis about theCapacity whole industry – and you can meet us at the conferences and other events. Entries for this year’s Global Carrier Awards will open in June and if you’d like to find out more during ITW, speak to the team at the Capacity Media stand (East Tower, Purple Level: Exhibit Booth #1640). We will be working hard at ITW 2018 producing the Show Daily every day, printed overnight and distributed to delegates at the event. If you have any news to share, get in touch with me at jason.mcgee-abe@capacitymedia.com. If you’re not at ITW and you’re a global subscriber reading this from afar, why aren’t you here?! Don’t forget that in 2019, ITW will be in April and held in Atlanta!

Follow Capacity on Twitter: @capacitymedia Follow Capacity on Facebook: www.facebook.com/capacity-media Follow Capacity on YouTube: www.youtube.com/CapacitymagazineTV

Jason McGee-Abe Editor, Capacity Media

Follow Capacity on LinkedIn: www.linkedin.com/capacity-media

Management CEO Ros Irving ros.irving@capacitymedia.com

Sales International sales manager Federico Mancini federico.mancini@capacitymedia.com

Events Product director, conferences Vanessa Barbe vanessa.barbe@capacitymedia.com

Editorial Editor Jason McGee-Abe jason.mcgee-abe@capacitymedia.com Twitter: @JasonMcGeeAbe

International sales executive Charles Newman charles.newman@capacitymedia.com

ITW event director Ross Webster ross.webster@capacitymedia.com

Production Production and content coordinator Geralyn Samia geralyn.samia@capacitymedia.com

Accounts Administrative assistant Ruby Ward ruby.ward@capacitymedia.com

Design Freelance designer Gavin Brightman

Marketing Head of marketing Lubtcho Dimitrov lubtcho.dimitrov@capacitymedia.com

Executive editor Alan Burkitt-Gray alan.burkitt@capacitymedia.com Skype: alanbg Twitter: @alanburkittgray Deputy editor James Pearce james.pearce@capacitymedia.com Twitter: @jamespearce87 Reporter Natalie Bannerman natalie.bannerman@capacitymedia.com Twitter: @nitnat1989

Graphic designer Samantha Heasmer samantha.heasmer@capacitymedia.com

Marketing manager Simon Murray simon.murray@capacitymedia.com Digital content executive Uday Bahadur uday.bahadur@capacitymedia.com

Subscription enquiries Customer services customerservices@euromoneyplc.com tel +44 20 7779 8610 fax +44 20 7779 8602 Printer Stephens and George, UK Next issue June/July 2018 Published on 8 Junel 2018 Directors David Pritchard (Chairman), Andrew Rashbass (CEO), Colin Jones, Sir Patrick Sergeant, Andrew Ballingal, Tristan Hillgarth, Imogen Joss, Tim Collier, Kevin Beatty, Jan Babiak, Lorna Tilbian Freelance writers Gareth Willmer Sue Tabbitt Guy Matthews

How to contact Capacity Capacity magazine is published by Telcap, a division of Euromoney Global Limited TelCap, 8 Bouverie Street London EC4Y 8AX, UK tel +44 20 7779 7227 (switchboard) fax +44 20 7779 7228 www.capacitymedia.com Capacity (ISSN 1471-762X) is published six times a year by TelCap. Annual subscription €250, £210, $340. © TelCap, 2018. All rights reserved. No part of this publication may by reproduced, stored or introduced into any retrieval system, or transmitted in any form or by any means, electronic, manual, photocopying, recording or otherwise, without the prior written permission of the copyright owners Although TelCap has made every effort to ensure the accuracy of this publication, neither it nor any contributor can accept any legal responsibility whatsoever for consequences that may arise from errors or omissions or any opinions or advice given.

04 | north america

FCC’S PAI PROPOSES BAN ON TELECOMS GEAR FROM “SECURITY THREAT” FIRMS

Pai: Security restrictions on the USF

jit Pai, chairman of Federal Communications Commission (FCC), has unveiled new rules that would bar US telecoms companies from buying equipment using a government subsidy programme if the kit is bought from a “company that poses a national security threat”. Though Pai

hasn’t stated which companies he’s referring to on the banned list, legislators in the US have pointed to Chinese companies such as Huawei and ZTE as a potential concern. The plans would see the FCC place restrictions on the use of its $8.5 billion Universal Service Fund for broadband deployments in under-served areas of the country. Operators that win contracts through the fund would be prohibited from buying equipment from hardware manufacturers that, as Pai puts it, “pose a national security risk” to US communications services or the supply chain. “Threats to national security posed by certain communications equipment providers are a matter of bipartisan concern.” He added: “Hidden ‘back doors’ to our networks in routers, switches – and virtually any other type of telecommuniCapacity cations equipment – can provide an avenue for hostile governments to inject viruses, launch denial-of-service attacks, steal data, and more.”

GTT BUYS INTEROUTE FOR $2.3 BILLION GTT Communications has entered into a definitive purchase agreement to acquire Interoute, one of Europe’s largest independent fibre network operators, for $2.3 billion. The all-cash deal is set to bring a number of benefits for the global cloud networking provider, including increasing the scale of the company and expanding GTT’s Tier 1 global IP network with one of Europe’s most extensive fibre footprints. “The acquisition of Interoute represents a major milestone in delivering on our purpose of connecting people, across organisations and around the world,” said Rick Calder, GTT president and CEO. It will also contribute infrastructure, edge and hosted services to GTT’s suite of cloud networking services, and expand GTT’s multinational client base by adding over 1,000 strategic enterprise and carrier clients in Europe. Internally GTT will benefit from the addition of sales, operations and customer service organisation. “The combined assets and strengths of

our two companies create a powerful portfolio of high-capacity, low-latency connectivity, and innovative cloud and edge infrastructure services to support our customers in the global digital economy,” added Gareth Williams, CEO of Interoute.

Calder: GTT’s second deal of 2018

ORANGE CONVERTS ITS TWO US IP POPS INTO IPX POINTS Orange International Carriers has strengthened its US positioning by converting two of its IP PoPs into IPX points to improve its quality of service. The news was announced on Twitter, explaining that the two PoPs are physically located in Los Angeles on 7th Street and Palo Alto on Bryant Street. Speaking to Capacity, an Orange official said that the “PoPs have been in place for a long time, operating as IP PoPs for Orange OTI. As from now, they are also IPX PoPs”. The official continued: “It is part of an ongoing Orange plan to roll out new PoPs in order to improve services and customer experience. Our strategy is to ensure the best quality of experience for our affiliates and for our external ISP customers.” The company added: “Orange has a very ambitious plan for deployment of IP Transit and IPX PoPs over the next two years. The plan is to develop our presence in Europe in the major FLAP [Frankfurt, London, Amsterdam and Paris] cities as well as in our affiliates’ countries, starting in Romania and Spain. Additionally, we will widely expand our presence in Africa and Middle East, deploying 11 additional PoPs,” added the spokesperson.

TE SUBCOM BEGINS CONSTRUCTION OF LA LANDING STATION TE Subcom has announced that it will begin construction on its Los Angeles cable landing station. The company says that the easement, permitting and agreements are complete, and once construction is complete the new beach landing station will serve multiple subsea cables and users in South California. Chris Carobene, vice president of marine services at TE SubCom, said: “Starting the construction of these bore pipes is a significant milestone for us. The project will enable a gateway to greater information capacity and significantly increased speed. We are eager to begin and looking forward to completion of the work. We continue to progress the project according to schedule and look forward to aiding our customers with this critical enabling infrastructure.” The project will use horizontal directional drilling to install bore pipes for the landing due to reduce the impact this type of operation has on the beach and tidal area. april/may 2018

north america | 05

ZAYO ACQUIRES 62,000 SQ FT VIRGINIA DATA CENTRE Zayo Group has acquired a 62,000 total sq ft facility in McLean, Virginia, adding to its existing data centre portfolio. The company says that acquisition, which includes tenants, data centre systems, and long-term leases, was driven by strong demand in the Washington DC area for low-latency colocation, interconnection and access to fibre infrastructure. “This acquisition provides an important second Northern Virginia location for our client solutions and creates a strong data centre option for firms located downtown and in the heart of the beltway. Our deep, dense fibre footprint in the region facilitates global connectivity, further enhancing the value proposition of the McLean location,” said TJ Karklins, senior vice president of Zayo’s Colo business segment. The facility, which is on-net to Zayo fibre, will provide a low-latency colocation option for government

Karklins: A strong data centre option

agencies, web-scale companies, cloud providers and other large enterprises, especially those located in downtown Washington DC. In addition the new site will tether directly to Zayo’s data centre in Ashburn, Virginia and to Zayo’s network point of presence on M Street.

Capacity

AMDOCS PARTNERS MICROSOFT TO ENABLE ONAP ON AZURE Amdocs has announced that it is working with Microsoft to implement its Open Network Automation Platform (ONAP) on the Microsoft Azure cloud platform. The news means that operators are able to deliver virtual network services running on Azure, orchestrated and managed using ONAP. The offering will allow operators to gain the time-tomarket and cost benefits of public clouds. Anthony Goonetilleke, group president of Amdocs Technology, said: “This project is a first step in the evolution of ONAP to manage a multi-cloud environment where network capacity can be consumed in a dynamic way across a combination of private and public clouds.” Amdocs say it is aiming to have the ONAP code open source and available by April. Network operators will then be able to offer services running on Azure as the primary cloud or as complementary capacity for their private cloud to deploy virtual network functions that are managed and orchestrated by ONAP.

HURRICANE ELECTRIC PICKS AQUA COMMS FOR NEW YORK TO DUBLIN Hurricane Electric has chosen Aqua Comms for new high-speed connectivity between New York and Dublin. Hurricane Electric has activated with one 100Gbps wavelength of capacity on Aqua Comms’ America Europe Connect-1 (AEC-1) subsea cable system. By selecting Aqua Comms, Hurricane Electric can improve the speed, performance and resiliency of its IP backbone for all of its IP Transit customers. “Not only will Aqua Comms’ 100 Gigabit optical wavelengths service improve the performance and resiliency of our global internet backbone, but the networks of Hurricane Electric’s IP Transit customers will also ultimately benefit,”

said Mike Leber, president of Hurricane Electric. Aqua Comms’ subsea fibre-optic route includes diverse terrestrial segments on both ends, enabling Hurricane Electric to provision end-to-end high capacity connectivity without regeneration, utilising advanced modulation techniques. Aqua Comms say that its network has been designed to meet the needs of carriers, global service providers, cloudbased networks, financial services companies and OTT content providers. “This high capacity connectivity will deliver essential transport on a low latency route from New York to Dublin, onward to Manchester and Amsterdam, and

mainland Europe, which is diverse from its existing transatlantic circuits to London and Paris,” said Nigel Bayliff, CEO of Aqua Comms.

Leber: Better performance and resilience

WINDSTREAM COMPLETES $37.5M PURCHASE OF MASS COMMUNICATIONS Windstream Holdings has completed its $37.5 million cash acquisition of Mass Communications, a New York-based network management company. Mass Communications offers voice, data and networking services to a broad range of SMEs in the financial, legal, healthcare, technology, education and government sectors. Layne Levine, president of Windstream enterprise and capacitymedia.com

wholesale, said: “This acquisition adds a well-run company with a customer-first mindset and an impressive track record of growing revenue to Windstream. Mass Communications customers now will have access to Windstream Enterprise’s deep portfolio of networking solutions and cloud-based services, including SD-WAN Concierge and OfficeSuite.” The deal was announced December

2017 after an FCC filing in which Windstream requested the regulator’s “consent to transfer control of the international and domestic Section 214 authorisations held by MassComm to Windstream”. Windstream would purchase all of the issued and outstanding capital stock of MassComm, which would then become a whollyowned subsidiary of Windstream.

06 | news analysis: at&t trial

AT&T AND TIME WARNER IN COURT FIGHT AGAINST THE US GOVERNMENT T

he US government’s star witness in its action against AT&T and Time Warner says their $85 billion merger will put up consumers’ costs by $571 million a year by 2021. Professor Carl Shapiro told the court in New York that costs will rise because AT&T will use its DirecTV satellite and streaming service to deliver Time Warner channels rather than offer them to rival cable companies. Shapiro, an anti-trust expert who is a professor at the University of California at Berkeley, said: “The inevitable consequence of the merger is that DirecTV subscribership will grow over time.” Time Warner owns channels such as CNN, TBS and TNT under the Turner, HBO and Warner Bros brands. Daniel Petrocelli, the lawyer representing AT&T-Time Warner, questioned Shapiro over his assertions – including over what data the professor had used for his analysis and what he’d left out. Earlier in his career Petrocelli represented the family of Ron Goldman, the waiter who died in 1994 alongside Nicole Brown Simpson at OJ Simpson’s home in Los Angeles.

Lower loss In the New York trial, Petrocelli questioned Shapiro over evidence that subscriber loss figures can be far lower than the professor claimed. Executives from two cable companies – Charter and Cox – plus rival satellite operator Dish Network agreed with Shapiro. Comcast disagreed – though Comcast is also part of a vertically integrated company, Comcast NBC Universal – the sort of empire AT&T and Time Warner want to be. Matt Bond, head of content distribution at NBC, the TV service that is part of Comcast NBC Universal, testified that the parent company does not interfere with negotiations. And John Martin, CEO of

Time Warner’s Turner Broadcasting, said his company would not seek to use AT&T’s influence in the market to gain unfair prices – even though Martin was called as a witness by the US government’s Department of Justice (DoJ), not by AT&T Time Warner. And AT&T Time Warner pointed out that Turner and others have long contracts with the cable and satellite companies, so their prices are protected. The judge, Richard Leon, heard that Turner had offered so-called “baseballstyle” arbitration in case of dispute with cable and satellite providers. This is a form of arbitration designed to encourage each Capacity side to be reasonable: each must put its case to an arbitrator, who has to choose one or the other, and cannot negotiate a compromise. Leon questioned Shapiro’s conclusions

not considering AT&T’s promise to use baseball-style arbitration. The merger will be to consumers’ benefit, he said. One issue, though, is that an arbitrator should choose according to “fair market value”, without defining the term. A third professor, Peter Rossi of the University of California, Los Angeles, said the DoJ’s survey – used by Shapiro for his evidence – had methodology that could not be trusted.

Sealed documents

But much of the evidence is not heard in public, especially when the DoJ offers in evidence sealed documents – usually accompanied by objections from AT&T Time Warner’s legal team. Discussions are then masked by white noise in the courtroom, according to observers who have attended the hearings. And according to Ted Johnson, reporter for the entertainment industry newspaper Variety, on day one, members of the public were told “to keep two feet on the floor as they watched the proceedings, ostensibly to keep Carl Shapiro, University of California, Berkeley shoes from making scuff marks on wooden surfaces”. More importantly in this technological on AT&T’s role in influencing carriage age, electronic equipment is banned from fees and their influence on the rates cable and satellite subscribers will pay. Leon said the courtroom. Members of the public were ordered to turn off phones and he believed NBC’s testimony. laptops. Behind schedule As Johnson wrote, “even a courtroom The DoJ has brought the case against clock is stopped, at 5:05”. AT&T and Time Warner to try to prevent After this issue of Capacity went to them from completing the merger, which press, the two CEOs of the key companies was first announced in late 2016. The involved are expected to give evidence. Jeff companies are already at least six months Bewkes, CEO of Time Warner, will be behind schedule for the completion. followed a day later by Randall StephenAnother Berkeley professor, Michael son, CEO of AT&T. Katz, told the judge that AT&T’s The case continues, and Leon will proposals will “work well”. He said the US ultimately decide between the DoJ and government had made a “fatal error” by AT&T Time Warner. There is no jury.

The inevitable consequence of this merger is that [AT&T’s] DirecTV subscribership will grow”

april/may 2018

Capacity

08 | north america

DIGITAL REALTY ACHIEVES FIVE NINES OF UPTIME FOR ELEVENTH YEAR IN A ROW

igital Realty has achieved five nines of uptime for the eleventh consecutive year, surpassing 99.999% availability throughout 2017. “Delivering ‘five nines’ of uptime for the eleventh straight year demonstrates

Stein: 99.999% uptime for Digital Realty

T-MOBILE US AND SPRINT MERGER TALKS RESUMED ONCE AGAIN Merger talks between SoftBank and Deutsche Telekom about consolidating their US subsidiaries have restarted, according to sources. Reports claim that SoftBank initiated this latest round of talks over a deal that would bring together the third and fourth biggest operators in the US, creating a larger third-placed player to compete more directly with AT&T and Verizon. These most recent talks come less than six months after the last attempt at striking a deal came to an end in November. Negotiations fell apart over disagreements about who would control the combined unit. Prior to that, talks that took place in 2014, but were dropped due to regulatory concerns. The combined company would potentially have around 127 million customers and would have a market capitalisation of around $80 billion. It would also have a rich spectrum holding, ready for 5G services.

our commitment to resiliency and to serving as a true business partner to all our customers, from enterprises to telecommunications customers and leading cloud service providers,” said William Stein, Digital Realty’s CEO. “We are especially proud of this milestone given our rapid growth and we remain focused on ensuring that all of our facilities around the world meet the same stringent standards for design, construction and operations,” added Stein. The company says that its ability to maintain consistent uptime is down to its choice of strategic locations, robust data centre designs and outstanding staff in addition to its rigorous processes and procedures. “We are very pleased with our design, construction and operations teams, who have worked tirelessly to ensure that our customers maintain uptime, even in the Capacity face of extreme weather events such as the recent storms on the east coast of the US, in Ireland, and elsewhere around the world,” added Danny Lane, senior vice president of data centre operations.

MICROSOFT COMMITS $5BN TO IOT OVER THE NEXT FOUR YEARS Microsoft says that it is investing approximately $5 billion in the internet of things (IoT) over the next four years. In a recent blog post Microsoft said that it is investing this because it wants to give all its customers “the ability to transform its businesses and the world at large, with connected solutions.” The company says it has been investing in IoT “long before the term was coined” and that through its pledge will be able to “dedicate even more resources to research and innovation in IoT and what is ultimately evolving to be the new intelligent edge”. Through its IoT platform that spans cloud, OS and devices, Microsoft says it is uniquely positioned to simplify the IoT journey enabling any customer to “create trusted, connected solutions that improve business and customer experiences” and the investment announcement will ensure that Microsoft continues to meet its customers’ needs both now and in the future. The increase in investment will also support continued innovation in IoT. Microsoft will research and develop key areas such as securing IoT, creating development tools and intelligent services for IoT and the edge, and investments to its partner ecosystem.

TM FORUM PARTNERS WITH LINUX FOUNDATION ON OPEN-SOURCE PROJECTS TM Forum is partnering with the Linux Foundation to promote open-source software projects for carriers. Ken Dilbeck, the TM Forum’s vice president for collaboration and R&D, told Capacity that carriers backing the move include AT&T and Orange. In addition, equipment and software vendor Huawei has also been closely involved, he said. “The reality is that for companies such as Oracle, Microsoft and IBM open source is becoming critical to them as well,” said Dilbeck. The move will mean changes for the TM Forum, which has around 850 operators and vendors across the industry. The organisation will need to modify the intellectual property right (IPR) agreements with its members to cover the use of open-source software, added Dilbeck. However in the long term the deal will mean “a reduction in the total cost of

ownership” and software “will operate more seamlessly,” he explained. The collaboration will begin with “a narrow set” of application programming interfaces (APIs), with the company expecting to meet a deadline of May 2018 for the first phase of the project.

Dilbeck: Wide support for open source

april/may 2018

Capacity

10 | europe

BARNEKOW LEAVES TELIA SWEDEN AFTER COMPANY REPORTS DECLINING REVENUES

elia Company’s group CEO Johan Dennelind has taken over running the Swedish operation following the resignation of Hélène Barnekow. A statement from the company this morning said that Dennelind “will temporarily assume the role of CEO of

Dennelind: Change at Telia Sweden

RICCARDO DELLEANI, FORMER CEO, IS BACK AT SPARKLE Alessandro Talotta has left Sparkle, where he had been chairman and CEO for more than three years, following his nomination as a director of rival Italian carrier Retelit. The new CEO is Riccardo Delleani, currently CEO of TIM’s services division, Olivetti. Delleani is a former CEO of Sparkle. Sources at Sparkle refused to comment on or off the record when contacted by Capacity. Meanwhile the news agency Reuters reported that the Italian state investment unit Cassa Depositi e Prestiti (CDP) is set to buy a 5% stake in TIM, worth around €575 million, in order to gain influence on TIM’s future. Talotta has been nominated as a director of Retelit by Fiber 4.0. Fiber 4.0 is backed by banker Raffaele Mincione, who is also being nominated as president of the board of Retelit.

Riccardo Delleani: Olivetti to Sparkle

Telia Sweden until a permanent solution is in place”. In the 2017 annual report Telia said the Swedish business accounted for 46% of the group’s revenues in 2017, and that Swedish sales were down 2.6% year on year while revenues were 4.3% down. Neither Dennelind nor Barnekow gave any explanation for her rapid departure, though Swedish media had been talking about cost-cutting measures in the company for some time. “My tenure at Telia has been characterised by the immense ongoing changes of the telecom market,” said Barnekow. “Despite a tough market situation, we have grown our consumer business and stabilised our enterprise business, while also implementing a large transformation programme to secure Telia Sweden for the future.” Observers point to Barnekow’s

nomination as a director of Malta-based, but Scandinavian-owned, online gambling company Kindred, as indicating she was looking to a post-Telia future. At the end of March Swedish business newspaper Dagens Industri hinted that her Kindred nomination indicated that Telia’s “Swedish operations are about to get a new boss”. The betting company, formerly Unibet, announced her nomination on 27 March and it will be considered at a shareholders’ meeting on 15 May. Barnekow insisted to Dagens Industri that her departure “was her own initiative”. Dennelind said: “Hélène Barnekow has initiated an extensive change agenda in our Swedish operations and accelerated the digital transformation of Telia Sweden. Her strong customer focus has contributed positively to our journey to become a new generation telco.”

Capacity IRELAND’S EIR NOW UNDER CONTROL OF ILIAD/ FREE MOBILE OWNER XAVIER NIEL Xavier Niel’s personal investment company has officially taken control of Ireland’s incumbent operator Eir. Niel controls France’s Iliad group, which owns the Free fixed and mobile operator, but this deal has been completed via NJJ, his private investment firm, whose investments include Monaco Telecom and Switzerland’s Salt Telecom. At the same time Niel’s group has installed a brand new board of directors and Carolan Lennon, former head of Eir’s wholesale operation, has taken over as group CEO. David McRedmond, non-executive chairman at Eir, said: “The company will benefit greatly from having such a high calibre board of directors with strong Irish roots, a deep understanding of the Irish rural and urban landscape, specific knowledge of the company and extensive telecommunications expertise. The board will work closely with the management team to ensure the continued future success of the company.” The new board includes Niel as well as previous CEO Richard Moat, but excludes Lennon and the new CFO, Stephen Tighe, who was finance director of Eir’s consumer division. Former Vodafone executive Lennon said: “I will work with a new senior management team, all of whom have

Carolan Lennon: New management

been appointed from within Eir and who have substantial industry knowledge and market experience. The new management team reflects the importance of talent development and embraces gender diversity, themes that are extremely important to me.” She added: “I am confident that we can, together with the board, build the best fixed and mobile network in Ireland, offer the highest quality products and deliver a first-rate customer care service for the Irish people.” april/may 2018

Capacity

12 | executive interview: maxim akinin

ROSTELECOM BOOSTS OVERLAND ROUTES TO 100G The quickest way from Europe to China and Japan? Overland via Russia, says Maxim Akinin of Rostelecom. Interview by Alan Burkitt-Gray

ostelecom has upgraded its networks linking western Europe and Asia to 100Gbps connections throughout its routes. They provide, says Maxim Akinin, director of the company’s international carrier business, the shortest routes on these all-important services – and Rostelecom is building further resilience into the connections. “Trans Europe Asia is a very important product in terms of revenue and bandwidth,” says Akinin. “It’s our flagship. In the fourth quarter of last year we upgraded this to 100G from Europe to China and beyond.” Originally Trans Europe Asia was “about the direct routes through Russia to China and on to Hong Kong and other parts of Asia”, he adds. “But now there’s a route through Mongolia – that’s our fourth route. We continue to explore diverse routes.”

says Akinin, an engineer who joined Rostelecom in 2017 after seven years with Level 3 Communications, now absorbed into CenturyLink. The benefit for Rostelecom’s wholesale customers is that the traffic “goes through a single country with a single company in charge” from one side of Russia to the other. “Sometimes it’s a challenge if you have more than two or three countries to cross,” says Akinin. “It’s a challenge in terms of maintenance, support and capacity Capacity planning – and pricewise, as every country wants its share.” But for Rostelecom, “all the way from Europe to the Chinese border it’s a single country. The network is very stable. In comparison to all other services [between Asia and Europe] our strong differentiation is the [overland] route from Europe to China and Japan.” It isn’t a specific cable, or set of cables,

Trans Europe Asia is a very important product in terms of revenue and bandwidth. It’s our flagship. In the fourth quarter of last year we upgraded this to 100G from Europe to China and beyond” Maxim Akinin, director of international carrier business, Rostelecom It’s “definitely the shortest route” between Europe and Beijing, he adds. In China, “we work with all three Chinese companies”, he notes – China Mobile, China Telecom and China Unicom. Meanwhile Rostelecom’s Russia-Japan Cable Network (RJCN) takes the service on through to Japan, working with Japanese carrier KDDI. The cable runs from Nakhodka in Russia to Naoetsu in Japan, only about 250km from Tokyo. “It is an alternative route to subsea connections through Egypt. There is an extremely high concentration of cables in Egypt. People are looking for diversity,”

from west to east, he emphasises. “As the fixed incumbent we provide a voice transit business with close to 200 interconnections”, he notes. At the same time Rostelecom is enhancing other routes, to the south of Russia. “The market is still looking for new routes and we are looking for developments in terms of prices,” he says. Rostelecom is a partner in the Europe Persia Express Gateway (EPEG), which runs “from European territory through Russia and Azerbaijan to Iran and Oman”, where Omantel is the partner, giving direct access to the Indian Ocean.

“EPEG is heavily underestimated by the market,” says Akinin. But “we believe this project has a positive future”, and Rostelecom is likely to promote it more vigorously in the future, he hints. “It is not new but we are now in the process of reconsidering and preparing to be more active.” As with its terrestrial routes from Europe, EPEG provides an alternative to the usual connections through Egypt. Making more use of EPEG “is one of our priorities for the rest of 2018 and into the following years”, says Akinin. And there’s a further potential direction for growth, “into neighbouring countries such as Kazakhstan, Uzbekistan and Turkmenistan and beyond”, he says. “Historically we have played an important role in those countries. There are large Russian-speaking populations. Russian operators play an important role there. We continue to consider them as part of our international wholesale segment.” Meanwhile, at home, Rostelecom is Russia’s biggest internet service provider. “We connect more than 40% of all fixed eyeballs in Russia. In a content-driven world access to eyeballs on the internet is key,” he says. “We are like Orange and Deutsche Telekom – we are in a similar situation to them.” That’s one of the reasons the company has been upgrading its services to 100Gbps, he notes. “100G is already our standard, not only on transit routes, [but also for the] national backbone. We use 100G as the standard for the backbone.” Rostelecom “is very open to business initiatives”, says Akinin. “We are a very important partner for global companies into Russia, through Russia or within Russia. We have relationships with the most important global and European carriers – such as Telia, Vodafone, CenturyLink and GTT – and they are just a few of them. And the operators in places such as Kazakhstan and Uzbekistan. We have a very robust and open positive relationship with them.” april/may 2018

Capacity

14 | asia-pacific

BROADBAND FIBRE, 4G AND IPTV ADOPTION DRIVE JAPAN’S TELECOMS MARKET

elecoms and pay-TV services in Japan are expected to grow at a compound annual growth rate (CAGR) of 2.2% between 2017 and 2022, says data and analytics company GlobalData. According to its Japan Country Intelligence Report, mobile data usage will more than double over the forecast period, before reaching 9.9GB a month by the end of 2022, driven by the rise in usage of mobile

video and users accessing social media content over smartphones. GlobalData predicts that mobile voice usage will continue to fall due to the growing adoption of OTT-based communications. In addition, the report found that the fixed services market will see a steady rise in the adoption of fibre-to-the-home or building, cable internet subscriptions and growing average revenue per line for broadband connections. Sandeep Kolakotla, telecoms analyst at GlobalData, said: “Mobile data revenue will continue to rise and play a major role in the growth of total telecom service revenue to 2022 as a result of rising smartphone penetration, growing adoption of 4G LTE/LTE-A services and higher value data packs.” As for the pay-TV market, GlobalData predicts that growing internet protocol television (IPTV) subscriptions and Capacity operator investments in high-definition and ultra-high-definition content technologies will boost revenue growth.

MARTIJN BLANKEN TO LEAVE TELSTRA Martijn Blanken, group managing director and chief customer officer of Telstra Enterprise, is leaving in June after nine years with the company. Blanken joined Telstra in June 2009 and has been “instrumental in initiating Telstra’s transformation into a leading Network Applications and Services player”, the company told Capacity. In addition he led the company’s 2014 acquisition of the Pacnet service provider, which helped double the size of Telstra’s international business unit, before he was named group managing director and chief customer officer of Telstra Enterprise. Blanken will initially take a six-month sabbatical with his family, Telstra said, before deciding upon his next move. His departure is timed with the end of Telstra’s financial year. The company has also confirmed that Ellie Sweeney, the executive director of global sales international, is moving back to Australia, where she will take a six month break. Sweeney, who has served various roles with Telstra since joining in 2007 according to her LinkedIn entry, will then return to the company in a new, unnamed leadership role.

ST TELEMEDIA, TICON PARTNER TO BUILD DATA CENTRE IN THAILAND ST Telemedia Global Data Centres (STT GDC) has partnered with Ticon, a developer and provider of industrial properties, to launch a new data centre in Bangkok. Panote Sirivadhanabhakdi, chairman of the Ticon executive committee, said: “Thailand is in its transition to a full-fledged digital economy, as evident in rising adoption of digital technologies and systems for greater competitiveness of companies across industries as well as in robust emergence of e-commerce businesses and fintech industry in

Thailand. The trend is also favoured by government policies including Thailand 4.0 economic model, digital economy master plan, and high-speed Internet infrastructure projects.” Bruno Lopez, group CEO of STT GDC, said: “Partnering with Ticon provides us with one of the strongest local networks [with] intimate understanding of the Thai market, wide access to land banks as well as extensive experience in property development in the commercial and industrial space in the greater Bangkok area and across Thailand.”

Lopez: A stronger local network

NTT COM BOOSTS CLOUD IAAS PORTFOLIO WITH DIMENSION DATA NTT Communications has partnered with Dimension Data, the global technology solutions and services provider, to bring together their cloud infrastructure-as-a-service (IaaS) capabilities. Under the partnership, Dimension Data will transfer its cloud IaaS capabilities to NTT Com under the NTT Cloud brand while maintaining strategic partnerships. NTT has

confirmed that the transfer of Dimension Data’s cloud IaaS has been completed. Katsumi Nakata, senior executive vice president of NTT Communications, said: “We have completed transferring Dimension Data’s cloud IaaS capability to NTT Com strengthening our cloud development and support capabilities, thanks to both companies’ efforts driven by relevant members since the

announcement last November. We will continue to strengthen Hybrid IT solutions and contribute to digital transformation journey of our clients.” The aim of the partnership, according to NTT Com, is to bring together both company’s respective cloud offerings in order to “drive innovation into the market” and deliver services that enterprises demand. april/may 2018

Capacity

16 | asia-pacific

CONSTRUCTION BEGINS ON GOOGLE-BACKED JAPAN-GUAM-AUSTRALIA SUBSEA CABLE

he 9,500km subsea cable linking Japan to Australia via Guam and backed by the likes of Google has gone into construction. Other companies involved in the building of the JapanGuam-Australia (JGA) cable include

JGA: 9,500km from Japan to Australia

NEC Corporation and Alcatel Submarine Networks (ASN). Construction is due to be completed in Q4 of 2019. The 36Tbps cable will boost communication services between Japan and Australia, with onward connectivity to Asia and the United States, whilst also boosting connectivity in Guam. The system is split into two parts. JGA South (JGA-S), which links Sydney, Australia to Piti in Guam; and JGA North (JGA-N) which runs from Piti to Minami-Boso, Japan. Backers of JGA-S include Google, AARNet, and RTI-C. RTI-C is also the sole purchaser of JGA-N, which will interconnect with the southern portion of the cable at a new Guam cable-landing station, which is

being launched by Guam-based telecoms provider GTA. “Hyperscale cloud providers and enterprise companies are fuelling exponential data growth between Asia, Australia, and the United States,” said Russ Matulich, RTI-C’s president and CEO. “These customers require alternative paths, enhanced quality of service, and cost-effective bandwidth solutions.” He added: “By adding JGA to our existing cable investments, RTI is well positioned to serve these massive data-growth needs. JGA’s unique design will also improve latency between Tokyo-Sydney, while greatly reducing provisioning timeframes.”

ARYAKA PARTNERS CHINA MOBILE FOR ENTERPRISE SD-WAN SOLUTION Aryaka has entered into a strategic partnership with China Mobile International (CMI) to deliver a fully compliant global SD-WAN service for international companies that operate in China. The partnership, being touted as an industry first, will enable CMI to offer SD-WAN services to businesses headquartered in China, as well as offering a sanctioned SD-WAN service for foreign

companies that is fully compliant with local regulations and privacy policies. Capacity “This is a powerful partnership because Aryaka and CMI complement each other in ways that immediately benefit global enterprises,” said Shawn Farshchi, president and CEO of Aryaka. “Aligning our resources will increase enterprise agility by simplifying the job of deploying and managing SD-WANs that meet the

MERGERS IN INDIAN TELECOMS SECTOR RISE TO $14.7BN IN 2017

MU SPACE, SES AND HUGHES TO USE SATELLITES FOR BROADBAND ACCESS IN RURAL THAILAND

Mergers and acquisitions in the Indian telecoms sectors increased fivefold in 2017, largely thanks to the impact of Reliance Jio’s entry to the market in 2016. According to an EY survey, mergers and acquisitions (M&As) in Indian telecoms shot up from $2.7 billion in 2016 to $14.7 billion in 2017, the highest deal value for any sector in India over the past 10 years, said the accountancy and consultancy firm. EY says the telecoms consolidation has also fuelled acquisitions in mobile infrastructure, with Vodafone India and Idea Cellular selling their tower business to American Tower Corporation for $1.2 billion. In addition, Russian industrial company Sistema appears poised to buy the remaining business of Reliance Communications (RCom) after the unrelated Reliance Jio acquired its mobile spectrum and towers.

mu Space is partnering with SES Networks and Hughes Network Systems to deploy satellite-based broadband services to rural communities in Thailand. mu Space will deliver the new services by contracting capacity on SES-8 – and SES-12 when it is launched – and by using the Jupiter system from Hughes Network Systems. The start-up satellite firm says that it will improve the lives of Thailand’s citizens by providing reliable and affordable satellite-based broadband for telecom providers and businesses. “At mu Space, our mission is to deliver nationwide and reliable connectivity to everyone in Thailand, to improve the quality of life of the local people,” said James Yenbamroong, founder and CEO at mu Space. “As such, we have been searching for the ideal partners to ensure that we can deliver reliable broadband services at the right price point. Together with the

singular compliance requirements in China. Together, Aryaka and CMI will provide the only solution that can deliver significantly better performance for both on-premise and SaaS/cloud applications anywhere in the world.” CMI will be able to sell a combined solution of Aryaka’s global SD-WAN and internet connectivity to deliver SD-WAN optimised for enterprise applications.

global experience of SES Networks and Hughes, we are confident of the high service quality that we will jointly deliver in Thailand.”

James Yenbamroong: Ideal partners

april/may 2018

Capacity

18 | latin america

EQUINIX CLOSES $800M DEAL TO BUY INFOMART AND EYES MORE LATAM OPPORTUNITIES

CENTURYLINK GOES LIVE WITH NEW FIBRE ROUTE CONNECTING COLOMBIA AND ECUADOR

CenturyLink has activated its fibre route linking the city of Cali in Colombia and Quito in Ecuador. The expansion of infrastructure and network coverage will give CenturyLink’s enterprise customers access to dedicated internet services, the portfolio of CenturyLink’s global products as well as providing diversified fibre routes for service contingencies. The 585km route enables transport and IP services in Popayan, Ipiales and Pasto in Colombia plus Tulcan and Ibarra, Ecuador. The total network has an installed capacity of 400Gbps in the transmission layer and is connected to the ring of alliance in Colombia and the submarine system SAC (South American Crossing), enabling an international on-net outlet for Ecuador. Commenting on the route going live, Hector Alonso, Latin America regional president at CenturyLink, said: “Our expanded network offers companies in the region local network infrastructure and support together with global connectivity.”

quinix has completed its $800 million acquisition of the Infomart Dallas facility from ASB Real Estate Investments, calling it a gateway to Latin America. The deal was signed in February of this year and adds 1.6 million square feet of space to Equinix’s existing portfolio, in addition to multiple diverse fibre entry points and more than 50 tenants, including networks, colocation providers and enterprises. Equinix said the purchase would help

Dallas: Major gateway to Latin America

strengthen its global platform while also offering the opportunity to expand in the Dallas market by building on existing underdeveloped capacity on land adjacent to the existing building. The new facility offers Equinix significant growth opportunities in Latin America through key terrestrial routes. “Dallas is historically a major gateway to Latin America, serving Mexico as well as central and South America,” said Bill Long, vice president of interconnection product management at Equinix. “The Infomart acquisition combines with our existing operations in Bogotá, Los Angeles, Miami, Rio de Janeiro and São Paolo to give us a more robust Latin American footprint of network and content providers looking to grow in the region. “It bolsters business opportunities for managed services and cloud services providers, which have high usage rates by Latin American enterprises. And it Capacity increases access to important Latin American financial ecosystems, including those built around the Brazilian and Mexican stock exchanges.”

HUAWEI WINS CONTRACT TO BUILD CHILE’S 2,800KM SUBSEA CABLE Huawei Marine has won a contract from the Chilean government to build its subsea cable connecting the far south of the country. It will partner with Chile’s Comunicación y Telefonía Rural (CTR) to build the Fiber Óptica Austral (FOA), a 2,800km connection from Puerto Montt to the Patagonian cities of Caleta Tortel and Punta Arenas through to Puerto Williams in the far south. Mike Constable, CEO of Huawei Marine, said: “The FOA cable will provide state-of-the-art connectivity to enhance the digital economy of the

southern Chile region.” The $100 million project will give access to all Chilean providers and telecommunications services to the 16Tbps cable system. Pamela Gidi, Chile’s vice minister of telecommunications, said the FOA project “will bring multiple benefits to Chile’s southern region”. CTR’s CEO, Patricio Morales, added that the new cable will connect to existing operators’ networks using 100Gbps transmission. The cable “will guarantee an adequate return on the capital expenditures made”, added Morales.

Chile’s Fiber Óptica Austral cable

ELETRONET PICKS TELIA CARRIER TO BOOST CONNECTIVITY IN BRAZIL Brazilian national service provider Eletronet has chosen Telia Carrier’s global fibre backbone to provide dedicated internet access to its Brazilian customers. The partnership will also give Eletronet access to Telia Carrier’s global network. The two companies say that growing

business demand for digital content is driving the increasing need for scalable high-performance in Brazil. “Eletronet has found a Tier 1 IP Transit provider of the highest quality in Telia Carrier,” said Anderson Mendes Jacopetti, chief technology officer at Eletronet. “Until now, Telia Carrier has

not participated in Brazil’s local ISP market and is excited to grow along with Eletronet. Telia Carrier is the perfect match to help us extend our network and service offerings in this region. Telia Carrier provides more than just IP Transit to Eletronet; it also provides technical and business support.” april/may 2018

latin america | 19

MEXICO SET TO BE FIRST TO USE 600MHZ BAND FOR 5G

he Federal Telecommunications Institute of Mexico (IFT), the Mexican telecoms regulator, has approved a plan to free up space in the 600MHz band to prepare for 5G mobile. The plan, which is being described as a global first, involves the relocation of 48 digital terrestrial television (DTT) channels using frequencies between 614MHz and 698MHz, freeing the spectrum for 5G services. The relocated channels will continue to operate below channel 37, which is in 608-614MHz range, a move that the IFT says is consistent with its work programme to reorganise the spectrum for radio and TV, contained within Mexico’s National Radioelectric Spectrum Program that came into force in November 2017. The IFT says that this plan has been adopted by other countries, such as the

US, Canada and New Zealand, and is supported by Colombia and the AsiaPacific Telecommunity. In addition to freeing up space for 5G, the IFT says that, by migrating DTT channels to lower frequencies, it also reduces costs for operators and minimises the deployment times for the channel change.

IFT: Allocates 614-698MHz for 5G

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SUSTAINABILITY CERTIFICATION FOR GLOBENET DATA CENTRE IN COLOMBIA Globenet’s data centre in Barranquilla, Colombia has been awarded the International Computer Room Experts Association Green Seal certification for sustainability. The news marks Globenet as one of only two data centres in Colombia with this certification. Commenting on the announcement, Eduardo Falzoni, CEO of GlobeNet, said: “Sustainability was an important aspect in the design and construction of our new Barranquilla data centre and continues to be a focus in our operations and maintenance of the facility as we strive to achieve maximum efficiency with the use of minimum energy resource. “Organisations all over the world are becoming more concerned about power usage and carbon footprint, and we are honoured to be acknowledged by ICREA’s Green Seal certification for our efforts to meet rigorous environment and energy management standards.”

Capacity

news analysis: mexico | 21

RED COMPARTIDA’S 4G WHOLESALE NETWORK STIRS UP MARKET T

he telecoms market in Mexico is about to see a major shift as Red Compartida – a nationwide wholesale wireless network – goes live. With a population of around 121 million, fixed line density in the central American country is stuck around the 18% mark and dominated by incumbent Telmex, which holds around a 62% share according to market research figures. Telmex is part of of América Móvil, which, along with Telcel, dominates the mobile market, and it is this sector that is seeing a massive shift, following the entry of AT&T Mexico after its acquisition of Nextel and Iusacell, and the development of Red Compartida. Red Compartida was the winning bid from Altán Redes to develop a shared network that will cover 92.2% of the population of Mexico using 4G LTE technology using the 700MHz spectrum band. The open-access wholesale network will be the largest of its kind, according to the Altán consortium. Eugenio Galdón, who has headed the Altán Consortium as chairman of strategic partner Multitel, said when it was announced: “Everyone in the consortium

capacitymedia.com

is rightfully proud at being entrusted with this project, and are fully committed to fulfil Red Compartida’s mission to close the digital gap and to provide efficient network access to all Mexicans.” Mexico decided to create Red Compartida in order to offer competition to the dominant América Móvil, controlled by businessman Carlos Slim. It beat competition from Rivada Networks, which was excluded from the bidding days before the decision was reached.

Growing data share of market Figures from Altán Redes show Mexico’s mobile revenues sat at around $15 billion Capacity in 2016, with 61% generated by voice and 39% from data. This grew slightly to $16 billion in 2017, with data share growing. This is predicted to grow further, with data share of recurring revenues predicted to be at 48% in 2018. Overall, the market is estimated to grow at 5%. Despite this, ARPU is expected to continue a steady decline, following international trends, where blended USD ARPU has declined by 47% from $28.50 to around $13.60 (estimated for 2020). Total ARPU in Mexico has gone from just

over $10 per user to $7.80, according to the figures from Ericsson. Put simply, Mexico’s mobile data penetration has significant room for growth, especially when compared to some other countries in the region. Data penetration sits at 61 per 100 inhabitants, compared with 73 in Colombia, 88 in Brazil, 93 in Argentina and 120 in Chile, according to IFT, the regulator. The launch of Red Compartida is aimed at increasing competition in the market, where América Móvil is the primary wholesale provider, and at unlocking the potential of new MVNOs. In 2015 there were just two MVNOs in Mexico, compared with a global average of 14, according to Ovum. With this growth in data comes new opportunities. Beyond AT&T’s investment in Mexico, we’ve seen the likes of Equinix recently discuss opportunities in Latin America after it completed its $800 million deal to buy Infomart Dallas, with Mexico the gateway for that data. Mexico City – the location of Capacity Media’s Mexico Connect 2018 event in June – was earlier this year announced as one of the locations for a new Telefónica’s virtualisation hub, which will support network functions for its wholesale arm. It launched seven initially, and Mexico City was one of the first to go live. Virtualisation is already an essential part of Telefónica’s networks, supporting the construction of a more flexible, agile and scalable network through the evolution towards the softwarisation of the different elements and layers of the network, Telefónica said. “Moving from vertical architectures built over many networks and technologies with an unnecessary geographical spread, to simple and scalable architecture with shared infrastructure, Telefónica International Wholesale Services can deliver the best quality to its customers. “This investment means Telefónica offers a fully virtualised network system, which enables its customers to access a virtualised platform, available worldwide, in order to extend their own infrastructure and products globally.”

Capacity

middle east | 25

OMANTEL WHOLESALE ANNOUNCES PARTNERSHIP WITH DE-CIX

mantel Wholesale has struck a partnership with German internet exchange DE-CIX, becoming its first partner in the Gulf to provide direct access to seven DE-CIX Exchanges across Europe and the US. Customers that connect to Omantel Wholesale’s global network can use DE-CIX Exchanges to peer, interconnect, and optimise cloud and content for end users. The partnership includes connectivity to DE-CIX Exchanges in Marseille and Frankfurt, as well as Istanbul, Hamburg, Munich, Dusseldorf, and New York through DE-CIX’s GlobePEER Remote service. The partnership is part of Omantel Wholesale’s global strategy for enabling transformation and innovation with ultra-low latency networking.

Omantel Wholesale is a member of the AAE-1 cable consortium and offers connectivity from South East Asia to Europe via the Middle East. Its geographic location and more than 20 Subsea Cable relationships enable Omantel Wholesale to create solutions that directly impact upon how its customers and their customers experience Cloud, Content, and their applications and services. “Growth in Cloud and Content is driving demand for enhanced quality of experience for end users around the world,” said Sohail Qadir, vice president at Omantel Wholesale.”This partnership will enable Service Providers to simplify how they connect to peering Exchanges and creating a ‘one-stop shop’ for customers using the Asia Africa Europe-1 (AAE-1) cable system.”

Sohail Qadir: Cloud and content driving global demand

Capacity MIDDLE EAST RETELIT UNVEILS NEW ROUTES AT CAPACITY Retelit announced an expansion of its network at Capacity Middle East unveiling 160Gbps of new capacity in Asia and in Europe. The new routes are meant to support those already offered by the Italian carrier through its operative capacity on the

Federico Protto: Italy is becoming the meeting point for data traffic flows

25,000km AAE-1 subsea cable, which spans three continents, running from Marseille to Hong Kong. Retelit said it has now opened up new and diversified routes for the Mediterranean and the Far East, including a new direct connection between Singapore and Hong Kong. It also includes a ring between Sicily and Greece and a diverse link from Italy to the Far East including a direct connection between Palermo and Singapore. Retelit’s said its increasingly comprehensive international presence will permit businesses, operators and OTT’s to connect with the main European, Asian and Middle Eastern cities in a safe and redundant way because of solutions which include secure restoration and backup of data between the sections reached.

“Our infrastructure and our connections on the three continents reached connects Europe, through Southern Italy, with the areas in the world of greatest demographic, industrial and technological development,” stated Federico Protto, chief executive officer and general manager of Retelit. “Italy is increasingly a strategic meeting point for data traffic flows from the Far East, the Middle East and Africa to Europe, and vice versa. The true challenge is to make these hubs attractive, with returns generated for the entire country, by creating infrastructural and commercial conditions which support investment by those transporting massive quantities of content and Internet traffic, from major International Carriers to the so-called OTT’s (Over the Tops).”

TELSTRA EXPANDS PROGRAMMABLE NETWORK WITH DUBAI POP Telstra is set to boost its Middle East business by announcing the expansion of its Programmable Network to a new point of presence (PoP) in Dubai. The new PoP will offer flexible and dynamic access to Telstra’s high bandwidth, low latency and secure network to support businesses operating in the region, Telstra said. The Telstra Programmable Network is capacitymedia.com

built on software-defined networking and offers businesses a range of enterprise network services. It also provides consumption-based pricing and secure access to multiple cloud services through a single user interface. In addition, businesses can also leverage SD-WAN as a virtual solution. The service is due to go live by the end of March. “The Middle East and North Africa

region is emerging as an economic and technological powerhouse with companies turning to cloud-driven business models to accelerate innovation and scale. By 2021, the region’s digital transformation spending is expected to top US$38 billion and the region’s enterprise application software market is already estimated to be worth US$719.4 million,” said Telstra MD for EMEA Tom Homer.

26 | middle east

DU, EPSILON ENHANCE GLOBAL DATA CENTRE CONNECTIVITY FROM THE UAE

AE’s du announced during Capacity Middle East 2018 that it has extended its existing partnership with Epsilon to offer end-to-end connectivity between the UAE and major data centres in the US, Europe and Asia. Customers in du’s data centre can rapidly connect to the world’s data centre and cloud hubs with on-demand connectivity Combining the strengths of du and Epsilon will create a simple, effective and seamless ‘one stop shop’ for capacity and backhaul services, allowing cost-effective access to datamena - an EITC entity, and the UAE internet exchange (UAE-IX) from global data centres. “This commercial partnership seamlessly connects datamena in the UAE to all major data centres in the USA, Europe and Asia. Epsilon has over 500 carriers connected to its network who can now manage their connectivity requirements to

datamena via Epsilon’s online provisioning portal. This will significantly reduce the current lead time to provision capacities and further enhance the customer experience in datamena,” said Ananda Bose, chief wholesale & corporate affairs officer, Emirates Integrated Telecommunications Company.

du partners with Epsilon to offer 10G network connectivity

Capacity

Carriers, enterprises, content and cloud providers will be able to take advantage of the Infiny by Epsilon on-demand connectivity platform, which allows click-to-connect provisioning of Ethernet speeds from 100M up to 5G. In addition, Epsilon will also provide STM1, STM4 & STM16 capacity. As part of the agreement, Epsilon will act as the global sales channel for the partnership. In 2016, Epsilon deployed its infrastructure in EITC’s datamena colocation facility to bring its services closer to its partners in the Middle East. “du’s colocation facility, subsea and terrestrial capacities together with Epsilon’s Infiny platform and network reach, will allow us to offer enterprises, carriers, cloud & content providers the simplest way to connect sub 10G network services to the Middle East,” said Jerzy Szlosarek, CEO at Epsilon.

executive interview: hany fahmy ali | 27

DU BUILDS THE ECOSYSTEM, IT DOSEN'T COMPETE Smart cities, 5G trials and a thriving cloud-based ecosystem, Hany Fahmy Ali, VP of enterprise at du, talks to Natalie Bannerman about the digital revolution in the UAE

ore and more global enterprises view the UAE as the next big hub for cloud and connectivity services and as a result are quickly establishing a presence in the area. As the region undergoes a major digital transformation, Hany Fahmy Ali, executive vice president of enterprise business at du, talks us through a number of trends that are driving this migration of business to the Middle East. According to Ali this digital transition happening in the region is being driven by three factors. The first is the trend towards digitisation. “All of the industry especially in the Middle East, given that we have a high penetration of 4G phones, are looking to digitise its business processes,” explains Ali. The second he says is advent of 5G. “5G is coming next year,” says Ali. “We’re already running trials for it here at du. 5G opens up a whole new spectrum and allows us to provide

ability to have instant access to content, as well as the ability to manage and share content at scale, according to Ali is something that very few telcos in the region other than du can provide. “We are uniquely positioned to provide content across the region, because we have an end-to-end offering,” he says. "So if you are looking for a presence in the region that allows you to have distributed cloud content, the Internet or fibre-to-thehome we are probably the only provider that can give you a one stop shop of Capacity comprehensive solutions that allow you reach multiple audiences in multiple areas of the region.” Ali says that du has a number of partnerships with OTT content providers like Netflix and OSN, but proving that global content players are understand the need for regional presence. “I think what’s happening now is that you have the large cloud players understanding that they cannot serve the entire world from one

We think the correct approach is to set up the proper ecosystem for these large players to come and partner with us” Hany Fahmy Ali, executive vice president of enterprise business, du super-fast data, equivalent to broadband fixed-line data speeds as well as a whole new world of applications.” Not least of all is the cloud and specifically its impact on enterprise. “We see a number of global cloud players setting up a presence in the UAE,” continues Ali. “By having these cloud services with cloud implementation set up locally in the region, it opens up a whole new spectrum of customers to access and use the cloud. At the same time we solve the problem of latency and of local government.” Another area that is influencing the adoption of the cloud is content. The capacitymedia.com

location, in one country. So that’s why you see the likes of Amazon set up data centres in the region, after buying Souq last year (an online marketplace in the region), Microsoft just recently announced that it is setting up cloud nodes here in the UAE and Oracle has done the same.” du's datamena recently partnered with OSN on its trials of Microsoft Azure Expressroute. The partnership will enable OSN to extend its on-premises network into the Microsoft cloud running over a private connection powered by datamena, Globally we are seeing faster growth from newer revenue streams like data centres and managed services and

although du is active in these higher growth areas, Ali wants to make it clear that connectivity an area that the company is still very active in. “Yes connectivity as an area has slowed down but I have to clarify a misconception that connectivity is not growing. As businesses continue to transform into digital enterprises, the demand for connectivity remains strong. “ As for data centres and managed services, he says that the strategy is to invest in managed services, especially those services that leverage connectivity. Ali describes data centres, managed security and software-as-a-service as some of these potential areas but du’s approach to this type of investment is that they “don’t want to reinvent the wheel and compete with them.” “So I’m not going to go out to build an ecommerce website to compete with Amazon,” explains Ali. “Or build a cloud platform to compete with Microsoft Azure. We think the correct approach is to set up the proper ecosystem for these large players to come and partner with us.” du has been active in transformation projects throughout the Middle East, having recently partnered with the likes of Vodafone, Equinix, Cisco and leading edge security companies like DarkMatter and McAfee. Most notably du is the main partner with the local government on its smart city initiative. "Our responsibility in this project is to make sure we set up a proper ecosystem that will ensure that this initiative is successful. So we’re very excited about it because it’s a major building block required for a successful smart city deployment," says Ali. Beyond this, on the enterprise side Ali says du is focussed on two things for the foreseeable future. The first is providing a world class customer experience, as that is a “real differentiator when it comes to doing business with enterprises” and as the trends have indicated, the second is the digitisation of all of du’s services.

28 | africa

EPSILON AND WIOCC INK ON-DEMAND CONNECTIVITY PARTNERSHIP

psilon has partnered with Africa’s carriers’ carrier WIOCC to deploy its Infiny by Epsilon on-demand connectivity platform. The partnership provides WIOCC with on-demand connectivity to major global financial and communications hubs and extends the reach of the Infiny platform into sub-Saharan Africa for the first time. Infiny by Epsilon’s on-demand connectivity platform will be deployed in Johannesburg and Cape Town, giving African service providers rapid access to cloud-centric networking and assisting ISPs in extending services into Africa. Using Infiny, customers are able to access any of Epsilon’s 90+ PoPs globally and can direct connectivity to world-leading cloud and internet exchange providers. The partnership supports the growing adoption of cloud-based applications and services across the African continent, enabling service providers to quickly and seamlessly establish connectivity between sub-Saharan Africa and global communications hubs and peering points. “WIOCC is a unique organisation and we are proud to be supporting it as it delivers

on-demand connectivity across Africa. Its customers and end users will benefit from faster access to content and the Cloud as well as optimised application performance,” said Jerzy Szlosarek, CEO at Epsilon. “We are serving truly global demand for on-demand connectivity. Our global interconnect fabric has been developed over the last 15 years to provide consistent quality of service and experience no matter where our partners are located.” WIOCC’s diverse, high-redundancy

Capacity Chris Wood: Expanding capabilities

IOX CABLE PARTNERS WITH ANGOLA CABLES IOX Cable and Angola Cables have signed a joint provisioning agreement aimed at developing and enhancing their respective network capabilities and services across Africa, the Americas, Europe and India. IOX claims it will consolidate its position by extending its network to Europe, South America and North America through cable systems operated by Angola Cables. Antonio Nunes, CEO of Angola Cables, said: “The sharing of services between the complementing routing of the IOX Cable System, SACS and Monet will connect

Antonio Nunes: Fuelling expansion

customers and businesses across Asia, Africa and the Americas. This is a win-win partnership as it fuels expansion and growth for us both, more importantly though, it provides an information bridge that has the potential to accelerate and stimulate socio-economic investment and development between these important geographies.” Angola Cables developed South Atlantic Cable System (SACS), the first subsea cable in the southern hemisphere directly connecting Brazil to Africa, which is due to be ready for service by mid-2018. As part of this initiative, IOX Cable and Angola Cables said they plan to collaborate on many aspects of network services and drive infrastructure development. Arunachalam Kandasamy, CEO of IOX Cable, said this deal is “strategic, as it’s an investment in the future of connectivity and infrastructure”. He added: “IOX is proud to be associated with Angola Cables on this significant project which will better serve the growth of data communications and cloud computing requirements. This is a significant achievement for both companies and for the telecoms industry.”

network, which brings together 55,000km of terrestrial fibre in Africa and investments in more than 60,000km of international submarine cable – interconnects over 500 locations across more than 30 African countries. This infrastructure underpins WIOCC’s ability to connect its customers to key financial and commercial centres within Africa and around the world. “Partnering with Epsilon further expands our capabilities, offering our customers more flexibility in accessing global hubs,” added Chris Wood, CEO at WIOCC. “Epsilon’s Infiny platform makes it simple to connect and grow our presence globally and improves our customers’ ability to quickly roll out new applications and services in Africa.” He added: “The African market wants network services that can support the cloud, matching the speed and accessibility of other ICT solutions. “Infiny helps us to deliver flexible and cloud-centric networking to African and international customers. We see this as the first step in deploying the platform much more widely across Africa.”

MTN CONSIDERING IPO FOR NIGERIAN ARM, REPORTS CLAIM MTN is looking at options to list its Nigerian unit as part of a $5.2 billion initial public offering (IPO) of shares, according to reports. Reuters claims to have seen a pre-IPO presentation that will see MTN launch a debut initial public offering on the Lagos bourse in the hope of raising at least $400 million in funds, which will help the telco reduce debt. MTN gained approval from shareholders and is now preparing a file application to the Securities and Exchange Commission to launch the IPO. The funds will then be used to pay preference shareholders. It is the biggest operator in the African country. In its Q2 2017 results, it had 53 million subscribers in Nigeria, making it MTN’s biggest market. In terms of revenue, it made 18bn rand in the first half of 2017 in Nigeria, down 37% on the previous year. MTN would use the proceeds of the share sale to redeem preference shares issued to existing investors who bought the shares 11 years ago and also cut its dollar exposure, Reuters said, although MTN declined to comment on the report. april/may 2018

africa | 29

HELIOS TOWERS CANCELS £2BN LONDON IPO PLAN

BRINGCOM GAINS E-ACCESS AND E-LINE MEF 2.0 CERTIFICATION

ringCom has achieved E-Access and E-Line MEF CE 2.0 certification in east Africa and London. MEF CE 2.0 E-Access and E-Line are two standardised carrier-class Ethernet types of services, as defined by MEF, the governing body for Carrier Ethernet (CE). “With BringCom obtaining MEF CE 2.0 Certification, customers are guaranteed to receive Standardised Carrier Ethernet services of high quality and performance in East Africa. This certification would not have been possible without the support of our dedicated partners Djibouti Telecom and Datanet in East Africa,” said Fabrice Langreney, president and CEO of BringCom. BringCom hubs supporting E-Access and E-Line services are located in

Djibouti, Kampala and Nairobi in Africa and London in Europe. Standardised CE delivers businessgrade and carrier-class connectivity services with certified quality of service to connect office headquarters, branches, data centres and other locations on a metropolitan, regional, national and global scale, integrating all business traffic applications (voice, data, video and internet) into a single network. Langreney added: “BringCom’s MEF certification in the east African region is the first step towards establishing BringCom’s next-generation SDN/NFV platform in Africa that will improve our ability to support international carriers’ connectivity within Africa and competitively service the requirements of corporate customers in the region.”

Helios Towers, an independent tower company in Africa, has abandoned its plans to launch an initial public offering (IPO) in London, which was expected to value the business at around £2 billion ($2.8bn). Helios Towers, which has established one of Africa’s most extensive tower networks with more than 6,500 towers in four markets, cancelled the float on the London Stock Exchange but gave no reason other than “shareholders have decided not to proceed with an initial public offering of the company’s shares at the current time”. Helios Towers had announced its intention to float on 2 March and had been “met with considerable institutional investor interest, endorsing its business model, strategy and growth prospects,” a company statement read. “The company remains committed to executing its growth strategy and reiterates its confidence with respect to the outlook for the business.”

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30 | SPONSORED STATEMENT

MANY VOICES, ONE GROUP THE TELEKOM AUSTRIA GROUP BECOMES THE A1 TELEKOM AUSTRIA GROUP n autumn 2017 the Telekom Austria Group announced its A1 Telekom Austria Group keeps up with the digital age decision to roll out A1 – its successful brand in the Austrian As the growing requirements of our customers within the market – across all the Group’s operations. This move is the next years need accurate planning of new technologies within latest step in pursuit of the Group’s one brand strategy and will be implemented gradually and depending on local circumstances. the worldwide network infrastructure we are constantly modernizing our backbone to ensure maximum performance The rebranding decision was based on an extensive analysis and reliability. This is why A1 Telekom Austria Group of the market environment and the branding landscape that Wholesale decided to expand its coverage this year by setting identified the distinct potential and strengths of A1 as a powerful up a new POP in Hong Kong. Furthermore, nearly all A1 international brand covering all aspects of convergence, ICT and Telekom Austria Group POPs are now 100G ready. Moreover, Wholesale - mobile, voice, satellite, data, roaming and cloud our unmanaged MPLS solution is available in major parts of solutions as well as OTT services. The legal entity Telekom the world and includes all the benefits of a Layer 3 VPN, while Austria AG is not affected by the rebranding as the A1 Telekom at the same time offering you full access to the CPE so you Austria Group and remains unchanged. can tailor the service to your customers’ needs. Our portfolio The Group’s one brand strategy is a convincing example includes a range of access technologies and router models, of how synergy effects can be facilitated and existing assets classes of service as well as multiple VPNs. and capabilities can be optimally leveraged across the Group The A1 Telekom Austria Group has also increased its coverage - while exploring the emerging potential and opportunities of within the footprint by joining ngena – the Next Generation digitalization. Talking about the activities to implement the Enterprise Network Alliance – as a new alliance partner. By Group’s brand strategy and establish a catchy, unified brand Capacity sharing the partners’ existing resources on a global scale we can image, Alejandro Plater, CEO and COO of the A1 Telekom meet our customers’ ever-more demanding requirements and Austria Group, said: “We are accelerating our exertions to compete with the largest international players. The combination implement a powerful unified market presence for all our of SDN-technology, full automation and the unique sharing operations and to improve our international visibility. This will business model of ngena is unmatched. It goes above and support the efficiency and growth targets of the A1 Telekom beyond other SD-WAN models. Austria Group and its subsidiary companies by enabling them to act even more effectively as ‘One Company’”. “Following the rebranding as the A1 Telekom Austria Group, the former international carrier Telekom Austria Group Wholesale will Learn more about A1 Telekom Austria Group appear in the new design as A1 Wholesale, quasi the old team www.a1.group/wholesale with a new brand.”, said Franz Bader, Director Wholesale.

Paving the way to your worldwide connection.

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32 |

Pébereau becomes the

great

consolidator After little more than a year out of the industry, Alexandre Pébereau has a new Capacity company that is buying iBasis and Altice’s wholesale business. He’s looking for more, he tells Alan Burkitt-Gray

lexandre Pébereau is back in the wholesale telecoms industry after a gap of – blink and you’ll have missed it – just a little over a year since he left Orange. He came storming back into the business in March 2018 by announcing two deals within a few days to acquire two substantial international businesses. First, his new company, Tofane Global, will buy KPN’s wholesale operation iBasis. Then, the Altice Group, which owns French mobile operator SFR and the former Portugal Telecom, said that Tofane was the sole bidder for its wholesale voice carrier business in France, Portugal and the Dominican Republic. No price on either of them, but Pébereau says the two deals will push Tofane to a leadership position in the wholesale business. Now he’s looking for more acquisitions for Tofane, which is named after a mountain range in the north-east of Italy. “This industry needs to consolidate,” he says. “It needs scale; it needs to be more

and more global. It is a very competitive sector and at the same time for large carriers – especially European or North American carriers – it is not the core of their activity.” He means that such wholesale operations are “not the focus of interest” of their parents, yet have to compete on the global wholesale market with the rest of the industry. “It is important to have very competitive costs.” Hence the opportunity for Tofane. “I really wanted to lead this consolidation and I decided to go and launch Tofane – to create an independent carrier in voice to start with, but also to work in mobile services.” He has teamed up with Patrick George, a former BICS, Syniverse and Orange International Carrier executive, who says: “iBasis has turned around its mobile data strategy,” he says. “Now on 4G roaming they are one of the top players in the world.” This was one of the key factors when Tofane started discussions with KPN about iBasis. “It’s not only good on voice – but also on mobile data, they’re positioned very well,” explains George.

It’s clear from the conversation that Pébereau and George – described as a senior adviser – have been talking about ideas for some time. When did they start discussions? “Last year,” says Pébereau. “Clearly we both saw the opportunity of coming back to the market.” George adds: “We met each other as competitors in the early 2000s and then I had the pleasure of working with Alexandre in Orange to help him strengthen the mobile offer of Orange – and from that period on we stayed in contact and Alexandre shared his plan.” The wholesale business is “non-core for most carriers”, grumbles Pébereau. “The industry is ready for consolidation but with fully independent players instead of large groups.” Scale is important, but he sees an increased willingness among “all the telecoms players” to look for ways of “carving out” their wholesale business. “I was able to see that everybody was looking for consolidation,” he says. Companies wanted to “be a consolidator” or wanted to let someone else look after their wholesale business. april/may 2018

the big interview: alexandre pébereau | 33

1988

Head of planning and controlling, Nu-Swift (building maintenance), New York

1991

Senior consultant, Capgemini Consulting, Paris

1992

General manager, Delmas Containers, then Rivaud group diversification, then electric vehicle project, all in Bolloré group

2001

Managing director and CFO, Maroc Telecom

2005

SVP, cash-flow generation, Orange

2009

CEO, Orange International Carriers

2017

CEO, Tofane Global

$2.25 and the dispute went to court in the US. Eventually KPN paid $3 a share, nearly twice its original offer. Pébereau left Orange International Carriers in 2016 and set up Tofane the following year. “I found some investors to come with me,” he says, “and we went to several boardrooms to propose to carve out their business.” But “it was not on the priority list” of most of them. However, KPN had initiated a formal bidding process “and wanted only industry players” to bid for iBasis. “They wanted long-term commitments to contribute to the consolidation and the digital transformation of iBasis – to transform iBasis for the next digitisation era.” With that deal done, “KPN is going to stand by iBasis and Tofane Global in the long term,” he says. “We have a partnership contract that goes way beyond the strategic plan – it is important to iBasis that the former parent company should stand by its side.” Who are the investors behind Tofane?

KPN is going to stand by Capacity iBasis and Tofane Global in the long term” Alexandre Pébereau, CEO, Tofane

The iBasis story KPN led the way by asking for tenders for iBasis as part of its “strategy of simplification and focusing on the Netherlands”, says Pébereau. “For them it makes sense to outsource voice or to sell the department.” KPN decided on its strategy a year ago, he notes. But hasn’t iBasis shown falling revenues? Yes, he agrees, but that’s a direct consequence of KPN’s selling off operations outside the Netherlands. “They [iBasis] have never lost money and they still make a lot of money,” he says. “KPN used to be in Germany, Belgium, France, Spain and the UK with an MVNO.” Within “less than three years they concentrated on the Netherlands”, he adds. That drove iBasis’s sales down from €1.4 billion to €700 million, “not because of the performance of iBasis but really a reflection of the parent company’s strategy”. KPN owned 56% of iBasis until 2009, when the Netherlands company bid for the other 44%. It offered $48 million, but iBasis said that this was “wholly inadequate”. KPN increased its offer from $1.55 a share to capacitymedia.com

“The first funds are my own funds. I put my own money in and the other partners are following. The others are minority partners and they share the strategic vision that we have, that this industry is undervalued because of the voice decline – but the value in the international industry is growing.” Tofane’s website lists the company’s partners: the investment vehicle of the SCOR group, a reinsurer; Ciclad, a private equity investment firm focused on medium-sized companies, including telecoms companies; and Trocadero Capital Partners, a private equity investor focusing on small and mid-market European companies. Another partner is Les Comptoirs, a French integrated consulting agency. Pébereau himself is very well connected in the French business and banking world – and not just from his time at Orange. Earlier in his career he spent 10 years with various elements of the Bolloré group, a transport and logistics company whose current CEO is Vincent Bolloré – also chairman of the supervisory board of Vivendi, the largest shareholder in Telecom Italia (TIM).

Future plans The younger Pébereau says his own task now is a question of making the value proposition of Tofane clear to investors. “Closing the two acquisitions in the same week is a very good sign for us,” he says. “We are able to attract new investors into our own industry, in our own right, not just as part of something in the international communications industry.” iBasis brings all the services of mobile data, including Diameter, IPX and GRX as well as wholesale voice. Altice, on the other hand, is just voice. But those services will be built on the iBasis platform. “As we are showing with the Altice opportunity, it is a great platform to build upon. iBasis is the cornerstone of our strategy.” Tofane’s second opportunity arrives when Altice, having rapidly built up interests on both sides of the Atlantic, including US-based broadband cable operators, decided it was time to backtrack. “Altice decided that they would really focus on their core business and that international wholesale was not core business for Altice,” says Pébereau. “For them it was important to demonstrate that they could execute a strategy quickly. They ran a very competitive bidding process, limited to industry players.” The process started in October 2017, he adds. The deal howver “is not signed yet”. But the previous iBasis deal means the for Altice “they will be at the very leading edge of the technology for 4G and then 5G”. Now, before work starts on future bids, “we have to integrate the two companies. They are the partners of 800 carriers around the world.” The Altice wholesale deal brings relationships with SFR and the incumbent operator of Portugal. Tofane’s investors “became really interested the moment we were able to show them with the iBasis process that major players such as KPN were and are in the process of carving out their international services”, he says. “The KPN process was the proof of the pudding. They [the investors] have come for the long run. They have an appetite to grow with us for more operations.” How much are they putting in? How much is Tofane spending on its two acquisitions so far. “The considerations for those two operations are confidential. I can’t share that with you. What we can say is that for future operations we have enough money to finance them – it’s not an issue,” he says. And will there be more? “Some investors are calling us and saying they are ready to finance the next operations. There is money available for transformation and consolidation. It’s about having a clear business model with a track record.”

34 |

BLOCKCHAIN: overhyped or must-have? Capacity

WILL BLOCKCHAIN’S DISTRIBUTED LEDGER TECHNOLOGY UNLOCK NEW CARRIER OPERATIONAL DYNAMISM AND REVENUE OPPORTUNITIES? SUE TABBITT REPORTS

pen just about any publication at the moment and, if it’s not artificial intelligence, it’s blockchain dominating the headlines, heralded as the next big thing that’s going to change the way the world works. But will it – and what, specifically, might it mean for wholesale telcos? Certainly it’s something carriers, in common with many other organisations, are looking into. On the one hand it promises to open up the possibility of managing transactions very differently; on the other, blockchain’s premise potentially opens up new service and revenue opportunities. But how much of what’s being promised is hype, where might the reality settle, and what are the more innovative options that blue-sky visionaries should keep a look-out for? First, it’s worth setting out some definitions. Originally associated with bitcoin/cryptocurrency, blockchain technology provides a distributed ledger mechanism that enables secure transactions – not just financial ones – to be

agreed and processed along a supply chain, or across an ecosystem, without the need to pass through an official central settlement hub. Distributed ledgers use independent computer nodes to capture, share and synchronise transactions in their respective electronic ledgers, removing the need for a single, centralised ledger or data store. The idea of managing payment settlements or other transactions such as contractual agreements this way means that it’s potentially faster, more efficient and dynamic – allowing more real-time stuff to happen and paving the way for transactions to be highly individualised.

Granular billing Transactions could be for the tiniest amounts too, because there isn’t a minimum charge for processing them, which means the proposition ought to lend itself well to real-time service personalisation and more granular billing. The potential interest to telcos is substantial. Blockchains rely entirely on

networks to exist, because that’s where everything happens. Secondly, seamless telco network-based services involve complex handovers, agreements and financial settlements between service providers as traffic is carried between destinations. As that traffic becomes richer, more diverse in nature and more sensitive to service quality, the measures and controls around what happens to it and their timeliness become more critical. Additionally, telco services are becoming increasingly virtualised and cloud-based, placing greater emphasis on clever, software-based automation of service management and monitoring and discrete, real-time billing. Finally, the potential for blockchainbased operational improvements and value-added service innovation has attracted the attention of enterprise customers, which are now looking for suitable technology and service partners to help them harness the opportunities and guide them through any risks. So, looked at from just about any april/may 2018

Image: iStock

cover story: blockchain | 35

direction, blockchain or the broader category of distributed ledger technology, of which blockchain is just one variant, deserves board-level attention from telco carriers. For Ravi Kumar Palepu, VP and global head of telco solutions at IT consultancy Virtusa, the possibilities are exciting for carriers, with operational potential spanning contract management, capacity planning, identity management, root cause analysis, network, device and infrastructure management, quality of service and performance management. Immediate opportunities include simplifying and providing greater visibility in inter-carrier relationships. Here, blockchains offer greater visibility of what’s going on across a service ecosystem, he says – not only offering new options for billing management, but also leaving individual parties with no place to hide if something goes wrong for customers. “Blockchain is particularly useful in contexts where there is a need to manage multiple partners, so it is a perfect fit for inter-carrier contract management and dispute resolution as it provides transparency between customers, the carrier, their partners and suppliers,” Palepu explains. One of the challenges for wholesale carriers is that they do not own the entire customer journey, he notes. Where there is an agreement to provide services to a global bank, for instance, the lead carrier is likely to rely on other service providers in at least some countries – a complex scenario to manage, involving multiple agreements and SLAs. In the event of a customer complaint, the wholesale carrier must first confirm whether any service issues have occurred, if these breach SLAs, and which partner is responsible. “Traditionally, the carrier would rely on third-party data feeds to build up this picture,” Palepu notes. “But this can be very time-consuming and often incomplete, leading to inter-carrier disputes and irate customers. A breach of SLA can cost the carrier hundreds of millions of pounds, so this information black hole is a huge business risk.” Blockchain brings transparency to the customer-carrier-partner-supplier ecosystem by enabling all parties to contribute and share information, Palepu explains. “Whether it’s a network engagement, or capacitymedia.com

part of the move away from expensive, monolithic, proprietary back-office systems, and as telcos strive for an end-to-end view of customers, and a more dynamic approach to billing. Blockchain could certainly help with this, “but it will be a while,” he says. Virtusa’s Palepu agrees. “Blockchain is a foundational technology; it’s not something you can quickly switch in,” he says. “Carriers have incredibly complex network infrastructures, so making a change like this takes time and planning. There are a number of considerations that need to be taken into account – such as scalability, security and costs – before a service provider can take the leap. So, while blockchain use is tried and tested in banking and insurance, carriers are rightly cautious about taking the plunge and have not adopted the technology fully at this stage. However, we are seeing more and more proofs-of-concept taking place, so I expect this to start to change as theory moves into reality.” One such proof-of-concept, by PCCW Global, the international operating division of Hong Kong-based telecom giant HKT, and UK telecoms/data centre company Colt Technology Capacity Services, in collaboration with Clear, a blockchain start-up company, has shown that it is possible to reduce inter-carrier Ravi Kumar Palepu, VP & global head of telco solutions, Virtusa settlement time from hundreds of man-hours per month to less than a minute using blockchain technology. officer at EdgeConneX, a specialist But it’s important not to get too infrastructure provider which helps carried away, as there are issues and deliver a better content experience for end users, says: “Very soon, International challenges that need to be overcome before telcos can start reaping the many Telecoms Week will take place in potential benefits of blockchain/ Chicago – an event that historically saw distributed ledger-based opportunities. representatives of US telco organisations One of the concerns around blockchains turn up with boxes of computer is security, especially given that telcos are printouts: logs of all of the call minutes custodians of vast quantities of sensitive they’d handled and details of who owed personal data about customers and their each other what. With blockchain, all of activities. With the new General Data this can be reconciled instantaneously.” Protection Regulation coming into play in On the brink EU countries from May, wholesalers will If he is reserved in his enthusiasm it is not want to gamble their reputations if only because of the work that needs to be there is any doubt about information done so that telcos can exploit the falling into the wrong hands or straying potential of blockchain technology. beyond EU borders. Although blockchains “We’re on the brink of something really are supposed to be inherently secure, in a exciting, but there is a lot to sort out cryptocurrency context there have been first,” he says. “Certainly blockchain is a high-profile breaches. key enabler, but a lot of things need to be Lawson-Shanks thinks telcos will create lined up for everything to fall into place. their own distributed ledgers within their Lawson-Shanks believes that early own firewalls, to minimise their exposure. movement towards blockchain-style “They’ll do everything within their own mechanisms is happening in pockets – as walled garden to fulfil the requirements billing or operational support, each partner, supplier and customer involved in that customer engagement can feed their respective information into the blockchain.” He adds: “As blockchain is a transparent distributed leger, each party can update their thread in real-time with agreed information and only have to worry about their piece of the puzzle. The carrier can then pull together all this data and apply analytics to derive meaningful insights.” One obvious result is an end to buck-passing, boosting customer service. “Everything is right there in plain sight,” Palepu says. “This visibility also enables carriers to identify and fix problems more quickly, so they are more likely to stay within the terms of their SLA. This ultimately would help telco wholesalers to offer better service and connectivity than ever before.” Having greater clarity and the ability to resolve inter-party dealings more efficiently and accurately also offers telcos a chance to manage their operations in a more streamlined and dynamic way. Phill Lawson-Shanks, chief innovation

Blockchain is a foundational technology; it’s not something you can quickly switch in”

36 | cover story: blockchain

of governing bodies around data handling and ensure everything is traceable and auditable,” he says. Yet, carriers will need to be more inclusive than not if they want to maximise the commercial potential blockchain enables – so there is a balance to be struck between security and openness. Ed Finegold, director of content strategy at Netcracker Technology, a specialist in OSS/BSS and network virtualisation, says: “One of the core tenets for blockchains is that they are meant to safely facilitate trading partner relationships in environments where many of the parties don’t necessarily know or trust one another. So, because the wholesale side of the business is growing and changing to create more

moved and looked at where.” Of potential additional revenue opportunities, Lawson-Shanks sees blockchain paving the way for telcos to act as the conduit and customer owner for all sorts of innovative microservices, such as mobile phone-based banking and micropayments in markets such as Africa, or validating access to secure patient medical records. “And that’s before you even get into IoT opportunities such as smart homes and connected cars,” he says. “For all of these emerging applications, there’s a huge monitoring and measuring requirement. Using blockchain, carriers can distance themselves from the race to the bottom on pricing for voice minutes or data plans. This is a chance to rise above the crowd and offer something unique.” Netcracker’s Finegold picks up on the

Distributed ledger technology may be slow, but it can be trusted by parties that do not trust each other”

Capacity John Wilmes, director of IoE projects, TM Forum partner-driven services and mash-ups, it could make sense for service providers to organise around the idea that all trading partners in a partner ecosystem join and belong to your blockchain.” Reservations and challenges aside, EdgeConneX’s Lawson-Shanks speculates that, in five years, the industry could look back with amazement that anyone questioned blockchain’s potential. “We can’t be sure when, but it will become commonplace,” he says. Beyond operational and customer service advantages, Lawson-Shanks envisages blockchain/distributed ledger facilities helping carriers to exploit and manage rich media content opportunities. “A lot of the traffic being passed across networks is video and other rich media, from Facebook, YouTube, Netflix and the like, and it’s no coincidence that telcos are buying content companies to get access to their catalogues,” he says. “But telcos need to know who’s using what and when, and blockchain is the perfect tool to monitor that. “Once 5G is a reality and we have ubiquity of connectivity, everyone will be a broadcaster. If you’re the carrier of that content, you’ll have an interesting degree of responsibility – especially in the wake of the recent Facebook scandal over data sharing. So carriers will need good insight into what’s being said, what’s being

potential for blockchain in digital identity management. “If being a trusted digital identity broker is still something service providers would like to achieve, applying blockchain could make great sense because it can create the concept of ownership of one’s digital identity in a way that is lacking in the market now.” Joanne Frears, a solicitor at law firm Lionshead and an advisor on the legal aspects of blockchain, agrees that digital identity management is one of many lateral routes large operators could take with the technology if they have vision. “As early adopters and rapid accelerators of technology, customers already trust telcos to provide safe access to systems,” she says. “There is scope to provide better transparency and is it an easy step for telcos to add blockchain’s self-certification of accuracy to their service offering.”

Ridiculous use cases But John Wilmes, director of IoE projects at TM Forum, warns against thinking that distributed ledger technologies including blockchain offers an automatic passport to future fortune. “Distributed ledger technology (DLT) is not a panacea,” he says. “It currently suffers from the ‘hammer problem’ – that is: ‘I have a hammer and everything looks like a nail’. If we step back and take the perspective that DLT is a

database that may be slow or otherwise inefficient, but can be trusted by parties that need not trust each other, it helps to filter out some of the often ridiculous use cases being proposed.” He adds: “When looking at the revenue opportunity, it makes sense to ‘follow the patents’. This is a fairly good indicator of intent, whether the patent is being used as a sword or a shield. BT filed at least six DLT patents in 2017. Other recent telco patents include Verizon (digital rights management), Telefónica (data tracking through service function chain), and others from Comcast, Du, Orange, Swisscom, Huawei, IBM and Microsoft. With the caveat I’ve already outlined, any use case involving trusted multi-party decentralisation is a candidate.” Getting telcos themselves to speak openly about their plans is another matter, which may be a measure of the competitive value they see attached to the opportunity – or evidence that most are still unsure of which route to take at this point. Orange International Carriers was among the carriers that actively declined to speak on the subject at this stage; others politely ignored our requests for comment. Activity is clearly underway though, with new members signing up to a global blockchain consortium, the Carrier Blockchain Study Group, whose stated aim is to explore how to collaborate on building a global next-generation cross-carrier blockchain platform and ecosystem. South Korea-based carriers LG Uplus and KT, along with Etisalat, Telefónica and PLDT from the Philippines joined existing collaborators SoftBank, Sprint, Far EasTone and TBCASoft. In the meantime, legal advisor Shears thinks the need to build confidence in services will restrict how ambitious telcos can be – at least initially. “Privacy by design seems to conflict with blockchain transparency but they are in fact two ends of the same spectrum,” she notes. “People want to trust what they see and what they receive. How to mitigate these is a whole other issue.” So, what level of movement can be expected for the rest of 2018 towards blockchain projects? “Many are predicting that 2018 is the year we will start to see ‘productisation’ of blockchain, and it seems likely this will happen,” says Frears. “With that in mind, within the next 12-15 months we will start hearing announcements of telco blockchain projects and receive invitations to participate in these services. My best guess will be hardware and billing as small-scale springboard projects, followed by wider offerings to other businesses.” april/may 2018

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38 |

Colt and

PCCW Global

try out

blockchain wholesale settlements Carl Grivner, Colt CEO, and Mike Van Den Bergh, the CMO of Capacity PCCW Global, talk to Alan Burkitt-Gray about their pioneering trial of blockchain for inter-carrier settlement of voice minutes, and where this proof of concept may lead the wholesale carrier industry

arriers could use blockchain for a whole new range of services – even to start a currency that companies in the wholesale industry could use to pay for the services they buy from one another, says Carl Grivner, who’s been CEO of Colt for two years. Sceptical? “Fifteen years ago people were talking about the cloud just as people are talking about blockchain today,” he says. “But, now, people are starting to study blockchain and its impact.” Capacity announced in March that Colt and PCCW Global have started trials to see how blockchain can speed up time for inter-carrier settlements and make them more reliable. The proofs of concept they

have carried out so far indicate that blockchain can cut inter-carrier settlement times from hours to minutes. It’s early stages, says Grivner. “The settlement test with PCCW Global is a baby step.” What will follow? He already has a list of possibilities. “The most exciting of them is cyber security.” The whole blockchain project has emerged from the Global Leaders’ Forum (GLF), created by the top industry executives who a decade ago approached Capacity Media to start International Telecoms Week (ITW). The GLF meets several times a year at major industry events. “We came up with the idea at Capacity Europe at the end of October 2017,” says Grivner. From there

Fifteen years ago people were talking about the cloud just as people are talking about blockchain today” Carl Grivner, CEO, Colt

to a working proof of concept took just four months, he notes. The third partner in the project is a Singapore-registered blockchain start-up, Clear, whose CEO, Gal Hochberg, had already worked with Marc Halbfinger, CEO of PCCW Global, the international arm of Hong Kong’s HKT.

Benefit the sector Halbfinger chairs the GLF, which aims to foster an environment within the industry that focuses on ubiquity, collaboration and interoperability between providers. This proof of concept was centred on these themes by attempting to understand how a technology such as blockchain can benefit the sector as a whole. “I applaud Marc for his lead on this,” says Grivner. Blockchain is, simply, a distributed ledger – duplicated many, many times for security, and the members of the GLF had been discussing its potential for some time before that meeting at Capacity Europe. Its power for the wholesale carrier industry is that for decades the process of reconciling records and settling debts

feature: blockchain trial | 39

has been laborious. Blockchain technology, it now seems clear, can make inter-carrier settlements more efficient, reliable and scalable. “This is something that normally takes months,” says Grivner. “It’s not just the reconciliation of records but also the reconciliation of discrepancies.” The blockchain trial by Colt and PCCW Global shows that it’s possible to reduce inter-carrier settlement times to minutes using blockchain technology. It’s not just more accurate but “it means better cashflow”, says Grivner. Already he and Halbfinger – along with the rest of the GLF – are looking for ways to move beyond the first proof of concept, which involved voice minutes, largely because that was a well understood service provided by most carriers. “Maybe a cryptocurrency,” he muses. “It could be used by telecoms carriers and maybe even by customers. Marc and a few others have talked about the creation of a cryptocurrency.” Blockchain is best known, so far, as the engine behind Bitcoin, the cryptocurrency whose fluctuations in price have led to comparisons with Amsterdam’s tulip bubble of the 1630s. But whatever people say about the viability of Bitcoin and other cryptocurrencies, some are starting to realise that blockchain could have important business applications – and telecoms is just one of the possible uses. Not just bill settlement and security uses, and not just the idea of a cryptocurrency. “There are a lot more examples,” says Grivner. “The idea is to enrol more applications in the blockchain – not just settlement.” What’s the next step? “Let’s enlist others industry-wide to look at some of the other applications, such as security.” Because blockchain is a distributed ledger, it’s almost impossible for one individual or company to create fake entries. “Blockchain has raised the cybersecurity bar,” he adds. “It could be used for email, billing and other applications.” The mobile industry should find applications in roaming, he notes. “Ultimately I’d like to see the technology in our customers’ hands.”

Improve cashflow Using blockchain for settlement in the wholesale carrier industry can reduce cost, improve operating efficiency and improve cashflow. But for the real value to be recognised, the entire industry needs to embrace the idea, says Mike Van Den Bergh, chief marketing officer of PCCW Global. Van Den Bergh adds: “It is a value tool between ourselves and Colt. Right from the start we’ve got to be open and

Transactions between two companies can be made on a private blockchain, and then the overall ledger is replicated on the public blockchain” Mike Van Den Bergh, chief marketing officer, PCCW Global

inclusive. We need to have minimum barriers to entry. The object now is to promote a new way of working. It has the potential to transform the whole industry. The value will be in inclusivity – so everyone is working on a common basis.” Until now the industry has used conventional methods to record the transport of voice minutes – and other traffic – across each other’s networks. In the trials, Colt and PCCW Global implemented a bilateral private blockchain to record transactions, which were then reported to a public blockchain. Smart contracts were used to rate call Capacity detail records, resolve disputes and record the settlement transactions.

Levels of trust “The industry is a success because of the levels of trust between companies,” says Van Den Bergh. “Blockchain helps to reinforce that. It offers new and more effective ways to operate.” Voice minutes were used in the trial “because most players have a common set of rules”, he notes. “The nice thing about wholesale voice is that most carriers work in exactly the same way.” It made sense for the trial to work with existing processes “and just apply blockchain”, he adds. Blockchain is a distributed ledger system, with multiple copies of files making it virtually impossible to distort the entries. For the trial, Colt and PCCW Global used a combination of private and public blockchains, says Van Den Bergh. “That creates a level of resilience. It takes away the need for third-party verification.” If the GLF and the wider industry want to adopt blockchain for all transactions, what confidence is there that the system will be scalable? One of the most famous uses of blockchain so far is Bitcoin and other cryptocurrencies, but they need so much processing power that they are unsuitable for small transactions. “That’s the advantage of taking a private and public approach,” says Van Den Bergh. Transactions between two

companies can be made on a private blockchain, and then the overall ledger is replicated on the public blockchain. The next stage is for a larger number of carriers, working through the GLF, to do further proofs of concept. “Everyone is already talking about blockchain and knows it is a good thing.” The trial at the start of this year used live data, so the two carriers could compare the results from blockchain with the results using the traditional way of working. “Normally it involves large numbers of people and days if not weeks,” says Van Den Bergh. “But we were doing it in seconds. This immediately speeds up settlement.” Often the delays are caused by lengthy reconciliation and dispute procedures. Blockchain offers the potential to automate that, using what Van Den Bergh calls “smart contracts”. The project has already “captured the imagination of the industry”, he says. “We have had more and more people knocking on our doors, even people from outside the GLF.” For smaller players, he adds: “The real value will be created when the entire industry is working in the same way. Collaboration is a natural function of how the industry works.”

Business model A public blockchain “will accommodate every player including the smallest, and they will decide when to implement private blockchain”. The key, he says, “will be to make it attractive enough, so that the amount of investment will be small. We are starting to think about the business model.” And Van Den Bergh echoes Grivner’s suggestion that a later step could be a cryptocurrency that the industry would use for its settlements. “It’s an obvious evolution of the model,” he adds. The currency would be convertible into standard – or fiat – currencies. But what would it be called? Among the latest suggestions: the Carl or the Marc.

40 |

VCS looks to the

future after celebrating fifth

birthday Vodafone Carrier Services CEO Brian Capacity Fitzpatrick talks to James Pearce about the UK-based operator’s wholesale business, five years after it first launched at ITW

ne of Brian Fitzpatrick’s first ever responsibilities after he joined Vodafone Carrier Services was to hop on a plane to Chicago for ITW. The year was 2013 and Fitzpatrick, now CEO at VCS, was an industry veteran, having previously spent six years overseeing BT’s wholesale unit. He’d also held senior management roles with Teleglobe, later bought by Tata Communications, and Frontier Communications, bought by Global Crossing. Stepping into Vodafone to head VCS, he was sent to ITW to unveil the new carrier unit to the rest of the global wholesale community – a move that would bring together what had previously been 26 independent operating units managed locally. Fitzpatrick remembers: “It is literally five years because I joined three days before ITW and when I was 24 hours into the job Vodafone said: “Oh, can you go to Chicago”, and we launched Vodafone Carrier Services there.” If you cast your mind back, Vodafone

operated its wholesale businesses through 26 regional units, but that all began to change following its acquisition of Cable & Wireless Worldwide for just over £1 billion in 2012, with the unit integrated into Vodafone the following year. The acquisition gave Vodafone CWW’s fibre network for businesses, enabling it to take unified communications solutions to large enterprises in UK and globally, and expand its enterprise integration service offerings in emerging markets. Vodafone was “quite a difficult organisation to deal with five years ago”, explains Fitpatrick, because “we operated as 26 separate companies”. He adds: “We saw that as an opportunity not just for ourselves but as a way to enhance the relationship we had with the rest of our peers in the industry.” So what have been the biggest changes in the industry since that day when Vodafone entered the international wholesale fray? He tells me that the influence of the over-the-top providers such as Facebook and Google has had a massive impact on how carriers like

Vodafone operate. “They have helped the market by raising the bar for performance and changing the economics at a per-unit level that we need to continuously address.” He explains that the CWW acquisition, along with investments in infrastructure including capacity on subsea cable systems, means Vodafone Carrier Services is “somewhat uniquely positioned” to address the growing needs of the OTT community. Vodafone carried 2,730PB across its network in its last financial year. “There has been an absolute market dynamic shift in regards to not only what is being consumed but just who is consuming it and where, in terms of the major regional data centres of the world. The OTTs have helped shape the industry and from a Vodafone perspective they are a very valued customer, partner and in some cases supplier in many parts of the world.”

Three pillars VCS, he adds, now has three core areas it is focussed on: voice, data and what Fitzpatrick calls infrastructure services, april/may 2018

the big interview: brian fitzpatrick | 41

1984

President, North American carrier operations, Frontier Communications

1998

President, global communications, Frontier Communications

2003

President, worldwide commercial operations, Teleglobe

2005

MD/president, BT Wholesale

2013

CEO, Vodafone Carrier Services

2016 for the first time. As Vodafone is a leader in voice, what impact does this have on VCS? Fitzpatrick is surprisingly upbeat, saying in order to assess it properly, you need to “take a step back”. “The difference of Vodafone’s activity in the voice market is we have 500m+ consumers that are part of Vodafone who continue to generate that traffic for us,” he explains. “The majority of our traffic is extremely stable, consumer retail traffic that is quite manageable and forecastable. For our peers many of them are more active in the wholesale arbitrage trading and that’s where you get the volatility and the spikes.” It is for this reason that TeleGeography ranked Vodafone Carrier Services as the largest international voice carrier, for the fourth consecutive year, in a report published in December. I ask Fitzpatrick how much of a role the fact that Vodafone has operations in emerging markets, such as India or Africa, plays into this success. “It helps us tremendously [in the voice market] because not only can we originate calls in our handsets around the world but

The RCS capability Capacity enhances messaging. It makes it sexier” Brian Fitzpatrick, CEO, Vodafone Carrier Services

which is itself split into three parts – subsea cable capacity, Vodafone’s backhaul network, and its in-country, local access infrastructures. Vodafone transferred all its voice minutes to a fully IP-intelligent routing platform. This was a major move: Vodafone handles upwards of 59 billion international voice minutes a year. Fitzpatrick says: “With international voice we created a centralised platform that we call the IR platform – the intelligent routing platform – which now manages around 11% of the world’s international voice traffic. But we also established a new model inside the industry to better commercialise voice. When you get into the governance and financial controls, and the quality of service that we now manage through our suppliers, this has been a step change for us. It has been a key pillar of our success.” Though the OTTs may be seen as friends of Vodafone, I query if it is in the voice market where they are not perhaps the greatest threat. Figures from TeleGeography estimated that OTT voice would surpass carrier voice minutes in capacitymedia.com

also some of the key corridors for termination like in India we happen to operate the operating company in those countries. So we’re well positioned from an origination perspective but also quite uniquely positioned from a termination perspective.” In the messaging market, Vodafone Carrier Services has also established a centralised platform it calls VMH – Vodafone Messaging Hub. This, along with investments in Rich Communications Services (RCS), will give Vodafone a strong position to lead and sustain growth in the sector. “The RCS capability enhances messaging. It makes it sexier,” Fitzpatrick explains. “I can only see the upside. IoT is going to enable thousands of things we’re not aware of today and messaging will be one of them, as will RCS.”

Infrastructure investments Vodafone has ownership in some 83 subsea cable systems around the world and has continued to invest in several systems since VCS was founded, including the Bay of Bengal Gateway cable that links India to the Middle East and Singapore and the

Tasman Global Access (TGA) cable which connects New Zealand to Australia. “While others are turning back on investing in subsea cables, we’ve been heavily involved in seven new systems around the world over the last five years,” Fitzpatrick says. A lot of recent cables have been announced: why does he think that is? “There is definitely a new dynamic happening. As you begin to look at new builds, you look at how they interconnects with your existing infrastructure. Any new build will enhance what we already have.” He expects the company to “actively be involved in cable systems in the area around Africa”, adding that it is also looking at three or four other areas. This comes back to OTTs: “It is the perfect marriage of organisations – traditional telcos and OTTs coming together, as opposed to acting as enemies. The OTTs can act as an anchor tenant on these cable systems while the telcos take much more of a lead on the management, regulatory and technical expertise.” Some of the existing Vodafone capacity is on fairly aged systems that will, ultimately, be switched off in the coming years. What does a company like Vodafone do to prepare for this? He answers enthusiastically: “We actively have a migration and grooming strategy. We’re looking at our existing facilities and whether existing alternatives that are timed to come up with retiring that facility. Or whether it makes sense for us to partner and build a new cable along those corridors.” So with new investments in infrastructure on the horizon, and a bright future for RCS, what does Fitzpatrick expect for the next five years for VCS? He answers: “We think in those three legs of the stool – voice, messaging and infrastructure. From a voice perspective I think you’ll see Vodafone continuing to invest and focus on our intelligent routing platform and optimise its capabilities. What we have also done is outsourced 26 operating companies onto a single platform and optimised and created greater value for all of them.” This, he adds, opens up opportunities for working with others to get them on board with the voice platform in order to create an even wider alliance. This reminds me of other interoperability trials being carried out in the industry, such as SDN trials being carried out by several firms. “It is probably a bit premature to look at interoperability tie ups like SDN, but on the voice side it presents us an opportunity to open it up more,” says Fitzpatrick. “We know the complexities we had to go through ourselves on a global level. It is something we’re kicking around now to see if we should proactively engage.”

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market strategy: zero touch | 43

THE ROAD TO ZERO TOUCH Capacity

DYNAMIC NETWORKS ARE THE NAME OF THE GAME FOR THE CARRIERS OF TODAY. FUTURISTIC TECHNOLOGIES ARE CALLING FOR FUTURISTIC NETWORKS, WITH THE ABILITY FOR FULL AUTOMATION ALONG WITH FLEXIBLE PROVISIONING, WRITES GARETH WILLMER

Image: iStock

utomation is seen as necessary for operating 5G, as well as for the proliferation of the internet of things (IoT) and big data. The call towards this zero-touch vision is heightened by the onset of the so-called zettabyte era, characterised by surging demand for bandwidth-hungry applications – with annual global IP traffic set to hit 3.3ZB by 2021, according to Cisco’s predictions. The trend is reflected in carriers’ shift from static backhaul and transport networks to flexible systems such as software-defined networking (SDN) and network functions virtualisation (NFV), allowing them to react to more elastic capacity demands and to spin up new services rapidly. Carriers are clear about the benefits that moves towards zero touch will bring. This evolution is “critical” for driving operational scale, removing costs, enabling more self-service for the customer and, most importantly, improving the employee and customer experience, says Travis Ewert, VP of software-defined services and big data at capacitymedia.com

CenturyLink. “It allows us to differentiate by packaging all of these ‘softwaredefined services’ in unique ways. It’s a beautiful thing.” Not least in this equation is the need to address customer demand. “Customers expect orders to be delivered in minutes, not days,” says David De Klerck, senior manager of Verizon business networking and security solutions. Operators have multiple strategies in place to make this picture a future reality. At the Zero Touch & Carrier Automation Congress in Madrid at the end of March, Juan Carlos García López, global director of technology and architecture at Telefónica, outlined the carrier’s zerotouch vision. This roadmap includes the use of AI in self-organising networks and Telefónica’s expansion across its markets of its UNICA drive towards virtualising network functions – while a phase in the five years after 2020 will see a move towards so-called “extreme” automation ready for massive 5G deployments. Meanwhile, Telstra unveiled its Network of the Future transformation

programme last year, as part of a three-year plan for up to A$3 billion of investment in digitisation and networks of the future. This included the preparation of networks for 5G, IoT and media cloud services. Alongside that, its Telstra Programmable Network portfolio offers the benefits of self-service global network connectivity, APIs for integration into customers’ systems and on-demand connectivity to clouds.

Self service There is a variety of drivers for these types of service, says Jim Fagan, director of global platforms at Telstra Enterprise. Among others, these include cost reductions through factors such as a reduced need for on-site visits and fewer outages, as well as having network technology to serve IT customers that are getting increasingly accustomed to self-service and on-demand services. “If carriers aren’t leading this trend, we will not be competitive against newer, smaller, focused providers,” says Fagan. His vision of the industry’s future is that

44 | market strategy: zero touch

it “should be able to tailor solutions to customers’ needs, but built on standard, fully automated building blocks”. But if we are to see a truly automated industry that supports orchestration across networks, carriers cannot do everything on their own. This is something that they are only too aware of, with multiple efforts by industry players to get things working in tandem. A case in point was the three-month Zero Touch NSM project last year, which saw Telefónica, Deutsche Telekom and China Mobile working together with vendors and others to identify new approaches to managing networks. And carriers are working through industry associations and standards bodies to make this large-scale, crossnetwork automation a reality. “Communication service providers are doing a lot by themselves, but an industry-wide joint approach is needed,” says Klaus Martiny of Deutsche Telekom, who is chairman of the newly formed Zero touch network and service management group (ZSM ISG) at European standards body ETSI. Reflecting these needs, this zero touch group was launched last December with an initial remit to focus on 5G end-to-end network and service management, such as for network slicing – and, later, future network generations. It also aims to aid cooperation and coordination between standardisation bodies and open-source projects. ETSI can help deliver the “radical change” needed in the industry through its position as a well-known and accepted body, says Martiny. A large amount of work is also going on in the MEF industry association, with its 3.0 transformational global services framework. Stan Hubbard, director of communications and research at MEF, sums up the evolving picture: “We have embarked on a journey to enable service providers to transition from operating as independent islands of excellence to being integral players in a worldwide business federation of cloud-like networks that support dynamic services across multiple providers,” he says. Hubbard adds that he views the road ahead as a multi-year migration process that will involve a variety of factors, such as the deployment of new technologies, alignment on standards, and workforce training on new concepts. Among its areas of work, the group is in the process of standardising APIs for lifecycle service orchestration (LSO) to enable the orchestration of dynamic services across multiple providers and technology domains. And steps are being made among carriers in this area. In March, Verizon

and Colt, both members of the MEF, together demonstrated two-way intercarrier SDN orchestration in a live trial, with the ability to make near real-time bandwidth changes in each other’s production networks. “This is a component of full automation, because what we are trying to do with this effort is not only fix the end-to-end programmability or the end-to-end zero touch within a particular carrier, it’s to solve the problem across carriers,” says Javier Benitez, a senior network architect at Colt Technology Services. He says this was an area Colt started working towards after it launched its Novitas network programme in 2015, and the company has carried out other inter-carrier trials.

Running across carriers At Verizon, De Klerck says his company already provides zero touch on overlay services, but emphasises the need to get things running across carriers. “Our underlying network is automated, but reality is that any customer network will consist of multiple network segments

says Francisco Santos, head of wholesale services at Telefónica International Wholesale Services (TIWS). He says that Telefónica has instilled a mindset of digitisation over the past few years, so different divisions have become more dynamic, agile and faster to launch products – with people hired and trained for the new environment, and more agile OSS and BSS systems being rolled out. “We are also working on the ways that we intercommunicate with other providers.” Eduardo Guardincerri, chief marketing officer at TIWS, says: “At Telefónica, we are in the process of digitisation and becoming a full digital company. We understand that we need to have the required flexibility and agility to serve digital customers.” He says zero touch will happen step by step, with some initiatives this year and others later. At Colt, says Benitez, dedicated “on-demand” teams have been formed and programmes have been put in place to upskill teams for SDN, NFV and software architecture. But Benitez says that while some big carriers have initiated ambitious transformation programmes

If carriers aren’t leading this trend, we will not be competitive against newer, smaller, focused providers”

Capacity

Jim Fagan, director of global platforms, Telstra Enterprise

from different providers,” he says. “For a customer, it is only automated when the end-to-end is automated, not just the Verizon part.” Full cross-carrier automation will take longer – maybe five to 10 years – because of the need to cooperate and standardise, he says. “As this will be an evolution, we will live for some time to come with a mixed environment, with various degrees of automation depending on the capabilities of interconnecting carriers.” In the meantime, Verizon is moving towards further automation in other areas. For one thing, says De Klerck, the company has just unveiled bundles for its Virtual Network Services. This is to address the fact that apart from individual virtual services being automated, customers want “service chains” to help with spinning up combinations of services. Meanwhile, the changing world of virtualisation has called for a cultural shift at carriers. “A big challenge for every carrier is to break with silos of services,”

and upskill initiatives, some others are still in the early stages, not only in terms of internal transformation, but also in adopting SDN and NFV on the way towards zero-touch automation. The need to “touch all parts of the network” will, for a start, pose a big challenge and mean there is a long journey ahead, says Michael Howard, senior research director and advisor at IHS Markit – but he says the existence of the ZSM ISG is a positive development. And it is certainly something that carriers are not going to pull back from. “Zero-touch networking is the way forward and will clearly change the way network and service management is done,” says De Klerck. He also emphasises the need to focus on the benefits for the customer: “The complexity of the underlying networks will be taken away from the customer, but it will be important to provide the right tools and dashboards so they can continue to monitor the impact on their core business.” april/may 2018

FROM PIPES TO PLATFORMS

“How do successful platforms grow so fast? Through network effects, which every business needs to understand and foster.”* Platform business models lead the digital economy, altering the very DNA of the ICT industry and all of its players. From pipes to platforms, how will ICT players evolve, create, and monetize new paths for growth? What will be the impact for the ecosystem of ICT players spanning: • • • • •

Attend PTC’19 to seize new opportunities to set your path to success in an industry transforming from pipes to platforms.

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Capacity

special report

DATA CENTRES

April/May 2018

CONTENTS 48 Data centre moves afoot Mergers and acquisitions in the data centre space hit record highs in 2017, Capacity looks at the key drivers of this growth

51 Living on the edge: the new frontier Capacity

The internet of things is driving data processing closer to the edge of the network

55 Towards the edge What has been the impact of the move towards the edge and where is it heading next?

56 The big interview Chris Sharp, chief technology officer, SVP of service innovation at Digital Realty

60 The big interview Mike Hollands, director of market development & strategy, Interxion, and Andrew Edison, VP of wholesale, Colt

SPONSORED STATEMENT

| 53

POWER BEHIND THE CLOUD QUY NGUYEN, VICE PRESIDENT FOR GLOBAL ACCOUNTS AND SOLUTIONS AT COLT DCS TALKS TO CAPACIT Y ABOUT WHAT CSPS LOOK FOR IN A DATA CENTRE PROVIDER AND THE FUTURE OF THE CLOUD MARKET What makes Colt DCS unique as a data centre partner for carriers, service providers and cloud platform operators? Firstly, we do try to be a more flexible organisation than most. Many of our competitors are either publicly traded companies or investment trusts which therefore have certain constraints on what contracts they can and cannot accept. We have more freedom in how we structure our contracts, and in deciding which risks we are willing to take on the commercial aspects of a deal. Additionally, we have a good reputation in the market for delivering on our commitments. The quality of our data centres also tends to be higher than others. We try to offer a consistency of service, whether the customer is buying in London or Tokyo, while of course taking care to comply with local regulations.

one might term edge locations. We’re focused on making that core to edge strategy work, sharing capacity between the two with our campus network proposition. Customers like the fact that we can manage this without relying on others to do it for us. My job is to target the major hyper-scale cloud providers around the world by creating the right product for these CSPs. What these organisations are looking for is speed to market for a low cost. They want durability and scalability too. When they do a deal, they are always looking ahead three to five years, checking that you have enough capacity so they can grow within your site. Security is very important as well, both in a physical sense and in the area of compliance. You need also to demonstrate that you are energy efficient and, depending on the country you are in, that you are using renewable energy.

What are customers and partners looking for at theCapacity What sort of data centres will tomorrow’s cloud hyper-scale end of the data centre market? What is services market depend on? Colt DCS’s track record here? From a power density perspective, our experience tells us that this is almost doubling every five years. With things like artificial Before terms like hyperscale and core versus edge came along, intelligence coming into the market, I think this trend will only we already had data centres in locations in Tokyo, London, Paris increase. Another consideration will be location, and network and Netherlands which offered impressive scale and compute connectivity. A challenge that the whole industry will face is resources in a core location, as well as other data centres in what positioning data centres where they can have the power they need from the grid. The further away from the DC you go, the more that is a problem for CSPs. Given the radius they are prepared to accept, is there enough capacity for them within that? Network capability and latency will be critical. How important are green credentials for a data centre operator? Are they valued by customers? This is something that most customers are asking for now, compared to three or four years ago. The data centre industry is similar to the airline industry in terms of its carbon footprint. Whether we like it or not, governments will regulate data centres just like any other carbon-heavy industry. We need to get ahead of the curve on renewables. Will customers pay more for this? Some will, but not all. There’s no standard position here among customers and their expectations is evolving each year.

Quy Nguyen: We plan to open more core hyper-scale data centres

capacitymedia.com

Finally, how would you describe Colt DCS’s business strategy, product roadmap and expansion plans? What sort of company will it be in three or five years’ time? Our goal is to double the size of our business in that time frame. To do that we plan to open more core hyper-scale data centres. We have greenfield developments going on right now in Frankfurt which will come online at the end of 2019. We are looking to build in India too, as well as expand our capacity in London, Paris, Amsterdam, Tokyo, Osaka and Singapore. We will continue to support hybrid solutions by strengthening our edge to core strategy with the deployment of our campus network propositions and enhancing our connectivity ends.

Capacity

event: edge 2018 | 55

wo years ago, Peter Levine, a general partner at venture capital firm Andreessen Horowitz, foresaw that the majority of computer processing would shift to the Edge, rather than the cloud: “Sensors are going to produce massive amounts of data. The existing infrastructure will not be able to handle the data volumes or the rates, and data is going to be stuck at the edge and computing is going to move to the edge along with that data.” (Andreessen Horowitz Tech Summit, 2016). This has proved to be more than prescient. Edge – computation with cloud resources close to the user - represents the most profound change that will impact possibly for decades to come. Early deployment particularly evident in North America is expected to achieve significant growth over the next 5 years globally. Representing a response to a quantum leap in the volume of data generated and caused by connecting things, huge growth in mobile and video, and the eventual digital capabilities that will be enabled by 5G, Edge is also part of a shift to a distributed architecture, hosting intelligence in the virtual economy’s algorithms and machines. Indeed, the Edge is according to Edgeconnex, infinitely flexible and is “constantly moving the demarcation between service and the consumer.” Mark Thiele of Apcera has produced a succinct definition: “The Edge is where a combination of technology requirements creates a location specific capability to meet a set of customer use case needs. Those customer use case requirements could be a combination of any or all of; latency, data, data sovereignty, security, performance, cost and reducing impact on backhaul networking capacity.” Cloud computing and “programming techniques” have already enabled a new form of product abstraction, accelerated prototyping, simultaneous multi-platform

capacitymedia.com

development, construction and instant delivery to an expanding consumer base. Edge will now also take advantage of the convergence of a host of current and new technologies such as blockchain, AI, 5G, 4k and 8k, robotics, wearable tech and embedded sensors.

Huge opportunity Edge disaggregates traditional IT servers with the separation of compute processing networks and storage components. It prioritizes data critical to the operations of the local infrastructure and enables them to be analyzed, stored and processed immediately. Data can be stored close to the user on IoT or other devices, gateways, roadside cabinets and Edge datacenters. Edge computing devices will be primarily responsible for handling network switching, routing, load balancing, security, and audit trail while also doubling up for running data processing

taking advantage of the elasticity offered by the public cloud. It significantly reduces the latency involved in dealing with public cloud platforms. Edge will also create new highly connected ecosystems with car manufacturers, social networks, cloud providers, online retailers and content providers. Telco network providers, fiber owners and cable companies will benefit from the infrastructure assets they own, but they will also need to share value in the ecosystem.

Decade deployment In deploying Edge resources, new players will possibly emerge focused on installing and integrating billions of sensors, smart devices, cloud services, mobile networks, and an array of Edge facilities. The timescale for development can be judged in several stages with deployment of infrastructure and platforms, trials and

Operators Capacityand enterprises will spend about US$272 billion on edge computing capabilities between now and 2026” Mobile Edge Computing report, iGR research

pipelines. Other data moves to the public cloud for batch processing. The opportunity is widely perceived as huge. This according to Guggenheim Securities: “…. we think Edge Computing looks like the incremental growth opportunity, increasingly necessary to overcome cloud overhead in latency and bandwidth, to enable billions of new IoT end-points and real-time Local AI/ML for autonomous systems. As applications push processing back out to the edge, we see devices bifurcating into either Cloud Conduits or Edge Computers that will require much more local horsepower.” Edge computing will enable IT to retain sensitive data on-premises while still

launch of 5G across the next 5-7 years. Full implementation of Edge with device ubiquity, smart cities, autonomous cars and connected things could be envisaged over the next 10 years. Quantifying the scale of opportunity, telecom operators and enterprises in the US and Europe will spend about US$272 billion on edge computing capabilities between now and 2026, a figure that will exceed investments in 5G networks, according to a recent forecast from research house iGR. Join the debate and meet the players at Edge 2018 taking place in Austin Texas 24-25 October – www.edgecongress.com

56 |

Enhancing

data centre interconnectivity for future scale

By 2021, 95% of global data centre traffic will come from cloud services and applications. So how are data centre providers building for future hyperscale requirements? Jason McGeeCapacity Abe spoke to CTO Chris Sharp to find out how Digital Realty is readying itself for the imminent data onslaught

isco’s forecast that the cloud will account for all but 5% of all data centre traffic in a few years is quite frankly stunning to contemplate the surge and would have been unfathomable a decade ago. The Index estimated that the total volume of data passing through data centres will increase considerably too, from 6.8 zettabytes (ZB) in 2016 to 20.6ZB by 2021, representing a CAGR of 25%. The forecast predicted that 628 hyperscale data centre will exist and traffic within hyperscale data centres will quadruple by 2021. However, addressing this rapidly evolving trend is not new to Digital Realty proclaims Chris Sharp as we speak a few weeks before ITW 2018.

Hyperscale: not new but hyperchallenging “Hyperscale is hyper-challenging without the right supply chain,” a statement included on a Digital Realty slide from its

investor day last year. “Have you ever been to Ashburn Virginia and seen some of the new campuses we’re building out there and seen the sheer scale that we’re operating at?” he asks me. “People are just in awe at the sheer scale of building L on our campus for example. After the call I received the ‘Ashburn Building L’ slide, which highlights the two aircraft carriers overlaid to give perspective on size. “When people today try and paint hyperscale as some new trend, it’s not, we’ve seen it for a long time,” the CTO explains. “With Digital Realty’s heritage in our supply chain and landbank capabilities, we’re one of the few that can really efficiently and effectively do it. We’ve been doing hyperscale for some time and continually to do hyperscale for our customers.” The sheer amount of demand coming from these cloud operators is forcing data centre providers to innovate quickly and be able to build at scale to remain relevant. “There have been some operators who are just evolving into the scale business now, talking about doing a hyperscale

deployment of 5MW, but I think what’s lost on a lot people is that you’re selling to a cloud operator,” Sharp says. “If you go to them in the most general sense and talk to them about a 5MW need you have to show them line of sight to almost 15MW20MW as they don’t want to get landlocked.” That’s where Digital Realty is differentiating itself and its investment figures back this up. “We’re putting around $1 billion into the ground in 2018,” claims Sharp. The plans are consistent with its investment message off the back of Digital Realty completed its $7.6 billion acquisition of DuPont Fabros, which boosted its colocation offering and enhanced the combined company’s footprint and ability to serve its customers in the top US data centre metro areas. The company is offering a more comprehensive set of data centre solutions, from singlecabinet colocation and interconnection, all the way up to multi-megawatt hyper-scale deployments. It has a more expansive capability with its designs being able to better support its customers’ more april/may 2018

the big interview: chris sharp | 57

Feb 2007 – Feb 2009

US VP of professional services, Reliance Globalcom

Mar 2009 – Nov 2011

VP of interconnections and services innovation, Equinix

Nov 2011 – Aug 2015

General manager, cloud and content, Equinix

Aug 2013 – Aug 2015

VP of cloud innovation, Equinix

Aug 2015 – Present

Chief technology officer, SVP of service innovation, Digital Realty

Proximity matters Digital Realty is positioning itself well to deliver interconnectivity with an expanding range of solutions on a global scale. “In the past, we looked at the fact that we do land banks and build these huge scale facilities that are superefficient and they can house the actual cloud infrastructure or the actual cloud data objects,” says Sharp. “With the advent of us moving into the colocation market and having our deep heritage there too now we can support those customers trying to consume or leverage the cloud, so there’s a mash-up of services to provide their own customers. “We talk a lot about this concept of ‘proximity matters’ and we can put a cabinet right next door to major cloud operators, which is the most efficient access mechanism to those cloud objects. You can’t do that with just a traditional colo. You have to have a full suite of products to really support that.” He stresses that it’s very important to educate customers that not all data centres are equal. It is a prerequisite to not just be able to access those clouds, but the efficiency associated with accessing those

Capacity

We’re putting around $1 billion into the ground in 2018”

Chris Sharp, CTO, Digital Realty

cloud-centric needs. With global data centre traffic projected to grow three-fold by 2021, developing new and existing sites, as well as its Service Exchange platform, are critical. “It’s very timely that Capacity’s two special reports in this issue are centered on data centres and cloud,” he says as the two are clearly becoming increasingly connected. Sharp, who has over 20 years’ experience in the technology industry and prior to joining Digital Realty was responsible for cloud innovation at Equinix, says the Digital Realty Service Exchange platform not only provides the point-to-cloud access solution customers are searching for, it delivers consistent, secure, private connections to multiple clouds, which is also scalable – if bandwidth needs increase, so too does capacity. “Customers are consuming core components in a different manner today but ultimately it’s still a supply chain,” he explains. “There’s a consumer and a seller. Our customers have driven us to get a lot of efficiency through scale.”

capacitymedia.com

clouds. So what problems is the company facing? One problem Sharp says is how Digital Realty can better enable its partners – clouds, networks or multiple types of service providers. “We want to stay neutral to what we do best, but remove the complexity out of the overall architecture,” Sharp says. “The Service Exchange platform helps us with this. One of the things we can do is provide a single location where you can access multiple cloud on-ramps in a very non-technical manner. There’s a huge efficiency associated with a customer’s architecture being able to access all these cloud destinations from a very private, secure, high-throughput manner and the metrics that come out of those architectures are a huge advantage for their business.” Sharp can’t divulge details about the large cloud operators in particular, because of the secrecy around what infrastructure they have with Digital Realty and where they’re headed, but in the most general terms the CTO says that we can see a shift in the market whereby other competitors are having to change their offerings to try and offer scale. “That’s due to the fact that the clouds are telling them that they have

to solve for a broader proportion of their architecture. In the most simplistic manner, these cloud operators have a network node and they have their compute infrastructure.” He adds that some of Digital Realty’s competitors in the market have only focused on trying to win those network nodes, but what the cloud operators have created is a very efficient hairpin in the metro. “Because we can provide colo and scale, all enabled with interconnection, we can house both the network and compute nodes right within out campus environment, which provides the most efficient mechanism for customers to build out their hybrid cloud architectures. The majority of all our customers want to end up with this hybrid multi-cloud architecture, but most of them fail because of the complexity, but if you come to a provider like Digital Realty where we have the heritage of doing scale and colo, with our Service Exchange now you can access multiple types of clouds privately. A tagline which resonates well with this message is: how would you like the full benefit of all these public cloud infrastructures with zero public-facing infrastructure. People are very excited about that because it removes a lot of exposure and security risks associated with this.”

AI – the next frontier “I’m still a firm believer of cloud and how it will mature over time but artificial intelligence (AI) is that next frontier that everyone is trying to get a first market mover advantage,” Sharp says. “It requires a tremendous amount of infrastructure to support these services and also a different type of infrastructure to support the power density and being able to cool that efficiently.” One of the major frontiers in the industry today is AI and one can see this through the amount of intellectual property and R&D dollars being invested in it. “The variability that we’ve already proven in the market to support the network and power density associated with these AI components is huge. The sheer power that a lot of these new processors and AI farms coming online require is tremendous, so you have to be mindful of how the traffic will bloom, but the infrastructure behind that traffic also needs to be housed in a very efficient space.” This is why Sharp and Digital Realty are very excited with the work the company’s been doing and what the future has in store. The CTO adds: “AI is only as smart as the data set you feed it, so whoever can feed it the most efficiently can get a huge competitive advantage out of their architecture.” .

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60 |

Marseille is the gateway

to the East

Interxion is about to go live with its second data centre facility in Marseille, with plans to add a third in motion, and Colt is already Capacity announced as a key partner. James Pearce spoke to Interxion’s Mike Hollands and Colt’s Andrew Edison about why companies are investing in Marseille

he city of Marseille, the second largest city in France, was once one of the most important trading cities in Europe for the ancient Greeks and Romans. Now, as the largest port for commerce, freight and cruise ships in France, it is also one of the key Mediterranean hubs for data. Typically, when talking about the geography of the internet, the key European hotspots have been Frankfurt, London, Amsterdam, and Paris – known as FLAP. But an explosion in demand for data in Africa, the Middle East and Asia

and the deployment of new subsea cable systems has opened the door for Marseille to become a new European hub. The predicted growth of data to he Middle East, Africa and Asia is eyecatching. The Cisco Visual Networking Index estimates that internet traffic in the Middle East and Africa is set to grow six-fold by 2020 to 10.9 exabytes per month. Traffic in Asia Pacific is forecast to grow three-fold to 67.8 exabytes per month over the same period. That, according to Interxion’s Mike Hollands, is why the data centre company is investing heavily into the region. He explains: “Marseille is becoming now a key gateway

Traffic can exit the second data centre and go straight to the major cities in Europe without having to go via MRS1” Mike Hollands, director, market development, Interxion

for traffic.” That is why, he adds, Interxion is launching its second and third data centres in the city. If we rewind back to 2014, Interxion made its first move into the city through an acquisition. It snapped up the SFR Netcenter data centre, which ultimately became Interxion MRS1, for a total of around €45 million, of which €20m million was associated with the purchase of the freehold land and buildings.

Connectivity At the time, MRS1 served as a transit and caching node for around 60 network providers but now the 6,500 sq m space serves around 135 networks and 13 subsea cable systems. There were just eight connected at the time of the acquisition. This explosion in connectivity options, along with the growing onward demand coming out of Europe, was a key component to Interxion’s investment plans. These include a new 4,500 sq m facility – called MRS2 – which is being built around 4km away from MRS1, with the first phase due to go live in June. Then there are the plans for MRS3, which is going to be built next to MRS2. Hollands april/may 2018

the big interview: mike hollands & andrew edison | 61

adds: “We’ve already got part of the space ready and the first major space becomes ready on 1 June. The original data centre is around 6,500 sq m but this one is about 4,500 sq m.” So why build more in the same location? It “reflects the first major, diverse location in Marseille away from where our existing MRS1 data centre is located,” he replies. “In the past all of the traffic from the 13 submarine cable systems that land in Marseille and from the 135 networks present in the city were based in MRS1 and there has been a demand from cloud and content providers that are arriving there for more diversity in the city. “So rather than just MRS1 being the core focus of this traffic, a diverse location to add to resilience but also to ensure there is a second site – so it doesn’t just become a satellite of the first site. So traffic can exit the second data centre and go straight to the major cities in Europe without having to go via MRS1.”

Diversity of routes That diversity of routes is being demanded by Interxion’s partner base, both new and old, as they see more and more data coming into and out of Marseille. With more data and more connection comes greater risk of a single point of failure – something no operator or data centre provider would want. If you don’t believe what impact this could have, consider this from Interxion’s director marketing and strategy for connectivity Michael Rabinowitz in an article he wrote for Capacity in March. The knock-on commercial effects, he says, of major outages “can be catastrophic for both providers and business customers.” In it, he outlined five of the biggest outages, such as the AWS outage in 2017 or the impact of the DDoS attack on Dyn in 2016. Having diversity can help allay the impact of such failures on a single point, and customers recognise the need for alternative routes in the same location, says Hollands. He points to subsea cable AAE-1 as an example. “What we have in the submarine cable system AAE-1 is for the first time a system that asked for two PoPs in Marseille – half in MRS-1 and half of the traffic lands in MRS-2,” Hollands explains. “The reason for that is because the volume of traffic that was passing through MRS-1 was becoming so large it would be a concern for any network planner that it was a single point of failure that was too big to fail. And so, MRS2 was built, with capex of around €76 million. “By having invested in a second data centre and with other networks coming to that location and providing diverse routes out of Marseille, we have together provided a solution for capacitymedia.com

Out of Marseille we bring our high bandwidth optical network and then we can pull that traffic to all the key peering points and data centres across Europe” Andrew Edison, head of technology and cloud for UK, Ireland and Israel, Oracle

the likes of AAE-1 – a solution that really removes that horrible single point of failure situation that they were looking to avoid.” The carrier community has responded too, with Colt Technology Services becoming one of the first carriers to announce a point of presence in MRS2. This accompanies the carrier’s existing PoP in MRS1 and diversity was a key part of Colt’s thinking, says VP of wholesale Andrew Edison. He adds: “We have three core areas of focus: helping other operators, carriers and service providers meet their own internal needs and those ofCapacity their end customers; digital transformation services through our high bandwidth optical network – the IQ Network; on helping companies become more agile and to boost their customer experience through software-defined networking. “Marseille fits into this picture across three points. It is important from a connectivity standpoint. We’d already invested into MRS-1 in 2016, and we’ve seen that Marseille is an important hub to provide connectivity into and out of the European region. There are around 130 connectivity partners who come into MRS-1 and that makes it a very important strategic opportunity for us,” says Edison.

High bandwidth He adds: “We want to support the demand on that traffic coming in. We’ve seen an explosive growth in internet demand and internet traffic. That internet traffic is primarily trying to get to the data, content and applications which are housed in Europe. Out of Marseille we bring our high bandwidth optical network and then we can pull that traffic to all the key peering points and data centres across Europe.” Though London-based Colt is traditionally seen as a European operator, it has recently invested in expanding its presence in Asia – notably in Singapore and Hong Kong – and the Americas. But it is the former of these areas that make investing in the additional PoP in Marseille

even more important, Edison tells me. “What has been driving our growth in other areas is the need to support our European base of customers and this deep presence we have in Europe,” he says. “We’re seeing that customer demand expand outside of Europe but what they want is the same level of experience, consistency continuity, which we are looking to replicate as we build out. Our core market is here in Europe and that’s where our density of customer activity is – we’re looking to support their own end connections into the market,” he adds.

Single point of failure “Both on the wholesale side and in the retail business, the submarine operators and other service providers we’re dealing with really want to have a second route. They are looking for diversity, security, flexibility and, if we can show there isn’t a single point of failure in the Marseille hub, that gives them more comfort around doing business with us and the service levels they can offer back to their own end user customers. We see increasing demand for data and traffic and our customers are looking to serve that demand over multiple links rather than one single link.” Colt is a key partner for Interxion, Hollands explains, as it has the highest number of cross connects with other operators in Interxion data centres with a presence in 42 of its sites. “This has led to Colt being arguably the most popular network with customers we serve in our data centre,” he adds. For Interxion – the lead data centre partner at the upcoming Subsea Connect EMEA event, being held in Marseille in July – the likes of Colt is vital to its own outward plans. Hollands explains: “For us to deliver a data centre and diverse location is only part of our story. Colt is providing another part – a modern network with diverse routes out of Marseille and providing services that are very popular with the clients that we serve.”

62 | q&a: mike hollands

INTERXION: THE MARSEILLE CONNECTION Interxion is set to open its second Marseille data centre, MRS2. Director of strategy and market development Mike Hollands tell us opportunities this offers the indutry Interxion is to have its opening ceremony for its second data centre in Marseille (Interxion MRS2) next week (May 16th). What’s driving demand for colo services in that market? Marseille is Europe’s gateway to and from Africa, the Middle East and Asia. The 13 submarine cable systems that land in Marseille connect the city to 43 different countries in these markets. Network Operators, content providers and cloud platforms therefore find Marseille a very cost effective and efficient location from which to serve multiple markets, and this is the key driver of demand.

Can you give some indication of the growth that Marseille has experienced over the last two or three years? Marseille has transformed from a transit location to one where data is stored and exchanged. Over the last three years the number of connectivity providers with network infrastructure in Interxion MRS1 has grown from 50 to over 130. Within that we have seen strongest growth from international network operators from China, India and Africa. Another indication of he city's growth as an interconnection hub is the number of networks joining the exchanges present in Marseille (DE-CIX, FranceIX, NL-ix and NetIX). Traffic flows are switching from more northern European cities to Marseille as networks exploit the technical advantages of peering privately and publicly in Marseille.

Why does Marseille continue to be so attractive for submarine cable systems? Firstly, the community of interest present in Marseille’s data centres is a ready-made market place for the subsea operators. The success of projects such as AAE-1 and SMW-5 illustrates how the commercial viability of a cable system is enhanced when so many potential buyers of capacity are in the same data centre as the system’s SLTEs. Secondly, the local authorities in Marseille haveCapacity an integrated vision for transforming the city into a digital hub. This includes facilitating the landing of submarine cables in the city, ensuring the permits and infrastructure needed is in place to accelerate project timescales. And finally, the large number of backhaul providers (over 30) connecting Marseille to other key European cities ensures operators of subsea traffic have a wide range of commercial and technical offers to select from. This is a key ingredient for making the city a true gateway – serving the needs of traffic coming to Europe as well as that departing.

Is Interxion’s second data centre in Marseille simply a case of adding colocation capacity to the city? That’s certainly part of the story, as demand is high from content platforms wishing to take advantage of Marseille strategic location. However, Interxion MRS2 also provides diversity to our customers. Six backhaul providers have already deployed their networks into the facility, offering routes out of Marseille that are independent of our existing data centre, Interxion MRS1.

How do you see Marseille developing in the future? The density of connectivity providers will continue to grow, but the biggest transformation (already well underway) will see Marseille become a leading location for the storage and processing of content. The symbiotic relationship between the connectivity community already present and digital media and cloud platforms is clear.

Do you expect more submarine cable systems to land in Marseille? Yes, there are a number of subsea projects that are currently finalising technical evaluations for terminating in Marseille before the end of 2019. These projects will see the total potential capacity in Marseille double from today’s 152Tbps to 320Tbps.

Marseille has transformed from a transit location to one where data is stored and exchanged” Mike Hollands, director of strategy and market development, Interxion

april/may 2018

special report

CLOUD April/May 2018

CONTENTS 65 Cloudâ&#x20AC;&#x2122;s coming in to dominate the data centre Capacity looks at Ciscoâ&#x20AC;&#x2122;s Global Cloud Index

66 The big interview Ian Massingham, chief evangelist, Amazon Web Services, EMEA

68 Mixing it up Capacity

Why are an increasing number of enterprises adopting hybrid or multi-cloud approaches?

71 Executive interview Sebastian Krause, head of cloud at IBM Europe

72 Designing the idiots out of cloud security Infrastructure, applications and people - the three areas of concern in cloud security

capacitymedia.com

64 | q&a: dino andreou

OTEGLOBE: BUILDING NEW ROUTES ACROSS EUROPE OTEGLOBE CEO Dino Andreou details the company’s recent plans and how their new investments will affect the company’s financial results now and in the future Which were the biggest challenges OTEGLOBE faced during the past 12 months? The redesign of our backbone network and the successful launch of the Asia Africa Europe 1 (AAE-1) submarine cable, where OTEGLOBE is a landing party, were the biggest challenges we’ve faced during the previous year. Can you share more details on these two major, for your company, projects? Up until 2016 our company has based its operations and services on two separate, optical backbone networks, we called them TBN & GWEN, that stretched from Greece to Western Europe through the Balkans and Italy respectively. This robust infrastructure elevated our company to the position of

quite challenging, it took as almost two years to complete this network transformation from its planning stages but we strongly believe that it will put us in a leading position to offer unparalleled, seamless connectivity options in the region. AAE-1 project is well known in the market, the biggest next generation submarine cable to connect selective Capacity destinations in Asia – both Singapore and Hong Kong – Middle East and Africa to Europe. Working together in a consortium of 19 global carriers we managed to overcome many challenges and complete its construction last October. The cable is now fully operational and I can add quite successful as we are heading for its first major upgrade, hopefully within 2018.

By investing in AAE-1 we aim to enhance and strengthen our position in the developing markets of Middle East, North Africa and Southeast Asia” Dino Andreou, CEO, OTEGLOBE leading international telecommunication carrier in South East Europe and formed the basis of our next steps. To offer our customers advanced telecommunication services and cope with the ever increasing demands in our region, we’ve decided to invest anew and transform these backbone networks to a unified, optical, multi-terabit platform covering a large part of Europe. By leasing new fibre - we now have more than 21,000 km of acquired fibre in total - our redesigned European backbone is having 4+ diverse fibre routes between Greece and the Balkans to Italy and Western Europe. The whole project was

Have you seen these new projects and investments yielding any results for OTEGLOBE? It is too early to see the full impact of our network transformation and investment in AAE-1 in our financial results. OTEGLOBE reached €333.5 million in revenues in 2017 with a 15% increase in our EBITDA margin. This can be partially attributed to our previous years’ investments but also to the maintenance of high revenues coming from our international voice services. OTEGLOBE is a strong regional voice hub in South Europe,

with its own IPX platform, offering both bilateral voice terminations as well as hubbing services, accounting to the majority of our revenues. Over the course of the next 2-3 years we will be seeing the full impact of our recent investments in our financial results. A new diverse European backbone totally based on leased fibre will improve our cost structure and competitiveness, whereas AAE-1 opens up new markets and sources of revenue for OTEGLOBE. So what are your plans for 2018? Maintaining our leading role in Greece and the wider area of Southeast Europe is our primary target and that includes both our Voice and Data Business. By investing in AAE-1 we aim to enhance and strengthen our position in the developing markets of Middle East, North Africa and Southeast Asia. Traffic from Asia can be routed through the AAE-1 subsea cable to OTEGLOBE’s landing station at Chania, and from then on through our new, diverse terrestrial network to the rest of Europe ensuring resilience and diversity in the region. So you can see how these projects are interlinked as part of our short term strategy to make Greece the alternative hub in the Mediterranean region. Speaking about the future in the long-term what would you expect from the next 5 - 10 years? Making a long-term forecast is quite challenging. Emerging technologies such as IoT, 5G deployment, SDN, cloud computing, etc. will have a strong impact on our services, the interaction with our customers and our overall operation. The wholesale industry will have to transform to adapt to these new needs, but it’s too early to make safe predictions today. april/may 2018

cisco cloud index | 65

CLOUDS COMING IN TO DOMINATE DATA CENTRE SKYLINE

ata from the cloud will represent 95% of total data centre traffic by 2021, it is estimated, highlighting the importance of cloud service adoption in driving data centre demand and growth. The figures were revealed as part of Cisco’s seventh annual Global Cloud Index, which looks at data centre virtualisation and cloud computing, and how these have become fundamental elements in transforming how many business and consumer network services are delivered. It is not just business applications that are driving cloud growth. Cisco’s study found that consumer services such as video streaming, social networking, and internet search are among the most popular cloud applications in use. Key business drivers include enterprise resource planning, collaboration, and analytics. In 2016, traditional data centre traffic was around 849 exabytes while cloud traffic was 6 zettabytes. The former is predicted to rise to 1.7ZB by 2021, while cloud services will treble to 18.9ZB – taking total data centre traffic to 20.6ZB. Software-as-a-service (SaaS) will be the most popular cloud service model in 2021,

Cisco predicts. The growth will see 199 million cloud workloads expand to 534 million cloud workloads, meaning around 94% of all workloads will be cloud-based by 2021. This would demonstrate a compound annualCapacity growth rate of 22% at a time when traditional data centre workloads are declining 5% a year. • By 2021, 75% (402 million) of the total cloud workloads and compute instances will be SaaS workloads and compute instances, up from 71% (141 million) in 2016. (23% CAGR from 2016 to 2021). • By 2021, 16% (85 million) of the total

cloud workloads and compute instances will be IaaS workloads and compute instances, down from 21% (42 million) in 2016. (15% CAGR from 2016 to 2021). • By 2021, 9% (46 million) of the total cloud workloads and compute instances will be PaaS workloads and compute instances, up from 8% (16 million) in 2016. (23% CAGR from 2016 to 2021). In the past, security concerns have been a major barrier to cloud adoption, Cisco said. Improvements in data centre governance and data control have helped to minimise enterprise risk and better protect consumer information. Security innovations coupled with tangible cloud computing benefits, including scalability and economies of scale, play key roles in fueling the cloud growth projected in the study. Additionally, the growth of internet of things (IoT) applications such as smart cars, smart cities, connected health and digital utilities requires scalable computing and storage solutions to accommodate new and expanding data center demands. By 2021, Cisco expects IoT connections to reach 13.7 billion, up from 5.8 billion in 2016.

Sources: Cisco Global Cloud Index, 2017

By 2021, 95% of global data center traffic will come from cloud services and applications.

capacitymedia.com

66 |

Cloud new is the

normal

As one of the market leaders in cloud technology, Ian Massingham, chief EMEA evangelist at AWS, speaks to Natalie Bannerman about the Capacity trends driving cloud consumption and his thoughts on the future of infrastructure providers

e often talk about the cloud as the technology that is transforming business applications and software. It’s usually spoken of in terms of something emerging and new, but Ian Massingham, chief evangelist at Amazon Web Services (AWS) Europe, Middle East and Africa, brings a new perspective to the conversation. “I already think it’s the new normal for customers that want to deploy applications, build new services or modernise their existing IT. I think a lot of the evolution of the cloud has rapidly taken place over the course of the last five years or so, where mainstream adoption amongst traditional enterprises has really started to accelerate.”

Market snapshot As one of the biggest players in cloud services, AWS is a $20 billion run-rate business, growing by about 45% year-onyear with a market share of approximately

35%. Despite this, the worldwide IT services market is worth approximately $3.5 trillion, so Massingham says there’s still a long way to go before you can say that the cloud is ubiquitous or has reached a position where it’s most of IT. Many of you would be forgiven for not knowing exactly what a chief evangelist is, but he explains: “We call it evangelism at AWS but, in other companies, the team and role I’m involved with would probably be called developer relations.” In short Massingham’s role is to educate and build awareness among software developers and architects, who use the vast array of API’s available within AWS, to be affective users of the platform and how to put AWS to work to help them build products or services. He says there are several different components driving cloud consumption today. The first is that the people who are building brand new products or applications are interested in accessing a set of services to help them get their work done in a quick and efficient manner. “Its very rapid, very responsive, very cost optimised

and very secure,” explains Massingham. “Plus it allows customers to offload a lot of the undifferentiated, unnecessary heavy lifting associated with building applications to someone else and to focus their efforts on what’s really unique about their application and the problem that they’re trying to solve.” And some customers are trying to modernise their existing IT. “They already have applications that are running their business so they want to modernise those services and deliver those applications in a more efficient, secure and lower cost manner,” he says. Internet of things applications, data-centric applications, artificial intelligence and machine learning are the big three that are accelerating in terms of importance. Unlike the many who are hailing hybrid cloud as the future of cloud technology, Massingham sees it as a phase that allows companies to reach their end goal. “I think hybrid cloud is going to be a reality for the foreseeable future because, although enterprises in the main can see a strong business case for doing things april/may 2018

the big interview: ian massingham | 67

2001 2005 2010

Hosting service delivery director, Energis Hosting and information security business development, Energis & Cable and Wireless CTO for cloud and telecoms service providers, EMEA, EMC

2013

Developer & technical evangelist, Amazon Web Services

2016

Chief evangelist, EMEA, Amazon Web Services

business and the challenges the company faces around cloud adoption. Massingham replies: “We face a challenge in educating customers about the reality of using the platform we provide. Unfortunately it’s still not uncommon that you’ll come into contact with customers with misconceptions about the cloud.” Another challenge is the inherent complexity of large enterprises. “They have complex landscapes of technology and a lot of complexity in applications that have grown up within carriers and working through that is something that can take a little bit of time.” Speaking of educating customers, security is one particular area that customers need to be taught about when it comes to AWS. “Customers might feel that for some reason the cloud offers a lower standard of information security or that compliance in

Unfortunately it’s still not uncommon that you’ll come into contact with customersCapacity with misconceptions about the cloud”

Ian Massingham, chief technical evangelist, EMEA, AWS

adopting the cloud, they simply have to prioritise the way in which they make that change,” says Massingham. “You can’t flick a switch and overnight suddenly have modern state-of-the-art IT. You have to move through a journey in order to get to where you want to be, especially when you have that level of complexity and operating constraints that many enterprises have.” He thinks that idea that you can have multiple infrastructure providers within a business is not going to be the normal pattern. “I think you’re going to have one predominant provider of infrastructure, probably one of the large cloud providers, and then you’re going to have other suppliers of IT who you purchase applications or business services from instead, which is in line with the rise of the subscription-based software model.” On the topic of multi-cloud convergence, Massingham adds that “customers will buy the solution that best fits their use case requirement, and they’ll be really quite ambivalent about whose infrastructure that solution is running on.” We move on to discuss AWS as a capacitymedia.com

the cloud is more difficult than it is with owner operated infrastructure,” he says. “But when customers have adopted AWS they find that it’s easier to maintain a robust security posture in the cloud because they have less heavy lifting to do. It’s also easier to achieve compliance in the cloud, because the auditors are familiar with how the security controls are applied within cloud and, of course, they are standardised across all customers. There tends to be a lot of pre-work done by AWS and other operators to ensure that the cloud offers a safe, secure and reliable location for customers to run mission critical services.” AWS has almost 2,000 security controls that are continuously audited by third parties. He explains that AWS operates something called the shared responsibility security model. It means that AWS jointly shares the security responsibility with its customers. “We secure our low level services infrastructure but of course customers choose what applications they are going to run on the platform as well as what data they are going to store and process with AWS and customers are ultimately responsible to their stakeholders, we’re not. So in GDPR

terms we’re a processor and our customers are controllers of the data.” AWS became fully GDPR compliant in March, a fact that Massingham says “underscores that it’s simpler and easier for customers to reach the right level of security and compliance in the cloud than it is with traditional models.”

Enterprise and wholesale Enterprises have many demands of their cloud provider but top of that list is trust. “Security, compliance, operational excellence, reliability: these are all absolutely key in ensuring we maintain the trust of enterprise customers. You need to serve their customers in the way they would serve them themselves,” he explains. Next, referenceability. “If I’m a CIO or an enterprise decision maker looking to buy technology, one the first things I will do is look at analyst reports and look at my peers.” And last, portfolio breadth. “You wouldn’t buy a car that doesn’t have enough seats for your passengers, so why would you buy a cloud that doesn’t have the basic features that you need?” he asks. AWS is a major consumer of network infrastructure, with its 18 global regions weaved together using subsea and surface fibre. Massingham says that the company delivers a lot of traffic to the public internet and also receives a lot of traffic from the public internet. “We have many partnerships with retail carriers like Vodafone, BT and Colt,” he says. “This is the way that carriers play a really critical role in customers’ access to cloud in a reliable, secure and performant manner. We have a broad partner ecosystem of operators that we work with and we’re always looking for more, to provide our customers with more choice.” AWS still shows no signs of slowing down. Describing the company’s plans for the future, Massingham says: “We’ll continue to expand our geographic footprint, adding to our existing 18 regions around the world where customers can access AWS services. We’ve already announced Stockholm and Bahrain, which we’re going to open over the coming months.” The company will also expand in the area of services. Over the last 12 months period, an average of 100 new services and features a month have been added to the AWS platform, says Massingham, driven largely by customer feedback. He says that the company will look to expand its services footprint in the area of artificial intelligence and machine learning. Whether it’s still emerging, evolving or maturing, the cloud is undeniably here to stay – with AWS as one of its leaders. Massingham has it right when he says: “It’s a services-based world.”

68 |

MIXING IT UP Capacity

As more enterprises move applications to the cloud, demand for hybrid models is growing. Guy Matthews looks at how wholesale telecoms sector can adapt to profit from this scenario

nterprises wanting flexible and scalable access to compute resources, without either breaking the bank or sacrificing too much control, are turning in large numbers to a hybrid cloud model. Many of the efficiencies of an on-demand application model can be enjoyed by organisations who choose to operate their own private cloud server. By tweaking and adapting their server infrastructure they find they can enjoy a satisfactory balance of freedom and control over resources. But when it comes time to scale those resources up, it can help to blend the use of their private cloud with public cloud services, as operated by the likes of Microsoft, AWS or Google. It may indeed suit them to go beyond a simple hybrid cloud model and use a mix of different cloud services from different providers, according to what they see as the strengths of each, while still retaining their own infrastructure for particular roles.

“Operating on a hybrid basis enables businesses to take advantage of the collaborative working capabilities offered by the likes of Office 365 and G-Suite, while securing sensitive HR or financial data that must be kept on-site,” points out Steve Foster, senior solutions engineering manager UK and Ireland with Riverbed Technology, a vendor of application performance solutions.

Connectivity is central This ability to have multiple cakes and eat them too explains why the hybrid model is soaring in popularity. Research firm Markets and Markets predicts that the market will globally be worth $91.74bn by 2021, up from £33.28bn in 2016. Connectivity has always been a central part of a successful cloud strategy. Never more so, as the cloud market becomes more complex and nuanced, argues Mark Scaife, head of cloud practice at UK-based service

provider Daisy Group: “Carriers play a pivotal role in cloud adoption,” he says. “One of the biggest inhibitors to large scale adoption of cloud services is the connectivity between A and B. While public cloud adoption is increasing at a rapid pace, businesses are still hamstrung by compliance and regulatory constraints along with amortised assets or legacy solutions sitting in datacentres, which is the perfect storm for hybrid cloud adoption. Connectivity is the glue that bonds these together and ensures a smooth onramp to cloud, hence the necessity and collaboration between carriers and cloud solutions.” Rick Moore, global director, cloud strategy at data centre operator Digital Realty, believes that enterprises are getting more savvy about how to get the best from a cloud investment and see carrier connectivity as more central to that than ever: “Businesses are smarter about where their cloud resources actually sit, and about april/may 2018

feature: hybrid cloud | 69

how they architect their data centre topology and networking strategy around high performance, high security connections into those resources,” he believes. “A couple of years ago, at the beginning of cloud 2.0, when enterprises were migrating workloads and applications, not a lot of though was being given to where those cloud resources sat or about specific latency requirements. We were all thinking more about physical security at the time. Now people are thinking again and realising that some public cloud resources can sit in a multi-regional environment and satisfy certain perhaps not very demanding performance requirements. Other workloads are demanding not only milliseconds of latency performance but in some cases microseconds. People are getting wiser about where resources sit so they can connect to them and meet certain performance and latency requirements.” Moore sees the software enabling of so many carrier networks as playing very well in this scenario: “SDN enables the performance we’re talking about, plus it is starting to make things really simple,” he explains. “It’s getting easier to peg yourself to an underlying cloud resource, plus more services are available. And as the industry continues to consolidate, for example with Level 3 and CenturyLink, you are getting some really powerful networks emerge. That’s great for cloud.” Moore says a crucial benefit of SDN is to allow for a standardisation of network services to become possible for the first time. “You’ve got a network provider who can come in and make it so ordering a VLAN to my cloud services in Australia is as simple as it is in New York or Singapore. It’s confusing and time consuming to order services in one part of the world and have to start over in another part of the world. Network providers are needed who can address that by moving along the SDN front. Delivering simplicity is our job too.” Moore foresees a more consolidated and collaborative hybrid market developing over the next three years: “You’re already seeing partnerships between players like AWS and VMWare, and Microsoft talking to Dell EMC about its Azure Stack. There’s an opportunity for carriers to become part of those solutions. We’re certainly going to see more bundled and packaged solutions in the cloud market.” But there is transformative work to be done first, and certain carrier names are determined to be in the vanguard of a more flexible and more aggressively direct approach: “Carrier focus to date has been on supplying the big content players,” says Mattias Fridstrom, Telia Carrier’s chief evangelist. “Carriers have the connectivity into the cloud – the Googles and the capacitymedia.com

Amazons – so why not use that and go to enterprises direct and sell them this connectivity, and more besides?” He says Telia has had to undergo significant reinvention to address this opportunity: “It was easier when it was just a matter of supplying point to point solutions, but now we are offering so much more a lot of time is being spent on enhancing systems and building IT resources to become a much easier company to work with so people will want to buy everything from us,” he says. “We have all the pieces – the public Internet, the private network, the dedicated circuits – we just need to make sure customers can easily select what they want.”

Going beyond wholesale Wilfred Kwan, COO of Global Cloud Xchange (GCX), is similarly excited about the hybrid cloud opportunity: “The problem for enterprises often is that they have too many cloud options on the table and they don’t know which one to pick,” he observes. “We’re used to picking the right solutions for our customers. It’s nothing new to us. We’re often approached by enterprise CIOs or COOs who want to test out new ideas, which we are more than Capacity happy to do for them.” Traditionally, the wholesale carriers communit has not been used to providing a customised solution: “If you want to capture the cloud market, you have to have the big muscle and the big pipes, but at the same time you’ve got to have the project management team than can handle the variance that the customer needs,” he explains. “That means a lot more work of course, and a lot more technology you need to understand. Along with that added work comes a lot more stickiness.” Jerzy Szlosarek, CEO of Epsilon, believes it is vital for carriers to go well beyond a traditional wholesale approach to maximise the hybrid opportunity: “Legacy networking models are too slow and inefficient to support a hybrid cloud,” he believes. “They add complexity instead of removing it while increasing costs. Connectivity is critical to any hybrid cloud strategy and enterprises want simple networking solutions that mirror the agility and adaptability of the cloud. The best way for a service provider to support hybrid cloud is to deploy an on-demand connectivity platform, like our Infiny, with its direct access to multiple CSPs.” Through a single connection, he says, they are given the control and the freedom to adopt more cloud services and use whatever infrastructure best suits their objective: “Connectivity is managed from a single platform and they aren’t paying for or managing multiple direct connections,” he adds.

John English, senior manager service provider solutions at network performance solutions firm NetScout, believes better network visibility is crucial for carriers with cloud ambitions: “To maintain a competitive edge, carriers must ensure they have actionable intelligence based on comprehensive visibility across their entire infrastructure, including all on-premise, wide area networks, and off-premise cloud environments, for full service assurance,” he says. “End-to-end visibility will therefore be required across the increasing amount of data travelling back and forth in traditional on-premise and multi-cloud environments.”

Profound transformation Not every carrier, however, has the horsepower to make hybrid cloud work, certainly not solo. The model of connecting organisations with legacy IT hosted in their private data centres as well as assets hosted in multiple public clouds requires a connectivity proposition with reach and density. “This means not only connecting branch offices to each other globally, with availability and reliability that supports customers’ strategy and growth ambitions, but also providing connectivity into the mission critical digital ecosystem that lives in the cloud,” believes Andrew Edison, vice president of wholesale at Colt. “No one network can cover the entire globe so there is an extensive reliance on other carriers to fill in the missing pieces in the coverage map. As a result, networks will buy connectivity and capacity from each other in varying quantities.” Increasingly, he observes, data centre operators are also becoming resellers of connectivity, as enterprise customers buying cloud services also need access to those facilities: “In fact the biggest area of growth in terms of connectivity right now is data centre to data centre interconnection,” he points out. The transformation that carriers must undergo to meet the hybrid cloud market head on is as profound as it is beneficial, argues Iain Harfield, senior presales consultant at Tibco Software: “This changing business model for telco and specialist wholesale will reverse their down turn,” he says. “A focussed wholesale organisation will be fundamental to delivering network capacity for ‘anyone to anything’ in an agile manner. However, connectivity and capacity is not enough. A successful transformation must be accompanied by differentiating value added services. Future wholesale providers will be able to supply more traffic distribution use cases, on-demand and at scale.”

Capacity

executive interview: sebastian krause | 71

SECURITY IS ‘AT THE HEART’ OF IBM CLOUD STRATEGY Cloud ‘gives enterprises the ability to innovate’, says IBM’s European cloud head, Sebastian Krause. But security is essential, he tells Alan Burkitt-Gray

BM does not believe in public versus private cloud, says the company’s head of cloud for Europe. “It’s not ‘either or’,” says Sebastian Krause. “It has to be both. We invented the term ‘hybrid cloud’, which everyone now uses. We also use ‘multiple cloud’,” a term that includes on-premise services, he says. Krause is responsible for IBM’s “entire cloud franchise”, in Europe, from Spain in the west to Sweden in the north and Russia in the east – and including Israel. A key part of the company’s European cloud operation is a data centre in Frankfurt “which is not touched by anyone who is not an EU citizen”. That’s one element of the company’s privacy

means IBM fits well with the European Union’s new General Data Protection Regulation (GDPR), which comes into effect on 25 May 2018. That will enforce tough new rules about what enterprises can do with personal data: it’s their responsibility, not their cloud providers’ responsibility, to get things right. “Some countries don’t like personal data outside their borders. We think that’s a better strategy.” That means IBM – and other cloud providers – have to provide data centres in Capacity each country where such restrictions apply. “We have 60 data centres [around the world] for cloud services,” says Krause. “Customers are connected with a

We have been very clear: we treat data privacy in a prudent way. Data responsibility is something the entire IBM corporation has taken seriously over decades. We don’t do anything with the data of our clients. We don’t look at it – even to improve our algorithms. That would be sacrilege for us” Sebastian Krause, head of cloud for Europe, IBM strategy – not just as it applies to cloud, but to all operations. He's normally based in Madrid but we're talking in IBM's riverside offices in central London, a raw concrete construction from the 1970s, designed by the same architect as the National Theatre, which sits alongside. “Security is one aspect of our data responsibility,” says Krause. “We have been very clear: we treat data privacy in a prudent way. Data responsibility is something the entire IBM corporation has taken seriously over decades. We don’t do anything with the data of our clients. We don’t look at it – even to improve our algorithms. That would be sacrilege for us.” This strategy, he says, capacitymedia.com

high-performance network.” And, where allowed, the data centres are connected. “We have data transmission for free between data centres. You need to have the data flow. We wouldn’t want to hinder that.” The network providing the connections between data centres “is normally owned by us”, says Krause. “The network is important: we wouldn’t want to sell the network.” IBM’s annual cloud revenue is now $17 billion, 24% up year on year and 30% up in the fourth quarter, when it reached $5.5 billion. The company provides “more than 170 services” via cloud, including artificial intelligence (AI), internet of things (IoT),

blockchain services and, well, data. It’s offered as cloud-as-a-service, and the company says that each of the 10 largest global banks, as well as nine of the top 10 retailers and eight of the top 10 airlines, are its customers. And there are some telecoms carriers in the list, too, but Krause is not sure whether he can name them. Some carriers use IBM’s AI-based service, called Watson – after Thomas J Watson, the company’s leader for more than 40 years until 1956, and effectively the creator of IBM as the computer giant it became. Krause has some way to go to reach Watson’s longevity in the job. “I’ve been in this role since January 2015,” says Krause, who has worked for IBM for his entire 28-year career so far. “I grew up in software, as an OS/2 sales rep – still the best operating system.” OS/2 was IBM’s in-house operating system for personal computers, built to compete with Windows, but Krause would probably forgive me for saying it lost the market battle to Microsoft. “I spent four years in New York running storage, and I’ve worked in various places in Europe and the US – the normal life of an IBM executive.” In 2015 IBM brought together “different investments in cloud to make sure we handled the marketing and spread the message in a unified way”. Since then the range has expanded as IBM has added more elements. “Today we offer the broadest range of cloud services,” says Krause. “Private cloud could also be on a public cloud, a private instance that is isolated for [the user’s] own purposes. That’s part of how we have strengthened the portfolio.” Cloud “is characterised by innovation,” he adds. Unlike software, where he started, “cloud doesn’t have a release number – it’s continuous innovation”, he says. “We are the cloud provider for the enterprise. It gives you the ability to innovate.”

72 | feature: cloud security

DESIGNING THE IDIOTS OUT OF CLOUD SECURITY Ç§ ÇĄ

ÇĄ Ç§ ÇĄ NATALIE BANNERMAN

ver 60% of organisations in Europe and the Middle East admitted to being victims of cyber-attacks and, according to Alex Hilton, CEO of Cloud Industry Forum, a further 26% are waiting or expecting them to happen. Speaking on a panel discussing multi-cloud security, Hilton was joined by Adrian Roberts, director of global cloud solution architecture at VMware, Edward Rowley, SE manager of EMEA at Proofpoint, James Brown, global vice president of technology solutions at Alert Logic, and Sean McAvan, managing director of Navisite Europe.

Infrastructure, applications and people A huge 56% of organisations say there is a lack of skilled personnel when it comes to cloud security, something that the panel members said needs to remedied. â&#x20AC;&#x153;If you donâ&#x20AC;&#x2122;t know how to manage and how to architect security into your application, no matter where you host them, if you havenâ&#x20AC;&#x2122;t got the skills, youâ&#x20AC;&#x2122;re going to run into problems,â&#x20AC;? said Roberts. â&#x20AC;&#x153;There are a lot of the concerns around the threats delivered via email to individuals. They used to say â&#x20AC;&#x2DC;you canâ&#x20AC;&#x2122;t catch stupidâ&#x20AC;&#x2122;, but thatâ&#x20AC;&#x2122;s no longer the case,â&#x20AC;? explained Rowley. â&#x20AC;&#x153;I think one of things cloud has done is democratise access to technology,â&#x20AC;? added McAvan. â&#x20AC;&#x153;Automated threat prevention systems that were only really available to enterprises a few years ago are now available to most organisations. It now becomes a question of knitting those skills and tools together so that you design security into platforms from the start.â&#x20AC;? â&#x20AC;&#x153;There is a skills gap, but I think itâ&#x20AC;&#x2122;s slightly more nuanced than that sometimes,â&#x20AC;? chimed in Brown. â&#x20AC;&#x153;A lot of our security professionals come from a networking background, so you can construct a very secure network environment in the cloud â&#x20AC;&#x201C; but when you open port 80 and let web traffic through to your server, then what? So I just think that skills required are changing and itâ&#x20AC;&#x2122;s

moving much more into applications security.â&#x20AC;? Cloud-based technology allows organisations to get up and running very quickly â&#x20AC;&#x153;but that same technology also allows criminal gangs to get up and running very quicklyâ&#x20AC;?, explains Rowley.

Demographics But overall he says it varies from very widespread targeting to very precise targeting built on lots of online research, sometimes specified by things like language and job role. â&#x20AC;&#x153;Millennials in particular have never Capacity been so free to give their information away, but you canâ&#x20AC;&#x2122;t patch stupid. I think evolution will generate more idiots than technology can catch up with,â&#x20AC;? joked Roberts. Brown on the

and to do that you need tools that will connect to all those platforms in order to be able to manage security across all those platforms, and you also need people who have the skills to manage across all those different platforms.â&#x20AC;? But there is hope, said Rowley, that â&#x20AC;&#x201C; with the level of automation that exists in the cloud â&#x20AC;&#x201C; that in the future there will be ways to make things easier to manage.

Backing up for business continuity We now live in an age where we instinctively back things up to the cloud â&#x20AC;&#x201C; everything from the photos on our iPhone to the remote access logins we use for work â&#x20AC;&#x201C; but Brown pointed out a crucial flaw that many overlook in that plan, although he thinks backing up in the

I think evolution will generate more idiots than technology can catch up withâ&#x20AC;? Adrian Roberts, director of global cloud solution architecture, VMware

other hand doesnâ&#x20AC;&#x2122;t think any one group is more susceptible than another. But what our technology has done is â&#x20AC;&#x153;reduce the gap between a criminal producing the attack and then actually monetising itâ&#x20AC;?. He added that cryptocurrencies and specifically cryptocurrency mining is the quickest way to do that.

Complexities of multi-cloud environments â&#x20AC;&#x153;I think organisations use multi-cloud to achieve security, so to classify different types of applications and data on the most relevant and secure platform available,â&#x20AC;? said McAvan. â&#x20AC;&#x153;The complication comes because you need to deliver a holistic end-to-end security regime across all those platforms,

cloud has some definite advantages if youâ&#x20AC;&#x2122;re still moving things off-site. That same agility, automation and scale, you have in that cloud environment can also go wrong. â&#x20AC;&#x153;In the cloud you can automate failure at scale,â&#x20AC;? said Brown. â&#x20AC;&#x153;You just need to run the script incorrectly and you could have deleted a yearâ&#x20AC;&#x2122;s worth of backups.â&#x20AC;? But for those of you clutching at your pearls, fearing for the safety of your data in the cloud, Brown said that, although we do see routine attacks in the cloud environment, it is secure. The risk is being on the internet as a whole. â&#x20AC;&#x153;If you put something online, and open an IP address â&#x20AC;&#x201C; whether is in a cloud environment or on a server underneath your desktop â&#x20AC;&#x201C; someone will take a poke at it within a few hours.â&#x20AC;? april/may 2018