telegeography workshop: international market trends€¦ · 2 as competition for 100g increases,...


Today’s Batting Order

Where Networks Connect: Colocation Market Trends

— Stephan Beckert

Global Bandwidth & IP Transit Pricing Trends

— Brianna Boudreau

The Dystopian Future of International Networks

— Alan Mauldin


Where Networks Connect: Colocation Market Trends

Stephan Beckert

[email protected]


Where Networks Connect


Where the nodes are, 2015Largest Retail Colo Markets, 2015


Space is growingGross Retail Space, 2011 vs 2015


Colo is geographically concentratedGross Retail Space, 2011 vs 2015


Who owns all that space?Largest Retail Providers, 2015


The big are getting biggerMajor Transactions, 2015

Buyer Seller Value

Equinix Telecity $3.6 b

Digital Realty Telx $1.9 b

NTT e-shelter €742 m

Zayo Latisys $650 m

Tierpoint Windstream Data Centers $575 m

Cyrus One Cervalis $400 m

QTS Carpathia $326 m

vXchange SunGard Assets 8 DCs)


What does colo cost? Median Baseline Price Q2 2015


Prices ranges are wideBaseline Price Range, Q2 2015


Spot the patternMedian Cross Connect Prices, 2h. 2015


Cross connects can matterTCO with 1 cross connect


Cross connects can matter — a lotTCO with 5 cross connects


Prices are stableColo vs. IP Transit prices, 1h. 2014 – 2.h 2015


Outlook


Global Bandwidth & IP Pricing Trends

Brianna Boudreau

[email protected]


Overview

• Wholesale Bandwidth Price Trends

• End-to-End Cost Components

• Technology & Cost Improvements

• IP Transit Price Trends


Wholesale Bandwidth Pricing


1 Bandwidth price erosion has been most rapid on routes where new supply has come online.

1 Despite universal price erosion and an influx of new capacity in many markets, geographic price differences persist.

2 Long-haul submarine capacity still comprises the largest portion of a circuits end-to-end cost across all major subsea routes.

1 Bandwidth price erosion has been most rapid on routes where new supply has come online.

1 Despite universal price erosion and an influx of new capacity in many markets, geographic price differences persist.

2 Long-haul submarine capacity still comprises the largest portion of a circuits end-to-end cost across all major subsea routes.


Bandwidth Prices Continue to FallMedian 10 Gbps Monthly Lease Prices, 2015


But Still Vary By Geography



And By CarrierMedian & Price Range for 10 Gbps on Los Angeles-Tokyo, 2012-2015


End-to-End Cost Components


Backhaul Impacts PriceMedian PoP-to-PoP 10 Gbps Price Components, 2015


Local Access, The Longest MileMedian End-to-End FastE Price Components, 2015


Technology & Cost Improvements


1 While 100 Gbps service prices are declining, the pace of price erosion lags behind 10 Gbps wavelengths.

2 As competition for 100G increases, carrier price multiples have converged.

1 Ethernet is a cost-effective option for point-to-point services, providing over 50 percent more capacity for less than the cost of an SDH circuit in some cases.

1 While 100 Gbps service prices are declining, the pace of price erosion lags behind 10 Gbps wavelengths.

2 As competition for 100G increases, carrier price multiples have converged.

1 Ethernet is a cost-effective option for point-to-point services, providing over 50 percent more capacity for less than the cost of an SDH circuit in some cases.


The Evolution of 100G Pricing10 & 100 Gbps Prices & Multiples on Key International Routes, 2015


Prices & Multiples Vary by CarrierChicago-New York 100G Prices & Multiples by Carrier, 2015


For Whom the Bell Tolls….(SDH)Median Prices for SDH & Ethernet on Frankfurt-London, 2015


Ethernet Prices by Transport TechnologyMedian GigE Prices for EoMPLS, EoDWDM, and EoSDH/SONET, 2015


Ethernet Price TrendsMedian FastE EoMPLS Prices on Key International Routes, 2015


IP Transit Pricing


1 After years of relentless decline, the pace of IP transit price erosion has slowed across major cities.

2 Low prices in London, a critical international traffic hub, have fallen to the $5 per Gbps mark.

3 Transit is more expensive in markets that remain largely dependent on long-haul links to Europe or the U.S. to gain international connectivity.

1 After years of relentless decline, the pace of IP transit price erosion has slowed across major cities.

2 Low prices in London, a critical international traffic hub, have fallen to the $5 per Gbps mark.

3 Transit is more expensive in markets that remain largely dependent on long-haul links to Europe or the U.S. to gain international connectivity.


IP Transit Prices are Still Falling10 GigE IP Transit Price Declines in Major Cities, 2012-2015


But Geographic Price Differences Persist



The Evolving Wholesale Market

• New Supply

• Shifting to 100G

• IP transit pricing

• Future Products


PTC Presentations to Come?Implied Price per Gbps per Minute, 2015


The Dystopian Future of International Networks

Alan Mauldin

[email protected]


What’s a dystopia?• It’s the opposite of a utopia (A mythical place with constant sunshine, rainbows, and stable bandwidth prices)

• A dystopia is an imagined place or state in which everything is unpleasant or bad, typically a totalitarian or environmentally-degraded one.


Dystopian trait 1: A figurehead or concept is worshipped by society


Who is this man?• Gordon Moore

• Moore’s Law states the number of transistors on a circuit was doubling approximately every 2 years (implied annual growth of ~41%).

• This law is assumed to apply to technology more broadly, even to bandwidth demand.


Has demand growth been “Moore’s Law”-ish?


The magic of compoundingUsed Bandwidth Forecasts – Moore’s Law


The magic of compoundingUsed Bandwidth Forecasts – TeleGeography Forecast


Dystopian trait 2: Concentration of power among an elite group


Private network growth outpacing Internet backbone growth...

Internet Backbone Operators vs. Private Networks

38%


...but concentration is happening in both categories

Top 5 Content Providers + Top 5 Internet Backbone vs. Everyone Else

47%


Concentration is most extreme on the main transoceanic routes

Trans-Atl & Trans-Pac Top 5 Content Providers + Top 5 Internet Backbone vs. Everyone Else

72%


Dystopian trait 3: Dehumanization


Data centers driving bandwidth demand growth


Major Content Provider Data Center Locations, 2015


More on the way


Major Content Provider Data Center Locations, 2017


Dystopian trait 4: Resource exhaustion


Capacity exhaustion?Lit and Potential Trans-Pacific Capacity 2015-2025

Exhaustion in mid-2018

Potential of existing cables 2015



Exhaustion in 2021

Potential of existing cables plusFASTER, SEA-US, & NCP



Exhaustion in 2023

Potential if all older cables could theoretically accommodate 100 x 100G



Exhaustion in mid-2023

Potential with adding 1 new 72 Tbps cable


Dystopian trait 5: Citizens conform to uniform expectations


Prices perpetually decline, but are they “conforming” (becoming similar)?

Median Monthly 10 Gbps Wavelength Lease Price, 2010-2015


Transport price differences narrowing

10 Gbps Wavelength Lease Price Multiples over London-New York


What about elsewhere?10 Gbps Wavelength Lease Price Multiples over London-New York


Dystopian trait 6: Prevalence of violence


Submarine cables are continued targets of violence • Sharks

Sharks and other fish bites

were 0% of cable faults 2007-2014, according to

ICPC



• Russian submarines painted like sharks



• Russian submarines painted like sharks

• Actual causes of most damage:

– Fishing

– Anchors

Cause of External Aggression Cable Faults, 2007-2009

Source: Trends in Submarine Cable System Fault, M. Kordahi, S. Shapiro, & G. Lucas


Dystopian trait 7: Increased Surveillance


attend TeleGeography’s SubOptic 2016 Masterclass for More

information


Outlook• Demand growth will remain strong ~30-40% per year.

• A small groups of companies will likely account for a larger share of international capacity.

• Investment in new cables and technological advantages will delay the risk of capacity exhaustion.

• Transport price differences will continue to narrow.

• Sharks and Russian submarines painted like sharks will not damage many cables.


Questions?

telegeography workshop: international market trends€¦ · 2 as competition for 100g increases,...

Documents