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Trends in Global Capacity Availability and Trading Bruce Girdlestone VP Network Trading Band-X

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Page 1: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Trends in Global Capacity Availability andTrading

Bruce GirdlestoneVP Network Trading Band-X

Page 2: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Topics

• The Trading of Bandwidth

• International Deployment of Capacity

• An imbalance in supply and demand

• A new model for Internet Trading

Page 3: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

A quick History

• Deregulation

• Technology lift off

• International build

• Broadband – fixed

• 3G

Page 4: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

• Global Players

Vertical Integration

•Switching •Wholesale transport•Network management•Hosting/Co-location

Horizontal Specialisation

•Mediation/Trading

Page 5: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Telegeography Finance

Agency Based Facilities Based

Switched

RoutedRecruitment

Co-location

Bandwidth

RoutedTrading of IP Transit based uponprice and quality executedthrough the Band-X IP TradingExchange Infrastructure.

SwitchedMinutes Exchange, TrafficManagement and facilitiesmanagement

RecruitmentHuman resources, skilled stafffor the telecoms industry

Co-locationSpecialist Telecom real estateservices.

NetworkOwned and managed circuitsand network infrastructure

Page 6: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Improves efficiencies in the market

or

Traditional model The Bandwidth Exchange

Page 7: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

• A neutral and confidential Marketplace with absoluteintegrity

• Brings buyers and sellers together in most efficient forum,providing benefits to all parties

• Brings clarity in the complex comparison of quality,availability, contractual terms and price

Page 8: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Market reports and Consultancy

• Telegeography – Information Products• In depth reviews of market segments or bespoke research• Procurement Service Agreements: review of all solutions

and suppliers for a specific requirement (quality,availability, contractual terms, price)

• Market Briefing Service– Monthly updates and real time hot line for information

Page 9: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

More than 20,500 members from a broad range ofplayers

• Carriers of all types

• Cable system operators

• Backbone operators

• Dark fibre providers

• Internet Service Providers

• Video streaming solutions

• Carrier Hotels / tele-houses

• Data Network Providers

Page 10: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Band-X in the world

x

xx

xxx

x

x

Page 11: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer
Page 12: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer
Page 13: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Price Band-X Bit Index

0

20

40

60

80

100

120

Oct-98

No v-98

Dec-98

J an-99

Feb-99

Mar-99

Apr-99

May-99

J un-99

J ul-99

Aug-99

Sep-99

Oct-99

No v-99

Dec-99

J an-00

Feb-00

Mar-00

Apr-00

May-00

J un-00

J ul-00

Wo rld Index

Euro pe Index

LA to To kyo

LA to HK

LA to Be ijing

NY Lo ndo n

Lo ndo n to HK

Lo ndo n to Sydney

Lo ndo n to Frankfurt

Page 14: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Price decline• Transatlantic STM-1 IRU 25 year term

– 1998 $12m+

– 2001 $450k

• Northern European STM-1 Lease– 2000 $50k per month

– 2001 $10k per month

Page 15: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Price

Cost

12 months or less?

Time

Val

ue

Sales Window

Challenge

New

System

Page 16: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Transatlantic Market

Date System GB/S1988 TAT 8 11991 TAT 9 21992 TAT 10 21993 TAT 11 21994 Cantat 3 51995 TAT 12/13 251995 Canus 1 51998 AC 1 1601997 Gemini 602001 TAT 14 6402001 FA1 24002001 Level(3) 1280

Total 4582

Page 17: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer
Page 18: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

International Cable Deployment• Americas:

– 360Americas– South American Crossing– Emergia

• Asia– East Asia Crossing– FLAG North Asia Loop/Tiger

• Trans Pacific– Japan US– Pacific Crossing 1

Page 19: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

• “Glut” on Long haul

• Local Connectivity via fibre is key– Telehouse interconnectivity

– MEA Clusters

– End User

• Everyone is bandwidth restricted – price v delivery

Page 20: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

New Carrier Focus on Metropolitan Area

• Emphasis on fibre in city centres

• Capacity is scarce due to:– Practicalities of digging networks

• Access

• Local restrictions

– Cost• High per customer cost

• Restriction in capital

• Falling price of bandwidth

– Activity and Competition in the Long Haul

Page 21: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Telegeography Finance

Agency Based Facilities Based

Switched

RoutedRecruitment

Co-location

Bandwidth

RoutedTrading of IP Transit basedupon price and qualityexecuted through the Band-XIP Trading ExchangeInfrastructure.

SwitchedMinutes Exchange, TrafficManagement and facilitiesmanagement

RecruitmentHuman resources, skilledstaff for the telecoms industry

Co-locationSpecialist Telecom realestate services.

NetworkOwned and managed circuitsand network infrastructure

Page 22: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Peering Link

PeeringNAPPeering Link

Peering Link

Peering Link

IBP B(Tier 1)

IBP C(Tier 1)

IBP A (Tier 1)

Client ofIBP B

Client of IBPC

CorporateNetwork

(Client of IBP A)

Tier 2 IBP(Client of IBP A)

CorporateNetwork

(Client of IBPA)

Tier 2 IBP(Client of

IBP A)

New IBP/ISPNeeding IP

Connectivity

6723

6723

Peering will onlydeliver LocalRoutes

Page 23: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Transit Link

(paid for “private peering”)

PeeringNAP

IBP B(Tier 1)

IBP C(Tier 1)

Client ofIBP B

Client of IBPC

Peering Link

Peering Link

Peering Link

IBP A (Tier 1)

CorporateNetwork

(Client of IBP A)

Tier 2 IBP(Client of IBP A)

CorporateNetwork

(Client of IBPA)

Tier 2 IBP(Client of

IBP A)

New IBP/ISPNeeding IP

Connectivity

Page 24: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

DNS Server

Mail Server

Access Circuit

The Seller Sales andmarketing information

Sales Person

Buyer Testing

BuyerIP Address Range

From Seller B

Seller A

Seller B

Seller C

Seller D

Traditional Transit

Page 25: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Band-XRouted

IP ExchangeAS12885

Stats Server

Trading System

DNS Server

Mail Server

StatsCollector

StatsCollector

StatsCollector

StatsCollector

Customer CCorporate

Customer Fshare trading

Customer EshoppingCustomer D

Portal

Customer BTier 2 ISP

Supplier A(Tier 1)

Supplier B(Tier 1)

Supplier C(Tier 1) Supplier D

(Tier 1)

BAND-X Supplier Connections

Customer AxDSL Provider

BAND-X Customer Connections

Page 26: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Fragmentation and Standardisation

• Half right• Increasing commoditisation of bandwidth• If bandwidth were a commodity it would have been a

financial market by now• Can it be traded – Interconnection of networks is key• Continuing lack of homogeneity validates the role of

mediator

Page 27: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer

Summary

• The increase in International Bandwidth availability –– Quality and reduced cost of Internet Transit

• Internet backbones connected at Telehouses– Getting on / off is the challenge

• Broadband access to end user is key

• Commoditisation of Bandwidth increasing but still not homogenous

• Where deregulated supply is high

• More Dynamic Trading of Internet traffic– A visible and efficient market

Page 28: Trends in Global Capacity Availability and Trading · Mail Server Stats Collector Stats Collector Stats Collector Stats Collector Customer C Corporate Customer F share trading Customer