MANAGING BANDWIDTH - To buy or to build?
Matthew Finnie looks at the ever growing bandwidth requirements in Europe, and details what 
can be done to meet this increased demand
For those of us that have been working for a decade or more, the speed and reliability of our Internet connection is now assumed. We want access to be ubiquitous and limitless. We no longer hunker down and dial into the Internet or marvel at a T3 transatlantic interconnect which speeds it all up.
Europe - the new Internet superpower
The Internet was a North American invention and for a long time America was the Internet. Now those days have gone. Europe is now the largest Internet presence in the world, and the fastest growing market. Recent data from telecoms analyst group Point Topic's Global Broadband Statistics service suggested that Eastern Europe continues to show growth, and was the only region to record more than 10 per cent growth in Q2 of this year. In March 2007 Romania passed the one million subscriber mark, which made it three Eastern European countries in the 10 fastest growing countries worldwide.
Western Europe is also setting a fast pace when it comes to broadband growth. Greece was the top grower in percentage terms in Q2, expanding by 27 per cent, and the biggest mover in the top 10 countries by number of subscribers was France, achieving the highest percentage growth rate of 9.36 per cent in the quarter.
As well as being the fastest growing territory, Europe also has the highest number of broadband subscribers. A recent audit by Internet World Stats revealed America had 64,614,000 subscribers and China had 48,500,000. The total number of subscribers in the nine highest European countries is 77,706,870, so Europe is clearly a long way ahead, even without including the rest of the continent.
The increase in broadband subscription is being driven not by businesses but by consumers and their relentless experimenting and evolving applications. The sharing of videos, photos, music and more across sites such as YouTube and Facebook, places enormous demands on bandwidth. The challenge for the DSL providers giving consumers access, is that they aren't sharing in the valuations the content providers are seeing. Given this, how do they maintain spend to keep delivering service while access prices in real terms are declining on a per meg basis? Perhaps part of the problem is that many of these have still not embraced a connectionless NGN world where access to a customer is not a guarantee of all service revenue?
New applications are now being developed that assume that the broadband service is available. While the provider looks to include TV, there are whole sections of people with no network who see the penetration of broadband as the meal ticket for their latest venture. The most bizarre turn in this trend is mobile operators freeing up capacity in their own wireless networks by placing femtocells on the consumer premises and in some cases using the existing DSL as wireless backhaul.
Bandwidth, and its availability, has hit a tipping point where people expect to see ever increasing levels of service. One note of caution, most consumer broadband networks are horribly asymmetrical, while bandwidth is going up there is still a bias toward download making it unsuitable for many business applications. But the global business community is also demanding ever-increasing volumes of bandwidth as more and more business critical applications sit on the Internet.
Business 2.0
Web 2.0 is a phrase coined to capture the collaborative nature of a network, and now people are talking about Business 2.0 in the hope that some of this social networking and agile application delivery will rub off in the corporate sector. The demands for corporate bandwidth are also being challenged.
The practical needs of a corporate are less glamorous but by no means less network intensive. The IT Director no longer has the luxury of time or resources to embark on a grand IT plan spending millions for a promised brighter future in two years. IT Directors are talking about embracing a "service aware" approach to developing IT applications that borrows much from the experimental evolutions seen in the consumer Internet experience. The challenge for many is that invariably this approach is network centric (it has to be) but requires a more iterative and agile approach to application development.
And the on-going move towards collaboration and unified communications is a key factor in demands on corporate networks too. Unified communications - the embedding of tools such as IM, presence conferencing and voice into one platform - is going to have as big an impact on business communications now, as e-mail did in the 90s. Earlier this year we launched our own integrated communications platform, Interoute One. This service enables corporate customers to manage voice calls as easily and cost effectively as e-mail, and without the need for complex integration or upgrades to their existing telephony infrastructure.
And with its recent launch of Office Communications Server (OCS), even Microsoft is looking to get into the unified communications market. Yet despite its strengths, OCS is only as strong as the network that carries it. Without a network provider able to route calls the OCS doesn't achieve its ambition.
So with the demand brought about by unified communications, combined with Web 2.0 and businesses running more and more applications over their networks, a clear picture emerges - there is an incredible increase in demand for bandwidth to ensure the highest quality end-user experience.
This demand can only be met by more bandwidth, yet for service providers, what is the best way to meet this demand?
Buy or build?
The demand for bandwidth will stretch many existing service provider infrastructures to breaking point, so what are the options available? DSL has traditionally been the preferred technology to deliver broadband services in Europe. It uses existing copper access networks to deliver broadband and is well entrenched in Europe, but is struggling to cope with bandwidth demand now, and in the future will struggle massively as demand grows yet further.
Consequently, service providers have to start looking at deploying fibre deeper into the network, even to the home or building, to meet future bandwidth requirements. Fibre is as future-proof a communications technology as is possible to get, and several service providers have already made a commitment to deploy fibre-to-the-node or fibre-to-the-home networks in the next three to five years. But is building new fibre networks a viable option?
It's a paradoxical situation. The main problem with fibre is that it is just so expensive to build from scratch, it's basically real estate. The industry has had well-documented problems with a number of carriers who built large fibre networks in the 90s, and then watched as the telco market dipped and their businesses suffered massively. Now the telco market is booming again, demand for bandwidth is high, yet the best (and arguably only) way to meet that demand requires fibre. So for service providers looking to stay in the wholesale provider space the only way to sensibly achieve this is through fibre ownership.
This means that in the wholesale space, if you are without the physical assets, you are shortly going to run out of capacity. Even if you have fibre but only a leased pair you will shortly be buying more. This leaves a small but battle hardened minority of carriers with multiple fibre backbones that will be the dominant suppliers in the market place. But even owning fibre is not quite enough - you need to have an operation that understands how to deal with Europe's different laws and regions. For example, the Interoute network connects 85 cities in 22 countries across 54,000 cable kilometres of fibre. Up to 48 fibre pairs have been deployed throughout the network, which means it has the capacity to carry over a petabit (a billion megabits per second) of traffic. The backbone is complimented by 19 deep city fibre networks that interconnect with the necessary diversity of access methods required to deliver 21st century telecoms
Fibre is vital to business communications in 2007 and beyond - it is the ultimate delivery mechanism - and the harsh reality is that a service provider without the physical fibre in the ground will not have the raw material necessary to satisfy the huge demand for bandwidth. The die is now cast, fibre is the bandwidth raw material of choice for the Internet, but building fibre networks is now simply too expensive, so the only real option is to buy bandwidth from someone who has it. There is a tipping point with all technology when it passes through a point where the user understands it and operates accordingly. Bandwidth and the Internet has hit that point, and fibre is the only viable way to meet the demand.
Matthew Finnie is Chief Technology Officer at Interoute
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