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Expanding Regional Connectivity in Asia and the Pacific

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Expanding Regional Connectivity in Asia and the Pacific Expanding Regional Connectivity in Asia and the Pacific: I. Broadband Markets: State-of-Play II. International Network Vulnerabilities III. Terrestrial Infrastructure Initiatives, Opportunities, and Challenges Michael Ruddy Director of International Research Terabit Consulting www.terabitconsulting.com Part 1: Broadband State of Play in Hub Markets www.terabitconsulting.com Broadband State of Play in 5 “Hub” Markets ESCAP Subregion Market East and Northeast Asia China South and Southwest Asia India North and Central Asia Russia The Pacific Australia Southeast Asia Singapore www.terabitconsulting.com China • China shows the strongest prospects for growth in the region – China is already the world’s largest broadband market, having surpassed the US in 2008 – Currently 10x more fixed-broadband subscribers than India – Fixed-broadband subscribers will exceed 200 million by 2014 – 1.4 Tbps of international demand as of year-end 2011 • In terms of international bandwidth demand, still trailing Japan (>2 Tbps) for the time being www.terabitconsulting.com China: Broadband Targets • 12th Five-Year Plan calls for broadband speeds to increase to 20 Mbps in urban areas and 4 Mbps in rural areas by the end of 2015 – More than 8m fiber kilometers deployed; robust FTTx market of 25m+ (although DSL still dominant) • Ministry of Industry and Information Technology indicated intention to lower broadband access pricing • ARPU of US$11 per month, while comparatively low, should still allow for investment in 4G networks www.terabitconsulting.com India • Extremely promising broadband growth, but timing uncertain • 3G service launch was marred by weak coverage, incompatible handsets, and “bill shock” – Watching 1-hour sporting event on 3G = 300 INR ($5) • Reliance planning nationwide $10 bil 4G rollout – But some foreign 3G/4G investors have pulled out of market, citing “regulatory uncertainty” • Fixed-broadband market: 100Mbps VPON FTTH service launched in 2011 – However, affordable packages were limited to 2Mbps (and 8GB/mo). Unlimited 100Mbps was priced at $1,500 • India’s middle- and upper-class ($4k+/household/yr.), while growing, is less than 20% of population • ‘In-between class’ ($1k-$4k/household/yr.) has remained steady at more than 60% of population ==> greatest growth potential www.terabitconsulting.com Russia • Total international bandwidth reported to be as high as 2 Tbps as of year-end 2011 • Demand is largely westward - only a small percentage of international demand is routed through Russia’s east • Russian Internet content market is not yet mature – Localization of western content prevails • Russian-language content, combined with westward international connectivity, makes Russia a hub for traffic from CIS countries • Much of the country’s terrestrial fiber investment has focused on the China-Russia route in order to capture Europe-Asia transit – One China-Russia network operator claims that it has been able to charge a premium of up to 300% for low-latency routes www.terabitconsulting.com Australia • $40 billion Australian National Broadband Network (NBN) underway – More than 3.5 million residences and businesses set to be connected by fiber by 2015 – FTTx connectivity serving more than 90 percent of the population by 2021 – 1 Gbps target speed to the home – Potential to be severely disruptive technology • Limited number of carriers in Australia/New Zealand (i.e. Telstra, Optus, TNZ, and Vodafone Hutchison) has led to limited deployment of international infrastructure – Could prove an obstacle to the NBN’s success www.terabitconsulting.com Singapore • Population of 5 mil but serves as important transit hub for southeast Asia • Approaching 2 Tbps of international Internet bandwidth; very high growth continues • Next Gen NBN nationwide broadband buildout • Approximately half of market controlled by Singtel – #2: StarHub – #3: MobileOne • International demand mixed between Chinese- language content, English-language destinations, India, Malaysia, and Indonesia www.terabitconsulting.com Part 2: International Network Vulnerabilities www.terabitconsulting.com FLAG Europe-Asia (1997) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAG Europe-Asia (1997)99 Sea-Me-We-3 (1999) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAG Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Seacom (2009) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Seacom (2009) I-Me-We (2010) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Seacom (2009) I-Me-We (2010) Europe-India Gateway (2011) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Seacom (2009) I-Me-We (2010) Europe-India Gateway (2011) Gulf Bridge International (2012) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting FLAGF Europe-Asia (1997)99 Sea-Me-We-3 (1999) i2i (2002) SAFE (2002) TGN-TIC (2004) Sea-Me-We-4 (2005) Falcon (2006) Seacom (2009) I-Me-We (2010) Europe-India Gateway (2011) Gulf Bridge International (2012) MENA (2012) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting UNDERSEA CABLE CHOKE POINTS AFFECTING ASIA Strait of Sicily (145km) and the Mediterranean Luzon Strait (250km) Egypt, the Red Sea, and Bab-el-Mandeb (30km) Strait of Malacca (3km) Source: The Undersea Cable Report 2012 © 2012 Terabit Consulting Part 3: Terrestrial Infrastructure Initiatives, Opportunities, and Challenges www.terabitconsulting.com Carrier-Operated Terrestrial Networks: Challenges • High construction costs make it difficult for terrestrial networks to compete head-to-head on those routes that are already efficiently served by submarine cables – e.g. the China-India (Yadong-Siliguri) path crosses difficult, mountainous terrain and still only serves a narrow point-to-point market • Carriers often overprice capacity on their domestic portions of the network • Very difficult to establish and maintain end-to-end network performance matrices • Carriers often wary of purchasing capacity on cable operated by a competitor www.terabitconsulting.com Obstacles to the Democratization of Bandwidth • The majority of broadband deployment in Asia is in coastal and urban areas • Markets without coastlines or with lower population density are increasingly falling behind • Many multi-national terrestrial fiber optic networks are structured to allow operators with submarine cable hubs to profit from interconnection – Landlocked or underserved coastal nations become dependent upon larger coastal markets • Pricing of international bandwidth in Asia remains expensive throughout the region www.terabitconsulting.com IP Transit Remains Extremely Expensive Throughout Asia • Compare to less than $5/Mbps in USA www.terabitconsulting.com Terrestrial Networks as a Complement to Undersea Cables • Asian nations experience some of the highest rates of Internet downtime in the world due to dependence on a handful of submarine cables • Up to 90% of international capacity purchased on submarine cables in Asia is unprotected – customers are therefore desperate for terrestrial redundancy options within Asia, but affordable, coherent terrestrial solutions are rare • Secondary markets need more options: e.g. Mumbai, as South Asia’s primary undersea gateway, serves as the only logical IP transit hub for most South Asia Association for Regional Cooperation (SAARC) countries • Terrestrial networks can offer lower latency on some routes – Increasingly important for search engines, which report higher click- through rates when latency is lower www.terabitconsulting.com Nature of Asian Bandwidth Demand • As of 2012, approximately 50% of Asian international traffic is intraregional • Vast majority of the region’s traffic is routed via undersea cable – e.g. Only about 10% of Asia-Europe traffic is currently routed terrestrially www.terabitconsulting.com Characterizing Terrestrial Deployment in Asia • Six important categories of terrestrial fiber optic deployment: – Asia-to-Europe and China-Russia transit networks – Subregional initiatives – Southeast Asian multi-national networks – China-India cables – New West Asia/Middle East Networks – Other transborder (bilateral) links www.terabitconsulting.com Asia-to-Europe and China-Russia Transit Networks • Trans Asia Europe (TAE) – Conceived in 1990s; very low capacity; missing trans-Caspian links • China-Russia Networks – Trans Europe Asia (TEA) (Rostelecom)
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