I. Broadband Markets: State-of-Play Opportunities, and Challenges · III. Terrestrial...

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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


Part 1: Broadband State of Play

in 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

Broadband State of Play in 5 “Hub” Markets


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


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


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


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


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


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


Part 2: International Network Vulnerabilities

FLAG Europe-Asia (1997)

Source: The Undersea Cable Report 2012© 2012 Terabit Consulting

FLAG Europe-Asia (1997)99Sea-Me-We-3 (1999)


FLAG Europe-Asia (1997)99Sea-Me-We-3 (1999)i2i (2002)


FLAG Europe-Asia (1997)99Sea-Me-We-3 (1999)i2i (2002)SAFE (2002)

F


FLAG Europe-Asia (1997)99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)

SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)Seacom (2009)

SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)

I-Me-We (2010)Seacom (2009)

SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)

I-Me-We (2010)Europe-India Gateway (2011)

Seacom (2009)

SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)

I-Me-We (2010)Europe-India Gateway (2011)Gulf Bridge International (2012)

Seacom (2009)

SAFE (2002)

F



Sea-Me-We-4 (2005)

99Sea-Me-We-3 (1999)i2i (2002)

TGN-TIC (2004)

Falcon (2006)

I-Me-We (2010)Europe-India Gateway (2011)Gulf Bridge International (2012)MENA (2012)

Seacom (2009)

SAFE (2002)

F



Luzon Strait (250km)

Strait of Malacca (3km)

Egypt, the Red Sea, and Bab-el-Mandeb (30km)

Strait of Sicily (145km) and the Mediterranean

UNDERSEA CABLE CHOKE POINTS AFFECTING ASIA


Part 3: Terrestrial Infrastructure Initiatives,

Opportunities, and Challenges


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


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


IP Transit Remains Extremely Expensive Throughout Asia

• Compare to less than $5/Mbps in USA


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


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


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


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) (Upgraded to 200 Gbps in

2012) – Europe-Russia-Asia (ERA) / China-Russia-2 / Eurasia Highway

(TransTeleCom) – Europe-Russia-Mongolia-China (ERMC) via Mongolia Railway

(2004) – Europe-Kazakhstan-Asia (EKA) / Information Silk Road

• Trans Eurasian Information Superhighway (TASIM) – Frankfurt-Hong Kong – China, Kazakhstan, Azerbaijan, Georgia, Turkey (Including trans-

Caspian link) • LION pan-regional network along Asian Highway ROW

– Defer to Abu Saeed Khan’s presentation


Subregional Initiatives

• Greater Mekong Subregion (GMS) Information Superhighway – Cambodia, China, Laos, Myanmar, Thailand, Vietnam – Supported by Asian Development Bank

• South Asian Subregion Economic Cooperation (SASEC) Information Superhighway – Bangladesh, Bhutan, India, Nepal – Supported by Asian Development Bank


Southeast Asian Multi-National Networks

• China-Southeast Asia Cable (CSC) (2001) – China, Vietnam, Laos, Thailand, Malaysia,

Singapore

• Also Greater Mekong Subregion Information Superhighway

• Thailand-Cambodia-Vietnam-Hong Kong (2012-2013) – TCC (Thailand), VTI/VNPT (Vietnam), NTC

(Cambodia), DHT (Hong Kong)


China-India Networks

• China-India Networks – China-India Cable / Another Gateway to India (AGI)

(China Telecom) – China-India (China Unicom)


New West Asia/Middle East Networks

• Europe-Persia Express Gateway (EPEG) • Regional Cable Network (RCN) • Jeddah-Amman-Damascus-Istanbul (JADI) • Egypt-Jordan-Saudi Arabia • EPEG/RCN/JADI designed to bypass Egypt;

however, sanctions prevent American operators from participating in projects passing through Iran or Syria


Notable Transborder (Bilateral) Links

• Bhutan-India (2009) • Myanmar-China (2008) • Afghanistan to Tajikistan and Uzbekistan

(2009) • Laos-Cambodia (2010) • Cambodia-Vietnam (2012) • Bangladesh-Myanmar and Bangladesh-India

(2012-2013) • China-Pakistan (Karakoram Highway/Khunjerab

Pass) (2012-2013)


Conclusions • Bold, next-generation domestic broadband initiatives are underway

throughout the region – each faces a variety of obstacles

• Undersea cable “choke points” pose a significant threat to Asia’s network reliability – and, by extension, its economic well-being

• Terrestrial networks are the logical solution for network redundancy – however, they should be viewed as a ‘complement’ and not a

‘competitor’ to undersea networks

• Drawbacks of carrier-owned international terrestrial networks need to be addressed

• Obstacles to the democratization of bandwidth need to be overcome

• Significant progress has been made in the deployment of terrestrial fiber optic infrastructure, but a more harmonized approach to accessible multi-national connectivity is needed (e.g. LION)


Thank you!

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I. Broadband Markets: State-of-Play Opportunities, and Challenges · III. Terrestrial...

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