Ethernet Executive Council Q&A: Inteliquent
Inteliquent provides Ethernet interconnection, IP transit and voice services on a global scale. In early November, the company reported that total data revenues -- including Ethernet and IP transit sales -- were fairly steady year-over-year at $16.6 million in 3Q12, while Ethernet-related revenues grew rapidly off of a small base. Total data traffic processed on Inteliquent’s network increased 41 percent year-over-year from 5.8 terabits in 3Q11 to 8.2 terabits in 3Q12. Inteliquent is strategically focused on grooming its network to be more efficient in reducing its cost per circuit and driving profit from booming traffic demand.
Heavy Reading: During Inteliquent’s past two quarterly conference calls, the company has highlighted growing momentum for the EtherCloud business. Can you give an update on where you are in terms of your service coverage, customer traction and growth with that service?
Paolo Gambini: We now have over 120 Ethernet network-to-network interconnection relationships on four continents. Forty percent to 45 percent of those arrangements are in North America, while 55 percent are in Europe, Asia (including China and India), North Africa and Latin America. Inteliquent recently announced that we will be offering services in Turkey and the Middle East via a PoP inside a Turkcell Superonline data center in Istanbul.
Our Ethernet revenues grew nearly 50 percent year-over-year in the third quarter. Business in the U.S. grew at a faster pace.
Jeff Beer: What we’re seeing that’s a nice trend are the follow-on orders -- a second, a fourth, a tenth order. As for the type of customers, we predominantly serve the carrier market. We are getting some exposure through our agent channel for enterprise involvement, but more than 90 percent of our business is carrier wholesale.
Heavy Reading: You have talked about offering a one-stop shop approach with EtherCloud. Can you describe how that works if I am a service provider looking to extend service reach into a new market?
Beer: The customers that we talk to want an easy way to get outside of their territory and to simplify the outsourcing of network connectivity. We simplify the quoting process for them. We’re very transparent about who we are using in the last mile, and we use tools like EtherVision to ensure our partners are performing within the SLAs that we provide. We have figured out how to deal with regional and national carriers.
Customers can order through our portal or through a salesperson. Every carrier we work with can be a buyer or seller. Once an ENNI is established, we roll their price list to an API. We allow them to buy from us, but on the other end we become an international distribution channel for them.
Heavy Reading: Is there a certification process that you run through with your partners?
Gambini: We’re trying to qualify partners to MEF compliance, but the challenge is many carriers run their networks with older technology.
Heavy Reading: Given that challenge and the fact that the use of Y.1731 service OAM varies a lot among operators, are you able to offer performance monitoring with EtherCloud today? How do you handle that?
Gambini: We typically end up deploying intelligent demarcation platforms for service management. It’s not ideal, but it provides acceptable capability for service assurance and fault management.
Beer: The price of NIDs is coming down where companies can afford to deploy them.
Gambini: Yes, NIDs are becoming more affordable, and that’s definitely helping. Ethernet has won the battle on the access side, and this helps speed up the upgrade of the access infrastructure.
Heavy Reading: Can you elaborate on how EtherVision leverages the service OAM technology deployed in your network?
Beer: When customers see a tool like EtherVision, they get excited. It helps them trust us.
EtherVision allows you to have performance monitoring and connectivity fault management on an end-to-end basis or on segments. We developed it in-house because we did not see a tool like it in the market. We can manage point-to-point, VPLS, or meshed WANs.
EtherVision is included for all customers. Not everybody uses it, but they have access to it. Graphically, lines on a Google map show where circuits are. There are fault management alarms and performance thresholds that can proactively help us manage the SLA. It’s the tool we use to troubleshoot. It’s our responsibility, but it helps them understand what we’re doing to fix any issues.
Heavy Reading: Apart from macroeconomic concerns, what do you see as the top concerns for your customers and what are you doing specifically to address them?
Gambini: What we are seeing is a lot of concern about SLA management, service assurance, latency and resiliency. Customers cannot afford long-lasting outages or service degradation.
Beer: The core of what the enterprise wants is for the WAN to perform like the LAN. We need to make the network perform well from a latency perspective with TDM-like reliability. It’s getting closer and closer every year.
As for what we’re doing for customers, we’re simplifying out-of-footprint access. That’s probably No. 1 for the wholesale customer. No. 2 is we are providing them the flexibility to create the services that they want. And No. 3 is providing a fast turnaround on a quote.
Heavy Reading: Thank you both for taking time to chat today.
— Stan "EtherMan" Hubbard, Senior Analyst, Heavy Reading