Telstra Plans to Build Asian Empire
Telstra is making a major bet on a combination of unique subsea routes and overland fiber redundancy to build its case as the carrier-of-choice in the Asia Pacific region for multinational enterprises, web-scale companies and media content companies. The company's pitch is greater reliability and control in support of the cloud. (See Telstra Bolsters AsiaPac Connectivity.)
The Asia push is based heavily on Telstra Corp. Ltd. (ASX: TLS; NZK: TLS)'s Pacnet acquisition and comes as the company is under increasing pressure to replace the $2 billion to $3 billion annual earnings in broadband that it is surrendering in the re-nationalization of its last-mile connections in Australia. Telstra CEO Andy Penn recently cited Asia as one of the areas in which the company expects to grow revenues significantly. (See Telstra Completes Acquisition of Pacnet.)
Telstra can now lay claim to being the largest intra-Asia subsea network but, as Martijn Blanken, group managing director and chief customer officer for Telstra's Global Enterprise Services, explains, it's not just a matter of size but of where the cables are placed. One particular subsea cable -- the EAC-C2C, which Telstra acquired when it bought Pacnet -- is unique in landing in the south of Taiwan. By investing in connecting the northern part of the island with overland fiber, Telstra now has a robust fiber connection that avoids the Luzon Strait, where seismic activity has frequently caused cable breakage and major outages.
"That means we are able to create the lowest latency path between Taiwan and Hong Kong, which is a nice niche to be in," Blanken says. It also puts Telstra in the position of having an attractive redundancy option for operators looking to hedge their bets.
As cloud services and digital commerce make enterprises more concerned about service characteristics such as latency and network characteristics such as resiliency and redundant routes, Telstra is bolstering its position by building more overland fiber routes, as well as creating rings across significant parts of the Asia-Pacific region. In South Korea, for example, Telstra has three cables that land where it controls the fibers, Blanken says, and it has built fiber rings that enable eight separate paths in and out of that country.
All this investment is giving Telstra "unique capabilities" and Blanken says the market is responding well. In addition to increased business from the multi-cultural consumer and enterprise market in Australia, which consumes content stored in Asia, Telstra is also serving the web-scale players who are building their own content delivery networks, including Facebook , Apple Inc. (Nasdaq: AAPL), Google (Nasdaq: GOOG) and Amazon Web Services Inc. ; large media companies who have massive video content to ship and store; and, increasingly, enterprises.
"We are finding they still buy network connectivity on a circuit-by-circuit basis," he says. "The majority in this region prefer to do business with an Asian player, and we are finding they are moving away from usual virtual network providers."
That trend has blossomed in the face of some serious subsea cable outages, Blanken adds, as enterprises find it advantageous to do business directly with the cable owner and operator, to have "one throat to choke" and one company capable of controlling the quality of service.
Telstra also offers enterprises its own cloud gateway service so they can manage connectivity into multiple clouds, which is driving their growing concern about network quality and reliability, he says. "Without the network, the cloud isn't there, and if you are an enterprise customer putting workloads into AWS or Azure, you still need the network connectivity into those cloud environments. We give them a chance to deal with a partner that offers all of that."
— Carol Wilson, Editor-at-Large, Light Reading