Wholesale/transport services

Quake Shakes IP Transit Market

The December 26 earthquake in Taiwan shook up IP transit rankings across the Asia/Pacific region, and its effects continue to be felt by carriers, according to data from Internet intelligence firm Renesys Corp.

The 6.7-magnitude quake disrupted several submarine cables, and repairs continued for weeks afterward. (See Earthquake Cuts Cables Near Taiwan, Quake Disrupts StarHub Service, Chunghwa Assesses Quake, and StarHub Updates on Cable Damage.)

In a report compiled for Light Reading, statistics from Renesys's Backbone Internet Index show that the likes of NTT America Inc. and even Telecom Italia (TIM) stepped into the breach left by regional operator Singapore Telecommunications Ltd. (SingTel) (OTC: SGTJY) and U.S. providers as their Asian connections fell.

Renesys gathers information from the Internet's routing tables to rank major Internet transit providers, drilling down into the data to provide statistics on regional trends and route selection in the retail, wholesale, and backbone markets.

Renesys notes: "While Asian carriers wait for repairs, European carriers are reaping the rewards of massive shifts of traffic away from the quake-damaged region and its congested routes."

The report focuses in particular on the impact in India, "where continuity of Business Process Outsourcing (BPO) services is a major concern. India's connectivity to the global internet relies nearly exclusively on submarine fiber connectivity to Asia and, to a lesser extent, Europe."

As Table 1 shows, India's top three providers of international backbone bandwidth -- Level 3 Communications Inc. (NYSE: LVLT), Savvis (Nasdaq: SVVS), and AT&T Inc. (NYSE: T) -- all dropped down the IP transit rankings after the quake and have remained lower than their December 1 positions even in the recovery phase. AT&T Worldnet has dropped from third to seventh place and Savvis from second to fifth.

Table 1: Indian Backbone (2+ Transit Hops To Enterprise) Provider Rankings
ASN Service Provider Before Quake 1 Dec 2006 After Quake 1 Jan 2007 Recovery Phase 1 Feb 2007
3356 Level 3 1 4 (-3) 2 (-1)
3561 Savvis 2 8 (-6) 5 (-3)
7018 AT&T Worldnet 3 5 (-2) 7 (-2)
6453 Teleglobe (VSNL) 4 3 (+1) 4 (NC)
1239 Sprint 5 1 (+4) 3 (+2)
2914 NTT America 6 2 (+4) 1 (+5)
4788 TMNet 9 (NEW)
7473 Singapore Telecom 7 24 (-17) 10 (-3)
6762 Telecom Italia 11 (NEW)
3320 Deutsche Telekom 8 9 (-1) 12 (-4)
15412 Flag Telecom 9 7 (+2) 8 (+1)
3292 TDC 10 6 (+4) 6 (+4)

Sprint, which has local infrastructure and relationships with FLAG Telecom Ltd. and Bharti BT, moved up from the fifth spot to first immediately following the quake and now sits at third behind America and Level 3. (See Report: Level 3 Tops IP Transit.)

NTT America moved up the rankings from ninth to first thanks to increased backbone handoffs from customers Flag Telecom and Videsh Sanchar Nigam Ltd. (VSNL) (NYSE: VSL).

SingTel's cables were directly affected by the earthquake, and it was by far the carrier hardest hit on the Indian backbone index. It plummeted 17 places from number 7 before the quake to number 24 on Jan. 1, relying on its partnership with Bharti to help climb back up to tenth place.

"Singtel was forced to begin using some novel providers to carry Indian prefixes out of Asia," Renesys says, "starting with Telecom Italia (on January 9th), and adding Sprint (on January 12th) and Cable and Wireless (on January 24th)."

Congestion on the remaining Asian routes pushed other regional operators down the rankings. European carriers moved up the table thanks to the sudden demand for alternative transit on routes through the Suez Canal.

New entry Telecom Italia was recorded carrying Indian prefixes as a backbone provider for the first time in memory, while "France Telecom found themselves providing some temporary transit to Bharti BT on December 27th. This may have been an expensive solution, banking on rapid repair of the affected cables, as the observed relationship was torn down again on January 5th." Denmark's TDC A/S (Copenhagen: TDC) remained four spots higher at sixth place heading into February.

BT Group plc (NYSE: BT; London: BTA) has been increasing its IP transit business in India as part of its larger push to serve the country's outsourcing companies, signing India's National Internet Backbone and Bharti BT as transit customers. Renesys reports "they became significantly more popular (if expensive) choices, rising from #23 to #11 in the days after the quake." (See BT Buys Indian Outsourcer.)

The report notes that India's carriers are on the right track in acquiring their own submarine cable systems to provide more reliable connectivity. VSNL, which acquired Teleglobe more than a year ago, is expanding its cable systems; Bharti is buying out the Network i2i system from SingTel; and Reliance is investing $1.5 billion in its Flag Telecom network. (See VSNL Boosts Asia Subsea Capacity, Bharti Sees Big Q3 Profits, and FLAG Announces NGN.)

"The open question, as the undersea cables are repaired and congestion eases throughout East Asia, will be whether Indian providers will allow their newfound European connections to lapse in favor of cheaper (but potentially riskier) Asian transit," Renesys notes.

— Nicole Willing, Reporter, Light Reading

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