TeleGeography News and Analysis » TeleGeography Update

Cable Cuts Disrupt Internet in Middle East and India, Again

Friday, December 19th, 2008

Three international submarine cables in the Mediterranean Sea were damaged on Friday, December 19, causing significant disruptions to internet and phone traffic in Egypt, Saudi Arabia, India and all of the Gulf states. The location of the fault was thought to have occurred between Tunisia and Italy. The three damaged cables are the FLAG Europe-Asia cable, operated by Reliance Globalcom, and two consortium cables, SeaMeWe-3 and SeaMeWe-4 owned jointly by several telecommunications companies.

Additionally, there were reports that the GO-1 cable connecting Malta with Sicily had been damaged on the evening of Thursday, December 18. It was not immediately known if the outages were connected.

The current series of faults is reminiscent of the submarine cable faults that occurred in January 2008. Today’s events have the potential to create worse disruptions: while the January 2008 accidents broke two of the three cables connecting Europe with Asia via the Middle East, Friday’s cable failures have caused faults on all three. France Telecom projects that service on all cables will be restored by December 31. Until then, many carriers in the Middle East and South Asia will need to route their European traffic around the globe, through South East Asia and across the Pacific and Atlantic oceans.

New cable construction should help to prevent such outages in the future, according to TeleGeography Research Director Alan Mauldin. “Many new cable systems are slated to enter service between Europe and Egypt in the next few years, including Telecom Egypt’s TE North cable, Orascom’s MENA system, FLAG’s HAWK cable, the IMEWE consortium cable, and the EIG consortium cable.” Though constructing multiple cables are no guarantee against outages, the introduction of these new systems will provide additional routing options and improve resiliency.

European VoIP—The Revolution is Underway

Monday, September 22nd, 2008

New research from TeleGeography indicates that consumer VoIP subscribership in Europe is skyrocketing. At year-end 2007, 25.3 million consumer VoIP lines were in service in Western Europe, up from 15 million in 2006, and nearly four times the 6.5 million VoIP subscribers in 2005.

The key driver of growth has been aggressively priced bundles of voice, broadband, and video service. While prices vary widely across Europe, many operators charge as little as €30 (U.S. $43) for all three services, including unlimited calling. This strategy has been spectacularly successful: TeleGeography projects that western European VoIP subscribers will top 37 million and will account for 29 percent of western European fixed lines by year-end 2008.

The success of upstart service providers has forced legacy telcos to respond. Most European incumbent phone companies have introduced dual-play or triple-play bundles, which frequently include flat-rate IP telephone service. While their success has varied widely, France Telecom has emerged as the largest VoIP service provider in Europe, and incumbents now account for five of the 10 largest European VoIP service providers.

Some countries are much further along the adoption curve than others. Household penetration of consumer VoIP service in the 13 countries profiled by TeleGeography ranges from 43 percent in France to as low as 2 percent in Spain (see figure). “A fixed-line revolution is underway in Europe,” commented TeleGeography analyst Paul Brodsky, “but it’s certainly not happening at a uniform pace.”

TeleGeography’s European VoIP & Triple Play Research Service is the most complete source of data and analysis about the rapidly growing consumer VoIP market in western Europe.

To download the executive summary and sample data, please visit: http://www.telegeography.com/products/euro_voip/index.php.

For further information please call us at +1 202 741-0042 or email press@telegeography.com.

Internet Traffic is Growing Fast—but Capacity is Keeping Pace

Wednesday, September 3rd, 2008

According to new data from TeleGeography, international Internet traffic grew 53 percent between mid-2007 and mid-2008, down from 61 percent the preceding year. Traffic growth between the U.S. and Latin America was especially fast, surging 112 percent. In contrast, traffic on Internet backbones between major cities in the relatively more mature U.S. market rose a modest 47 percent.

For the second consecutive year, total international Internet capacity grew faster than total Internet traffic, leading to lower utilization levels on many Internet backbones. Between 2007 and 2008, average traffic utilization levels decreased from 31 percent to 29 percent, while peak utilization fell from 44 percent to 43 percent. The aggregate trend toward lower utilization of capacity belies significant regional differences. While utilization on international links to Europe and Asia fell in 2008, they rose in the U.S. & Canada and Latin American where traffic growth outpaced the deployment of new Internet bandwidth.

Traffic growth has remained strong, even though the pace of broadband subscriber growth has declined. “Broadband subscriber growth has been slowing since 2001, but the volume of traffic generated by each user grown,” said TeleGeography Director of Research Alan Mauldin. “Traffic growth is fueled by consumer demand for video, delivered via web browsers, peer-to-peer services, or streaming protocols.”

TeleGeography’s Global Internet Geography provides in-depth analysis of international and U.S. domestic Internet backbone capacity, traffic and pricing.

To download the executive summary of TeleGeography’s Global Internet Geography study, please visit: http://www.telegeography.com/products/gig/index.php.

For more information please contact us at:
+1 (202) 741-0042 or press@telegeography.com

How Much Should International IP VPN Service Cost?

Tuesday, July 8th, 2008

IP VPNs and private networks are a lifeline for international businesses, providing secure communications between headquarters and far-flung locations. Telecom companies around the globe are vying for corporate customers, offering IP VPN, private lines, and dedicated Internet access in cities around the globe.

This market is proving to be a challenge for buyers and sellers, alike. New data from TeleGeography’s Enterprise Networks Research Service reveal that prices for international network service vary dramatically, by service provider, by country, and by class of service. For example, while the median price of a 2 Mbps E-1 IP VPN port in London was $576 per month in Q1 2008, a comparable connection would cost $1,034 in Hong Kong, $2,871 in Beijing and $6,083 in La Paz, Bolivia (see Figure).

The wide range of prices quoted by telecommunications companies for similar services within a given city suggests that telcos, too, are having a difficult time finding appropriate prices for their services. For example, in Beijing, prices for 2-Mbps VPN ports varied from just over $1,300 per month to nearly $5,000 per month.

The rate of price change also varies widely by market. The median monthly price of a 1.5 Mbps T-1 port in Atlanta fell 19 percent from $580 to $470 between Q2 2007 and Q1 2008. In contrast, the median E-1 port price in Dubai, one of the most expensive markets tracked by TeleGeography, fell only 4 percent, from $16,538 to $15,877.

“VPNs lie at the heart of modern corporate networks,” said TeleGeography analyst Gregory Bryan. “However, the tremendous range and variability of prices reflect that this market is neither transparent, nor commoditized. Both buyers and sellers of wide-area networking services need to keep close track of market prices to ensure that the prices they charge—or pay—are appropriate to the markets in which they operate.”

TeleGeography’s Enterprise Networks Research Service provides comprehensive and timely market data and expert analysis for IP VPN, retail private line services, and Dedicated Internet Access (DIA).

For more information please contact us at:
+1 (202) 741-0042 or press@telegeography.com

Wholesale Revenue Growth Remains Elusive

Friday, May 30th, 2008

New data from TeleGeography’s Global Bandwidth Research Service reveal that the average price of wholesale circuits in most major markets dipped 10 to 20 percent in 2007. This decrease would represent a steep decline in most industries, but it’s a far cry from the price collapse carriers experienced in the early 2000s.

As price declines have moderated, international bandwidth demand has remained strong, growing at a compounded annual rate of 52 percent over the past five years.

Still, revenue growth remains elusive for many wholesale network operators. A key reason lies in bandwidth buyers’ changing purchase patterns. Instead of simply buying more circuits to handle their growing traffic volumes, wholesale buyers are purchasing larger, higher-capacity circuits. Companies that may have purchased a few 155 Mbps STM-1/OC-3 circuits five years ago are now opting for 2.5 Gbps or 10 Gbps wavelengths. These large circuits are far cheaper in terms of the price per Mbps of capacity than the smaller circuits.

“The effective price per Mbps of capacity sold is falling a lot faster than nominal circuit prices, themselves,” observed TeleGeography Research Director Robert Schult. “Carriers need to sell ever larger volumes just to maintain stable revenues.”

TeleGeography’s Global Bandwidth Research Service provides the most detailed analysis of the long-haul network and submarine cable industry available—including supply, demand, costs, and pricing analysis as well as profiles of 119 submarine cables and 176 network operators.

For more information please contact us at:
+1 (202) 741-0042 or press@telegeography.com

US VoIP Gains Mean RBOC Pain

Monday, May 19th, 2008

New data from TeleGeography reveal that voice over IP (VoIP) telephone service, which was only recently a novelty, is now commonplace in the U.S. By the first quarter of 2008, 16.3 million consumer VoIP lines were in service, representing 13.8 percent of all U.S. households, and 27 percent of broadband households.

While VoIP services are growing fast, incumbent phone companies, particularly the three Regional Bell Operating Companies (RBOCs), AT&T, Verizon and Qwest, are hemorrhaging traditional fixed-line subscribers. Since the start of 2005, the RBOCs have lost 17.3 million residential telephone lines, while VoIP service providers have gained 14.4 million new customers. More than 80 percent of these new VoIP subscribers use the services of cable companies, which have achieved remarkable subscriber growth by offering VoIP as one component in a triple-play bundle.

“VoIP service providers’ growth has largely come at the expense of the old phone companies,” observed TeleGeography analyst Patrick Christian.

Incumbent phone companies are responding to the new challenge by launching their own triple-play offerings. Verizon had over 1.8 million subscribers to its FiOS fiber-optic Internet service, and 1.2 million FiOS TV subscribers in Q1 2008. AT&T is upgrading its broadband network to offer broadband, video and VoIP telephone service under the brand name “U-verse.” At the end of Q1 2008, AT&T had 379,000 U-Verse broadband and video subscribers, including 4,000 VoIP subscribers.

TeleGeography’s U.S. VoIP Research Service provides in-depth analysis of U.S consumer voice-over-IP service subscribers, service providers, and revenues, and investigates the impact of VoIP on incumbent service providers.

For more information please contact us at:
+1 (202) 741-0042 or press@telegeography.com

Meet TeleGeography at ITW ‘08

Thursday, May 8th, 2008

TeleGeography will be exhibiting at the new International Telecoms Week (ITW) conference at the Hilton Washington in Washington DC (June 2-4, 2008).

Stop by Booth 207 to meet TeleGeography’s analysts, find out about our latest research, and for a chance to win one of our international telecom maps—we’ll be giving away 10 telecommunication maps each day of ITW.

To schedule a meeting with TeleGeography at ITW, please contact:

Stephan Beckert
+1 (202) 741-0042
sbeckert@telegeogaphy.com

Cable Cuts Disrupt Internet in Middle East and India

Thursday, January 31st, 2008

On the morning of 30 January, two international submarine cables in the Mediterranean Sea were damaged, causing significant disruptions to internet and phone traffic in Egypt, Saudi Arabia, India and all of the Gulf states. The two damaged cables are the FLAG Europe-Asia cable, operated by FLAG Telecom, and SeaMeWe-4 (South East Asia-Middle East-Western Europe-4), a consortium cable owned jointly by fifteen telecommunications companies. These two cables account for the majority of international communications capacity between Europe and the Middle East.

Cable outages in the Mediterranean

The two cable cuts leave the older SeaMeWe-3 system as the only cable in service connecting Europe to the Middle East via Egypt. The cable cuts have reduced the amount of available capacity on this direct route to Europe by 75 percent (620 Gbps). Until service is restored, many carriers in Egypt and the Middle East must now route their European traffic around the globe, through South East Asia and across the Pacific and Atlantic oceans.

New cable construction should help to prevent such outages in the future, according to TeleGeography Research Director Alan Mauldin. ‘Many new cable systems are slated to enter service between Europe and Egypt in the next few years, including Telecom Egypt’s TE North cable, Orascom’s MENA system, the IMEWE consortium cable, and a new cable by FLAG Telecom.’ The introduction of these new systems will provide additional routing options and improve resiliency, but multiple cables are no guarantee against outages. In December 2006, seven of the eight cables connected to Taiwan were damaged by an earthquake, disrupting communications in much of Asia. Cable operators needed several months before service was entirely back to normal. Fortunately, the Mediterranean outage is much less severe, and the damaged cables could be repaired within a week.

For further information please call us at +1 202 741-0042 or email press@telegeography.com.

Download as a PDF.

Meet TeleGeography @ PTC

Thursday, December 20th, 2007

TeleGeography International Telecom Trends Workshop
PTC’08, January 13-16 2008; Hilton Hawaiian Village Beach Resort & Spa; Honolulu, Hawaii, USA

TeleGeography’s senior research team will present its latest findings on global voice and data traffic growth, network supply and demand, and market pricing trends. Specific areas of focus will include:

Impact of video on wholesale markets
Impact of bundled VoIP and video services on the consumer telephony market
Global Internet backbone capacity and traffic growth
Wholesale capacity and undersea cable supply, demand, and pricing trends
Developments in international enterprise networks pricing

TeleGeography’s PTC workshop, now in its 3rd year, provides detailed market data and background for the week’s many workshops and meetings.

To arrange a meeting with one of the speakers please send an email to Stephan, Eric or Tim using the links below.

Speakers

Stephan Beckert, Director of Research
Eric Schoonover, Senior Analyst
Tim Stronge, Vice President of Research

Workshop sponsored by

Free Cable Map

Attendees will receive a complimentary folded Submarine Cable Map 2008.

International Voice Traffic Growth is Slowing: Consolidation Ahead?

Tuesday, December 11th, 2007

New research from TeleGeography reveals that international voice traffic growth is slowing, after decades of rapid growth. International voice traffic grew approximately 15% annually, from less than 18 billion minutes in 1986 to just under 300 billion in 2006. Deregulation, falling call prices, and rapid mobile subscriber growth helped to sustain the long boom. Recently, however, the effects from these factors have petered out: international calls grew only 10 percent in 2006, and signs point to continued sluggish growth in 2007.

Skype and other computer-based voice services are a key reason for the slowdown. According to TeleGeography estimates, Skype generated approximately 14 billion minutes of international traffic in 2006. “Skype only accounts for a small share of international calls. But they’re generating enough volume to have a clear impact on the growth rate of traditional calls,” said TeleGeography analyst Stephan Beckert.

This trend presents a challenge to international carriers. With average international calling prices 70 percent lower than they were 10 years ago, scale has become an ever more important consideration. “Carriers depend on rapid traffic growth to offset falling prices. Slower volume growth hurt carriers’ revenues, and will almost certainly force further consolidation in the international long distance market,” said Beckert.

Published continuously since 1989, the annual TeleGeography study is the most comprehensive source of data on the international long-distance market. To download the executive summary of the study, please visit: http://www.telegeography.com/products/tg/index.php

For further information please call us at +1 202 741-0042 or email press@telegeography.com.

Archive for the 'TeleGeography Update' Category

Cable Cuts Disrupt Internet in Middle East and India, Again

European VoIP—The Revolution is Underway

Internet Traffic is Growing Fast—but Capacity is Keeping Pace

How Much Should International IP VPN Service Cost?

Wholesale Revenue Growth Remains Elusive

US VoIP Gains Mean RBOC Pain

Meet TeleGeography at ITW ‘08

Cable Cuts Disrupt Internet in Middle East and India

Meet TeleGeography @ PTC

International Voice Traffic Growth is Slowing: Consolidation Ahead?

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