Matthew Finnie, CTO, Interoute, owner operator of Europe's most advanced and densely connected voice and data network, encompassing over 54,000 kilometres of lit fibre, feels that much of the concern is driven by a reluctance on the part of many operators to invest in a business where many feel they have lost the value end of the service.
“There has a phenomenal rise in bandwidth in the past 3 years with the ever increasing growth of TV, music, social networking and commerce that pressure is only set to increase. We are seeing a doubling of data capacity from this year to next, going from 2.5 Terabits to more than 5 Terabits.
“It comes as shock to many access providers that the traditional rules of telecoms have been overturned by the Internet and many are frustrated at their inability to participate in the value to same extent as Facebook, Google and Myspace.
“Bandwidth providers are enjoying a boom time as a result of this. The issue is largely in the consumer delivery side or “internet on-ramps”. Operators need to adjust their business models to cope with the demands of being a “bandwidth player”, making good margins, or get out; the pressure on price per meg is only going to get harder. Today the access and bandwidth market has become like the hard disk market, we always pay the same amount, but continually expect more. Those who are struggling to live in a world where the value is in “over the top” content have changed the technology but not the business model. Modern telecoms is about building multi-service platforms that you can scale over geographic areas to maximise economies of scale. We have deep fibre reserves (the raw material of the internet) so are able to keep pace with demand for bandwidth, but the value comes in building new services that can exploit the availability of low cost capacity.
“But surely if the on-ramps are struggling how can the backbone of the Internet cope as more and more bandwidth demands are placed on it In light of the infamous bandwidth glut between 1999 and 2002 one has to ask what went wrong?
“During the telecoms market downturn, operators dramatically scaled back capacity expansion plans, went bust or simply walked away as there was not the business to justify lighting these networks. Seven years on and broadband penetration has created an explosion in demand. There is now a drastic need for investment in new systems and future growth is wholly dependent on new infrastructure.
“In reality many of the access providers are angry at having to deliver content to millions of users over their networks with little recompense for it. Operators need to start thinking about how they want to participate in this boom aid the growth and not sit around moaning about it.”