Wholesale operators are becoming open, savvy and flexible partners but they must be ready for massive growth in ethernet demand. Co-sponsored feature: Tata Communications
John Hoffman: No other provider can deliver 10GB services to as many global cities as we can
Service providers looking to partner with wholesale operators are becoming increasingly demanding customers and have a growing list of complex demands that they require their providers to meet. In addition to the industry fundamentals of network footprint, quality of service and capacity, they seek flexibility in terms of how contracts are constructed, willingness to engage in new pricing models and the capability to support specific services across their wholesale partners’ networks.
For John Hoffman, head of ethernet product management for Tata Communications, there are three key attributes partners are looking for: “They need to know the partner provides a high quality service, that the partner has the network and the expertise to support their business,” he says. “High quality services are important and Tata Communications has MEF 9+14 certified services – we were the first provider to be globally MEF certified for our ethernet services. To earn MEF 9 + 14 certification, approximately 400 tests were performed on our network.”
The next key element is the network. It’s easy to forget in the rush to provide service-oriented wholesale propositions that it is the network that is at the foundation of success. “Another demand is the range of services that you are able to offer to partners,” says Hoffman. “When I look at partnering globally, there are a lot of service providers that can offer services but have a very limited network. We are different because we’ve got the services and the network. We can provide 10GB down to 1MB on our own cables almost anywhere worldwide. We offer 10GB service into 25 global cities in India, Asia, the US and Europe. No other provider can deliver 10 GB services to as many global cities as we can.”
Hoffman cites cable ownership as the real differentiator for delivering 10GB connectivity. “The ability to deliver a 10GB product cost effectively is all based on cable ownership,” he adds.
The third element is expertise. “Partners want a truly global player,” he says. “We have more than 80 offices in 40 countries, which means we can provide local support wherever it’s needed.” Tata Communications has staff in all major business centres in the world as well as in key emerging markets such as Russia, Brazil, Kenya, Nigeria, UAE, Saudi Arabia, the Philippines and Malaysia. In addition, it has substantial presence in South Africa through its 56% holding in Neotel, the country’s second national operator.
Tata Communications’ expertise is also shown in its commitment to technology through its ongoing research and development investment and innovation in new ethernet platforms and services. “Many providers run their ethernet service as a part of their overall VPN portfolio, and are driving a convergence of their IP, MPLS and ethernet platforms,” says Hoffman. “We see this hurting the richness of the ethernet portfolio they can offer, and providing a service constrained to the lowest common denominator of many competing requirements. We are fully committed to ethernet technology as an enabler of differentiation for our customers and partners. We were early adopters of ethernet services and we have seen the transformation it can bring to customer networks.”
Hoffman points out that there are further points of differentiation, not least the company’s presence in India. “Definitely India is very important, it’s the crown jewel because it is such a dynamic and large economy,” he says. “Our ability to deliver anywhere in India is an important asset.”
Even taking that into account, Hoffman is keen to emphasise that Tata Communications’ Indian capabilities are far from all it has to offer. “Yes, we can deliver circuits to almost anywhere in India but we can also deliver circuits into more than 40 other countries,” he adds. “You can do one partnership deal with Tata Communications and have access to India, China, the Middle East, Africa and every major business centre in the world. And as our partnerships grow, our offering to our existing partners grows as well.”
Hoffman also highlights that although a relative newcomer to the enterprise market in North America and Europe, in contrast to the incumbents in those regions who are still building their footprint, Tata Communications has been providing global ethernet services for almost five years. Tata Communications is lithe and continues to invest substantially both in new cable consortia and its own capacity. “It’s only five years since Tata Communications entered the global market but we continue to invest, building our partnerships and points of presence.”
Tata Communications’ mode of business is flexible both in terms of providing services to enterprise end customers and to wholesale partners. “For enterprise customers, the flexibility we provide gives the customer the ability to adjust their bandwidth as their needs change,” says Hoffman. “The customers have the ability to upgrade or downgrade the circuits as needed. Of course the price and bandwidth will change in the order form but you can make adjustments without having to sign a new contract and the lead time to adjust is very short.”
That approach resonates with the market. Hoffman refers to the example of a pharmaceutical company that bought a 4MB circuit linking Asia with India. The customer underestimated its requirements and was able to increase to 16MB within four weeks. “No one can predict the future but our ability to quickly upgrade the bandwidth allowed our customer to profitably adjust to a growing market,” he says. “They’ve now ordered 50MB and haven’t needed to change their contract.”
Hoffman gives another example of a European service provider that estimated the need to have 1,000MB in place to support its operations but instead took 500MB initially, expecting to rise to 1,000MB in three months. Ultimately, it took 18 months for the provider to raise its requirement to 1,000MB. “The flexibility we offered saved our customer hundreds of thousands of dollars,” he says, “and that’s also a win for Tata Communications because they extended their initial contract.”
Flexibility is only one aspect of effective partnerships. Tata Communications recognises the need for individual approaches but has a standard partnering proposition to bring to prospects. “We open up our network to our partners,” says Hoffman. “First we train partners to understand our services and give partners contacts to our product and sales teams. Secondly, we provide marketing materials that can be cut and pasted into the letterhead and signage of our partners reducing their time to market and marketing costs. Our goal is to provide a complete support ecosystem covering sales, product, engineering and operations - and that’s very important because we understand they have the relationship with the end customer. They become part of our team and we collaborate to create a profitable partnership.”
The network of the future
Two years ago Tata Communications started a top to bottom review of the ethernet technology underpinning its network, Tata Communications embarked on a process of future proofing its network. Although already having a much more modern network than those being deployed by many of its competitors, the company identified a need to keep up with the exponential growth in ethernet traffic and move to more consistent technology globally. “We decided a major investment was required to keep the cost structure profitable and also to assure the freshness of the services we offer,” says Hoffman. “Our network is growing by orders of magnitude every year, even faster than analysts are predicting for the overall market, because we’re winning market share. That means not only greater demand in the megabits you need to handle on the network, but also in the number of simultaneous services you can support.”
This growth will result in a massive increase in needs for MAC addresses and VLANs. “As customer numbers grow, the resource demand on the network grows, but not necessarily at a one to one ratio,” he says. “For example, a customer might require ten VLANs so that’s an order of magnitude. VLAN volume tops out at 4,094 today. How many customers can a service provider manage with the 4,094 VLAN restriction?”
The situation is similar for MAC addresses. One multipoint customer may have a minimum of ten MAC addresses, a requirement for 20 or 30 is not uncommon and there is potential for 50, 100 or 1,000 MAC addresses to be required by a single customer. “When you consider analysts are predicting 40% of the ethernet business will be multipoint within five years, you are talking about a lot of MAC addresses used within a global network,” he explains. “On a global scale you’ll run into problems with MAC limits and current equipment does have limits. Some equipment has maximum capacity of 32,000 MAC addresses, others 64,000. MAC address explosion within the lookup tables on a service provider’s network will slow the network, and as a service provider you need to consider these issues. Traditional technologies do not address the growth issues effectively.”
Hoffman says that Tata Communications has planned its investment to handle services or VLAN numbers up into the millions and solve the issue of MAC address proliferation. Hoffman points out shifts in technology are not performed rapidly by service provides because they need to maintain the integrity of their services. “Any service provider who performs a technology shift embarks on a long process,” he says. “The process can take years and because we’re doing this now, our technology choice will be operational by the beginning of 2011. By putting our investment in today, we’re future proofing our network to the extent that we expect to be able to use the same technology in a scalable, cost effective manner for the next seven to ten years. That tells our partners they’ll get stability for that period.”
When pressed on the nature of the technology, Hoffman just comments, “We know this will be the most advanced and scalable ethernet backbone available anywhere in the market. We expect to once again step two to three years ahead of our competitors in terms of ethernet service capability.”
That is certain to pack a powerful punch.
John Hoffman is head of ethernet product management at Tata Communications
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j.hoffman@tatacommunications.com