Cogent Communications still growing strongly -18 years after the Fiber Optic Bust
Cogent Communications, one of the world’s largest ISPs, is carrying more traffic on its network than most incumbent telcos. During its most recent earnings report, Cogent said its quarterly traffic growth came in at 10%, while year-over-year traffic growth hit 44%. Let’s break that down into on-net and off-net services/customers:
On-net service is provided to customers located in buildings that are physically connected to Cogent’s network by Cogent facilities. On-net revenue was $93.0 million for the three months ended June 30, 2018; an increase of 0.7% from the three months ended March 31, 2018 and an increase of 8.7% over the three months ended June 30, 2017. Cogent’s more than 65,000 on-net customer connections and its nearly 2,600 on-net office buildings and carrier-neutral data centers send traffic over its all-IP-over-DWDM network, protected at Layer 3, using Ethernet as its network interface. On-net customers are obviously the most profitable customers for Cogent.
Off-net customers are located in buildings directly connected to Cogent’s network using other carriers’ facilities and services to provide the last mile portion of the link from the customers’ premises to Cogent’s network. Off-net revenue was $36.1 million for the three months ended June 30, 2018; the same amount as the three months ended March 31, 2018 and an increase of 6.3% over the three months ended June 30, 2017.
Total customer connections increased by 13.8% from June 30, 2017 to 76,193 as of June 30, 2018 and increased by 3.1% from March 31, 2018. On-net customer connections increased by 14.1% from June 30, 2017 to 65,407 as of June 30, 2018 and increased by 3.2% from March 31, 2018. Off-net customer connections increased by 12.3% from June 30, 2017 to 10,480 as of June 30, 2018 and increased by 2.3% from March 31, 2018. The number of on-net buildings increased by 161 on-net buildings from June 30, 2017 to 2,599 on-net buildings as of June 30, 2018 and increased by 58 on-net buildings from March 31, 2018.
Cogent classifies all of their customers into two types: NetCentric customers and Corporate customers.
- NetCentric customers buy large amounts of bandwidth from us and carrier neutral data centers and our Corporate customers buy bandwidth from us in large multi-tenant office buildings. Revenue in customer connections by customer type. There were 33,520 NetCentric customer connections on our network at quarter-end, which declined from last quarter due to significant circuit grooming, consolidating multiple 10 gig circuits to fewer 100 gig circuits at the same location from some of our larger NetCentric customers.
- Corporate customer revenue grew sequentially by 2.7% to $83.3 million and grew year-over-year by 11.9%. We had 42,673 Corporate customer connections on our network at quarter-end. Quarterly revenue from our NetCentric customers declined sequentially by 3.4% and grew year-over-year by 1.4%.
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CEO Dave Schaeffer’s Earnings Call Remarks:
The size and scale of our network continues to grow. We have over 927 million square feet of multi-tenant office space on-net in North America. Our network consists of over 31,900 metro fiber miles and over 57,400 intercity route miles of fiber.
Cogent remains the most interconnected network in world, where we are directly connected with over 6,360 networks. Less than 30 of these networks are settlement-free peers. The remaining over 6,330 networks are paying Cogent transit customers.
We are currently utilizing 27% of the lit capacity in our network. We routinely augment capacity in sections of our network to maintain these low utilization rates. For the quarter, we achieved sequential quarterly traffic growth of 10% in what is traditionally a slow seasonal period for traffic growth and we saw a significant improvement in our year-over-year quarterly traffic growth to over 44%.
We operate 52 Cogent-controlled data centers with 587,000 square feet of space and we are operating those facilities at 32% utilization. Our sales force turnover rate in the quarter was 4.8% per month, again better than our long-term average turnover rate of 5.7% per month. And I think a testament to the training and retention programs that we’ve put in place. We ended the quarter with 438 reps selling our services.
Cogent remains the low cost provider of internet access and transit services. Our value proposition to our customers remains unparalleled in the industry. Our business remains entirely focused on the Internet and IP connectivity and data colocation services. Our services provide a necessary utility to our customers. Beginning at the start of Q2 and April 1st, we began selling our SD-WAN services. We do not expect a material contribution from these services for the next several quarters.
We expect our annualized constant currency long-term revenue growth to be consistent with our annualized guidance of 10% to 20%, and our long-term EBITDA margin expansion rates to remain approximately 200 basis points per year for the next several years.
We expect to grow the sales force at between 7% and 10% per year for the next several years, while we expect operational head count growth to be slower at probably 2% to 3%. So the mix will increasingly become more sales-centric. Because of the efficiencies in running our business and the standardization of our products and the systems that we’ve deployed, we can sustain 44% traffic growth, 20% growth in unit number of connections and do that with a increase in operational and overhead employees of only about 2% to 3% per year. The sales force, however, is the engine that will drive accelerating revenue growth. And investing in that sales force has been and continues to be our major focus.
Analysis:
Cogent is trying to provide the most bandwidth at the lowest possible price, which means it’s in a race to run its network at the lowest possible cost, which means it’s in a race to take every advantage of new optical networking and routing technologies, as soon as they’re available.
“We divide the network into four big technology regions — edge routing, core routing, metro transport and long-haul transport,” Schaeffer told Light Reading. “In all of those functional areas we are on our third generation of equipment — we’ve done two complete forklift upgrades in 19 years — and, you know, I’m sure we’ll go to a fourth generation soon,” he added.
Webcast Replays:
The KeyBanc Capital Markets 20th Annual Global Technology Leadership Forum was held at the Sonnenalp in Vail, CO. Dave Schaeffer will be presenting on Monday, August 13th at 10:00 a.m. MT. Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.
The Oppenheimer 21st Annual Technology, Internet & Communications Conference was held at the Four Seasons Hotel in Boston, MA. Dave Schaeffer will be presenting on Wednesday, August 8th at 1:05 p.m. ET. Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.
The Cowen 4th Annual Communications Infrastructure Summit was held at the St. Julien Hotel and Spa in Boulder, CO. Dave Schaeffer will be presenting on Tuesday, August 7th at 3:30 p.m. MT. Investors and other interested parties may access the live webcast of the presentation by visiting the webcast page.
Verizon & Nokia complete 3GPP NR vehicle handoff
Verizon and Nokia announced they were able to achieve a key milestone on the road to 5G: handing off a signal seamlessly to a vehicle traveling between two radio sectors. The test took place at Nokia’s Murray Hill, N.J., campus. A data transmission at 28 GHz was sent from two 3GPP New Radio (NR) radios on a Nokia building to a vehicle outfitted with a receiver and equipment to measure transmission statistics. The vehicle traveled between the two radios, achieving seamless NR Layer 3 3GPP-compliant mobility hand off of the signal between the two sectors, intra-gNB and inter-DU, according to the companies.
Verizon said that the call mobility test involved a data transmission at 28 GHz that was sent from two 3GPP compliant NR radios on Nokia’s building, to a vehicle that had a receiver and test equipment to measure transmission information.
“The vehicle traveled between the two radios, achieving seamless 5G NR Layer 3 3GPP-compliant mobility handoff of the signal between the two sectors,” Verizon said, noting that these were intra-gNodeB and inter-distributed unit handovers.
“Unlike some of the incremental 5G technology announcements we’ve seen lately, tests like the one we conducted are significant advancements in the development of 5G technology,” said Bill Stone, vice president, Technology Development and Planning for Verizon, in a press release. “By taking these tests out of the lab and into the field, we’re replicating the experience users will ultimately have in a 5G mobility environment,” he added.
“We are pleased to showcase the acceleration of the mobile capabilities in 5G,” said Marc Rouanne, president, Mobile Networks, Nokia, in the release. “Enhanced mobile broadband is one of the first services being delivered on Nokia’s end-to-end 5G Future X portfolio. As a result, we can help our customers meet their early 5G deployment schedules and initial coverage demands.”
Verizon plans to be the first to launch 5G residential broadband service in four markets this year: Los Angeles, Houston, Sacramento and Indianapolis. Verizon CEO Hans Vestberg told CNBC the operator is going to be first in the world with 5G. “We are building everything right now,” he said, with 5G mobile phones due in the hands of consumers next year.
References:
https://www.verizon.com/about/news/5g-move-verizon-and-nokia-complete-first-5g-nr-mobility-call
https://www.rcrwireless.com/20180817/5g/verizon-nokia-test-5g-nr-call-mobility
https://www.fiercewireless.com/wireless/verizon-nokia-complete-5g-nr-mobility-call
Samsung’s Digital City Provides a Glimpse of What’s Possible with 5G
Samsung’s digital city in South Korea showcases many of the perceived benefits of 5G. Samsung has deployed a 5G hot spot (or hot zone) within its campus to demonstrate how quickly a person in a moving vehicle could download and upload large video files to the network. The company’s pre-5G standard technology already supports some in-vehicle services, as well as smart city initiatives such as traffic, smart lighting and CCTV, and as it gains widespread coverage, even more innovations will occur.
Sporting venues will likely use 5G hot zones to deliver a new in-stadium fan experience that offers personalized video feeds of a customer’s favorite player to their mobile device. One example of this was the time slice feature that was available for the winter Olympics. Moreover, remote healthcare use cases will get a boost with better bandwidth to enhance the video and enable new use cases such as assisted surgery with augmented and virtual reality.
https://news.samsung.com/global/video-5g-city-samsungs-preview-of-the-5g-era
Cignal AI’s Optical Customer Markets Report: Optical spending up in China & NA; Down for cloud service providers & other regions
Cignal AI’s (Andrew Schmitt) latest Optical Customer Markets Report states that spending growth by cable Multiple System Operators (MSOs) led all other North American industry verticals during first quarter 2018. The report also reveals that contrary to continued increase in China’s optical spending, incumbent network operator spending in North America and Europe, Middle East and Africa (EMEA) on optical transport equipment continues to decline. Spending in North America grew 30 percent and outpaced all other customer verticals, including cloud operators.
Indeed, optical equipment spending by cloud operators has stalled due to rapidly declining prices and the use of IP-over-WDM as a substitute. Despite the downward trend, however, Ciena and Infinera continue to increase market share in the cloud optical network market.
“In North America, cable MSOs were the strongest performing customer market during the first quarter of 2018,” says Andrew Schmitt, lead analyst at Cignal AI. “Cloud operators are not increasing purchases of optical equipment, though common belief right now is just the opposite. The revenue growth from cloud operators experienced by Ciena and Infinera came at the expense of other vendors’ sales.”
Other key findings in the report include China being the largest source of optical hardware market growth, almost single-handedly representing the one-third global spending by Asia. Global spending by cable MSOs grew 5% year-over-year in the first quarter, with North America increasing 30%.
Other findings of the report were outlined in the press release and included:
- Ciena and Infinera sales growth in the cloud and colo market came during a period of overall spending decline among these customers (see above chart).
- Optical equipment spending by cloud operators has stalled, which contradicts the common perception that cloud operators like Amazon, Google and Microsoft are increasing spending on optical transport equipment. Growth in the cloud market has been inhibited by rapidly declining prices and the use of IP over WDM as a substitute.
- One third of global spending on optical hardware is in Asia, with almost all coming from Chinese incumbent operators.
- Cable MSO global spending grew 5 percent year-over-year in the first quarter.
Cignal AI’s Optical Customer Markets Report is issued quarterly and quantifies optical equipment sales to five key customer markets as well as equipment vendor market share for sales to cloud operators.
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From a separate Cignal AI market research report, here’s the latest YoY Revenue % increase/decrease for various segments of the optical networking market by country or region and Grand Total:
Chart courtesy of Cignal AI
AT&T to build “5G Evolution” connected community in Frisco Station, Texas
Frisco Station is a 242-acre, mixed-use urban development in Frisco, Texas. Located along Frisco’s North Platinum Corridor, Frisco Station includes office, residential and medical space, along with a retail and restaurant district.
On Friday, the entity announced plans to deploy integrated network connectivity from AT&T. Frisco Station said that the development will be one of the first connected communities in the nation built from the ground up with “5G Evolution” wireless technology from AT&T. The future deployments will include “wireless stealth micro cells,” fiber-based internet service and Wi-Fi throughout all common areas according to Frisco Station and AT&T.
“Frisco Station understands the future belongs to the individual,” said Ed Balcerzak, SVP of AT&T Connected Communities in a statement. “With this development, we’re working together to give you more of your thing and connect you to the people, information and entertainment you care about.”
“Stations are places where people go to make connections. That’s why the Frisco Station Partnership chose AT&T as its partner to implement a platform that can support a connected community at every stage,” said Mike Berry, president of Hillwood, Frisco Station’s master developer. “We believe we are creating a high-tech environment, unlike anywhere else in the country, that has the potential to change the way people think about what’s possible in their day-to-day interactions with people and information.”
AT&T highlighted that this investment in innovative technologies will allow Frisco Station to be ready for new innovations to be launched, like Uber Air’s first Skyport and the recently announced drive.ai autonomous vehicle pilot program.
“By proactively addressing current and future connectivity needs, Frisco Station will be prepared for greater reliance on smart devices and automated platforms for transportation, healthcare, entertainment and lifestyle advancements – connecting an anticipated 15,000-person daytime population, five million square feet of office and 2,400 urban living residents,” AT&T’s statement says.
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Frisco Station’s enhanced wireless technology is providing a platform to encourage connectivity between Frisco’s emerging corporate and entertainment destinations. Building a connected community from the ground up ensures that Frisco Station’s vision can be put into practice today and maximized well into the future.
About Frisco Station
Frisco Station is an unprecedented 242-acre, mixed-use development in Frisco, Texas that is created with a new approach to urban design based on the foundational principles of smart, creative and healthy experiences. It is among the first connected communities in the nation to be constructed from the ground up, which enables the development to offer innovative amenities that increase convenience and productivity. Frisco Station is served by one of the world’s first Skyports to support Uber Air’s unique flying taxis and is one of the first projects in the nation to be served by a network of autonomous vehicles. Located along Frisco’s highly desired North Platinum Corridor, Frisco Station features fully amenitized office, residential and medical uses, along with a robust retail and restaurant district that will be anchored by Alamo Drafthouse. The project is being developed by the Frisco Station Partnership, which is composed of The Rudman Partnership, Hillwood Properties and VanTrust Real Estate.
About AT&T Communications
We help family, friends and neighbors connect in meaningful ways every day. From the first phone call 140+ years ago to mobile video streaming, we innovate to improve lives. We have the nation’s largest and most reliable network and the nation’s best network for video streaming.** We’re building FirstNet just for first responders and creating next-generation mobile 5G. With DIRECTV and DIRECTV NOW, we deliver entertainment people love to talk about. Our smart, highly secure solutions serve over 3 million global businesses – nearly all of the Fortune 1000. And worldwide, our spirit of service drives employees to give back to their communities. AT&T Communications is part of AT&T Inc.
References:
AT&T to deploy 5G-ready connectivity services for Frisco Station urban development
Global Data: 5G Enterprise Market Business Case May NOT Be Compelling
Is it possible for anyone to throw cold water on the 5G market potential and diminish ultra hyped expectations? YES!
5G use cases may not be compelling enough for massive uptake by businesses, according to Kathryn Weldon, technology research director at GlobalData. Weldon offered her view on upcoming challenges for mobile operators:
“While 5G services are not yet ‘live’ this next generation of wireless technology is already top of mind for service providers, original equipment manufacturers (OEMs) and other telecom market ecosystem players. Aside from gearing up to build out the technology, they will be working together to make sure that 5G use cases are compelling – that is, different enough from 4G to matter to customers. As with any new generation of wireless, the stakes are high, and operators are hoping that they’ll make back their substantial investments in 5G. For most operators, this should come via a ‘massive’ uptake of connectivity, plus revenues from advanced services spanning both consumers and business customers.”
Operators need to move beyond their current barrage of technology build-out narratives and discussions of fixed vs. mobile services, she emphasized. “Rather, it’s the use cases and business outcomes that will make the difference. Operators need to deliver novel and compelling capabilities that change how business customers see and use cellular services.”
Enterprises have different requirements than consumers:
“As 5G communications traffic is expected from Internet of Things (IoT) sensors in industrial robots, roads, and vehicles and can leverage the technology’s reliability and low latency to control critical services and infrastructure for public safety, healthcare, government organizations, and utilities. But the ROI for these applications must be compelling.”
Weldon further acknowledged that questions remain:“Will the enterprise appetite to spend more to use these futuristic use cases exist when 5G networks become a reality? Will devices to support these applications be in place once those networks are ready? Will businesses finally see wireless as a valid replacement for wireline broadband? And lastly, will operators be able to offer all these futuristic services profitably? Only time will tell.
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Last year, Global Data said 5G networks will become mainstream by 2020, but Europe will lag behind Asia and the US, as operators seek to make the most of 4G, according to GlobalData, a recognized leader in providing business information and analytics. The company’s 5G report forecasts that while over half of all mobile subscriptions will be 5G-capable in South Korea by 2022, compared only around 7% in Europe.
5G will, for the first time, go beyond increased bandwidth and capacity, as was the focus in previous wireless generations, adding low latency, high density and high reliability. These capabilities will enable a variety of use cases, opening the door to new, predominantly business-focused services such as self-driving cars and smart cities. 5G also supports the focus that many operators have in looking for new, adjacent revenue streams, including fixed-mobile integration, digital content and the Internet of Things.
Peter Jarich, Chief Analyst for GlobalData Technology, adds: “Hopes are running high for the potential of 5G to truly transform mobile business models, and tap new revenue opportunities moving beyond consumers and into diverse digital industries. The implications go beyond any individual operator to impact national and regional competitiveness.
“Despite this, for all the efforts to fast-track early 5G deployments, it’s important to recognize that 5G rollouts will take years to complete; no region or country has won or lost the race to 5G yet.”
Australia regulator ACMA to auction 125 megahertz of spectrum in the 3.6 GHz band for 5G services; NZ Spark Outlines 5G Plan
Australia 5G Auction in November
The Australian Communications and Media Authority (ACMA) announced it will award spectrum in the 3.6 GHz band for the provision of 5G services in November. Australia’s telecom regulator confirmed that it will be auctioning off 125 megahertz of spectrum in the 3.6 GHz band. The spectrum will be divided into 350 lots across 14 regions of Australia.
“As a key enabler of the digital economy, the 3.6 GHz spectrum will ensure Australia is well-placed to realize the benefits of 5G. Timely release of 5G-compatible spectrum will facilitate the early delivery of next generation 5G services to the Australian public and industry,” said ACMA Chair Nerida O’Loughlin. “The ACMA has designed an auction process—including starting prices—that aims to maximize efficiency, competitive outcomes and the full utility of this spectrum for 5G,” O’Loughlin added
Interested carriers will have to pay a AU$10,000 ($7,400) application fee to participate in the auction. Prices for spectrum in metropolitan areas begins at AU$0.08 per megahertz per population. ACMA said the parties wishing to participate in the auction must put in their applications by August 31. The regulator also said that the auction will include a spectrum cap, whereby each bidder is limited to 60 megahertz of spectrum in urban areas and 80 megahertz in rural areas.
In October 2017, the government of Australia developed a paper outlining a 5G policy for the country, including the establishment of a working group to drive the deployment of 5G mobile technology in Australia.
The government said this working group will support the timely rollout of 5G technology in the country with the primary goal of fostering the growth of the digital economy.
The government highlighted that it will support 5G deployments by making spectrum available in a timely manner, actively engaging in international standardization processes and streamlining planning arrangements to allow mobile operators to deploy infrastructure more quickly and at lower cost.
In February, Australian telecommunications company Telstra opened a 5G innovation center in the Gold Coast region. Telstra said the main aim of the new 5G center will be to test next-generation technologies to support the early commercial deployment of 5G mobile services in Australia. Telstra said it aims to launch commercial 5G services in Australia in 2019.
The carrier said its 5G center is designed to enable collaboration among technology vendors, developers, start-ups and the operator’s enterprise customers. At the time of the opening, the carrier announced plans to conduct 5G field trials in the coming months in and around the Gold Coast.
Telstra previously said that said that it would work with Ericsson on key 5G technologies including massive multiple-input, multiple-output (Massive MIMO), adaptive beam forming and beam tracking, and OFDM-based wave forms in its Gold Coast center.
References:
https://www.telecomasia.net/content/australia-auction-5g-spectrum-november
https://www.rcrwireless.com/20180809/5g/australia-auction-5g-spectrum-later-november
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New Zealand’s Spark on its 5G Plan:
Meanwhile, New Zealand telco Spark today published a briefing paper that outlines how it is on track to start providing 5G services to New Zealand consumers and businesses from 2020. The briefing paper aims to inform investors of Spark’s 5G intentions, help customers and stakeholders understand more about 5G, and address key considerations for policymakers. Spark Managing Director Simon Moutter said Spark’s technical and network planning for 5G is advancing after successfully conducting outdoor and indoor trials earlier this year. He has called on the government for clarity on the delivery of 5G spectrum, while outlining the telco’s technical and network planning.
Moutter said Spark is already making decisions that are contingent on securing additional 5G spectrum and is having to make those decisions “in the absence of any clear government policy” on when that spectrum will be available or in what bands. Furthermore, Moutter said the allocation processes for the two most likely spectrum bands – mid frequency C-band and high frequency mmWave band – should be completed as soon as possible, to ensure 5G services can be delivered in time for the 2020-21 America’s Cup in Auckland.
In addition to these bands, low frequency spectrum (below 1000MHz) will be required to deliver 5G services on a pervasive basis into rural areas. The government’s current work to define 600MHz spectrum as a band for potential 5G use should continue at pace, he said.
“We are undertaking detailed planning to ‘map’ expected 5G cell site densities in New Zealand and, as a result of this planning, and the learnings we have taken from our 5G testing, we are forming a good understanding of how many new sites we will need for 5G, and where,” said Moutter today, while releasing a briefing paper on Spark’s 5G intentions.
“We have already begun a build programme to increase the number of cell sites in our existing mobile network – which will enable us to meet near-term capacity demand as well as lay the groundwork for network densification required for 5G.”
Moutter said 5G will enable Spark to provide additional capacity at a lower incremental unit cost than under 4G and 4.5G.
“This means that once 5G is available to deploy, we will have a strong commercial incentive to rapidly build 5G network capability as the primary means of keeping ahead of growing customer demand for more data at faster speeds,” he added.
Spark expects to fund 5G network development (excluding spectrum and any move towards widespread rollout of new cell sites using high frequency mmWave band spectrum) within its existing capital expenditure envelope of 11 per cent to 12 per cent of revenues by diverted investment from 4G as soon as the necessary spectrum is available.
By 2020, Spark expects its wireless-network specific capex to be between 25 per cent and 35 per cent of Spark’s overall capital expenditure envelope, up from 25 per cent in the year ended 30 June 2017.
In late 2018, Spark will launch a 5G Innovation Lab in Auckland’s Wynyard Quarter Innovation Precinct that will allow partner companies to test and develop applications over a pre-commercial 5G network.
Moutter said it was important for policy makers to recognise 5G is not a standalone technology or solution – it will operate with previous generations of wireless technology and will be deployed as an overlay of existing network infrastructure.
Therefore, policy settings need to support network operators having control over the evolution of their wireless networks, he said.
Moutter also took another swipe at recent suggestions an organisation such as Chorus should roll out a single 5G network for New Zealand along the lines of the Ultrafast Broadband project.
“The current competitive market model, in which multiple wireless network operators compete against one another to grow their customer bases through product and service innovation and pricing, represents a good blueprint for the way 5G can be rolled out in New Zealand and would provide for more investment predictability and certainty over the coming decade,” Moutter commented.
Reference:
https://www.sparknz.co.nz/news/Spark-outlines-5G-network-intentions/
IHS Markit: Service Provider Data Center Growth Accelerates + Gartner on DC Networking Market Drivers
Service Provider Data Center Growth Accelerates, by Cliff Grossner, Ph.D., IHS Markit
Service providers are investing in their data centers (DCs) to improve scalability, deploy applications rapidly, enable automation, and harden security, according to the Data Center Strategies and Leadership Global Service Provider Survey from IHS Markit. Respondents are considering taking advantage of new options from server vendors such as ARM-based servers and parallel compute co-processors, allowing them to better match servers to their workloads. The workloads most deployed by service provider respondents were IT applications (including financial and on-line transaction processing), followed by ERP and generic VMs on VMware ESXi and Microsoft Hyper-V. Speed and support for network protocol virtualization and SDN are top service provider DC network requirements.
“Traditional methods for network provisioning to provide users with a quality experience, such as statically assigned priorities (QoS) in the DC network, are no longer effective. The DC network must be able to recognize individual application traffic flows and rapidly adjust priority to match the dynamic nature of application traffic in a resource-constrained world. New requirements for applications delivered on demand, coupled with the introduction of virtualization and DC orchestration technology, has kicked off an unprecedented transformation that began on servers and is now reaching into the DC network and storage,” said Cliff Grossner Ph.D., senior research director and advisor for cloud and data center at IHS Markit , a world leader in critical information, analytics and solutions.
“Physical networks will always be needed in the DC to provide the foundation for the high-performance connectivity demanded of today’s applications. Cisco, Juniper, Huawei, Arista, and H3C were identified as the top five DC Ethernet switch vendors by service provider respondents ranking the top three vendors in each of eight selection criteria. These Ethernet switch providers have a long history as hardware vendors. When selecting a vendor, respondents are heavily weighing factors such as product reliability, service and support, pricing model, and security,” said Grossner.
More Service Provider Data Center Strategies Highlights:
· Respondents indicate they expect a 1.5x increase in the average number of physical servers in their DCs by 2019.
· Top DC investment drivers are scalability (a driver for 93% of respondents), rapid application deployment (87%), automation (73%), and security (73%).
· On average 90% of servers are expected to be running hypervisors or containers by 2019, up from 74% today.
· Top DC fabric features are high speed and support for network virtualization protocols (80% of respondents each), and SDN (73%).
· 100% of respondents intend to increase investment in SSD, 80% in software defined storage, and 67% in NAS.
· The workloads most deployed by respondents were generic IT applications (53% of respondents), followed by ERP and generic VMs (20%).
· Cisco and Juniper are tied for leadership with on average 58% of respondents placing them in the top three across eight categories. Huawei is #3 (38%), Arista is #4 (28%), and H3C is #5 (18%).
Data Center Network Research Synopsis:
The IHS Markit Data Center Networks Intelligence Service provides quarterly worldwide and regional market size, vendor market share, forecasts through 2022, analysis and trends for (1) data center Ethernet switches by category [purpose-built, bare metal, blade, and general purpose], port speed [1/10/25/40/50/100/200/400GE] and market segment [enterprise, telco and cloud service provider], (2) application delivery controllers by category [hardware-based appliance, virtual appliance], and (3) software-defined WAN (SD-WAN) [appliances and control and management software], (4) FC SAN switches by type [chassis, fixed], and (5) FC SAN HBAs. Vendors tracked include A10, ALE, Arista, Array Networks, Aryaka, Barracuda, Cisco, Citrix, CloudGenix, CradlePoint, Dell, F5, FatPipe, HPE, Huawei, Hughes, InfoVista, Juniper, KEMP, Nokia (Nuage), Radware, Riverbed, Silver Peak, Talari, TELoIP, VMware, ZTE and others.
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The following information was collected by Alan J Weissberger from various subscription only websites:
Gartner Group says the data center networking market is primarily driven by three factors:
- Refresh of existing data center networking equipment that is at its technological or support limits
- The expansion of capacity (i.e., physical buildouts) within existing locations
- The desire to increase agility and automation to an existing data center
Data center networking solutions are characterized by the following elements:
- Physical interfaces: Physical interfaces to plug-in devices are a very common component of products in this market. 10G is now the most common interface speed we see in enterprise data center proposals. However, we are also rapidly seeing the introduction of new Ethernet connectivity options at higher speeds (25 GbE, 50 GbE and 100 GbE). Interface performance is rarely an issue for new implementations, and speeds and feeds are less relevant as buying criteria for the majority of enterprise clients, when compared to automation and ease of operations (see “40G Is Dead — Embrace 100G in Your Data Center!” ).
- Physical topology and switches: The spine-and-leaf (folded Clos) topology is the most common physical network design, proposed by most vendors. It has replaced the historical three-tier design (access, aggregation, core). The reduction in physical switching tiers is better-suited to support the massive east-west traffic flows created by new application architectures (see “Building Data Center Networks in the Digital Business Era” and “Simplify Your Data Center Network to Improve Performance and Decrease Costs” ). Vendors deliver a variety of physical form factors for their switches, including fixed-form factor and modular or chassis-based switches. In addition, this includes software-based switches such as virtual switches that reside inside of physical virtualized servers.
- Switching/infrastructure management: Ethernet fabric provides management for a collection of switches as a single construct, and programmable fabrics include an API. Fabrics are commonly adopted as logical control planes for spine-and-leaf designs, replacing legacy protocols like Spanning Tree Protocol (STP) and enabling better utilization of all the available paths. Fabrics automate several tasks affiliated with managing a data center switching infrastructure, including autodiscovery of switches, autoconfiguration of switches, etc. (see “Innovation Insight for Ethernet Switching Fabric” ).
- Automation and orchestration: Automation and orchestration are increasingly important to buyers in this market, because enterprises want to improve speed to deliver data center network infrastructure to business, including on-demand capability. This includes support and integration with popular automation tools (such as Ansible, Chef and Puppet), integration with broader platforms like VMware vRA, inclusion of published/open APIs, as well as support for scripting tools like Python (see “Building Data Center Networks in the Digital Business Era” ).
- Network overlays: Network overlays create a logical topology abstracted from the underlying physical topology. We see overlay tunneling protocols like VXLAN used with virtual switches to provide Layer 2 connectivity on top of scalable Layer 3 spine-and-leaf designs, enabling support of multiple tenants and more granular network partitioning (microsegmentation), to increase security within the data center. Overlay products also typically provide an API to enable programmability and integration with orchestration platforms.
- Public cloud extension/hybrid cloud: An emerging capability of data center products is the ability to provide visibility, troubleshooting, configuration and management for workloads that exist in a public cloud provider’s infrastructure. In this case, vendors are not providing the underlying physical infrastructure within the cloud provider network, but provide capability to manage that infrastructure in a consistent manner with on-premises/collocated workloads.
You can see user reviews for Data Center Networking vendors here.
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In a new report, HTF Market Intelligence says that the Global Data Center Colocation Market will Have Huge Growth by 2025.
The key players are highly focusing innovation in production technologies to improve efficiency and shelf life. The best long-term growth opportunities for this sector can be captured by ensuring ongoing process improvements and financial flexibility to invest in the optimal strategies. Company profile section of players such as NTT Communications Corporation, Dupont Fabros Technology, Inc., Digital Realty Trust, Inc., Cyxtera Technologies, Inc., Cyrusone Inc., Level 3 Communications Inc., Equinix, Inc., Global Switch, AT&T, Inc., Coresite Realty Corporation, China Telecom Corporation Limited, Verizon Enterprise Solutions, Inc., Interxion Holding NV, Internap Corporation & KDDI Corporation includes its basic information like legal name, website, headquarters, its market position, historical background and top 5 closest competitors by Market capitalization / revenue along with contact information. Each player/ manufacturer revenue figures, growth rate and gross profit margin is provided in easy to understand tabular format for past 5 years and a separate section on recent development like mergers, acquisition or any new product/service launch etc.
Browse the Full Report at: https://www.htfmarketreport.com/reports/1125877-global-data-center-colocation-market-6
Deloitte: China Winning Race to 5G; Has Outspent U.S. by $24 Billion in 5G Infrastructure
China is pulling ahead of the US in the race to build infrastructure for 5G wireless, according to a new report from Deloitte Consulting. The report titled “5G – The chance to lead for a decade” illustrates how China and other countries are outpacing the U.S. in terms of wireless communication infrastructure spend, tower density and efficiency of execution. Together, these practices are distinguishing China’s lead in the early stages of 5G deployment. This report explores the sense of urgency for wireless carriers and policy makers to work together in an effort to increase investment in the country’s communications infrastructure and offers potential solutions to help improve economic efficiency.
China has outspent the U.S. by $24 billion since 2015 and built out ten times more sites than the U.S. to support 5G communications, according to the report. In just three months of 2017, Chinese cell phone tower companies and carriers added more sites than the U.S had done in the previous three years, the Deloitte Consulting report found. The country has built 350,000 new cell phone tower sites, while the U.S. built less than 30,000. Even with this estimate normalized to account for the population to wireless subscriber ratio, the study concludes that the U.S. has under spent China in wireless infrastructure by $8 to $10 billion per year since 2015.
In 2017, U.S. tower companies and carriers added fewer sites in the last three years than China added in three months. China now has 1.9 million sites, 10 times more than the U.S., which yields almost 40 times the tower density per square mile, and three times the density on a per-capita basis.
“We predict that 5G will expand the network effect dramatically by extending the reach of the internet to almost any kind of connection, by almost any kind of device, anywhere a wireless signal can reach,” said Dan Littmann, principal, Deloitte Consulting LLP. “The potential economic benefits of 5G will soon become a key differentiator for cities looking to attract both businesses and residents. For the U.S. to remain competitive and eventually emerge as a leader, the race to 5G should be carefully evaluated and swift actions should be taken.”
- Establishing lighter touch policy frameworks that are able to deliver higher scale and efficiency and help reduce deployment cycle times.
- Encourage collaboration among carriers and other ecosystem organizations so that the demonstrated benefits from network effects are equitably shared.
- Implementing a national communications infrastructure database to provide deployment statistics, leading practices, and visibility into small cell approval and denial rates.
The report concludes that as another era of untapped economic potential emerges with the adoption of 5G technology, investment in upgrading the underlying communications infrastructure has become increasingly critical. Unless tangible steps are taken to help rebalance the private investment case for the upgrade, the U.S. may risk losing the macro-economic leadership it gained in the previous wireless investment era.
“Maintaining U.S. leadership in mobile communications requires that carriers, technology vendors, OTT innovators, municipalities and policy makers collaborate to build a strong business case for 5G. Deployment costs and cycle times for a densified network infrastructure is are critical for the U.S. to gain equal footing with other countries striving to be first to 5G,” Littmann added.
While China is streaking ahead of the US in terms of network rollout, it looks like there are also several other nations who are in a more comfortable position also. In terms of the number of sites per 10,000 citizens, Deloitte estimates this number at 4.7 in the US, though this is eclipsed by China (14.1), Germany (8.7) and Japan (17.4). Looking at the average number of sites per ten square miles, US stands at 0.4, while China has 5.3, Germany has 5.1 and Japan has 15.2.
Jamie Davis of telecoms.com writes:
The US telcos might be bragging about getting to launch commercial 5G services first, but this means very little. Having several pockets of 5G coverage scattered over the US, focused around the cities which house telco HQs is not the same as taking a leadership position in the 5G economy. When it comes to network densification investments, a key factor for the success of the technology, China does seem to be taking the lead.
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Addendum:
ITU Report on 5G:
https://www.itu.int/en/ITU-D/Documents/ITU_5G_REPORT-2018.pdf
Italy’s forthcoming 5G auction projected to raise €2.5 billion with 7 bidders
Italy’s Ministry of Economic Development (MISE) announced seven companies will participate in the country’s upcoming 5G spectrum auction, which is projected to raise €2.5 billion. Mobile operators Iliad, Telecom Italia, Vodafone Italy and Wind Tre will be joined by fixed broadband operators Linkem, Fastweb SpA (Milan: FWB) and Open Fiber.
The auction is unusual in attracting so much interest from outside the existing mobile telecom sector. In sharp contrast, recent 5G auctions in South Korea, Spain and the UK have not produced new mobile challengers. Italy will be auctioning spectrum across a variety of bands, and not just the mid-range airwaves that were made available in Spain and the UK.
Companies will bid for licences in the 649MHz to 790MHz; 3.6GHz to 3.8GHz; and 26.5GHz to 27.5GHz frequencies, with the auction designed to create new entrants focused on boosting infrastructure in the market as well as making 5G-suitable spectrum available. MISE said that new low-cost operator Iliad was the only participant to indicate it would bid for spectrum in the 700 MHz band frequencies currently used by broadcasters, and where special conditions apply to new entrants.
The auction is scheduled to be held at the end of September, with half of the €2.5 billion raised this year. Allocation will, however, not be finalized before the end of 2022. Bidders are expected to submit initial offers by September 10th.
Under the tender’s rules, a new entrant (or remedy taker) can acquire up to three blocks of 2×5 MHz in the 700 MHz band of the six available, while an operator that has 10 MHz in both the 800 MHz band and in the 900 MHz band, can acquire just two of these blocks.
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About Italy’s Ministry of Economic Development (MISE):
MISE is responsible for Internet Governance through participation in various international bodies and supervision of the assignment of domain names. It operates for IT security, certifying the security of systems and products and providing prevention and support services to citizens and businesses. It authorizes network providers to offer public access to the network and telecommunications services (ISP). It also promotes the dissemination of accessibility and usability of websites and, more generally, digital literacy. Finally, the Ministry supports the development of the ultra-broadband and defines the National Strategy together with Agid (Agenzia per l’Italia Digitale) .
The development of ultra-broadband through the simplification of the regulatory framework, the creation of new development drivers, the use of tax incentives, the reduction of installation costs is a priority for achieving the objectives of the EU 2020 agenda.