Earlier this month, tndm closed its acquisition of Italian based Tinet, transforming itself into an international player in the IP and Ethernet businesses. They had of course been building out their Ethernet Exchange sites over the summer, but the purchase of Tinet raised the stakes while posing questions about just what this company was to become. With us today to help us clarify the company’s plans is Surendra Saboo, Neutral Tandem’s Chief Operating Officer:
TR: By building an Ethernet Exchange and buying Tinet, Neutral Tandem is moving from a very focused business tandem switching model to a much broader one encompassing IP transit and Ethernet. How should we you think of you as a network operator?
SS: We have been a network operator already, and clearly are now in all three spaces – voice, IP transit, and Ethernet. We seek to streamline interconnections connections between our customers, whether it’s voice data or video. We are now more global and have a more diverse set of products, but we are still very wholesale focused – we won’t compete with our customers.
TR: How does Tinet’s Ethernet based network become part of Neutral Tandem’s Ethernet Exchange? Do you need to build new infrastructure along their network or will the two play well together as is?
SS: Their whole network is Ethernet, and all their 90 PoPs have Juniper routers that are Ethernet Exchange capable. We have deployed the Cisco ASR9000 routers for our backbone, and we’ve already networked those nodes together through our IP backbone. We will interconnect these Ethernet backbones and simply bring their 90 Juniper PoPs and bring them into the fold of our Exchange portal. Then we will have reach and provisioning capability end to end.
TR: It seems like that blurs the difference between a network an exchange?
SS: People often focus on Ethernet Exchanges as local exchanges. For instance, from New York to New York. We took that a step further and made it a network exchange. One connection into our network will get you connectivity to anyone else on our network.
We will be able to give three flavors of an Ethernet Exchange. You can connect to us in Chicago and reach a supplier locally in Chicago. You can go long distance and connect to a supplier in another city. Or you can use us as a one stop shop and via our NNIs with incumbents in hard to reach places we will bundle in an end to end solution to the building in those hard to reach places.
TR: Can that hard to reach incumbent currently connected via one of Tinet’s NNI’s also initiate a connection via the Ethernet Exchange?
SS: Yes. Each one of those companies we have an NNI with will also be part of the exchange from a buying perspective. If a carrier in Romania is connected to us via one of Tinet’s NNIs and wants to reach a building in New York, they can do that. It is a two way relationship.
TR: Will the acquisition of Tinet also allow you to expand your traditional tandem switching business internationally?
SS: Yes, we will make it a more global tandem network. Today our voice business is more domestic. There is some voice traffic we have today that comes in from international carriers for termination in the US, but we pick it up here stateside. What this acquisition allows us to do is to be closer to those international customers and pick up that traffic in-country, as well as use those connections for outbound calls to those carriers.
TR: Tinet has traditionally leased intercity capacity rather than owned fiber assets. Do you expect that Neutral Tandem will continue that way?
SS: I think so. It’s less important to own fiber, because leased line prices have been coming down over the years and technology is always improving. Every few years the capacity of what you can do doubles. For us, it’s been better to ride that wave than own fiber assets.
TR: For almost a decade, wholesale has been a tough place to play with many companies shifting to the enterprise. Neutral Tandem has been an exception, and Tinet was as well. Is wholesale getting to be a better place to be? Or are you just particularly good at it?
SS: A bit of both, in some sense. We’ve been better at what we do because of our focus. Wholesale does have its own benefits, where can leverage scale. With retail comes a whole lot of other issues – billing, provisioning, agreements, etc. This way we don’t compete with our customers, which is good place to be.
TR: Thank you for talking with Telecom Ramblings!