Few segments of the telecommunications industry have been changing as rapidly as international interconnectivity, whether it be voice, IP/MPLS, Ethernet, or Sonet/SDH. As a carrier neutral independent exchange, Epsilon sees an opportunity to carve out some new territory. With us today to discuss Epsilon’s rapidly evolving interconnection and local access aggregation model is the company’s Chief Commercial Officer, Irwin Fouwels.
TR: How does Epsilon approach the growing market for interconnectivity and global last mile access?
IF: Epsilon is basically a global network exchange. We have about 65 points of presence around the world where about 450 carriers (global, regional, and domestic) interconnect with each other on our switches at layer 1 or layer 2. They are all pre-connected on our switches, which is a key point because it allows us to take away lots of the inefficiencies of the traditional carrier-to-carrier world. There is no need for any patching, which can be very costly. With the prices of bandwidth always going down, you often see that even on an international circuit cost of the cross-connect outweighs the cost of the actual backbone capacity. We take that cost away by doing a logical cross-connect as opposed to a physical patch.
TR: Does your model have similarities to an Ethernet Exchange, whereby you aggregate the last mile capabilities of your customers and make them available to each other?
IF: There’s been a lot of talk about Ethernet Exchanges and in some ways it never really took off. But yes this is something we in effect have been since day 1, although we serve all layers including SDH and wavelength as well. We can leverage the notion of pre-connectivity and reverse the NNIs to get from our PoP locations to enterprise locations, a service offering we call ‘enterprise connect’. Aggregating last mile access is a very logical extension of what we do.
TR: How does this differ from the global MPLS wholesale approach of serving the enterprise market?
IF: We don’t want to replicate being another MPLS wholesale vendor, of which there are already many. In a way for a regional carrier to buy its global MPLS network extension from one of the top three international carriers is a bit of an awkward model since these are the same carriers they often compete with for enterprise customers. We are totally neutral and we don’t compete in the enterprise space, that’s something we will never do.
TR: Does your global network exchange allow you to address the same opportunities?
IF: Yes, we see a lot of that MPLS business being substituted by Ethernet, but we also are seeing that local internet access and the ability to run an enterprise network over the public internet infrastructure is becoming more and more viable and the take-up is accelerating. So that is something we bundle in. Given all the commercial relationships that we have we can provide local internet access services via an aggregated, one-stop shop model. If we provide that as a managed service where we manage the VPN router, we also have an interesting advantage that we can route that IPsec tunnel as far as possible over our own global core.
TR: What advantages do you derive from the global network exchange model in the marketplace?
IF: All the contractual and administrative work has already been done. There’s no need to go back and forth with contracts, quotes, and SLAs. It’s a question of a logical provisioning only, and the back office systems are key. We are continuing to invest a lot in our platform, because at the end of the day everything we do in the global telecoms landscape everything ought to be done by the click of a mouse and it’s kind of bizarre that the industry is not there yet. We intend to continue driving this forward.
TR: What parts of the world are you focusing on the most and why?
IF: It’s very much demand-driven. We see a lot of demand from the Middle East and Africa and from Central Europe. The reason is that apart from being global network exchange we are also an outsourcing company in that we provide a virtual presence. For example, rather than a Middle Eastern or African carrier putting its on PoP in London, we provide a virtual PoP. It’s therefore logical that they will use us for the last mile as well. In terms of where else we see demand, certainly in the Asia-Pacific region but from a slightly different angle. We actually see some carriers decommissioning PoPs because the operational expenses are too high. When we do that, it also becomes a logical extension for us to supply last mile access to that virtual PoP.
TR: How does Epsilon view consolidation in the industry. Are there inorganic opportunities for you to expand? If so, what kind of assets would fit?
IF: There are opportunities out there. We are completely debt free, privately owned, and have access to funding. So we are in a healthy position, and we do see certain players doing things that we could convert along the lines of our current model. We also have a number of global hubs that are basically hosting and collocation facilities, the main ones being in London, Singapore, and Hong Kong. North and Latin America is a bit of a blind spot in that sense, and such assets there could be of interest to us. However, we are a very prudent company. We’re not jumping up and down to go out and buy stuff. We’ve grown organically for the last 10 years or so, and we’re not going to change that model. But if something is opportune, we’ll certainly look at it.
TR: Thank you for talking with Telecom Ramblings!
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Unfortunately legacy thinking has lead to many operational inefficiencies that are becoming no longer acceptable.
I think it is inevitable that telecom operations become more streamlined from a service engineering and delivering perspective.
Epsilon is bang on when is comes to their forward thinking approach. It’s the logistics of meshing networks seamlessly and maintaining a competitive price that will be the tricky bit.