As the North and South American subsidiary of China Telecom, China Telecom Americas (CTA) has a tougher path to follow than most international forays into the Americas. The rise of China’s economy means companies need help crossing the border, because there are many more language and cultural issues at play than between the U.S. and Europe, for example. With us today to talk about the company’s approach to the western hemisphere is Luis Fiallo, Vice President for China Telecom Americas.
TR: What’s your background, and how did you get involved at China Telecom Americas?
LF: I have spent more than 20 years in the telecom industry. I’ve worked for Cable & Wireless, Sprint, IBM Global Services, and an internet startup called Applied Theory in the late 90s, which was an ISP with a division that provided hosting and website development. During my tenure there, one of our board members asked us to invest in China, suggesting that we could capitalize by going in early—and that’s what we did. I was the vice president responsible for building the relationships with Fudan University and Intel China. That’s where I met China Telecom, which helped provide us with IP. When I left about a year later, China was just emerging onto the internet, and the country was preparing itself to get into the global marketplace. I joined iLearning owned by Sylvan Learning Systems, which was sold to Educational Testing Services (ETS). Then in 2004, China Telecom Americas asked me to help them, and what I originally expected to be 6 or 9 months became 18 years. Since then, China has emerged into the global marketplace and become a much more prominent player. It has been such a phenomenal experience personally to help and develop our international presence in North and South America and slowly continue to evolve and make investments to build what we call China Telecom Americas today.
TR: What does that infrastructure and business look like today?
LF: Since the beginning of our company, we’ve always built what’s called an aggregation network. We use typical carrier hotel facilities along with transport circuits back to Asia — whether through our parent company or through other resources — as well as the domestic pieces within Asia and the Americas. Our focus was originally assisting American companies to get access to China and the rest of Asia. Over time, as China continued to evolve and more Chinese companies started going abroad, we began to help Chinese companies get access to the U.S. and the rest of the Americas. Our network today consists of POPs scattered throughout the U.S. as well as in Canada. We also built a local ISP business in Brazil. Our business has continuously evolved as more multinational companies went to China or more Chinese companies came here, and we’ve always been the solution provider for everything — from the connectivity to the data centers to the customer’s equipment that was required.
TR: You have run into some regulatory and political roadblocks recently, with a license being revoked by the FCC. How has that affected your business overall?
LF: That was the 214 license, which you need if you provide common carrier services. We had an MVNO business that we were very proud of, helping students get access to the U.S. market. We would actually begin the marketing of these services in China, so that when they came here the parents had a way to communicate with their kids. We are a company that’s always trying to do the right things and operate the right way. After the FCC’s decision, we stopped that business.
TR: In what ways do you see the competitive landscape of global infrastructure evolving in the near future?
LF: A couple things have happened, such as the global pandemic and the push towards digital transformation. Because of such events, we believe that the world is going to continue to change, not only moving more business to the cloud, but also accommodating end users’ migration to the edge. We’ve definitely seen the emergence of everybody moving towards the cloud, where people are now even planning to migrate parts of their infrastructure to the edge and all the computing being inside the network. The world of point-to-point-solutions is gone, and that has given us a chance to reflect and really re-evaluate our business model. We look at the network in two parts: the underlay and the overlay. Outside of China, the underlay has very limited value to China Telecom Americas, because if we resell somebody else’s private line services, we are not necessarily making a lot of money on that. We decided to focus on building the overlay, based on software-defined network and cloud technologies to give companies access to what we call our Elastic Computing Platform. This platform today provides connectivity to 80 public cloud locations across 48 of the biggest metropolitan cities in the world. What we’re doing right now is helping our customers move to our ECP infrastructure. In domestic China, we still sell them the solutions that may be focused on underlay technologies, but the goal is to get them to the cloud.
TR: How do you expect those changes to manifest themselves and how do you plan to adapt to them?
LF: We’ve already seen some of those investments in deployments across China which also take advantage of 5G technology. There are a lot of partners that we’ve added to have APIs to be able to do things as part of the ecosystem. There is a bare metal component to it and a lot of computing issues to solve. It’s now no longer enough to show you a network map — it’s understanding what you need to do, how you want to get there, and how to focus our software-defined capabilities and cloud infrastructure to get you those solutions. We are also focusing on Data ICT equipment. We believe that we’re well positioned to help companies buy and procure those services in China and Asia. When a U.S. multinational goes to a place like China, until you start building out your infrastructure or your teams, they are going to depend a lot on the U.S. teams. There are time zone issues, cultural issues, and language issues, and we have the staff here in the U.S. to be able to support them. We also have U.S. contracts that are localized here to help our customers get a better understanding of how to do this. Our expertise and our value as China Telecom Americas is understanding how to navigate technology options and investments that you may need in Asia. That’s our strength, and we’ve become much more of a consultant and less of a sales organization to help everybody navigate through these solutions.
TR: Do you have plans to expand in Latin America?
LF: We’re intending to build a regional network that’s connected to our global network, but for the purposes of extending our edge. We’re not going to go and buy a telco locally and start getting into that business; that’s not our model. Our model, as in the U.S., is to build an aggregation network and extend our edge to those particular countries. It’s going to be different from Brazil, where we sell IP transit to local ISPs. The rest of the region is not as big as the Brazilian market, so we will focus on selling to multinationals- either domestic ones that want to go abroad or to the U.S., or other international companies that have asked us to help them get into Latin America and to extend our ECP platform into Latin America. We will build beachheads and where appropriate, we’ll connect to local public cloud infrastructure. The second thing is we continue to operate as a network/systems integrator, and we believe regions of the world like Latin America are looking for those types of solutions.
TR: With what types of customers are you seeing the most traction?
LF: We are focused on U.S. multinationals that are going to China, and within that, retail and manufacturing are big areas. We have even developed our own industry teams to focus on those particular customer bases that are going to China. They can have big network requirements in China, and sometimes we’re not only helping them run their core infrastructure and communications, but also getting it back to the U.S. and other parts of the world. We also have IoT technology, called CTWing, to help them manage their IoT devices. On the Chinese customer side we have a lot of customers that don’t know anything about the U.S. market. We introduce them and help them procure services from data center providers that they may need. We’re moving away from just providing network solutions and are trying to give them access to our cloud infrastructure.
TR: Are there new customer segments you’d like to make inroads into?
LF: Currently, our goal is to educate the market about our focus on the overlay side of things. We’re trying to find industries where the focus of communication is either at the edge or in the cloud that needs to go back to the core. We are targeting industries and companies that need that solution globally. Historically, you always thought about the enterprise and what locations you needed to connect; that’s no longer the focus. Our focus is now on building everything in the cloud and the edge, and helping people get back to their core infrastructure at the enterprise level. It’s a shift in thinking, and we believe that’s the future of communications.
TR: China Telecom Americas has also recently been involved in promoting MANRS-conformant networks. How does that fit in?
LF: The best way to think of MANRS is a set of policies that people will follow in order to have a good, strong, reliable internet. The internet that exists today wasn’t designed for the number of companies, end users and edge devices that are using it. It was based on BGP technology for routing in a much smaller segment of the world of communications with universities and some enterprises. Some of the inherent technical limitations of BGP has put a strain on the global internet. MANRS is a commitment by carriers worldwide to follow procedures that will filter out bad actors, track route leaks, and create capabilities to prevent spoofing. We made a substantial investment in all our networks. We have four global MANRS-approved networks, and we’ve invested in all the routing capability to follow MANRS. At the same time, we participate in this community to provide coordination and communication and make sure we hold each other accountable. There’s global validation that takes place because all our routing is public, and we now have a cleaner network. And if you’re a Tier 1 operator like China Telecom Americas and its affiliates, then Tier 2 and 3 operators get the benefit of our clean network as they traverse through our network.
This is important because we need to have trust in the world of the internet, especially with the accelerated adoption of the internet during the pandemic. If the internet was not stable, we would have had a much more difficult time adjusting to the communications requirements needed for all of us suddenly being remote. So it was opportunistic that we ended up making that kind of investment and being the largest IP provider that is part of MANRS today. Now, we’re becoming more of an evangelist for MANRS. It’s never going to stop all the bad things that possibly can happen. But it’s a step in the right direction.
TR: How prevalent is MANRS right now among network operators?
LF: There are now 837 participants in MANRS. But there is still a long way to go. I believe it is actually a differentiator for us because at the end of the day, it is something that everybody’s going to have to do.
TR: Thank you for talking with Telecom Ramblings!
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