IP-Only Telecommunication AB (publ.) Annual Report 2011

Transcription

1 IP-Only Telecommunication AB (publ.) Annual Report 2011

2 Content 2 Financial highlights of This happened in Directors' Report 28 Consolidated statement of comprehensive income 1 4 IP-Only in brief Tomorrow's operator 29 Consolidated balance sheet 6 Chief executive's review 30 Consolidated cash flow statement 9 High quality and personal service 31 Parent company income statement 10 IP-Only s network in Parent company balance sheet 11 IP-Only s infrastructure and platforms 34 Parent company cash flow statement 14 Market and services 36 Notes 14 Corporate 57 Audit report 20 Wholesale 59 Shares and shareholders 60 The Board of Directors 62 Addresses

3 Financial highlights of For the third consecutive year IP-Only reports a very strong EBITDA development as well as a particularly strong improvement of the gross margin, which is now in excess of 50 per cent. Consolidated net sales grew by nine per cent, after adjusting for the divested private customer business in Blixtvik January-December Net sales SEK million (426.3) The gross margin improved to 50.3 per cent (41.0) EBITDA SEK 76.0 million (49.0) Operating result SEK million (-85.9) Earnings after tax SEK million (-130.9) Earnings per share SEK (-22.68) The order intake for new services was SEK 6.9 million (7.2), which refers to the estimated monthly value of contracted fixed and variable fees Cash flow from operating activities SEK 52.7 million (-26.7) Cash and cash equivalents SEK 35.2 million (25.9) at 31 December Net sales and earnings in the last five years 2011 revenues by segment MSEK % 40 % Operational & Outsourcing Service Providers Banking & Finance Contact centers % Wholesale % % Corporate & Public % Media & Content providers EBITDA (MSEK) Net sales * (MSEK) Gross margin % * adjusted for the divested private customer business in Blixtvik Mikael Sköld, CFO. Chief Financial Officer with overall financial responsibility for the IP-Only Group.

4 This happened in 2011 Sales and operating results 2011 proved another very good year for IP-Only. Growing sales coupled with the consolidation of our operations and a continued focus on cost-cutting led to an improvement in EBITDA by SEK 49.0 million to SEK 76.0 million. Customer numbers have continued to increase and billing increased during the year. In our operator segment the increase was over 20 per cent, mainly on the back of strong interest in IP-Only s Ethernet access service, not least among international operators. In 2011 underlying demand for bandwidth continued to grow, primarily due to the trend towards the centralisation of IT services in the business sector, the introduction of cloud computing as well as the continued rapid increase in Internet traffic generally. Service development and network expansion In 2011 the geographic reach and redundancy of IP- Only s Nordic fibre backbone were further expanded. Through deals with other fibre network owners the Uddevalla Örebro link was rerouted to the east of Lake Vänern while a new redundant fibre path to Gothenburg via Borås and Jönköping was established. The eastern parts of the fibre network were also improved through the addition of new links, including Norrköping Västervik Gotland and Oskarshamn down to Nybro. IP-Only s IP and wavelength networks were also upgraded in 2011, resulting in a sharp improvement in performance in the form of optimised design for further minimising delays in the network (which is particularly valued by the financial sector) as well as increased capacity. The main Stockholm Malmö route, for instance, was increased from sixteen 10 Gbps channels to 40 x 10 Gbps. Many of these upgrading activities are closely tied to the major wholesale agreement concluded with the mobile operator 3 and to Net4Mobility, a consortium jointly owned by Tele2/Telenor. Here IP-Only delivers capacity to the base stations in the ongoing rollout of 4G. IP-Only s Finnish network was also improved as a result of increasing demand in the wholesale market for connections to Helsinki and onwards to the Russian border. We also saw a sharp increase in demand for our Ethernet Access wholesale service, which is designed for operators who are looking for an easy way to connect their Nordic end customers to central ports with full Ethernet functionality. In the corporate market an important product launch took place in the autumn as IP-Only introduced its Virtual Server infrastructure service, providing access to secure and flexible server capacity directly over the Internet. The service is produced on an entirely new and specially designed platform located in one of IP-Only s recently expanded colocation centres. IP-Only has long enjoyed a strong position as a supplier to major Internet sites in the media segment, for whom the company s second product launch of the year, DDoS Protection traffic analysis and protection against overload attacks, was a welcome addition. 3 Lennart Lakso, Group Controller Overall responsibility for Business Control and Billing at IP-Only.

5 About IP-Only Tomorrow s operator 4 IP-Only is an established provider of reliable and powerful telecom and data services to businesses and organisations with stringent requirements. The foundation for what we do, and what our services are built on, is our Nordic fibre network and our specialised modern technology, integrated interconnection solutions 4 for telephony and modern data centres. What makes us a unique provider in the Nordic market is our ability to combine the power of an extensive company-owned fibre network with the efficiency provided by specialised modern technology and the personal service that a small organisation can provide. We are a more modern, more alert and more responsive alternative to the older telecom giants, yet we also control our own network and have strong expertise and more muscle than our smaller rivals who lease their networks. As the owner of a fibre backbone with very high available capacity, we are a natural provider of bandwidth to large companies as well as a wholesale provider to many other operators. Controlling all parts of the infrastructure also enables us to deliver cost-effectively precisely the raw or value-added services that our customers demand, always with high capacity and availability. That s also why we have become a successful provider in niche segments like media, call centres and banking & finance, which have very specific communication requirements. Our customers include engineering firms like Volvo Aero and SSAB, media giants Aftonbladet, SVT and Radio Sweden, and operators like T-Systems, Level3, mobile operator 3, Bredband2 and AllTele. IP-Only has for many years been promoting IP/Ethernet and the Internet as key technologies for modern communication services. We have helped to drive the trend towards the centralisation of IT systems and towards the Internet as a carrier for all forms of cloud computing services and media consumption. We do this by offering powerful, future-proof communication services such as Carrier Ethernet, SIP Telephony, Internet, CDN Streaming, Virtual Server and Remote Backup. Our vision and strategy going forward IP-Only s vision and goal is to be the operator of choice in the Nordic region in terms of capacity, reliability and service provision for customers requiring a very high standard of data, telephony, Internet, IaaS (infrastructure as a service) and colocation services. We place a strong emphasis on being close to our customers and on providing the flexible personal service and knowledge that is required, for instance when a customer needs expert advice from technicians or is looking to develop a particular aspect of their service. IP-Only's unique position We built our business from scratch in 1999, and were thus able to build an organisation that is ideally adapted for the technologies and services of the future. Today we have gathered under a single roof individuals with the skills and experience required to build and operate every part of a complete fibre, transmission and IP network. This efficient and modern organisation is coupled with a powerful fibre network infrastructure. It is precisely the combination of a modern organisation with no limitations in the form of legacy business areas and outdated technologies, and a network with a raw the original network IP-Only was founded in In autumn 2002 IP-Only acquired the extensive fibre network owned by KPNQwest. The network linked up the Scandinavian capitals and the cities of Malmö and Gothenburg. The purchase also included the technical stations for signal amplification and regeneration built by KPNQwest along the fibre-optic cable to ensure complete independence from other players. In 2007 IP-Only acquired Karlskrona Nät, which had an extensive fibre network in the south-east of Sweden. The regional parts of this network were sold in 2012, although KPNQwest s network, acquired in autumn 2002.

6 power which can only be matched by the very largest operators that gives IP-Only an entirely unique position in the market. Strategy IP-Only s focus is always on delivering powerful, pure, high-quality services using our modern infrastructure. Our strategy is based on the growth in demand for bandwidth, both for external connections to the Internet and internally within businesses and organisations. We expect this growth in demand to not only continue over the next few years, but accelerate. Today we see three primary drivers behind the growth of broadband: the centralisation and outsourcing of IT infrastructure in the business sector and, over the longer term, access to applications over the Internet ( cloud services ) the distribution of high-quality audio and video content over the Internet the explosive growth in the use of mobile broadband IP-Only offers high-quality office-linking network services to the business sector, giving the customer a wide choice of design and presentation coupled with Internet, telephony and value-added services such as IaaS, Remote Backup and Firewall. We drive the development of the Internet by offering future-proof Internet services with the highest availability to the most demanding customers in the media sector, websites and other content providers. IP-Only uses its highly developed fibre network, consisting of a regional Nordic backbone and several local metropolitan area networks, to offer network services and infrastructure as a service (IaaS) to businesses and, on a wholesale basis, to other operators, systems integrators and other end-customer-facing business partners. Thanks to its strong expertise, the high operational quality of its services and its powerful network, IP-Only is a natural service provider for all businesses that are in some way dependent on network services in their production activities. Clear evidence of this is the high proportion of IT companies and/or high-tech firms among IP-Only s customers. Organic growth and customer-driven network rollout One of the pillars of IP-Only's strategy has long been to provide our services using company-owned fibre infrastructure all the way to the customer whenever possible. This enables us to make the most of our inherent strengths and our existing network, ensures optimal control of the quality of services, maximises margins and gives us control over future costs. In addition to connections through the company's own fibre network, IP-Only uses other local network owners and continuously adds new connection nodes to expand our on-net coverage and connect customers as cost-effectively as possible. To expand the addressable market while maintaining profitability, we also choose to supplement our offering with copper-based services. In addition to organic growth, we do not rule out possible acquisitions over the next few years, which could involve acquiring supplementary customer bases and/or network infrastructure. 5 IP-Only retained a number of important main fibre routes. As part of its strategy to build a denser network and carry the services all the way to the customer, IP-Only acquired Uppsala Stadsnät from TDC in 2008, adding a further 110 km of tubes and fibre cable in the Uppsala metropolitan area. In 2009 the company made three acquisitions: the operator Dataphone, which significantly broadened and strengthened IP-Only s offering in telephony, the server hosting company Telefortress and the private customer operator Blixtvik. However, as part of a drive to focus on its core operations, IP-Only sold its private customer business to AllTele in March IP-Only s fibre infrastructure is currently one of the four largest in the country, but with no technological or organisational legacies. Coupled with our ultra-modern data centres and new platforms for infrastructure as a service (IaaS), this infrastructure constitutes the foundation for our simple and powerful services. Add a compact and fit-for-purpose organisation and the ambition to always live up to our customers high expectations, and you understand why IP-Only is one of the very top players in the telecom market.

7 Message from the CEO 6 IP-Only s strategy for delivering powerful high-quality data services to businesses and operators remains. The Group has continued to streamline and focus its business, and the operating profit expressed as EBITDA increased to SEK 76 million in 2011 from SEK 49 million in the previous year. The gross margin continued to improve 6 sharply, to 50.3 per cent (41.0). The operations of IP-Only s Blixtvik subsidiary were sold to AllTele Allmänna Svenska Telefonaktiebolaget with effect from 1 March The decision to sell the Blixtvik business, which is focused on the private customer market, was based on the assessment that it would be difficult to achieve synergies with IP-Only s other operations, which target the corporate and operator markets. The sale of Blixtvik s operations had a slight negative impact on total consolidated sales, which decreased to SEK 434 million compared with SEK 489 million in The total order intake for 2011 increased slightly (5.4%) compared with the year before. IP-Only s sales organisation was also restructured in the spring, resulting in a stronger focus on slightly larger customers. Pär Jansson took up the post of Sales Director in April, while Mikael Philipsson, who previously held that position, became CTO and Head of Product & Marketing. Considerable efforts have been made to raise the quality of the network and our production platforms with the aim of minimising any disruptions. We have also improved the service we provide to our customers in the form of a new customer portal, where our customers can obtain a good overview of their connections, contract terms, billing, etc. IP-Only s customer service has also been expanded somewhat, and considerable emphasis has been placed on improving the information provided to customers in the event of any disruptions. It is clear that these efforts have improved customer loyalty, which is very encouraging. Another indication of this is that our revenues in network services from our corporate and operator customers have increased at slightly faster pace (9%) than our order intake. Because of this increase, the IP-Only Group s monthly revenues have now returned to the same level as before the sale of Blixtvik s private customer business. Cash flow from operating activities improved in 2011 and is now positive. Bank loans have been paid down but the Group s debt ratio is still high. In late 2011, in order to reduce the debt level and raise additional working capital, the company initiated a funding process led by an international investment bank. At the time of writing this process has not yet been concluded. The single largest deal during the year was concluded with the mobile operator 3, to which IP-Only delivered a national backbone with fibre connections to mobile masts for increased capacity in the mobile data network. This agreement shows clearly that the increasing data traffic in the mobile network relies on an extensive fibre-based transport network. In connection with this delivery IP-Only took the opportunity to upgrade its WDM network to meet the growing demand for powerful 10 Gbps connections from many other players. Telenor and Tele2 have also received fibre from IP-Only for some of their mobile masts. Other important deals in 2011 included significant deliveries of transport services to AllTele for backbone and access services, and an agreement with ICA for delivery of a business-critical WAN for their distribution centres. Wasakredit has chosen to use our data centre in Järfälla coupled with powerful Ethernet connections. For many of our customers in the financial sector we

8 launched a highly successful IP-VPN service in 2011 that we had developed in collaboration with Nasdaq OMX. During the year 58 new customers signed contracts for this service. We also successfully marketed our services to the public sector, concluding contracts with the Swedish Social Insurance Agency, Post and Telecom Authority and Pensions Agency. In Wholesale we continued our efforts to sell Ethernet access in the Nordic countries and successfully implemented NNIs (network-to-network interfaces) in Stockholm, Copenhagen and Helsinki with a number of international operators. Using a streamlined process, we currently handle about 2,000 enquiries a year. Demand for ever higher capacities in the network remains as strong as ever. In 2011 IP-Only upgraded its transport network to support up to forty 10 Gbps optical WDM channels per fibre pair. We have seen a particularly strong increase in demand from our operator customers on the Stockholm-Helsinki-Russian border route. We are also proactively expanding our IP network with 40 Gbps switches to meet an expected increase in traffic and to enable dynamic traffic management at high bit speeds. The number of traffic minutes on our IP telephony platform has increased sharply and is now roughly double the level a year ago. During the year IP-Only successfully converted Com Hem s telephony solution to SIP. Although IP telephony still only accounts for about one third of the Group s total telephone traffic, the share is increasing rapidly. The trend among our corporate customers towards moving their IT equipment out of the office has continued, and IP-Only therefore chose to launch its new Virtual Server infrastructure service in autumn Magnus Öberg, Chief Executive Officer 7

9 8 This solution, known as cloud computing, gives customers fast access to secure and flexible server power directly over the Internet or through a link to the customer s private company network. Largely in response to this trend, there is a pressing need for more space in our data centres. During the year we added 8 about 70 rack spaces to our largest data centre in Järfälla and we also expanded and improved the power supply in our data centres in Oslo and Gothenburg and in our underground facility in Grödinge to the south of Stockholm. Our sales activities for our Virtual Server and Remote Backup services will now be stepped up. In preparation for next year we will also be expanding our platforms for streaming services in order to meet the increasing need for online distribution of media. In accordance with our previously stated goal of simplifying the legal structure of the Group, the number of subsidiaries has been further reduced. In 2011 the subsidiary companies IP-Only Inc. (USA) and DP Sweden AB were liquidated and sold for liquidation, respectively. An intercompany merger was also implemented through the merger of the Norwegian subsidiaries IP-Only Telecommunications AS and IP-Only Networks AS. The drive to simplify the legal structure of the Group will continue in As a further step in our drive to focus our activities on powerful data services for businesses and operators, the regional network infrastructure in the subsidiary company Karlskrona Nät AB was sold to Affärsverken Karlskrona AB in April The municipally owned buyer will be using the infrastructure partly to increase its take-up among village associations and private individuals in rural areas. In connection with the sale IP-Only retained a number of fibre pairs under long-term leases in order to be able to ensure that the company can continue to deliver capacity and services to its existing and future corporate customers in the area. The deal resulted in a one-off gain of SEK 7.8 million while the impact on earnings is neutral. IP-Only s vision is to be the operator of choice in the Nordic region in terms of capacity, reliability and service provision for corporate and operator customers with stringent requirements. We deliver our services through our company-owned modern infrastructure and our strategy is based on the expectation that demand for bandwidth will continue to grow, both internally among our customers and externally in terms of Internet traffic. According to a survey produced by the Swedish Post and Telecom Authority, 49 per cent of all households and businesses in Sweden had access to at least 100 Mbps in October The government s Broadband Strategy for Sweden document defines an objective of raising that figure to 90 per cent by In practice, this gigantic rollout will be achieved through fibre connections in an absolute majority of cases. With Sweden s fourth largest fibre network, IP-Only is in a good position to capitalise on this trend and will be an obvious participant in helping to push the agenda forward. The future looks bright! Uppsala, 16 May 2012 Magnus Öberg Chief Executive Officer

10 High quality and personal service the hallmarks of IP-Only according to our customers IP-Only s customers include a high share of IT companies and other communications-intensive businesses for which network services are business-critical. Our customer surveys show that what determines how satisfied our customers are is not just a high level of quality and the reliability of the network services we provide. Equally important is that the operator is able to provide the personal service, flexibility and expertise required for fast error recovery or support when the customer needs to adapt or change something in its services. Being a relatively small organisation that owns and controls its own complete infrastructure has many advantages. It makes us independent, gives us the power to act, enables quick decisions and encourages us to remain at the forefront of new technological developments, ensuring that we continually offer our customers more powerful and cost-effective services. We also make every effort to ensure that our customers receive personal and qualified service in all their contacts with IP-Only. Our employees provide help and answer any queries from customers during the requirements analysis phase of the sales process, and when any new issues arise they are never further away than the nearest telephone. For customers with special requirements IP-Only arranges regular meetings to discuss operational issues. We are happy to discuss adjustments, upgrades or the addition of new services to meet our customers specific requirements and high expectations. From the moment they place an order until the service is up and running customers are assisted by a dedicated personal coordinator. Our delivery coordinators have full control over all stages of the process and work closely with customers. Customers contacting IP-Only s customer service or our 24-hour Network Operations Centre (NOC) can receive qualified answers directly from our technical staff. The NOC monitors all parts of the network and systems everything from broadband use in the transmission system to temperatures in data centres. The NOC can answer all questions about operational status, and leads and coordinates error recovery efforts in the event of incidents. It also ensures that the identities of all persons entering IP-Only's buildings and data centres are verified. Reports of alerts and incidents are generated and sent to the customers concerned. 9 Carin Maher, Delivery Coordinator Primary contact person during the delivery process with responsibility for planning, ordering and coordinating internal and external resources. Mikael Westerlund, Product Manager Datacom Responsible for maintenance and development of our Ethernet, Internet, IP-VPN and Wavelength products.

11 IP-Only s network in beyond the nordics IP-Only covers all of Sweden... In the Nordic region IP-Only uses its own fibre network. The central backbone consists of a ring-shaped Nordic network connecting the countries capital cities. The backbone is in turn connected to a large number of local and regional networks along the way, enabling IP-Only to deliver its services to smaller towns around the country. and in cities like London, Amsterdam, Frankfurt and New York The fibre backbone is also redundantly connected to the continent, with links across the Atlantic, enabling IP-Only to deliver its services in many locations outside Sweden, including several major western European cities and New York.

12 IP-Only s infrastructure and platforms IP-Only s infrastructure IP-Only s fibre backbone is not only one of the most powerful in the market; the modern technology we employ also makes it highly cost-effective. Thanks to our strategically correct choice of technology upon acquiring KPNQwest's network in 2002 Ethernet, which became the technology of the future, rather than SDH, IP-Only now has by far the longest experience of delivering transparent and pure Carrier Ethernet transport services in the market. IP-Only s network infrastructure has different service platforms for parallel IP/Internet and Ethernet service delivery on the optical WDM layer. This means that IP-Only is able to deliver high levels of functionality, availability and performance in a very costeffective manner. Fibre network and data centres IP-Only owns and operates a Nordic fibre backbone with very high capacity, good coverage and branches to other parts of Europe and beyond. The central fibre ring, comprising land and subsea cables, links up a large number of cities in Sweden, Norway, Denmark and Finland with extensions to the Russian border and the European continent to the south. IP-Only controls its own infrastructure from the foundation up: from fibre and tubes to company-owned properties for technical equipment, transmission systems and the IP backbone. The fibre backbone consists essentially of two ducts with one 96-fibre cable. The backbone branches out into a number of denser access networks in cities and regions where, in the first hand, end customers are connected to the network through the company s own infrastructure. IP-Only has data centres offering a very high level of operational reliability that are located along the fibre network and offers colocation at several sites in Stockholm, Gothenburg, Malmö, Oslo and Helsinki. The most extreme level of protection is provided in a data centre housed in a former military command and control centre just south of Stockholm that sits under 20 metres of bedrock. Along its fibre cables IP-Only also has more than 40 company-owned buildings with equipment for amplifying and regenerating the optical signals as well as space for customer equipment. Transmission network A WDM system (wavelength division multiplexing) is used above the fibre network infrastructure. WDM is a technology that uses each fibre pair effectively by enabling the transmission of several wavelengths through a single fibre. The WDM system is a high-capacity system and can easily be upgraded. IP-Only has a pure network structure in which the various service platforms are located parallel to each other directly on the WDM layer. IP network IP-Only has a separate, powerful Internet backbone located directly on the optical network for all demanding services such as Internet Capacity, CDN/Streaming and Telephony. What sets the company s IP network apart from its rivals is that it is built using redundant equipment in the core nodes and in several ring structures and is used exclusively for IP services. Unlike most of our competitors, IP-Only provides no office-linking services (e.g. IP-VPN or MPLS-VPN) through this network. This reduces complexity, improves availability 11 Eva Sjögerås, Head of Transmission Systems Responsible for pre-sale, capacity planning, purchasing and planning of the implementation for IP-Only s transmission network. Catrin Enarsson Back Office

13 12 IP-Only's modern and efficient network infrastructure ensures low running costs In 2011 DDoS protection was introduced as an addon service for our IP network. Through detailed analysis of traffic patterns, we are able to identify and prevent overload attacks already in the backbone, where the capacity is greatest. 12 A strategically important technology choice made directly in connection with IP-Only's acquisition of KPNQwest's network in 2002 was the decision to invest in Ethernet rather than SDH. As a result, IP-Only now offers the market's most modern and cost-efficient services, delivering pure Ethernet directly over the wavelengths. The network structure has service platforms that are parallel with the WDM layer, and Ethernet switches are connected directly to the WDM equipment instead of being routed via SDH. and cuts response times both in the network itself and in traffic with other operators. Our IP network also uses the architecture of the Internet for efficient routing of telephony traffic. Calls can be routed based on domain name rather than IP address/number series, which means that the DNS architecture is used as load balancer for the centrally located telephony servers. We also have a well developed system of traffic exchange with other operators, both nationally and internationally. Through an open peering policy, we have acquired a large number of peers, which helps to improve the quality of the IP traffic. Traffic exchange takes place at Netnod's nodes in Stockholm, Gothenburg, Malmö and Sundsvall and at the nodes in Oslo, Copenhagen, Helsinki, Amsterdam, Frankfurt, London and New York. Ethernet IP-Only s Ethernet network stretches from Luleå in the far north of Sweden to Manhattan in New York. This means that there is no need for compromise when delivering Ethernet services across long distances. The network is installed on dedicated wavelengths in IP-Only s fibre network. The technology is designed to meet the high standards expected from a traditional point-to-point connection as well as today's and tomorrow's technological standards. Thanks to the simple architecture without tunnelling or protocol conversions, IP-Only is able to provide by far the most transparent and flexible Ethernet service in the Nordic market. Telephony platform IP-Only has a long history of building and operating telephony networks for handling large traffic volumes. Today both traditional and modern, state-of-the-art technology are used to achieve maximum flexibility, scalability and availability for our customers. A central system based on IP and SIP handles customer accounts, telephone numbers and IP addresses. By using our network and our extensive expertise in Internet Fredrik Rosenbecker, Peering Coordinator Handles contacts and negotiates the terms for exchange of IP traffic with other operators as head of the company s IP network and peering strategy.

14 technologies such as routing, load balancing and DNS, we create advanced functionality for traffic routing while enabling integration with other systems. The SIP system is coupled with an Ericsson platform which supports very large volumes and connects IP-Only to the interconnection network. Traffic exchange with other operators takes place at many locations across the Nordic countries, both in the interconnection network and through direct connections for IP and SIP. Thanks to our good geographic coverage, we are able to receive and hand over traffic at those locations in the Nordic region and using those interfaces which best suit each individual customer. IP-Only places a lot of emphasis on and devotes considerable resources to fraud prevention by building functions which prevent fraudsters from gaining access and generating costly traffic against our customers wishes. Infrastructure as a service (IaaS) IP-Only has built an entirely new technological platform for delivery of virtual servers over the Internet or through a direct connection to the customer s private network (cloud computing or infrastructure as a service (IaaS)). The core platform consists of hardware from IBM and virtualisation technology from WMware, which ensures very high performance and good scalability both in terms of CPU, memory, storage and communication. A virtualised and layered disc system guarantees optimal functionality for databases and other I/O-intensive applications. Thanks to the location directly on IP-Only s backbone, virtual server capacity can be delivered to the customers with the highest security and with very short response times regardless of geographic distance. Each customer is assigned a dedicated web portal where they are able to administer and monitor their existing servers and upgrade or order entirely new servers. IP-Only Remote Backup is an entirely redundant solution in which backup data is stored on disc and cassette. The service is based on IBM s Tivoli Storage Manager (TSM) software, ensuring full functionality. Scheduled backups of the customer s servers (located in the customer s premises or in one of IP-Only s data centres) are made over the Internet and then stored in one of IP-Only s high-security underground facilities. The backups are always available online and can be read back quickly over the Internet when required. IP-Only s Managed Firewall service is based on products from Fortinet and includes functions such as IP, web filtering, VPN, VLAN, protected SIP and traffic reports. The firewalls can be placed physically in the customer s premises or centrally in one of IP-Only s data centres. IP-Only s Antispam service effectively blocks spam and harmful s already in the operator network, ensuring that harmful s do not reach the customer s mail server. The service is based on Cisco s IronPort, which is the world leader in the field, and filters spam with a very high degree of precision. 13 Christian Pallinder, Senior Systems Architect Responsible for Virtual Server architecture and system design.

15 Market and services 14 In 2011 the previous year s trend towards growing sales to other operators continued to gather pace. In this context IP-Only s fibre link from Sweden to Helsinki and on to the Russian border plays a key role. Thanks to IP-Only s continued success in selling its services to other operators, a division into two main business areas, Wholesale and Corporate, is natural in order to characte- 14 rise the company s market position and service portfolio. Corporate The corporate market accounts for a majority of IP- Only s sales. IP-Only s customers come from a wide range of industries and their requirements and wishes vary as much as the fields in which they operate. What they have in common is that fast and efficient communication is of crucial importance. The key to many of IP-Only s successes is precisely our ability to listen to the customer and adapt our delivery to their specific requirements. A current example is Mogul, a web, e-commerce and cloud computing consultant and longstanding IP-Only customer. When they needed to upgrade their production platform we were able, at short notice, to provide redundant Internet connections, ultra-secure colocation for their secondary site and physically separated fibre connections for fast Ethernet and Fibre Channel communication between the sites. Company WAN (Ethernet Link / IP Link). Adding the epithet 2.0 to something is somewhat hackneyed but for want of anything better, we like to refer to the next generation of company networks as WAN 2.0. We have noticed a growing trend for companies to build networks with very high capacity and availability to link up their offices and connect to the Internet. While companies previously opted for 10 or perhaps 100 Mbps, a growing number are now choosing gigabit speeds and redundancy. This creates opportunities for new, flexible ways of interacting in networks. In real time and with very large data volumes. Managing your offices as if they were linked to one and the same LAN cuts costs and creates opportunities to work in entirely new ways. You can share large files among offices in different parts of the country as easily as at your own office, save money by centralising server operations, or store backups in one of Sweden's most secure data centres and still access them as quickly as if they had remained at the office. the public sector IP-Only delivers essentially the same type of solutions to the public sector as it does to private companies, and the orders vary from nationwide data networks with connections to a large number of local offices to simple Internet connections to individual government agencies and organisations. As customers who wish to order services under a framework agreement are required to choose the supplier that provides the best solution at the lowest cost, IP-Only has an advantage through its long experience of offering services with a very good price/ performance ratio. IP-Only s public-sector customers including communication-intensive organisations such as the Swedish Social Insurance Agency and the Pensions Agency. Mikael Wiklund, Sales Manager Large Corporate Sales manager focusing on large corporate customers and providers of operational and outsourcing services.

16 Ethernet Link IP-Only's EthernetLink service enables businesses and organisations to connect branch offices using the same, fast and inexpensive technology that is used locally at the head office, creating a switched LAN at a national or Nordic level without the need to take detours through routers. And at speeds of several 100 or 1,000 Mbps! IP Link Through our managed IP-VPN service, IP Link, customers can link up local area networks at various locations into a single layer 3 company network that is entirely separate from the Internet. The service comes with support for all-to-all communication but can also be configured so that only certain offices are permitted to exchange data with the head office, for instance. Our IP Link service also allows customers to quality-assure time-critical traffic such as IP telephony, thin clients and other business-critical applications via QoS in the company network. Internet IP-Only has provided very high-capacity Internet connections to operators and leading Internet sites for many years. These customers require a very high standard of quality and reliability, but in recent years a growing number of businesses from a wide range of industries have realised the benefits of the raw power that IP-Only offers and have opted to upgrade their connections to multiples of 100 Mbps or even several Gbps. IP-Only applies one and the same homogenous structure throughout its network to maximise scalability and optimise the flow of traffic. Together with our well developed traffic exchange with other national and international operators (about 90 per cent of the traffic from a normal Swedish website is handled through 15 WAN with plus services Large companies often operate across a wide geographic area but want to bring together their employees, IT resources and customers as if everything and everyone were located in one place. IP-Only offers a high-performance gigabit WAN with a range of add-ons for this very purpose. Centralised IT systems located IP-Only s colocation centres or in a customer-owned data centre improves efficiency and security and simplifies the administration. Coupled with a fast connection to the Internet and external parties as well as capacity services such as Virtual Server and Remote Backup, IP-Only s WAN service creates opportunities for smart ways of interacting. Providers of operational and outsourcing services, another important customer group, also appreciate these building blocks from IP-Only. They can package IP-Only s services into scalable systems without having to invest in infrastructure or operation. Typical end customer solutions include backup, storage and virtual servers or various types of hosting, such as server and client operation. Many outsourcing suppliers also opt to locate their platforms in IP-Only s data centres, which gives them access to extreme bandwidths on demand. This solution ensures a very high level of operational reliability. Examples of IP-Only customers in this segment include 24 Solutions, Atea, Mogul, Q-Branch, Evry, Cygate and Advania.

17 16 direct traffic exchange), this ensures good control of traffic routes and enables us to provide services with guaranteed capacity and service levels. Load Balancing IP-Only 16 offers a global load balancing service for demanding content providers who want to guarantee optimal reliability and robustness. Services that can be secured through load balancing include www, streaming and telephony. The service is offered separately or as part of a complete streaming service. IPv6 and DdoS Protection/Traffic Analysis IP Only has long experience of IPv6 in practical use, as we adopted the technology at an early stage and tested it in our network. Today we are one of only a handful of Internet providers that offer standardised IPv6-configured interfaces to Internet customers. Roughly one in twenty IP-Only customers are running IPv6 live, and we offer the same SLA as for IPv4. Overload attacks aimed at blocking legitimate users access to websites and network services are a growing problem. Not even the most advanced firewalls or intrusion prevention systems can protect against this type of volume-based attacks; the attacks need to be blocked in the Internet operator s network before they reach their target. To respond to this new threat, IP- Only launched its Traffic Analysis with DDoS Protection service in 2011, which is based on market-leading software that is installed on servers in IP-Only s network. Infrastructure as a service (Iaas) Infrastructure as a service, or cloud computing, is a rapidly growing segment for IP-Only, and the reason is simple. It is simpler, more efficient and more flexible to deliver security, server and storage capacity through the network than to own and administer one s own platforms. Moreover, IP-Only s platforms are located in Sweden and are configured to handle the most demanding applications. Virtual Server One area that is growing very rapidly right now is delivery of server capacity over the Internet (cloud computing or infrastructure as a service, IaaS). This is a cloud-based service which enables companies to avoid investing in and operating hardware and instead get servers delivered over the Internet when required. The customer chooses which operating systems they wish to use along with any applications. IP-Only offers virtual servers with Linux or Windows as well as applications such as web, SQL and Exchange. To further improve Helena Bengtsson, Sales Executive Develops new and existing customers with the aim of increasing new and add-on sales. Fredrik Hemmingsson, Product Manager Hosting Responsible for IP-Only s products and hosting services, including cloud computing services.

18 security, the virtual servers can be delivered over dedicated Ethernet links. This ensures a very high level of security and makes it easy to connect servers directly to the customer s WAN or operating data network. The whole environment is of course monitored by IP-Only s 24-hour Network Monitoring Centre (NOC). and backup reports. All this is included in the service, and the customer only pays for the storage volume used. Using a web interface, the customer can control used backup volumes, schedules and events, and each morning a report detailing the backups made in the last 24 hours is sent to the customer s inbox. 17 Remote Backup Data availability requirements are growing constantly as IT becomes increasingly business-critical in all industries. Placing backup systems in a secure location, separate from other systems, reduces the likelihood that important information will be lost in the event of an accident. Our Remote Backup service offers the customer automated backups as well as simple and fast data restore directly over the Internet. With IP-Only Remote Backup customers no longer need to think about administration, security, machinery and software expenses, redundancy, scalability, space, power supply Firewall IP-Only s Firewall service gives customers access to a flexible and price-efficient high-security solution that handles complex threats without the risk of bottlenecks in the communication. IP-Only is responsible for operabanking & finance Our customers in the banking and finance sector demand a low latency (delay) for trading applications as well as high bandwidth and transparency. A difference of a few milliseconds in the transmission of data between the application and exchange can be crucial in determining how successful a trade is. Many of these customers therefore opt for our Ethernet service with short response times. The number of connected exchanges and companies that are able to access each other through IP-Only is continually increasing, which strengthens our offering to the industry. Dennis Söderström, Sales Manager Corp. & Contact Centres General responsibility for sales to SMEs, media organisations, the public sector, contact centres and the banking & finance sector.

19 18 tion, monitoring and all updates that are required to prevent the growing number of network-based threats and attacks. The customer can also choose to receive graphic reports of the traffic and any incidents. Based on the reported data, it is easy to identify any changes to existing rules that may be required. 18 Anti-spam Spam is today a big problem for many companies. Over 90 per cent of all s sent over the Internet today are junk mail. The difficulty lies in quickly identifying what is spam or harmful and effectively filtering out the right messages. This requires significant computing power and can be costly to acquire and maintain. With IP-Only s Antispam service the customer avoids this, as the junk mail never reaches the mail server. The service is available with different security levels to cover differing customer requirements. CDN/Streaming IP-Only offers a complete streaming service to content providers who want to distribute audio and video media over the Internet. The customer gains access to a powerful and cost-effective platform which allows it to grow in response to changing requirements. We also provide more complex, customer-adapted solutions. The platform is spread across several of IP-Only s geographically separated data centres to ensure full redundancy and very high availability. The platform is scalable both on the communications side and in terms of storage volume to ensure that it is able to handle the media/content providers Since the company s inception in 1999 IP-Only s network services have helped Sweden s largest media companies and most traffic-intensive websites to distribute content to their users. Requirements specifications from this category contain a number recurring points: very high bandwidth, modern technology, the ability to manage temporary peaks in traffic and near total availability. If the customers prefer to focus more on applications and content than on administering their own technological platform, IP-Only also provides so-called IaaS services (infrastructure as a service), including Virtual Server and Remote Backup, which simplify the administration and improve scalability and operational reliability for a fixed monthly charge. Content providers benefit from IP-Only s CDN (content delivery network), which enables them to stream audio and video content to tens of thousands of simultaneous viewers without creating bottlenecks. Load balancing and 24/7 monitoring of traffic routes for the streaming service are handled by IP-Only. A typical customer is Onside, which broadcasts live Swedish premier-league football.

20 growing volume of data to be distributed. IP-Only offers a range of streaming technologies, such as Flash Media Streaming (FMS), Windows Media Services (WMS) and Silverlight. The platform supports on-demand streaming, where the consumer decides when to view the content, and broadcast (live) streaming for mass broadcasts of media during a predetermined time period. Colocation/Data Centre/Server Hosting IP-Only offers very high security colocation at several sites in Stockholm, Gothenburg, Malmö and Oslo. The installations are built directly on IP-Only's backbone with several physically independent connections to national fibre networks to ensure the highest possible redundancy. IP-Only's data centres also provide access to several other operators. The data centres come with 24- hour surveillance, fire and burglary protection systems, standby power, climate control, etc. All areas of the data centres are monitored by CCTV round the clock from IP-Only's Network Operations Centre (NOC), which also monitors the operation of the company's network services and infrastructure. By enabling each customer to place its equipment in a separate lockable cabinet, or even in a separate room, in one of its data centres, IP- Only is able to maximise security while providing redundant communication of the highest quality. Customers of course have physical access to their cabinets round the clock, 365 days a year. Corporate Telephony IP-Only is a full-scale telephone operator with a powerful and flexible platform that enables us to deliver the services our customers require. Our extensive telephone network offers maximum availability and quality, and we have long experience of providing telephony solutions, both ISDN PRI (for customers with a traditional private branch exchange) and SIP Trunk (for customers with SIP-based PBX systems). We can also offer flexible telephony solutions that can be tailored to the specific requirements of communication-intensive businesses such as contact centres or dialler customers. SIP Trunk SIP Trunk is a connection linking an SIP-based PBX or equivalent solution to IP-Only s telephone network and from there to the public switched telephone network (PSTN). The SIP Trunk replaces the old ISDN/PRI link, but for customers wishing to retain a traditional PBX this can be solved by using a customer premises gateway. With SIP Trunk from IP-Only customers avoid double connection costs for their external communication, as the same infrastructure is used for telecom and data services. SIP Trunk should ideally be delivered on a redundant Internet connection to avoid interrupted calls in the event of a fibre rupture or other disruption. The Burst option for IP-Only s data services enables customers to make calls uninterruptedly using the maximum capacity of the interface, e.g. 10 Mbps agreed capacity delivered on a 100 Mbps interface, i.e. 1,000 simultaneous calls instead of 100. For customers looking for a more secure SIP Trunk the service can be delivered together with IP-Only s Firewall service. 19 contact centres An increasing number of companies are choosing to outsource voice-based functions such as customer service, market surveys and sales to external providers. In this fast expanding industry IP-Only is in a strong position to deliver extremely competitive solutions for complex traffic routing and integration with the customer s other systems and platforms. The fact that IP-Only has its own network in the Nordic countries is a trump card in this context, as it enables us to terminate voice traffic in Sweden, Norway, Finland and Denmark and to transport very large volumes in our network to where the customer wishes at very low cost. Per Svahn, Product Manager Voice Tasked with developing IP-Only s telephony platforms and adapting our services to customer requirements.