GLOBAL INTERNET GEOGRAPHY The content on the following pages is a section from TeleGeography s Global Internet Geography Report. The work is based on sources believed to be reliable, but the publisher does not warrant the accuracy or completeness of any information for any purpose and is not responsible for any errors or omissions. This work is for the confidential use of subscribers. Neither the whole nor any part of this publication may be reproduced or transmitted in any form or by any means, electronic, mechanical, photocopied, recorded or otherwise, without prior written consent from PriMetrica, Inc. All rights reserved. Copyright 2007 PriMetrica, Inc. TeleGeography Research A Division of PriMetrica, Inc. Washington, D.C. San Diego Exeter U.S. tel: +1 202 741 0020 U.K. tel: +44 1392 315567 www.telegeography.com
Executive Summary Demand for the public Internet has remained strong over the past years. Year after year, new applications and services combined with strong worldwide broadband subscriber growth have transformed how the Internet is used and fueled Internet capacity growth. Fortunately, global Internet backbone operators have been able to accommodate that demand through new network investment and better network management. While some predicted that surging Internet traffic could overwhelm the available infrastructure, the expansion of Internet backbones has stayed well ahead of the curve. The beginning of the millennium saw strong demand for Internet services offset by rapidly declining prices. The last two years, however, have begun a new stage of increasing price stability. As prices stabilize, the implications for revenue growth are more favorable. TeleGeography s Global Internet Geography provides analysis and statistics on international Internet capacity and traffic, IP transit pricing, and backbone competition. FIGURE 1 International Internet Traffic and Bandwidth Growth, 2004-2007 Notes: Data reflect traffic over Internet bandwidth connected across international borders. Data as of midyear. Source: TeleGeography research 2007 PriMetrica, Inc. 3
FIGURE 2 GigE IP Transit Price per Mbps by Region, Q2 2005-Q2 2007 $225 Price per Mbps $200 $175 $150 $125 $100 $75 South America Asia Europe United States $50 $25 $0 2005 2006 2007 Notes: Data shown are monthly price per Mbps, excluding installation fees. Source: TeleGeography research 2007 PriMetrica, Inc. Internet Traffic and Capacity TeleGeography s annual survey of international Internet backbone operators tracks both their deployment of international Internet capacity as well as peak and average network utilization levels. International Internet capacity increased steadily between 2003 and 2006, growing at a compound annual rate of 45 percent. In 2007, annual international Internet bandwidth growth accelerated to 68 percent as backbone operators around the world upgraded their networks to meet demand. In 2007, international Internet network capacity grew faster than the volume of traffic carried on these networks. On average, peak international Internet backbone traffic grew 60 percent between 2006 and 2007 (see Figure 1. International Internet Traffic and Bandwidth Growth, 2004-2007), while bandwidth grew 68 percent. Consequently, peak utilization declined somewhat, from 47 percent in 2006 to 44 percent in 2007. International Internet traffic growth varied by region, but the pace was generally slower than the torrid growth experienced in 2006. Intra-European Internet traffic grew 71 percent in 2007, compared with 85 percent the previous year. Intra-Asian Internet traffic grew 55 percent in 2007, down slightly from 59 percent in 2006. Traffic growth on both the trans-atlantic and trans-pacific routes was 41 percent in 2007. In contrast to other regions, traffic growth between the U.S. and Latin America accelerated to 87 percent during 2007, up from 72 percent in 2006. 4
FIGURE 3 IP Transit Price per Mbps Discounts by Region, Q2 2007 Notes: Data shown are monthly price per Mbps, excluding installation fees. Source: TeleGeography research 2007 PriMetrica, Inc. Prices Only a small handful of the world s largest Internet service providers are able to exchange all of their traffic via unpaid peering relationships. All other service providers must rely on wholesale Internet connectivity called IP transit from other backbone providers to deliver at least a portion of their traffic. TeleGeography has conducted a quarterly survey of major IP transit providers in key telecom hub cities around the world since 2003 to track trends in IP transit pricing. IP transit prices vary widely by region; prices in the U.S. and Europe are lowest, while prices in Asia, Latin America, and other markets tend to be significantly higher. Transit prices, like circuit prices, declined rapidly in the aftermath of the telecom bubble. However, prices have been increasingly stable through 2006. For example, between Q2 2005 and Q2 2007, the average monthly price per Mbps for a GigE (1 Gbps) port in much of Western Europe fell only 14 percent, from $28 to $24. IP transit prices in major Asian markets and in the United States experienced similarly modest rates of decline, while IP transit prices to South American cities fell more rapidly (see Figure 2. GigE IP Transit Prices per Mbps by Region, Q2 2005-Q2 2007). Steady traffic growth is compelling buyers to purchase ever higher-capacity ports, which carry a significantly lower price per Mbps than lower speed ports. For example, in the United States, the price per Mbps for a GigE (1000 Mbps) is 21 percent lower than the price of an STM-4 (622 Mbps) 5
port (see Figure 3 IP Transit Price per Mbps Discounts by Region, Q2 2007). Consequently, Internet backbone providers revenue growth is not necessarily growing in direct proportion to traffic growth, despite a stable pricing environment. Outlook Barring an unforeseeable price collapse, the outlook for the international Internet backbone market is better than it has been in years. Weak demand has never been a problem for the wholesale Internet market; rather, the rapid downward spiral of IP transit prices has been the biggest challenge. Now that IP transit prices in many markets have reached a level of market equilibrium, carriers may increasingly seek to differentiate their services on the basis of non-price factors, such as network redundancy, reliability, and diversity and quality of service. 6
Table of Contents I. EXECUTIVE SUMMARY Internet Traffic and Capacity Prices Outlook II. MARKET STRUCTURE Market Trends Types of Suppliers Types of Connectivity Competition Ranking Backbone Providers III. REGIONAL OVERVIEW Capacity Trends IV. TRAFFIC Capacity Utilization Global Traffic Trends Traffic by Application Traffic Methodology Traffic Outlook V. PRICING Pricing Overview IP Transit Pricing: Regional Variations Pricing Variations Among Providers Ethernet versus SDH/SONET Pricing Outlook Numbering Final Thoughts VI. COUNTRIES VII. INTERNET SERVICE PROVIDERS VIII. COUTRY ISP DIRECTORY IX. REFERENCES 7
List of Figures I. EXECUTIVE SUMMARY 1. International Internet Traffic and Bandwidth Growth, 2004-2007 2. GigE IP Transit Price per Mbps by Region, Q2 2005-Q2 2007 3. IP Transit Price per Mbps Discounts by Region, Q2 2007 4. Market Structure 5. International Internet Carriers by Number of International Internet Routes, 2007 6. International Internet Provider Types, 2007 7. Top 50 Internet Providers by Autonomous System Rank, 1999-2007 8. Top 30 Internet Providers by Countries Connected, 2007 9. Concentration of International Internet Capacity by Company, 2002 and 2007 10. Circuit Composition by Type of Route, 2002-2007 II. MARKET STRUCTURE 1. International Internet Carriers by Number of International Internet Routes, 2007 2. International Internet Provider Types, 2007 3. Top 50 Internet Providers by Autonomous System Rank, 1999-2007 4. Top 30 Internet Providers by Countries Connected, 2007 5. Concentration of International Internet Capacity by Company, 2002 and 2007 6. Circuit Composition by Type of Route, 2002-2007 III. REGIONAL OVERVIEW 1. International Internet Bandwidth Growth, 2000-2007 2. International Internet Bandwidth Growth by Region, 2002-2007 3. International Internet, Switched Voice and Private Networks Capacity Growth 2000-2007 4. Africa International Internet Bandwidth by Subregion, 2001-2007 5. Interregional Connectivity with Africa, 2002-2007 6. Regional Connectivity Growth in Asia, 1999-2007 7. Major International Internet Routes in Asian Subregions, 2007 8. Middle Eastern Interregional Connectivity, 2002-2007 9. Middle Eastern Interregional Connectivity, 2002-2007 10. Concentration of European Internet Capacity, 2001-2007 11. Regional Connectivity Growth for Latin America, 2002-2007 12. Latin America Subregion Capacities 2007 13. Changes in Regional Connectivity to the U.S. & Canada, 2002-2007 14. Interregional Internet Bandwidth, 2007 15. International Internet Bandwidth by Region, 1999-2007 (Mbps) 16. 50 Highest Capacity International Internet Routes by City, 2002-2007 (Mbps) 17. 50 Highest Capacity International Hub Cities, 2002-2007 (Mbps) 18. Major International Internet Routes in Africa, 2007 8
List of Figures 19. 10 Highest Capacity International Routes for Africa, 2002-2007 (Mbps) 20. 10 Highest Capacity International Hub Cities for Africa, 2002-2007 (Mbps) 21. Major International Internet Routes in Asia, 2007 22. 30 Highest Capacity International Routes for Asia, 2002-2007 (Mbps) 23. 10 Highest Capacity International Hub Cities for Asia, 2002-2007 (Mbps) 24. Major International Internet Routes in Europe, 2007 25. 30 Highest Capacity International Routes for Europe, 2002-2007 (Mbps) 26. 10 Highest Capacity International Hub Cities for Europe, 2002-2007 (Mbps) 27. Major International Internet Routes in Latin America, 2007 28. 25 Highest Capacity International Routes for Latin America, 2002-2007 (Mbps) 29. 10 Highest Capacity International Hub Cities for Latin America, 2002-2007 (Mbps) 30. Major International Internet Routes in U.S. & Canada, 2007 31. 30 Highest Capacity International Routes for U.S. & Canada, 2002-2007 (Mbps) 32. 10 Highest Capacity International Hub Cities for U.S. & Canada, 2002-2007 (Mbps) 33. Map of Major International Internet Routes, 2007 34. 50 Highest Capacity International Internet Routes by Country, 2002-2007 (Mbps) IV. TRAFFIC 1. International Internet Traffic and Bandwidth Growth, 2004-2007 2. Average and Peak Utilization by Region, 2007 3. International Internet Traffic by Region, 2004-2007 (Gbps) 4. International Internet Traffic For Asian Subregions, 2005-2007 (Gbps) 5. International Internet Traffic For Asian Subregions, 2005-2007 (Gbps) 6. International Internet Traffic For Western and Eastern Europe, 2005-2007 (Gbps) 7. Global Broadband Subscriber Growth, 2002-2007 8. Broadband Subscribers by Region, 2007 9. Broadband Subscribers by Technology, 2005-2007 10. Internet Traffic by Application, 2006 11. P2P Management Plans V. PRICING 1. Average IP Transit Prices per Mbps, DS-3 and STM-1, Q2 2003-Q2 2007 2. Average IP Transit Prices per Mbps, STM-4 and GigE, Q2 2004-Q2 2007 3. Average IP Transit Pricing per Mbps, 2.5 Gbps, 2006-2007 4. Individual Carrier GigE Pricing in Selected European and North American Cities 5. STM-1 IP Transit Prices in London, 2000-2007 6. Absolute and Relative STM-4/OC-12 IP Transit Price Variations in Major Cities, Q2 2007 7. STM-1 IP Transit Prices in London by Provider, Q1 2003 - Q2 2007 8. STM-1 IP Transit Prices in Hong Kong by Provider, Q1 2003 - Q2 2007 9
List of Figures 9. IP Transit Price per Mbps Discounts by Region, Q2 2007 10. Usage-Based Price Variances for 1 Gbps Port in London, 2007 Q2 11. SDH versus Ethernet Price Comparison, Q2 2007 12. IP Transit Price Declines versus Traffic Growth in Selected Cities, Q2 2006-Q2 2007 13. IP Transit Prices per Mbps, Q2 2007 10