A look at the world's dozen or so Tier one ISP's who run global networks and sell wholesale IP transit to national and regional 'tier two ISP's' is quite revealing when taking into account how their ranking evolved over the last five years. They peer with each other at selected locations while competing ferociously in an increasingly commoditized market. Indeed, wholesale IP transit prices continue to plummet as the available international cable capacity is on its way to increase by an order of magnitude with per wavelength capacity upgrades from 10gbps to 40gbps and more recently to 100gbps on a growing number of cables. Needless to say that our dozen tier ones who carry the bulk of the world's intercontinental internet traffic also control substantial amounts of subsea cable capacity.
Renesys has been keeping track of the evolution of these top providers for the last five years in its' annual 'Bakers Dozen' ranking. This classification has become a key barometer and a must read amongst telecomm companies and investors.
A look at the five annual rankings reveals the gradual shifts as some players rose and others declined or were acquired.
2008 was a pivotal year as it saw Sprint, who had been leading the pack since the world entered the commercial internet era in the mid nineties, overtaken by Level 3. Holding the crown ever since, Level 3 built a quasi unsurmountable lead when it completed the acquisition of then number two ranked Global Crossing in October 2011.
The progressive decline of Sprint and AT&T during these five years might surprise while Verizon's ranking stabilized after a relative decline in the first two years. Qwest and Savvis disappeared from the list as they were acquired by Centurylink who made a first appearance in the 2012 rankings.
The rising stars during this period have been NTT, Telianet and Tiscali (now Inteliquent) while Tata Communications and China Telecom also improved their rankings. The last two years have seen a strong upswing for Cogent and Italy's Sparkle.
It is interesting to compare the Renesys ranking and the most recent Telegeography ranking of ISP's serving the Fortune 500 companies. In the latter, the top positions are held by five American ISP's with Verizon in top spot, followed by AT&T;, Level 3, Centurylink and Sprint. Then we see Great Britain's BT and Colt. This illustrates that the more lucrative enterprise market generally favours well established native ISP's who combine high network capillarity in the enterprise's home-country with good international coverage.
Just to remain in the Bakers Dozen was no small accomplishment as it required to keep pace with five years of more than 50% CAGR in the volume of international internet traffic which is now zeroing in on 80Tbps.
These rankings are all based on IPv4 but what about IPv6? The intersection of ISP's, figuring in both the latest Bakers' Dozen and a reading of today's Renesys IPv6 classification, shows Level3 leading, followed by Inteliquent, Telia, NTT, Global Crossing, Cogent and Tata. This implies a good correlation between IPv6 support and a strong commitment to IP transit wholesale.
Another way to rank the these same networks is their degree of IPv6 preference based on APNIC's Geoff Huston's data. Here we find Tata leading followed by Telia and NTT. Level 3, Cogent and Global Crossing are grouped in a rather distant second cluster while Tinet (AS3257) was not ranked. One reason most of the major American tier ones rank lower on the IPv6 preference scale is probably the still lagging IPv6 penetration in the enterprise sector where they dominate the market. Something worth monitoring going forward.
How will international IP wholesale evolve over the coming couple of years? Some further consolidation within the Bakers Dozen is likely. The international IP wholesale transit market continues to evolve rapidly as some major IX's now go intercontinental and connect directly to each other. At the same time major content providers such as Google and Facebook are shifting a growing portion of their ever growing traffic to international Ethernet connections or leased lines and even acquire their own transoceanic capacity on some routes. With the growth of the mobile internet, the growth of internet traffic including its international component will remain staggering for years to come. The latest Cisco forecast was revised upward again and estimates that by the end of 2012, fourteen percent of mobile devices and connections were potentially IPv6 capable, growing to 41% by 2017 .
It is safe to bet that the absolute volumes of IPv6 traffic and IPv4 traffic will fit this growth pattern with the proportion of IPv6 traffic growing at a slow but steady pace. The proportion of inquiries in IPv6 in the Google ranking, currently at 1.1% should reach the 2% mark twelve months from now. Less than that would be a bit disappointing.
By Yves Poppe, Director, Business Development IP Strategy at Tata Communications. (Any opinions, findings, conclusions or recommendations expressed in these articles are solely those of the author and are not in any way attributable to nor reflect any existing or planned official policy or position of his employer in respect thereto.)
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