Interoute: developing ICT services in Europe
Company Strategy

Interoute: developing ICT services in Europe

Interoute has one of the most advanced networks across Europe. Yet as the company continues to develop its ICT services, is it turning its back on the traditional carrier space? Alex Hawkes investigates.

As buzz phrases go, ‘next-generation networks’ is certainly becoming one of the most frequently brandished by today’s carriers. Deploying the latest network technologies has become more of a ‘when’ rather than an ‘if’ for carriers looking to compete in the modern market, inevitably dividing the sector between technological pioneers and those simply left lagging behind.

As the proud owner of what it deems to be Europe’s largest and only next-generation network, Interoute fits firmly in the former bracket. Reflecting on the growth of the company’s revenue from its ICT and cloud services in April of this year, Interoute’s CEO Gareth Williams proclaimed that Interoute is now “more a technology company than a traditional telco”. The truth of this statement is becoming increasingly evident in the company’s activities.

Interoute’s approach can almost be perceived as twofold. On one hand the company can be seen to have consistently enhanced its network, extended its reach and accelerated the speed at which it can be deployed. This in turn has enabled the company to add and develop an extensive portfolio of services that range from IP, voice and dark fibre to managed hosting and co-location, MPLS VPN and Ethernet.

Flexible thinking

Spearheading Interoute’s prominent focus on technology was the launch of its Unified ICT offering in 2010. The service targets international enterprises looking to centralise and simplify their ICT infrastructure and, as the company’s commercial director Jonathan Wright explains, the platform has helped revolutionise the way the company delivers additional services.

“It’s a private VPN service, but an incredibly flexible one that allows customers to run services such as internet transit, voice, video conferencing and storage over it very easily. We offer the service to our wholesale customers on a channel basis, many of which don’t have a full European reach, and they can roll the services off the back of them,” says Wright.

Interoute’s director of voice and media Mark Lewis also highlights the major change that has occurred as a result of the Unified ICT service – that customers can roll out additional services no matter what network they are on or where they are based. “In the past we would invest money in expensive platforms which were partitioned to multiple customers, and deploy carrier-grade kit in our network where necessary,” says Lewis.

“The network core is evolving and, other than where silicon is required for raw speed, everything else is shifting quite rapidly to be running over basic servers, which are just as powerful in huge numbers and also cheap. Enterprises that run their IT services in their basements or through co-location can now purchase that computing capability from us and run it through our core. It wasn’t long ago that these customers would just use our VPN services. Now they would be foolish not to take at least a voice termination service from us as well.”

Interoute’s new service model has so far generated strong interest from companies and regions that possess “sophistication and a proliferation of technical knowledge”. “If you look at the Nordics, the region is very advanced in terms of the amount of services the companies there will feed to us. Whereas further afield, particularly in central and eastern Europe, you tend to find a more traditional mentality of what the carriers will hold onto and what they will seed as a service,” says Wright.

As procurement cycles come to an end, Lewis believes more “ownership-based” carriers will be open to the idea of letting companies such as Interoute handle their ICT services. “You can’t avoid cloud and generally it de-risks applications and removes lumpy capex,” he says. “It’s a simple thing to decide to do but the difficulty is the migration, which companies are usually less familiar with.”

Security remains a concern for companies looking to adopt such a cloud-based service model. Recognising this, Interoute announced its membership in the Cloud Security Alliance (CSA); a member-driven organisation that was formed to promote the use of best practices for providing security assurance within cloud computing, in July of this year.

“We acknowledge that, as a company which sells cloud services and facilities, it is always going to be difficult to convince the industry that we have come up with the answer ourselves, but it is extremely beneficial to be part of a consortium collectively working on those answers,” says Wright. “The change will inevitably come from the security sector and the media, but we can certainly offer our experience and expertise as a service provider and we believe that adds value.”

Progressive partnerships

Although the progress of its Unified ICT services crowns an exciting year for Interoute, 2011 has also seen the company considerably extend its network’s global reach through new projects in Africa and the Middle East.

In April, the company extended its partnership with SEACOM, the subsea cable connecting Africa to Europe and Asia, by launching a new broadband infrastructure project aimed at delivering higher quality internet access to Africa. The project involves the deployment and operation of nine land-based internet access points that will connect the SEACOM system to the broadband fibre networks of east and southern Africa.

As part of the move, Interoute and SEACOM entered into a distribution agreement which enables the delivery of services across the two networks: “This gives us access to east Africa and reflects a strategy where partnering outside of Europe seems to be our chosen modus operandi,” says Wright.

Similarly, in late May, the company went on to sign two European agreements with Gulf Bridge International (GBI); the highly ambitious 4,750km subsea cable project that is aiming to link all the Gulf countries together for the first time through one system. As a result, Interoute is to provide a network route from GBI’s landing station in Mazara, Sicily to Interoute’s Milan PoP via Caldera, as well as integrate both companies’ networks to allow GBI access to major European cities, such as London, Paris, Frankfurt and Amsterdam.

“It’s an interesting one,” says Lewis. “It predominantly involves Interoute serving GBI, but we will be looking to reciprocate and enter the Middle East ourselves on the back of those agreements. We already have a presence in Dubai through our sister company du, but this GBI partnership gives us so many more countries in terms of VPN termination. We receive a lot of requests for access to the Middle East and this will certainly help with our cost base and provide a larger global scope for our VPN service.”

Lewis also hinted that Asia could be Interoute’s next port of call: “We have a number of options we are exploring at the moment and we aim to have a presence there as of next year – although whether that is through a partnership or not, I can’t go into at this point.

Euro vision

Although its global footprint and ICT portfolio has grown, Interoute’s next-generation European network remains its pillar of strength and during the course of this year the company has once again been making major upgrades and adding to this network.

The company made a significant investment in its IP platform which essentially doubled its capacity, while in March, it acquired KPN’s dark fibre network which extended its fibre footprint across Germany to several new cities.

“It’s across the board really. Every platform is undergoing upgrades and our footprint is expanding which drives all services relentlessly,” says Wright. “Cost and quality are the two things that really drive us – and an aggressive cost base helps enable the launch of new technologies and services.”

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