Michael Wheeler, NTT Com Exceutive Interview: Strategic growth pays local dividends
Capacity talks to NTT Communications’ Michael Wheeler about incremental growth internationally, continued innovation and the approach of net neutrality.
NTT Communications Corporation (NTT Com) made a strong start to 2014. In February, it announced a new PoP in Luxembourg, and it is now looking to build on the points of presence (PoPs) established last year in Jakarta (Indonesia) and several European locations, and in São Paulo (Brazil) in 2012.
“For us, expansion at this point on the network is very much a customer-driven or an opportunistic situation,” states Michael Wheeler, EVP, Global IP Network, NTT Com. “We don’t look to expand the network to get to a place to increase scale, but from the perspective of either customer requirements and demand, or opportunities in emerging markets.”
Aside from new geographies, Wheeler notes some acquisitions by NTT Com have enabled expansion into physical buildings and access to prospective customers in cross-connect fashion. The RagingWire deal finalised in January for example, saw the addition of two new nodes in Sacramento, California, and Ashburn, Virginia.
“We used a similar strategy when we deployed into Indonesia last year. Although not the norm, the business case and market opportunity was such it allowed us to hit two specific spots in Jakarta simultaneously. In Latin America we’ve looked at several options, but the cost of deployment is still rather high, which makes us diligent in our business case analysis.”
Nevertheless, NTT Com’s strategic approach to growth has paid dividends. The company was named as one of the top two global wholesale IP providers of 2013 by analysts at Renesys, also taking one of the top two spots in its “Baker’s Dozen”, which charts the fortunes of the world’s 13 leading players in IP services.
Power of three
Wheeler is keen to stress that, during a period of heightened consolidation, much of the company’s growth has been achieved organically: “In 2008 we were ranked sixth by Renesys. While there’s been some consolidation, none of our acquisitions have had network elements in them that tied into the IP business.”
Although he sees industry recognition as important, he believes three unique selling propositions (USP) set NTT Com apart: “Firstly, we’re a company with $130bn in revenue and global scale with regards to connectivity. That’s important to firms looking for a stable provider that is happy to invest in infrastructure, not limited by capital constraints, and with cash to invest.”
Citing content-oriented companies as the example, the second USP is NTT Com’s global footprint, which has enabled many of its customers to quickly extend their reach globally out of the US and Europe.
“They’ve needed to get more local in their deployments, so we now have a large volume of customers connecting to us on three or four different continents. That makes us a global business in the truest sense of the word.”
NTT Com’s third USP is more subjective, but nonetheless important.
“Our Global Internet team has worked together since the late 1990’s and does an excellent job taking care of customers, network expansion and capacity management. The primary indicator of that long-term success is our churn rate being one of the lowest, if not the lowest in the industry.”
Innovation and net neutrality
Targeting the internet’s largest and fastest-growing content companies makes innovation and investment a founding pillar for NTT Com. As one of the first operators to move to 10G Ethernet back in 2006, it recently deployed its first 100G Ethernet across its backbone.
“We’ve been offering 100G Ethernet ports to customers for over a year and I believe we will see early adopters coming onto these somewhere within the next 6-12 months. Those early adopters will be followed by many others as soon as we see initial deployment and utilisation of those ports, so I expect a similar pattern to what occurred in the transition of 1G to 10G Ethernet in 2006/7.”
Acknowledging continued price compression, Wheeler also points to NTT Com’s use of programmatic management and configuration of the network as key to the company’s continued success.
“SDN and NFV are popular buzzwords today, but we’ve been using our own internally built SDN and controller to manage the network globally for 15 years. Essentially, it has allowed us to be more automated, lean and scalable operationally, while delivering strong results.”
One looming challenge is that of net neutrality.
“In the US, the impact of changing net neutrality guidelines could be significant, while Brazil is adopting stringent positions with regards to managing data. Naturally, I am much more excited about 100G Ethernet, but this is the reality of running a global business and net neutrality is something we are preparing for accordingly.”