BIG INTERVIEW: Michael Ourabah, CEO, BSO Networks
09 March 2016 |
BSO Networks has ambitious plans to become the low latency provider of choice for financial institutions looking for access to emerging markets. Co-founder and CEO Michael Ourabah explains to Alex Hawkes how the operator is responding fast to market demand.
At 32 years of age, Michael Ourabah, doesn’t fit the usual age demographic of a CEO in telecoms.
Ourabah cofounded BSO Networks when he was just 21 and still studying at the European Institute of Technology in Paris. Back then, his interest in telecoms was purely academic: “I just wanted to run and operate an internet backbone – that’s what drove me,” he says. “But along the way, I saw a gap between what clients were expecting and what they were being served by the telecoms companies.”
Over a decade later and BSO Networks has built a name for itself as a specialist in low latency services for financial institutions. The company is something of an anomaly in the telecoms market in that it has tried to bring together low latency services with emerging markets.
It has been astute in selecting which corner of the financial market it serves. There is a small and elite group of investment banks, hedge funds and institutional investors that rely on ultra-low latency, where speed of execution is absolutely critical, for high-frequency trading. For the rest of the financial community, says Ourabah, low latency is important, but equally so is route diversity and stability. “There are tens of thousands of enterprises which rely on stable low latency services, which require a lot of diversity. In order to achieve that, you need to have an in-depth knowledge of routing and fibre, not only on the metro but the long-haul from the cable landing stations to the PoPs,” he says.
“In a nutshell, we are positioning ourselves as the independent telco that provides global connectivity to the market. We believe we are one of the few carriers that still has autonomy and the ability to bring clients to the markets they want.”
Showing some backbone
BSO Networks set about growing its backbone significantly in 2015, bringing its total number of PoPs globally to over 70.
In May 2015, it announced that it had increased its capacity along multiple on-net routes from Europe to Africa, Russia, the Middle East and East Asia. The routes, which include the Pacific-Crossing 1, SEA-ME-WE-4, South-East Asia Japan Cable (SJC) and Asia Submarine-cable Express (ASE), are said to enable carriers and end-user organisations to strengthen their market positions in key strategic emerging and established economies.
“We are really focussing on emerging markets, and being the telco that can bring enterprises from the established North American and European markets to emerging markets across Middle East, Africa, Asia and Latin America,” says Ourabah.
As well as the established financial hubs of London, Paris, New York, Frankfurt and Milan, BSO also has added PoPs in the likes of Stockholm, Moscow, Chicago, Toronto, Sao Paulo, Dubai, Budapest and Warsaw.
One of its more eye-catching moves last year was a partnership with Borsa Istanbul (BIST) and the launch of a PoP at Borsa Istanbul’s primary data centre.
Borsa Istanbul is aiming to become a leading global exchange, not just amongst domestic investors and traders, but also in the broader international market.
One of its key objectives is to deliver world-class in-house exchange technology to enable strong links with other markets. “Borsa Istanbul’s accessibility – which brings together all of Turkey’s capital markets in a single location – and its commitment to high frequency trading makes it highly attractive on a global scale,” says Ourabah.
Spotting a gap in the market, BSO now claims to offer the fastest route between Istanbul and the Frankfurt FR2 hub, which hosts the Eurex and Xetra exchanges, at a speed of just 35 milliseconds. It also offers latency between Istanbul and London in 43ms, Moscow in 70ms, New York in 108ms and Chicago in 123ms. “Our PoP in Istanbul with TurkNet Iletisim Hizmetleri has long served our enterprise clients and this second strategic location with Borsa Istanbul ensures we can assist the growing number of trading firms looking to diversify their portfolios with a strong competitive differentiator,” adds Ourabah.
The Borsa İstanbul partnership serves as a good example of the niche BSO is trying to fill in the market: “We look at the high-volume stock exchanges that are moving from legacy systems to more electronic trading. The ones making announcements that they want to go global, as well as attracting interest from western markets,” he says. “We then see if the market is underserved, as often there is only an incumbent and second operator, which are usually very poor at managing long-haul over subsea connectivity and that’s where we are really strong.” After launching a new PoP, Ourabah claims the company usually attracts ten new clients within 10 months. “We start pushing to the market and naturally they come to us,” he says.
The company also made opportunistic investments in metro networks in 2015. In October, it launched a direct network between three key financial data centres in Tokyo.
Tokyo’s exchanges and financial data centres have undergone consolidation in recent years. The Tokyo Stock Exchange has moved from KVH Tokyo DC1 to @Tokyo, the consolidated Japan Exchange Group (JPX) facility that also includes the Osaka Securities Exchange. BSO will offer connectivity between these sites and Tokyo TY3, a major hub for FX trading in the city. The company’s dark fibre metro network service is said to have been designed for financial organisations interested in low-latency connectivity.
“Tokyo remains one of the most diverse trading locations in the world. However the metropolitan area is densely populated and reliable connectivity between data facilities often comes at a premium. Simplicity and the customer experience are at the heart of our new network service,” says Ourabah. “We believe this will significantly reduce the complexity associated with accessing Tokyo’s markets, particularly for companies already holding IT assets in the city’s legacy data centres.”
The move also strengthened its position in Asia-Pacific, where it has PoPs in 16 data centres across the region, including Singapore, Shanghai, Hong Kong, Tokyo, Mumbai, Johannesburg and Sydney.
This looks set to continue in 2016 as Ourabah outlined his expansion plans for the year: “We are going to keep pushing in Asia. In particular we are looking at China. It is a challenging telecoms environment there, but we are trying to deepen our relationship with the three operators in China as it is a big market opportunity,” he says.
“We already serve Shanghai quite efficiently with lowest latency routes from Hong Kong and Tokyo – but we have requests for Beijing and Shenzhen and we will investigate that.”
Russia is another market featuring heavily on the company’s radar in 2016. Does Ourabah see opportunity in the country’s controversial data localisation law? “It will take months for that to be ready. We can react quickly when it does happen as that is one of our strengths,” he says.
It is not just the emerging markets, however, that the company plans to focus on. In June 2015, the company opened its first office in North America in New York. “We will grow our domestic PoPs in Canada and the US this year. Probably a few more in the US – in places such as Los Angeles, Texas and Miami – as well as three PoPs in Canada in Montreal and Toronto,” he says. “We are already well established in Chicago and New Jersey, where we have metro DWDM diversity on the long haul.”
Improving carrier relations
Wholesale presently represents a small part of BSO’s revenues – between 5 to 7% – and today Ourabah sees Capacity Conferences and ITW as more of a relationship improvement platform.
“Our agility comes from buying IRUs on subsea or fibre. We don’t own these assets, so we have the ability to change, and the ability to mix and match subsea cables for latency,” he says.
With a number of consortium-back and private subsea cable projects in the pipeline over the next two years – many of which are targeting emerging markets in Asia, Africa and Latin America – are these of great benefit to BSO’s business? “Yes that is a big bonus for us. We are big buyers of subsea cables so more of them is amazing. It means options and more routes,” he says.
Ourabah says that the company insists on stricter contracts with carriers, as any changes on the backbone are critical to its business. “The technical solution is our value,” he adds.
Ourabah is hoping that its success with financial enterprises can now attract customers from other verticals. He believes that having the support and confidence of financial institutions to let BSO run their networks will be a major selling point to other industries. “We are working on our go-to-market strategy right now, where we are looking to roll out this service across lots of other verticals. I am, for example, meeting more and more with media clients as well as oil and gas clients, who are looking to rationalise their operation costs,” he says. “Instead of dealing with big incumbents, they look to us for better bandwidth, latency and costs.”