* Sales of IP VPN services are booming in China and India.
Sales of IP VPN services are booming in China and India. Several top-tier ISPs say that as multinational corporations expand their manufacturing, customer service and sales operations into these emerging markets, they’re also extending their networks.
In this week’s issues of the ISP News Report we’ll look at these two hot markets for IP services. We’ll cover China today, and India later this week.
Equant and AT&T are among the ISPs reporting a surge in sales of IP services in China.
Equant says it has more than 280 multinational customers in China, up from 150 one year ago. That’s an increase of nearly 90%.
To accommodate these additional customers, Equant has added network capacity in four key Chinese business centers: Beijing, Shanghai, Shenzhen and Guangzhou. Equant, which has a partnership with China Netcom, has network presence in 16 other Chinese cities.
“We started with coverage in 17 cities, and now we’re up to 20,” says Lisa LaBonville, head of emerging markets for Equant. “We’re up to 30 points of presence…We have four each in Shanghai, Beijing and Guangzhou.”
Through its partnership with China Netcom, Equant can support customers in 55 Chinese cities. The reach of Equant’s network in China recently was recognized by Gartner in its Magic Quadrant, which described Equant as being among the top carriers in China in terms of network reach and number of enterprises supported in the Asia Pacific Region.
Equant has operated a network infrastructure in China for 50 years through its relationship with SITA, an aviation industry association. However, the SITA network uses older frame relay technology while today’s commercial customers want MPLS-based VPNs.
Equant has been building up its IP VPN capabilities in China since 2001, when it formed a partnership with China Netcom. Equant says it is primarily selling MPLS-based IP VPN services in China, as customers there choose to run both voice and data over the same network to save on local connection costs.
“At least 65% of our customers in China are buying IP VPN services,” LaBonville says. “They are deploying IP VPNs globally, and they are seeing China as an extension of their networks.”
Similarly, AT&T says its sales in China and India are growing at a rate of more than 20% in 2004. These markets “are not only the two fastest-growing markets in Asia Pacific, they are also our most important strategic markets because our multinational corporate customers are increasingly focusing on these two countries,” says Greg Brutus, Regional PR Director for AT&T’s Asia Pacific Group.
AT&T, which has been in China for more than 20 years, is involved in a joint venture ISP called Unisiti. The partners of Unisiti are China Telecom, which owns 60%; AT&T, which owns 25%; and Shanghai Information Investments, which owns 15%.
AT&T and Unisiti have signed more than 150 new customers in the past two years, Brutus says. “We are now serving more than 300 active customers in China, and this number is growing by the day,” he says.
In terms of network capacity, AT&T is adding nodes to its own IP network in Beijing, Shanghai and Guangzhou. It also has a node in Shanghai through Unisiti. Through commercial agreements with China Telecom and China Netcom, AT&T can support customers in more than 60 cities across China.
Companies based outside China had to purchase leased lines or use the public Internet for network connectivity prior to 2001, when China was accepted into the World Trade Organization. Since then, China has taken steps to deregulate its telecommunications infrastructure to allow more top-tier ISPs, such as Equant, Infonet and AT&T, to expand inside the country.
“Before companies had leased lines that would go to Hong Kong, and then they’d jump on their networks there,” LaBonville says.
ISPs report growing demand for network services from transportation, logistics, financial services and manufacturing industries. Equant says it supports 18 of the top 20 container shipping giants in China, including APL, P&O Nedlloyd and China Shipping. Meanwhile, AT&T is servicing 36 banks in China with IP VPN services.
ISPs remain bullish on IP VPN sales in China and throughout the Asia Pacific region for 2005.
“As IP adoption continues to grow, the next phase of development will be the applications that sit on top of the network,” AT&T’s Brutus says. “Initially customers deploy IP VPNs, but we anticipate growing demand for other more sophisticated IP-enabled services, particularly security and voice applications. We will be introducing new services in both of these areas in 2005, subject to regulatory conditions.”
