A Baker’s Dozen in 2009

As our regular readers know, Renesys collects a lot of Internet routing data, using it to create reports and products based on hard facts and objective analysis. Perhaps the only controversial thing we do with our data is to rank all the service providers in the world: globally, by geography, and by market segment. The rankings are a rather crude measure of size, as they are based entirely on the quantity of IP space ultimately transited by each provider. However, it’s the ranking trends that are more revealing than any absolute number. Who is adding customers? Who is losing them or just standing still? Changes in IP transit answer these questions and more. Although there are obvious shortcomings in this approach, it is certainly objective and the process is fully automated. All of our rankings are updated daily and available via our Market Intelligence offering. In this posting, we will take a look at the top 13 providers in the world for 2009 and how they have jockeyed for position throughout the year, similar in spirit to our December 2008 blog, which provides more details about our methodology. We will see what a difference a year has made and highlight some of the more interesting changes.



The above graph plots global AS rankings over time for the top 13 providers in 2009. Since the exact numeric score is not that meaningful in this context, we will not provide the scale in our graphs. Rather, we will show how the scores changed over the year and consider some of the reasons behind these changes. The first thing to note is that membership in this elite set of top global providers did not change in the last two years. The next thing to note is that within this set, there are distinct tiers, where members of each tier vie for position. These details will emerge as we enlarge the scale and break the group into three distinct clusters, namely, the top two, the middle seven, and the final four. In these expanded graphs, the changes will be more obvious and we’ll make note of some of the more interesting ones.



In 2006, when Renesys first started ranking providers, Sprint (AS 1239) had a commanding lead with a global score of almost 25% more than second-place Level 3 (AS 3356). In 2009, Level 3 pulled away from largely stagnant Sprint, opening up a roughly 12% lead. In the spring of 2009, Level 3 gained nLayer (AS 4436) as a customer, which Renesys ranks as #12 in the US, thereby giving Level 3 a substantial boost in score. They also picked up KDDI (AS 2516) as a customer, the #2 ranked provider in Japan. Finally, Level 3 won increased transit from Japan’s Softbank Telecom (AS 4725), Europe’s Interoute Communications (AS 8928), Turkey’s TTnet (AS 9121) and a wide variety of other strong regional players. In short, Level 3 is aggressively gaining Internet transit business around the globe in both established and emerging markets, while Sprint, still solidly in the #2 position, appears to be largely treading water.



Looking at the second cluster of providers, it is readily apparent that Global Crossing (AS 3549) is in firm control of the #3 spot, but their growth slowed considerably in 2009 over 2008. In 2008, Global Crossing’s score increased by almost 50%, as they vaulted from #5 to #3. Their score increased 11% in 2009, leaving them safely in #3 with no clear challengers, but still a long way from the #2 position at three quarters of the size of Sprint.

Savvis (AS 3561) surged upward by over 25% in the summer, in large measure by winning Asia Netcom’s (AS 10026) business. But then they fell back considerably by losing Singapore Telecom (AS 7473) and Comcast (AS 7922) in the fall, ending the year with a score of around 8% higher than at the start.

TeliaSonera (AS 1299) rose by over 20% during the year, around a quarter of the increase due to gaining Russia’s Rostelecom (AS 12389) as a customer. Tata (AS 6453) entered this middle tier of providers in 2009 from the bottom tier in 2008 by consistently winning business throughout the world, including Serbia’s Telekom Srbija (AS 8400), UAE’s Emirates Telecommunications (AS 8966), the US’s Road Runner (AS 7843) and Comcast (AS 7922), South Korea’s Hanaro (AS 9318) and many others. As a result, Tata has now passed AT&T (AS 7018) to capture the #8 global ranking.

The remaining members of this tier, AT&T (AS 7018), Verizon (AS 701) and NTT (AS 2914), like Sprint in the top tier, largely treaded water in 2009.



Within the final set of providers under consideration, both Tinet (AS 3257) and China Telecom (AS 4134) showed significant spikes in score in 2009. In April, Tinet saw increased transit from Interoute (AS 8928) and, in November, they picked up Singapore Telecom (AS 7473) as a customer. China Telecom’s growth was of a very different nature: they grew by routing more address space on behalf of themselves, not by entering new markets. Rounding out this final group, we see Cogent (AS 174) with slow and steady growth throughout the year, while Qwest’s (AS 209) score remained essentially constant.

Finally, note that large global providers are not necessarily transit-free, sometimes called Tier 1, providers. Tinet and China Telecom, who made our rankings, are not transit-free,
whereas, XO (AS 2828) and Abovenet (AS 6461), who did not make our rankings, are.

Conclusions

Internet transit is an increasingly tough business, as prices continue to collapse. The emerging markets in Asia and the Middle East with their relativity low Internet penetration and higher margins remain a bright spot. These markets still offer enormous potential and providers willing and able to service them are growing and rising in our rankings. Those that do not service these areas are being left behind. For example, the US old guard of Sprint, AT&T and Verizon are at a virtual standstill, China is growing but without diversity, and Level 3 and Tata, two companies to keep your eye on, are growing thanks to strong global diversity.

But we hasten to point out that market share does not imply profitability or even a well-run, resilient and stable network. So we would never suggest you pick your providers based on Renesys market share rankings alone. While declining market share might indicate a problem, a growing company is worth your business only if they meet your service needs and are going to be around tomorrow. Objective rankings, by their very nature, cannot be tailored for each consumer’s needs, but they can contribute meaningfully to informed business decisions.

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