A Baker’s Dozen, 2013 Edition
It has become an annual tradition at Renesys to provide a year-end review of how the Internet providers at the top of our Market Intelligence global rankings fared over the previous year. The rapid and continuous evolution of the Internet’s structure and performance remains a huge blind spot for most enterprises, even those critically dependent on it for business operations. Renesys provides that insight, both real-time and historical, via its Internet Intelligence products. This blog reviews a single slice of our data related to the sizes of the top global players.
Back in 2008, we chose to look at the 13 providers that spent at least some time in the Top Ten that year, hence the name “Baker’s Dozen“. We looked at the top players again in 2009, 2010, 2011 and 2012. During this time, we’ve watched some predominantly US carriers exit the top spots as global demographics caught up with what has historically been a US-centric Internet. This year, Hurricane Electric joins this exclusive club, replacing CenturyLink. We’ve also observed surprising rebounds from Sprint and Verizon after years of not keeping up with the competition.
As you read this blog, keep in mind that all of the provider rankings we discuss are based on their success in offering services based on IPv4, the Internet protocol carrying essentially all Internet traffic. While we continue to measure the IPv6 “alternate Internet” in our Market Intelligence product offering, this nearly two decade old protocol continues to struggle for adoption, as we first noted back in 2006. And as we observed in 2011 (and it is still true today), the IPv6 “Internet” is not even fully connected, so attempting to rank a lightly used and partitioned network is questionable at best and misleading at worst.
Without further ado, then, let’s highlight a few of the trends and changes we observed in 2013 on the real Internet we all use everyday.
And the Winners are …
The above graph shows our global scores for the Baker’s Dozen over the past year. As always, the absolute scores (computed from the quantity of transited IP space) are not meaningful in this context, so we omit the scale. While we see more or less steady growth and minor jockeying for position throughout 2013, the long term trends are anything but predictable. For example, if we go all the way back to 2006 (before we started blogging on this topic), our top 13 providers were Sprint, Level 3, Verizon, Savvis, AT&T, NTT, Global Crossing, Qwest, TeliaSonera, Tata, AboveNet, Cogent and Telecom Italia, in that order. During the subsequent eight years, Sprint fell from #1 to #7, Verizon declined from #3 to #8, and AT&T left the Baker’s Dozen entirely, tumbling from #5 to #14. In 2012, AboveNet (formerly #11) was acquired by Zayo Group and now ranks #26 globally, just behind France Telecom.
Over this same eight-year period, Level 3 acquired various competitors, the most significant being Global Crossing, becoming the undisputed #1 ranked provider in the world. Meanwhile, TeliaSonera (#9 eight years ago) and NTT (formerly #6) now compete aggressively for the #2 global spot. Also during this time period, Cogent climbed from #12 to #5, Tata rose from #10 to #6, and Telecom Italia moved up from #13 to #9. But by far the biggest improvement in rank was made by GTT (AS 3257, formerly Tiscali), which catapulted from #34 in 2006 to an astonishing #4 in 2013. However, our focus in this blog is 2013, and to make sense of the tangled graphic above and this year’s changes, we’ll divide up the players into three tiers and zoom in on each.
Leaders of the Pack
Level 3 (AS 3356) completed their acquisition of Global Crossing (AS 3549) in October of 2011. Over two years later, we continue to show them as separate entities, since their networks have not yet been merged. However, the integration process seems to have picked up steam in 2013 as the former Global Crossing tumbled in our rankings. While achieving some mid-year gains, Level 3 completed 2013 barely changed from where it started the year. As we discussed last year, perhaps its dominant post-acquisition position in the market is driving customers to other providers in an attempt to increase diversity?
The real battle is for the #2 spot, which NTT (AS 2914) gained control of near the end of 2012. For much of 2013, TeliaSonera (AS 1299) appeared to have handily secured the #2 spot from NTT, thanks to a sequence of customer wins. Nothing is assured on the Internet except brutal competition, however, and in the closing hours of 2013, NTT reclaimed second place by the thinnest of margins. Some of TeliaSonera’s rise during the year came from increases in transit from South Korea’s SK Broadband (Hanaro, AS 9318) and Brazil’s Embratel (AS 4230). Meanwhile, NTT saw year-end increases from India’s Bharti Airtel (AS 9498) and Saudi Telecom (AS 39386), to name a few.
Cogent (AS 174), who has been on a tear for a few years now, broke into our top cluster for the first time, ending the year in the #5 spot and within easy striking range of GTT at #4. Cogent’s gains could been seen throughout the world. They picked up PT Telekomunikasi Indonesia (AS 7713) as a customer, and acquired increased transit from Cox Communications (AS 22773), Saudi Telecom, Companhia de Telecomunicacoes do Brasil Central (AS 16735), Australia’s Vocus (AS 4826), and many others.
Knocking at the Door
In our second grouping, we show Cogent again for context and to illustrate how close they are to #6 ranked Tata (AS 6453). Tata had a tremendous second half of 2013, increasing transit from Russia’s Rostelecom (AS 12389) and India’s #2 ranked retail provider, Bharti Airtel, among others. If they can maintain this growth, Tata could easily pass Cogent and break into our top group in 2014. Sprint (AS 1239), which has been steadily declining in our rankings for years, showed surprising signs of life late in the year. In part, this was due to increased transit from Japan’s #2 ranked provider, Softbank Telecom (AS 4725).
Verizon (AS 701) also showed renewed vigor, increasing transit from China Netcom (AS 4837), China Mobile (AS 58453), Japan’s National Institute of Informatics (AS 2907), and Time Warner (AS 4323), among others. They stumbled in early September, losing transit from Japan’s Softbank, but regained that in December to close in on Sprint.
On their Heels
In our third grouping, we see Hurricane Electric (AS 6939) for the first time. They benefited from an increase in transit from the Communications Authority of Thailand (AS 4651) and Rostelecom (AS12389). Some of PCCW’s mid-year drop and subsequent gains can also be attributed to changes in transit from Rostelcom. Later in the year, PCCW scored increases in transit from SK Broadband (Hanaro) and Vietnam’s Viettel (AS 7552).
As in 2012, XO (AS 2828) was flat-lined for the year and is in danger of being passed yet again — this time by Hurricane Electric. China Telecom (AS 4134) ended the year only slightly above where they started, which is not indicative of the 10% increase we observed in transited Chinese IP addresses. Perhaps smaller providers are now looking for alternatives to this dominant incumbent?
As we’ve noted before, Westerners view the Internet as a commodity and ubiquitous access is taken for granted. Unsurprisingly, carriers win in this environment with either market dominance or cut-throat pricing. Organic growth now only comes from underserved markets, and today we see the battle for global Internet dominance playing out in Asia, with increasing activity in South America and Africa, as new cable systems are built and regional connectivity improves. Even the Middle East, long a waypoint for cable systems between Europe and Asia, may be on the verge of developing robust local options.
Increasingly, simply having inexpensive connectivity in our interconnected world is not enough. As enterprises become more sophisticated consumers of Internet transit, they seek connectivity alternatives that will keep their own customers happy. They’re looking for providers whose global Internet service is truly fit for purpose: reliable without single points of failure, low latency and as direct as possible (i.e., not subject to snooping by hostile third parties). Any providers who can demonstrably meet these new expectations will undoubtedly gain customers and grow in our rankings. Stay tuned for an interesting 2014!