Despite the current global financial crisis, Reliance Globalcom CEO Mark Thompson is pretty confident that he has all the pieces of the puzzle to take on the market. His ambition is to ‘disrupt’ the market place with a new technology platform that he hopes will put the company on the leading edge of corporate networking.
Thompson, who was named CEO of Reliance Globalcom early this month, the entity that will integrated Reliance’s international telecoms assets – namely the former independent businesses of FLAG, Yipes and Vanco, says that the new company will bring some unique propositions to the market that are some years ahead of the competition.
“We fully intend to not be the same as our competitors. I fully intend to disrupt this market place,” Thompson said. First on the agenda is to integrate the infrastructure of the three companies into a single global platform.
“What I’m going to be able to do, and what I’m doing, is I’m going to take those three businesses, and integrate them at the operations and engineering level, so that physically means that I’m going to take all my PoPs and virtual PoPs – the companies call them different things – and integrate them at the engineering level,” Thompson told CommsDay in an exclusive interview in Hong Kong.
“That takes me from 37 PoPs to 50 odd points of presence. I then end up with a truly global backbone network and I’m going to Ethernet and VPLS-enable the whole lot. And it’s a relatively easy thing to do for us and very difficult for other people to compete with.”
The integration work will take between six to eight months and will involve connecting together the infrastructure of the former companies.
Once integrated, FLAG will serve as the global backbone network, while Yipes will bring to the table its extensive US Ethernet network and its expertise in servicing corporate Ethernet-based WANs. The last piece of the puzzle is Vanco’s VNO (virtual network operator) model and experience in rolling out enterprise networks across multiple markets through its 700 off-net partners, which now gives Reliance Globalcom both network reach as well as breadth of services.“Because I’m connecting Yipes and FLAG, I get that global network that goes into 50 countries, all Ethernet VPLS and MPLS enabled, that is also connected to all the virtual PoPs that Vanco operates in, so I can get the off-net capabilities as well,” he said.
“That means I can now offer door-to-door, all the way around the world, and I can provide Ethernet VPLS truly globally. I think we can do that quickly – relatively quickly – months not years. More importantly, I can do it, but if anybody wants to compete with us in this environment, they will need to spend US$2-2.5 billion dollar building a global undersea cable network – and that’s pretty difficult in this economic environment – and it will take five years. Then they are going to have to develop the off-net capability that has taken Vanco 20 years to develop."
Once the integration project is completed, Reliance Globalcom will become the only global Ethernet carrier, according to Thompson.
“A lot of people are building Ethernet, but the trouble with it is, it is very market place constrained, so you can only put Ethernet in the infrastructure if you’ve got it. So, Verizon has invested in the US, and AT&T has in the US, and BT has in the UK, but no one can do it globally because they don’t have the core backbone network that we have because we own FLAG,” he said. “If they do own it, it’s wavelengths and consortia builds, it’s not wholly-owned. So we can make that happen quite quickly, and I think we are a couple of years ahead in just subject matter expertise in that space because of Yipes.
At the same time, Thompson says the operator now has 13 data centres around the world, which will be connected onto the Ethernet infrastructure to form a single platform.
“What basically Ethernet allows you to do is to move big bits of data around the world very quickly. I have a global Ethernet infrastructure, I have 13 data centres around the world, I can host applications in there and make them available on the edge. I can move content around the world, much faster and cheaper than anybody else once I’ve built it – that’s why Ethernet is important,” he said, adding that the infrastructure will give Reliance “the unique capability to be the enabler of cloud computing, before anyone else can do it – because there is no telco that can do that.”
MACRO ECONOMIC ENVIRONMENT: Commenting on the current economic climate, Thompson says that it actually offers more opportunities for his organisation because it has a strong proposition in emerging markets and is coming to market with a cost effective solution.
“I think there’s a clear economic environment to be conscious of, but I actually think there are some important things to add to that. First, I think the competition will retrench more. Certainly some of their capital expenditure will be significantly constrained, some of their international ambitions will be put on hold. Reliance intends to go in the opposite direction, so Reliance intends to invest,” he said.
“Then you need to look at it from a customer’s perspective. So from a customer’s perspective, there are two important things to accelerate: One is their requirement to get into emerging markets – previously it was because they wanted to increase their sales and that is still true – they want to get into China, India, the Middle East – or they might want to reduce their costs, so they want to offshore more.
“One of the benefits that we have being owned by Reliance is that, as well as being global, we have a specific capability in the emerging markets that our competitors just don’t have because they are based in America, or based in Europe somewhere – so that’s going to be important in this macro-economic environment. People are going to want to increasingly accelerate their presences in emerging markets for one of those two reasons.”
At the same time, Thompson highlights the fact that in these tough economic times, corporations will be more open to take to new solutions that will save them money.
“We intend to disrupt this industry. The market place is going to be looking at cost reductions much more closely. So the CIOs of these large organisations are going to be under pressure to cut their budgets and I think that plays into our hands,” he said. “What I’m doing is, I’m not protecting a high margin, high profit Frame Relay, ATM revenue base. I’m going to challenge it. So I think customers always have the dichotomy of, the ideas of new entrants, the disruptors of the market place who are challenging the existing revenue streams and profitability, verses the person they know that they’ve been doing business with for twenty years. Sometimes you win that argument and sometimes you lose it.
“But in this kind of environment, the pressure is on those organizations and those customers to much more consider, at a very detailed level, the cost savings on offer, and I think that plays into our hands because our market share is relatively small. US$1.6 billion is, I think, less than 1% market share of the global data space. When it’s the time for people to save money, it’s the time to be the smaller player in the market, not the dominant player.”
Reliance Globalcom employs 13,000 staff around the world. It serves 1,400 enterprise customers and 200 carrier customers and has a revenue base of US$1.6 billion with EBITDA at around US$340 million.
Tony Chan
