StrataNet is one of the newest entrants in the international telecommunications market. It is set to “shake things up” starting with the submarine fiber optic cable market across Asia. It is not your typical telco or just another private equity group looking to build the next multi-country subsea cable system, who promises to outperform anything the market has seen before. Instead, StrataNet’s sole purpose is to integrate and monetize disparate, under-utilized and under-valued telecommunication assets to deliver a multi-path, multi-country network underpinned by an unprecedented commercial model for its customers. This approach is now enabling several StrataNet customers to rapidly expand their network at well-below average market costs. Telecom Review visited with Chris de Josselin, CEO, StrataNet Group, who gives an overview of some of the services and commercial innovations that StrataNet is bringing to the marketplace.
StrataNet is strategically acquiring, integrating and operating bandwidth capacity on selected subsea cable systems across Asia. As a wholesale provider of capacity, StrataNet is applying its unique commercial model for large connectivity sales to international telecommunications companies, content providers and large enterprises with requirements exceeding 100GBPs.
StrataNet has a pan Asia network spanning over 120,000kms of subsea fiber optic cable that connects more than 50 locations, in 12 countries across Asia and the USA. With each country having at least two landing points, StrataNet ensures absolute location and cable-system diversity into each country, providing peace of mind in the event of an unforeseen outage. To the capacity buying market, StrataNet provides access to over 15TBPs of capacity on six key cable-systems across Asia under a single sales, service and operations model.
With subsea fiber optic cables carrying 99.8% of the world’s internet capacity, and consumption growth across Asia sitting at around 45% year on year, it’s no surprise that the founders have focused on the subsea cable market for their initial launch pad as a telecommunications operator.
As a pure play wholesale provider, StrataNet is working closely with some of the region’s largest telcos while supporting the major and emerging OTT players from the US and China who are looking to expand or establish their connectivity across Asia.
While the business was originally founded in the US, with its first tranche of assets on the books, StrataNet now finds its home at the very center of its pan Asia network in Hong Kong, operating as StrataNet Group Limited. With a network that connects over three billion people, StrataNet is strategically positioned to take advantage of the massive demand being generated from Asia’s burgeoning middle class and is initially focused on connecting Asia’s emerging regions, including Thailand and Indonesia, while servicing existing digital hubs in Singapore, Hong Kong, Japan and the USA.
A sea of potential
For content providers and mobile operators alike, the growth of data consumption has grown at a torrid pace. Northern Asia has among the highest data use globally with the developing SE Asian nations catching up each year. In general, the demand for capacity is being driven by the introduction of new data services along with an insatiable appetite for video and content heavy applications with all of these being lapped up by consumers and enterprises across Asia, SE Asia’s rapidly growing middle class.
In these markets, consumption growth continues to rise; Gartner has previously stated that mobile data traffic is a key driver in universal adoption and growth. “While StrataNet Group focuses our investments at the base level of telecommunications infrastructure, with an ever-increasing demand for data and high bandwidth applications and pervasive uptake of AI across existing networks, it’s an exciting time to be working in telecommunications as we head toward a hyper-connected global community,” says Chris.
Operators of sub-sea systems endeavor to stay ahead of demand with new systems scheduled to deploy in 2018 through 2020 across Asia and the Pacific. Additionally, upgrade rights on existing systems will further increase total supply. It is these upgrade rights and leveraging capacity on existing cables systems which StrataNet is taking to market with vigor. These new systems and technology upgrades will positively address the ever-rising demand for faster throughput and greater capacity albeit, at the expense of price declines across the market. Price declines will continue to have a significant negative impact on sub-sea cable operators whose past infrastructure investments have included purchasing large volume of sub-sea cable system assets. It is also being argued that with prices declining and new technology increasing the available capacity on current systems, in some cases it is getting harder for new cable system builds to secure funding thereby delaying new capacity hitting the market. The team in the StrataNet camp is betting on this as they maximize the useful life of their assets and provide immediate access to capacity for their clients.
“APTelecom is excited to be assisting with the development of the StrataNet business. We regularly see customers requesting in excess of three individual circuits between two cities in 100Gbps multiples at price points well under the current market rates. Thanks to their network breadth and capacity, StrataNet can capitalize on these deals noting the strong commercial model it has developed across its assets,” says Sean Bergin, president, APTelecom.
The birth of the next era
StrataNet found that several Asian operators were saddled with significant level of underutilized assets on existing sub-sea routes. Efforts at recovering the initial capital outlay were being hampered by selling fragmented sub-sea systems. Furthermore, the constant erosion of market prices means it is increasingly difficult for certain operators to sell these assets as individual components at levels to recover the initial investment. StrataNet sees this as an opportunity to turn ‘routes’ into a network.
From an operating standpoint, high ongoing O&M widens the gap between income and cost. This opex ‘gap’ increases further when scheduled system upgrades mean operators must take more capacity, and thus more opex. Via StrataNet, the marketplace now has a vehicle to move those assets from being a cost burden to the operator to being the revenue generating opportunity they were intended to be in the first place. StrataNet collaborates very closely with their supplier partners to assess and acquire a range of telecoms assets and in many cases develop a joint go-to-market plan to expedite results.
Digital hubs & connected communities
In addition to their international focus, StrataNet is securing regional opportunities and growing Asia’s emerging countries through strategic investments and joint ventures with local operators. Successfully assessing and expanding to support market demands, StrataNet has formed a JV with Loxley Wireless of Thailand to form LXT Networks. LXT Networks is expanding and improving local connectivity in and around Vietnam, Cambodia, Malaysia, Myanmar and Laos, using Thailand as a central digital hub and digital connection point to access the rest of the globe. LXT will leverage StrataNet’s international backbone and will connect to a mix of existing and purpose-built network infrastructure assets across Thailand that are owned and operated by LXT.
This emerging regional focus is a core component of StrataNet’s strategic growth plan and the team will look to replicate this model in other regions across all infrastructure asset classes with selected local, strategic partners.
“Our commitment to enriching local connectivity with local partners is nurturing geographically dispersed yet logical regional connectivity hubs to underpin the ever-increasing demand in these communities.”
The founding team of StrataNet brings experience from around the globe covering telecommunications, datacenters, ICT systems integration and capital markets and is now focusing on identifying, securing and commercializing the next tranche of telecommunication assets under the StrataNet Group banner.