Total Telecom caught up with Virtual1’s CEO, Tom O’Hagan, to discuss the state of the industry in the run up to the Connected Britain event
What trends are you seeing emerging in Britain’s connectivity space?
We see that connectivity is being driven by the rapidly evolving face of IT. Businesses are driving down costs, whilst looking to increasing both functionality and security within their IT estate. Invariably the answer to this goal is running and storing business critical data and applications off site. Be that simple colocation, SaaS, IaaS or any of the other raft of Cloud solutions. At a basic level this means much more data flowing in and out of offices than ever before, putting increased pressure on capacities and making resilience a business-critical conversation.
Businesses are also increasingly security conscious, so with this ever-increasing flow of traffic, there is a growing appetite for private connectivity to these Cloud services, ensuring that traffic is kept away from the Public internet.
The majority of the new solutions are “as a service” products all empower a business to consume what they need when they need it, connectivity is lagging behind, and it needs to catch up to reflect these business models.
What predictions do you have for the sector over the next 18 months or so?
There have been a number of studies in the last few years talking about the amount of data we each use growing at a rapid rate. Although many of these tend to be mobile data focussed, we are certainly seeing that rise reflected across our own network traffic in the B2B market, fuelled by the move to the cloud as well as personal data usage volumes. Indeed it is seeing the rise in appetite for those use cases that helped justified our UK wide fibre network expansion.
I think we will also see a rise in the volume of resilient solutions demanded by businesses given both the business criticality of connectivity services, and the decrease in pricing for fibre based products. These conversations are much more accessible than they have been before
Why did you decide to exhibit at Connected Britain this year?
Two factors have driven our decision to exhibit at Connected Britain this year. Firstly, we are keen to make sure we are an active part of the connectivity conversation in the UK. We are already heavily involved in many of the forums behind the scenes of the industry. With a B2B focussed network, the attendees and agenda are a great fit for our business.
The second factor is brand awareness. We are a wholesale only organisation and many of our partners will be present. We are already helping them to deliver some of the solutions the attendees are looking for, and so our presence there only helps to reinforce our Partners, build credibility and gives our brand exposure to their end customers, ultimately helping them to win business.
You’ve invested early in Software Defined Networking, Why did you do that and what have been the benefits you have seen?
This decision was ultimately all about differentiation and the future direction of our business. When looking at the carrier market, there are a number of factors holding the industry back. Aside from the high cost of high bandwidth connectivity, others include; long lead times, lack of transparency, poor service levels, and no direct of control outside of the network.
With a famously slow-moving market, the best way to drive innovation was to do it ourselves, so decided to invest in our own fibre network across the UK. It was clear however that old technology and ways of working were not going to deliver this disruption that the market needed, or allow us to expand a quickly as we wanted.
Software Defined Networking (SDN) held the key to our challenges. The separation of the network control and configuration away from the hardware components to the core of our network delivers significant benefits:
• Manpower is no longer needed to configure components manually or individually, it can be done remotely and automatically, dramatically lowers the financial costs of deploying and running a network on a national scale.
• All features and functionality is templated, making services simple to deploy and removing human error
• The software defined nature of our network also means that for the first time in the UK, the IT and Telecoms channel are in direct control of the solutions they provide to UK businesses through our online Portal. This has given them, dramatically reduced Service lead times (down from days to minutes) Direct control of up to 35 key network features online, 24/7 including the ability to flex bandwidth on demand, in real-time
Why did you feel there was room to disrupt the market?
There are significant barriers to entry of the carrier market – that’s is why there have been so few new faces in the past 3 decades, and why those who have, such as the cable companies had to consolidate to survive. Innovation is critical when your major competitors are resource rich, but for whom change is much more complex.
Those incumbents have been slow to innovate, leaving connectivity lagging behind the progress seen across other aspects of the IT and Telecoms community. Nearly every other product can be consumed on demand, apart from the fundamentals of delivering a modern service, the connectivity. That needed to change, we are very excited to be part of a new wave of disruptive carriers challenging the UK status quo.
How has the market responded to your expanded network footprint and SDN features
We have been in the market for over 10 years, initially as an aggregator, before beginning our transformation to a UK wide carrier, so through working with all the leading players we have an intimate understanding of both our partners market frustrations, and the opportunities they presented.
This understanding has ensured that the take up has been very strong, we have recruited of 150 new partners, up 50% from FY16/17, many of who are looking to take advantage of a new fibre provider in their local geography.
We have seen a 35% increase in volume of Fibre Ethernet circuits sold, with over 1000 circuits delivered on our own network in the last 9 months. This has resulted in our revenue growing from £21.5m to £27m in the last 12 months, and continuing our 30% CAGR over the last 4 years.
What new markets are you particularly interested in at the moment?
The most immediate opportunity within the market is how SD-WAN will establish itself, it is seen as a threat by some network players, or a solution to vendors with ageing networks. In a legacy environment it can be used to inject functionality over the top of an existing network, delivering some of the real-time control that we have achieved with our network, alongside the application control and monitoring.
We see SD-WAN as a further opportunity to leverage the power of our network. Application shaping can only do so much, if there is not enough bandwidth, there is not enough bandwidth. However, if you are working with a network partner who can flex that bandwidth automatically, and has a suite of API’s that could be used to enable the SDWAN controller to do that automatically, you have a very powerful network solution
Virtual1 will be exhibiting at this year’s Connected Britain and their CTO, James Hickman will be leading a roundtable on day 1 at 12.20 – 13.00, entitled Digital Britain: Software Defined Networking – is the work really worth the benefits? Click here for more details