NTT Com Expands ICT Solutions in Russia and Europe
Global Communications Services Platforms
NTT Com is rapidly consolidating its position as a leading provider of communication-service platforms and solutions through partnerships in the EU, Eastern Europe and nations of the Commonwealth of Independent States (CIS), including Russia. An excellent example is a new service launched in cooperation with the Union of European Football Associations (UEFA) to provide an Internet-based global platform service. Last spring, NTT Europe Online started offering the UEFA Video Service, a content-distribution and web-infrastructure service for more than 20 UEFA Champions League broadcasters. The service, which offers live, web-based video for some 125 matches, enables football fans to view content via local providers and cable TV services in nearly 100 countries.
Growing Demand in Russia and Europe
Russia has seen explosive growth in the demand for information and communications (ICT) services. The Russian Ministry of Information Technologies and Communications reports that the market for communications services in 2005 rose 30% to nearly US$25 billion due to especially strong demand for data and mobile services. According to IT analyst Frost & Sullivan, Russia is one of the world's most dynamic and diverse ICT markets, and is poised for a boom between now and 2010.
Russia's burgeoning ICT market is backed by a GDP that has grown for eight straight years through 2006, averaging 6.7% per annum since the financial crisis of 1998. Moreover, investment and consumer-driven demand have been playing noticeably larger roles since 2000. Real fixed capital investments have averaged gains of more than 10% over the last five years, according the CIA World Factbook.
Resource4Business, a market research company, reports growth of more than 20% in the telecom sector, 20% in IT and nearly 28% in communications technology. Russia currently spends more than $2.5 billion annually on telecommunications equipment, with foreign-made products accounting for 60% of this outlay.
Such trends follow wider macroeconomic and business changes that are occurring in Russia. Economic growth hit 6.9% in 2006, following 6.4% in the previous year. Domestic purchasing power is rising, thanks to household incomes growing 11.5%, according to the country's Federal State Statistics Service.
Foreign direct investment (FDI) has surged in recent years as more and more foreign enterprises set up shop. The figures speak for themselves: FDI doubled over the prior year to $26.1 billion in 2005. The nation's increasingly diversified and dynamic economy is attracting surging investment from the likes of Toyota, which has just built a state-of-the-art plant near St Petersburg. In fact, Russia was the world's fourth most attractive target for FDI in 2005-6, ahead of traditionally strong targets such as Brazil, Mexico and Thailand, according to a poll of leading transnational corporations by the United Nations Conference on Trade and Development (UNCTAD).
Given such trends, multinational needs for Asia-Europe network connectivity continues to grow. According to The Yankee Group's 2005 Global Network Strategies Survey, more than 80% of Western European companies have network connectivity with Asia, of which 42% plan to increase transcontinental bandwidth capacity by the end of 2006.
NTT Com Responds
Locally based Japanese companies alone will account for substantially increased demand for secure, sophisticated and comprehensive solutions, according to Kazutaka Kobayashi, senior manager, Corporate Sales Group, Global Business Division. "The Japan Bank for International Cooperation's survey of nearly 600 Japanese manufacturers found that three quarters of these enterprises are considering expanding or strengthening operations in Russia and other CIS countries, and 71 percent have similar plans for Eastern Europe, over the next three years. With the need to connect Europe to Asia bigger than ever before, NTT Com fully expects to help meet this demand with end-to-end ICT and network solutions," he explains.
Wasai (left) and Trans TeleCom President Sergey Lipatov at the MoU singing.
NTT Com's recent tie-ups in Russia and Austria will enable the company to create synergies with local partners for enhanced intercontinental IT offerings, adds Kobayashi. The need to integrate IP-VPNs with secure, sophisticated solutions continues to grow as multinationals deepen their ties in Russia and Eastern Europe. Thanks to the new partnership with TransTeleCom, which has 900 POPs in 71 of Russia's 89 regions, NTT Com expects to dramatically improve local access while lowering costs for IP-VPNs through interconnection with MPLS networks, IP Transit and International Private Line Circuit. NTT Com and TransTeleCom in late February also signed an MoU for development of an undersea optic cable system, the Hokkaido-Sakhalin Cable System (HSCS), which will connect Ishikari, Hokkaido in Japan and Nevelsk, Sakhalin in Russia. The 500 km high-capacity fiber-optic cable will transmit data at a top speed of 640 Gigabits per second and will be the shortest uninterrupted link between Japan, Russia, other parts of Asia and Europe providing extra backup in the event of disaster, such as an earthquake. This project should be completed by the end of 2007.
Following the partnership formed with System Integration & Technology Distribution AG in Austria last November, NTT Com is now offering system network integration solutions across 18 countries in Eastern Europe, leveraging S&T's network of 60 offices and 2,000 people to provide secure communications systems in the region.
The new partnerships, besides enabling one-stop services for IT systems and networks in Europe and Russia, also facilitate seamless connection between Europe and Asia by interconnecting NTT Com's ICT services with TransTeleCom's transcontinental communications route. Customers can take advantage of TransTeleCom's 50,000 km route, which follows the trans-Siberian railroad from St. Petersburg all the way to Vladivostok.
Tokyo and London are currently connected by 2 routes - via the Indian Ocean (blue) and the US (green).
The planned Rusian Route (pink) will be significantly shorter.
Moreover, the establishment of the seamless network between Japan and Russia will improve network latency by about 20-30% compared to the current westbound route winding its way from Japan via Singapore, India and the Middle East up into Europe.
Next Frontier: The Middle East
NTT Com has now turned its eyes on the Middle East, where it established last December a representative office in the free trade zone known as Dubai Internet City (DIC). Under the direction of Hiroyuki Hosoi, the former director of NTT Com's Global Business Division, the office will coordinate support for the growing number of locally based multinational corporations that require one-stop domestic and global communications services.
As with Russia, the demand for global ICT services is developing fast in the Middle East. According to IDC, an international market research firm, spending on ICT in the Middle East will double to US$16.8 billion between 2005 and 2010. DIC has become a key regional base for global leaders such as Microsoft, Oracle, HP, IBM, Dell, Siemens, Canon, Logica, Sony Ericsson, Schlumberger and Cisco, as well as midsize enterprises and venture companies.
The city of Dubai, widely recognized as the Middle East's ICT hub, has seen rapid development under the UAE's ambitious goal of developing a full-fledged knowledge-industry sector by 2010. As part of this goal, the DIC is being positioned to serve as a strategic headquarters for resident corporations operating anywhere from the Middle East to the Indian subcontinent, or from Africa to the CIS countries, amounting to two billion people and a GDP of $6.7 trillion, according to DIC figures.
NTT Com plans to offer a strong lineup of services in the region, including IP-VPN and system integration carried out in close cooperation with local carriers and system vendors. The need for services from Japanese customers alone makes the company's strategic move into Dubai compelling, says Kobayashi. As of January this year, Japanese enterprises based in Dubai exceed 200, including Japan Bank for International Corporation, JVC, Mitsui Corp., Nissan, Panasonic, Sumitomo Mitsui Bank, Sony and Tokio Marine & Nichido Fire Insurance.