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   [3][ISMAP]-[4][USEMAP] September
World Wide Weight

     America's dominance of the Internet isn't just a cultural issue. It
     could pose an infrastructure nightmare. 
    By Andreas Evagora.
    Andreas Evagora is international editor for tele.com. He can be
    reached over the Internet at [5][email protected]
   The year is 1962. At a White House conference, aides warn President
   John F. Kennedy that the newly emerging global phone network isn't
   really global at all. Kennedy is told that almost every
   intercontinental phone call is funneled through the United Kingdom or
   one of the other former colonial powers, and that those countries
   control the lion's share of international cables. Fearing that the
   United States will be powerless in the new telecom era, the Kennedy
   administration decides to create Intelsat, an international satellite
   system that would quickly end the domination of the old powers over
   the global telecom network.
   Fast forward to 1997. International service providers find that the
   newly emerging global Internet isn't really global at all. Reports
   tell them that more than half of intra-European and intra-Asian
   traffic is funneled through the United States. Once predictable
   traffic patterns are going haywire, rendering established
   technological and economic models irrelevant.
   Right now, there is no Intelsat on the horizon to save the day for
   telecom providers outside the United States. In fact, far from
   globalizing, all the signs are that Internet backbone
   infrastructure--and the traffic running on it--will become even more
   U.S.-centric over the next few years. This isn't just about U.S.
   domination: Non-U.S. service providers are contributing greatly to the
   imbalance by hatching plans to add new capacity to the States rather
   than to other countries in their region. Underpinning that trend is
   the concentration of content in America (more than eight of 10 Web
   sites are in English) and the continued high price, poor quality, and
   lack of easily available infrastructure outside the United States.
   The increased concentration of infrastructure and traffic into the
   United States not only works against the distributed philosophy of the
   Internet but also threatens to endanger the 'Net's international
   growth and overwork the U.S. backbone to the point of exhaustion. "The
   Internet today is a hub-and-spoke system, with the U.S. at the center
   of the entire world," says Neil Tagare, chairman of CTR Group Ltd.
   (Woodcliff Lake, N.J.), which plans to build a new global fiber
   cabling network linking 175 countries. "That's not right,
   technologically or politically."
   Already, service providers report that Internet links to the U.S. are
   straining to stand up to growing traffic volumes, while demand for
   other regional and intercontinental links remains tepid. Around the
   globe, U.S.-bound capacity is at a premium, with developing nations
   clinging onto the 'Net by a thread. If they are lucky, Russia's 150
   million people will share 40 Mbit/s of international Internet capacity
   by next year. Today, India--a nation of 900 million--has just 10
   Mbit/s of Internet capacity to the U.S.--about as much available on a
   LAN supporting a few dozen workers in the United States. "The lack of
   non-U.S. infrastructure is holding back real growth of the 'Net in
   many regions," says Petri Ojala, technical director of the Finnish
   Commercial Internet Exchange (Helsinki, Finland). "If a regional
   Internet community is short of capacity, it simply cannot develop as
   it wants. Less capacity means less content, less innovation."
   If Internet infrastructure continues to be concentrated in the United
   States, some fear that the whole non-U.S. high-tech sector will be in
   grave danger. Because the 'Net is becoming a critical tool for
   software development, a concentration of capacity in the States might
   lead to a concentration of innovation there as well. To be sure, it's
   difficult to see how India's enormous software development industry
   can prosper with 'Net access that is far inferior to that of
   competitors in the United States.
   A few 'Net watchers warn that failure to address the Internet
   imbalance could put some nations at a political disadvantage as well.
   "What if a new U.S. government wanted to leverage its control of the
   Internet for political ends?" asks one executive at a non-U.S.
   Internet service provider. "If it wanted to embargo Cuba, it could use
   its influence to control Internet communications there."
   But the outlook for regional backbones is less than bright. Such
   networks are all but absent in Asia-Pacific, Latin America, and
   Africa, while backbones in Europe, where the World Wide Web was
   invented, offer no more than 2 Mbit/s of bandwidth (see
   [6]"Un-American Activities"). Compare that with backbone construction
   in the United States, where today's typical 622-Mbit/s backbones are
   expected to double in capacity next year.
   Interregional Internet connections also are sorely lacking. Almost
   every byte of traffic between continents passes through the United
   States, hopping over at least two backbone links on the way.
   Concurrently, non-U.S. network access points (NAPs), where Internet
   service providers exchange traffic, are small in both number and
   processing capacity. "If you were to squint at a map of the global
   Internet infrastructure, all lines would roll into the U.S.," says
   Robert Hagens, director of Internet engineering at MCI. "That's not a
   good way to build a network."
   Service providers have never quite faced anything like this before.
   Exponential demand for traffic to the United States is soaring, but
   investing more in these routes doesn't add significantly to the bottom
   line (some phone companies that are also Internet providers offer free
   local calling--and therefore free local access--to the Internet but
   still need to add extra capacity), and it only increases the
   dependency on the U.S. backbone. "Carriers are in a chicken-and-egg
   situation," says Chris Champion, senior consultant at The Yankee Group
   Europe (Watford, U.K.). "They only want to invest where there is a lot
   of traffic, but there won't be enough traffic until they upgrade the
   EUNet International B.V. (Amsterdam), the European backbone operator,
   this month is increasing its U.S.-bound capacity by 34 Mbit/s, to 72
   Mbit/s, to meet demand. But its intra-European backbone network, which
   comprises mainly 2-Mbit/s links, faces no capacity crunch. "We don't
   have any [intra-European] congestion problems whatsoever," says Wim
   Vink, the company's managing director.
   The problem is, the global Internet is running headlong into an
   international infrastructure regime that actually is causing
   congestion on intercontinental routes. Capacity planning and demand
   forecasts on these routes have been designed largely by monopolies
   around the predictable needs of a staid, 5 percent a year growth in
   traffic. Phone companies traditionally buy capacity on
   intercontintental cables 20 or 25 years ahead of time. That's not a
   strategy suited to the Internet; who knows what will happen when
   bandwidth-hungry voice and multimedia applications pile onto the 'Net,
   as they are expected to in coming years?
   Service providers already are feeling the tremors (see [7]"Borne in
   the U.S.A."). In the summer of last year, Internet traffic from Sweden
   to the United States was about half the volume of voice traffic
   between those two countries. By the end of 1996, data and voice
   traffic volumes on the Sweden- to-U.S. route were equal, and now data
   volume is double that of voice. Meanwhile, voice still accounts for
   the vast majority of traffic to neighboring Finland and Denmark.
   Traffic patterns between the world's two biggest economies also signal
   the changes that lie ahead. Kokusai Denshin Denwa Co. Ltd. (KDD,
   Tokyo), Japan's dominant international carrier, has 10 Mbit/s of
   Internet capacity to the United States and 15 Mbit/s to the rest of
   Asia. Yet the ratio of Internet traffic to the United States and to
   Asia is 8 to 1. "The situation is changing very quickly," says Hiroshi
   Kobayashi, the carrier's deputy director of Internet business. "Two
   years ago, the total ratio of traffic flow from the U.S. to Japan was
   4 to 1. Now, it is only 2 to 1." That means Japan is sending
   proportionally more traffic to the United States--a traffic shift
   directly attributable to the growth of the Internet.
   In Australia, Telstra Corp. Ltd. (Melbourne) is dealing with a
   U.S./Asia Internet traffic ratio of about 6.5 to 1. "I can deal with
   the 1--it's the 6.5 that is the problem," jokes John Hibbard, managing
   director of international carrier business. Telstra now has 130 Mbit/s
   of Internet capacity to the United States, compared with 2 Mbit/s to
   the rest of Asia. Still, Hibbard says of the U.S. route, "We will see
   a big squeeze in 1998." As a measure of just how high demand for
   bandwidth to the United States has been driven, Hibbard notes that
   bids for the 1,000 or so 2-Mbit/s circuits on the new transpacific
   TPC-5 cable, due to come into service at the end of this year, were
   oversubscribed by nearly four times. "The Asia-Pacific region must
   reduce its dependency on the United States to ensure that the quality
   of service is not dependent on the U.S. link, which is frequently
   congested," Hibbard says.
   That overdependency is creating an economic as well as a technical
   fallout. Non-U.S. carriers are investing in extra capacity to the
   United States, without seeing returns on that investment in terms of
   extra revenues. As a result, many international carriers--Telstra
   included--complain that in paying the full cost of circuits to the
   States, they are effectively subsidizing the U.S. Internet community.
   They argue that U.S. service providers should pay for at least a
   portion of those circuits.
   In the traditional telephony world, international circuits are
   provided on a shared-cost basis, with each carrier meeting costs to a
   theoretical midpoint between two countries. Telstra and its supporters
   want such principles to be looked at--although not necessarily applied
   fully--in discussions about the Internet.
   This year, Telstra will lose US$10 million on providing Internet
   circuits to the United States. By 2000, the total spending on
   U.S.-bound Internet circuits from all non-U.S. service providers will
   reach US$2.5 billion, Hibbard notes. "We are providing resources for
   which we are not adequately compensated," he says. "At the same time,
   I am offering U.S. users access to Australian databases without
   getting a brass razoo." Hibbard explains that traffic from the United
   States to Australia gets a free ride, as U.S. service providers aren't
   contributing to the international connection.
   International service providers are lobbying U.S. regulators for
   compensation. "When people first started connecting to the Internet,
   that normally meant they were connecting to America, and as a result
   had to pay for the connection," says Michael Behringer, senior network
   engineer at Dante (Cambridge, U.K.), which operates the EuropaNet
   Internet backbone. Until recently almost all Internet content has
   resided in the United States, so it was fair for overseas providers to
   pay the bill for access to that content, Behringer reasons. But for
   Internet content to become truly global, payments should be more
   equitable, and non-U.S. service providers should not have to bear 100
   percent of the payment burden, he says.
   A group of Asia-Pacific carriers, including KDD and Telstra, has
   already made a proposal to the U.S. Federal Communications Commission
   that such Internet circuit fees should at least be taken into
   consideration during discussions on accounting rates, the fees paid by
   one carrier to another for delivering an international telephone call.
   To give their argument on leased lines to the United States more
   ammunition, several Asian carriers recently agreed to share the cost
   of international leased circuits for Internet communications between
   their own countries. The matter has also been raised at meetings of
   the Group of Seven (G7) nations. But so far, U.S. officials have
   rejected the complaint, and international officials don't seem to hold
   out much hope of success. "The Americans are sympathetic, but I doubt
   if they'll do anything because they don't have to," Behringer says.
   Carriers that offer free local calls, such as Singapore Telecom Ltd.
   and Telstra, are the most eager for change as they recoup little or no
   revenue when users access local servers to tap the global Internet.
   They argue that the Internet needs to be put on a more commercial
   footing. In Singapore, 65 percent of all 'Net traffic passes through
   the United States. "Because of the high cost of international
   bandwidth, it actually would cost a user US$100 an hour to connect to
   the Internet with a 2-Mbit/s link if he was paying the real commercial
   rate to the U.S.," said Tan Boon Tiong, deputy director of network
   technology development at Singapore Telecom, speaking at the
   International Telecommunication Union's Asia Telecom conference in
   Service providers point to other factors holding back the
   globalization of Internet infrastructure, such as the high cost of
   maintenance, installation, and operation and a lack of human
   resources. But many independent Internet service providers say that
   old-line telecom operators are hardly covering themselves in glory as
   the 'Net spreads its tentacles. Independent service providers and
   builders of backbones say that high leased-line costs remain the
   single biggest factor holding back the expansion of regional backbones
   that could help keep more Internet communications away from the United
   States. Lack of competition and a scarcity of infrastructure,
   particularly cross-border links, continue to keep leased-line prices
   in Europe three to 10 times more expensive than equivalent lines in
   the United States. Service providers say that they must wait up to
   five months for a cross-border E3 (34-Mbit/s) line, where such service
   Ironically, it's the traditional telcos, which set those high prices,
   that are gradually taking over the operation of pan-European Internet
   backbones. "European carriers are schizophrenic," concedes one
   official at an international carrier alliance. "They will cry about
   lack of liberalization in another country but do all they can to delay
   liberalization in their own market as long as possible. That's human
   That human nature is only serving to encourage the flow of 'Net
   traffic and facilities to the United States. "Dante's backbone took 18
   months to organize and two years to turn into a reality," Behringer
   says. "That delay was far too long and was mostly caused by arguing
   with telcos."
   It's not just high leased-line prices that anger independent ISPs.
   Deutsche Telekom, now Europe's largest ISP, still refuses to peer its
   network at Frankfurt's commercial NAP, where more than 25 independent
   German ISPs exchange traffic. Instead, Deutsche Telekom maintains a
   single peering deal with Deutsches Forschungsnetz (DFN), a scientific
   and academic network. That lack of domestic peering means that all
   communications between Deutsche Telekom and other German ISPs must be
   routed via the United States.
   "Peering via the U.S. affects Deutsche Telekom customers and our
   customers because of the delays on U.S. lines, which are normally
   saturated," says Thomas Bastian, senior technical director at CERFnet
   Germany Inc. (Frankfurt), the German unit of U.S. ISP TCG CERFnet (San
   Diego). In response, he says, all independent ISPs have announced that
   they will cancel any private peerings with DFN as of this coming
   "We are confident that things will change, but everything takes so
   long in Europe," Bastian says. "Our U.S. operation connects into NAPs
   at 155 Mbit/s, but here in Germany it's at 2 Mbit/s. It's very
   expensive just to set up a system, and those costs are inevitably
   passed on to users, which slows market development."
   Until more capacity is made available, there's not much chance that
   the global Internet's dependency on the United States will fade away.
   CTR Group's Tagare, a former executive at Nynex Network Systems
   (Bermuda) Ltd.--one of the founders of the FiberOptic Link Around the
   Globe (FLAG) project building a new global undersea cable--says that a
   lot of capacity remains warehoused to block competition. "Active
   capacity is no more than 50 to 60 percent of the bandwidth out
   there--the rest is warehoused," he says. "The people who need capacity
   desperately can't buy it because none is available, while those that
   have it can't use it because they don't have sufficient demand for it.
   That's an extremely inefficient model."
   WorldCom International Inc. (New York), another company planning to
   lay new international cabling, also places much of the blame for the
   current malaise at the door of incumbent telcos, in particular for
   failing to spot the tide of demand for data communications. WorldCom
   International says that voice today accounts for 80 percent of
   international traffic, but will make up only 20 percent by the early
   part of next decade.
   "Terabyte requirements will soon be upon us, but carriers got caught
   asleep making cozy, 4 percent growth demand forecasts," says Colin
   Williams, the company's international executive vice president.
   "Today, 90 percent of Internet traffic goes to the U.S., but we
   haven't yet scratched the surface of bandwidth requirements across the
   Translation: Don't expect a truly global Internet anytime soon.
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