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Q&A: Pacnet’s Ian Farruggio on Low Latency and Asia/Pacific Opportunities

With many trading firms looking at new opportunities in the Asia/Pacific region, where algo trading and the lowest-latency are still very much in vogue, Pacnet’s connectivity and data centre offering is becoming increasingly popular. IntelligentTradingTechnology.com chatted to enterprise sales manager Ian Farruggio to find out more about the company – past, present and future.

Q: How did your company get started and what is its mission?

A: Back in 2000, when the maximum lit capacity of subsea cable networks around the world was just a little above 500 Gbps, Global Crossing, now Level 3, set out to build a global subsea cable network around the world. When Global Crossing filed for bankruptcy in 2002, our company acquired the assets of its Asian arm, Asia Global Crossing, which owned and operated an intra-Asia subsea cable system called East Asia Crossing (EAC). Through acquisitions and ownership, our company acquired another subsea cable system called C2C to form what is now the largest privately-owned intra-Asia subsea cable infrastructure called EAC C2C, which spans 36,800 kilometers across Asia. With its acquisition of Pacific Internet in 2008, our company, Connect Holdings Limited, was renamed Pacnet Limited. In 2010, Pacnet built a trans-Pacific network called EAC Pacific connecting Asia to the United States.

What has remained constant with Pacnet in its more than a decade of operation was the vision and commitment to meeting the connectivity demands of the Asia Pacific region. As a carrier-neutral service provider, we are capable of providing solutions without a specific focus on individual countries – we deliver the same product sets, the same customer experience, regardless of where they are doing business.

Q: What is the financial markets focus for your firm’s products/services and what do they do?

A: Pacnet’s entire portfolio of products are designed to meet the needs of enterprises across various verticals, including the financial services industry. For instance, our Lightning product, which is a private network based on SDH and Ethernet, offers fast, ultra low latency direct routes to Asia’s leading stock exchanges in Hong Kong, Singapore and Japan. The fact that customers do not need to use local loop access to connect with these exchanges makes this service particularly attractive to companies that deliver time- and latency-sensitive data.

The fact that these services run on our fully-meshed network means we are able to provide our customers with multiple protected bandwidth options to ensure availability of their mission critical applications.

Our 18 data centres in the region cater to the varying compute and storage demands of financial services companies. What makes us different from our competitors is our ability to provide customers hosted in our facilities with a range of connectivity options riding on a network we own and manage, which means we are capable of guaranteeing the quality of service we deliver.

Q: Are your products/services delivered as enterprise deployments or provides as a service, in a hosted/cloud delivery model?

A: Pacnet is really about providing customers options. Over the years, we have been provisioning solutions directly to our customers’ sites. It was easy for us to do so because we have both the footprint and local support capabilities in every country we operate. However, with the advent of cloud computing and the increasing requirement for on-demand resources – whether they be hardware, virtual servers or bandwidth – we have decided to develop an entire new portfolio of cloud solutions including Network-as-a-Service, which will enable customers to dynamically request and order the amount of bandwidth they want, when they want it, using the path they specify and they pay only for the services they use.

Q: How do your firm’s products/services reduce latency and/or boost performance?

A: There are many ways we can achieve latency reduction and performance gains among them:

Shortest Path and Protection – Pacnet offers the shortest paths between two Asian locations. Customers can use these paths as their primary or working path while using an alternate path for protection. The below table shows the lowest latency we can provide for both primary and protection paths.

Routes: Latency for Primary (Working) path Latency for Protection path
Hong Kong <> Singapore 29.68 ms 31.19 ms
Hong Kong <> Tokyo 42.43 ms 54.92 ms
Hong Kong <> Osaka 38 ms (approx.) 66 ms (approx.)
Singapore <> Tokyo 66.2 ms 72.98 ms
Singapore <> Osaka 68 ms (approx.) 75 ms (approx.)

 

Redundancy/Protection – Pacnet’s network is a fully-meshed network compared to other networks in the region that utilise a fish bone design, which makes them vulnerable to single points of failure. This gives us the ability to instantly find an alternative route in the event of cable cuts and failures and multiple options for restoration paths.

Q: Where is the customer take up and focus of these products and services; what segments of the market are you addressing?

A: We cover a highly-diverse market and the connectivity demands differ from country to country. Around the world, Pacnet serves over 270 carrier customers and some 2,400 enterprise customers, a number of whom are Fortune 500 companies. We serve some of the largest financial institutions in the world, as well as content providers, software-as-a-service providers, e-commerce companies, regional and global telecommunications carriers, internet service providers and government entities.

Q: What business drivers and technology advances do you see shaping the future of the low-latency world, and your product/service focus?

A: There are many business drivers and technologies that impact the low latency world. If we were to focus on those that relate to our involvement in financial services, it would be:

1. Ultra Low Latency Exchange Connectivity – With the increasing uptake of algorithmic trading in Asia, financial services companies are demanding ultra low latency connectivity to and from exchanges and low latency market data. Pacnet is well positioned to meet this demand with our Lightning service that enables direct connectivity to Asia’s leading stock exchanges. By Q4 2013, Pacnet will have completed its 100 Gbps network upgrade, which will significantly improve latency and bandwidth capacity we deliver to our financial services customers via our Lightning service.

2. Financial Exchange Consolidation – Mirroring the developments in Europe and the United States financial trading markets, Asia stock exchanges are embracing the benefits of consolidation, shedding their regional autonomy in order to be part of a larger Pan-Asian or global financial ecosystem that can offer a wider range of products and trading platforms, accommodate higher volumes of transactions and cover a wider base of investors. This year, the Tokyo and Osaka Stock exchanges merged to form the world’s third-largest Exchange. Korea Exchange in Busan was formed through the integration of the country’s stock exchange, futures exchange and the KOSDAQ stock market. In India, the Bangalore and Madras regional exchanges merged to create the single largest regional exchange in the country. Similarly, Asia stock exchanges are venturing out of the region. The Hong Kong Exchange and Clearing (HKex), for instance, has successfully bid for the London Metal Exchange. Pacnet’s high power, high availability data centres in Singapore, Hong Kong and Tokyo are ready to support the increased compute, storage and low-latency connectivity demands of these consolidated exchanges.

3. Mobility ­ ­– the increasing popularity of tablets and handheld devices enabled people to conduct financial transactions anytime anywhere, thereby raising the bar on speed, performance and reliability of financial services platforms and connectivity. Pacnet’s ability to deliver low latency connectivity within Asia and across the Pacific benefits our wholesale customers who provide connectivity and platforms that support mobile financial services.

4. Cloud Computing – Recent research from IDC shows that Financial Services and high tech companies are projected to have the largest cloud computing budgets. Enterprises are expected to invest an average of $1.5 million in cloud-based services during the 2013 – 2014 timeframe.

Pacnet’s cloud roadmap is built around our capability to offer an enterprise class on-demand hardware, virtualisation and elastic bandwidth solution which we plan to offer as a complement to our high capacity, low latency transport.

Q: How is financial regulation going to impact your business in the coming months. What opportunities and challenges will regulation drive?

A: According to the US government, financial services companies are urged by regulators to review their industry-wide and internal business continuity and disaster recovery plans to improve responsiveness to significant disruptions and reduce recovery time. This regulation is going to impact local telecommunications service providers too as they are required to consider their providers’ contingency plans as well as the availability of alternate providers, especially for remote or off-site operations.

This creates tremendous opportunities for us as a provider of integrated network services and ecosystem style approach to data center platforms for enterprise and carrier customers in Asia/Pacific. Our network of data centres across Asia, combined with our largest subsea cable in the region, will help companies and carriers to comply with their business continuity and disaster recovery requirement.

Q: How do you see the emerging big data world impacting your business?

A: Pacnet builds data centre facilities connected though our self-owned network, so from a commercial standpoint, big data provides an opportunity for us to affirm our value as a service provider because we can offer customers with secure and scalable infrastructure on which to store their data and the connectivity to access and transport them via our EIPL and IP Transit product portfolio.

Q: What do you see as the near/mid-term future for your company and its products/services, from both a business and technology viewpoint?

A: Cloud – Pacnet will be actively competing in the yet untapped Enterprise grade cloud services market in Asia as we continue to roll out cloud based solutions. With our launch of Network as a Service, a first of its kind Cloud solution that will allow dynamic and real time bandwidth provisioning, powered by a state of the art SDN topology, we hope to meet the requirements for on- demand scalability that has yet been achieved in today’s network environment.

Data Centers – Pacnet manages 18 data centers in Asia, five of which are self-owed Tier III facilities in Hong Kong, Singapore, Australia and China which serves 50% of our data center customers. By mid 2014, we will have added three new self-owned facilities to our data centre inventory making us arguably the biggest data center provider in Asia in terms of footprint.

Connectivity – Upon the completion of our 100G network upgrade this October, we will begin to launch new high-capacity services to meet the needs for higher capacity and low latency transport.

China – Pacnet, through its joint venture company, Pacnet Business Solutions, has been granted licensing to offer a number of value added services in China including IP VPN services in 23 cities, data center services in five cities, Internet access service in 10 cities and national Internet content services licensing. We are the first Sino-Foreign telecommunication joint venture to be granted such licensing. We will continue to leverage our China presence to provide world-class services in the mainland and become a service provider of choice of companies that are operating or looking to expand in the country.

Q: As an Asia-focused company what value could Pacnet provide to US-based financial services companies?

A: Pacnet currently services some of the world’s largest financial services companies and has presence in Asia’s major financial centres, including the emerging financial hubs in China and India. We connect these centres through our low latency, high capacity and redundant network. Nobody else in Asia has the breadth of resources Pacnet has in terms of footprint, network and infrastructure. With strong US operations, Pacnet helps financial services companies in the US explore the tremendous opportunities in Asia’s financial services industry.

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