The value of local Latin American Internet infrastructure
Fiber in Latin America
Independent service providers are building private networks based on a combination of optical and fixed wireless technology, exclusive peering arrangements, and Internet data centers to support the B2B marketplace.
PETER SCOTT, Diveo Broadband Networks Inc.
The arrival of the 21st century in Latin America coincided with the migration of the region's Internet from a communications/recreation medium to a platform for mission-critical applications and e-business. With this change, the region's Internet infrastructure is evolving from its dependence on U.S.-based hosting facilities and incumbent owned and operated transport to a mix of fiber-optic and fixed wireless private networks with Internet data centers (IDCs).
Until a few years ago, the dot-coms that pioneered Latin American Web content looked to local garages or U.S.-based Web-hosting firms for their infrastructure needs, since high-quality solutions did not yet exist in the region. The distance between U.S. hosting facilities and Latin American users combined with sub-par infrastructure tying the two regions resulted in poor performance and high-latency connections. Such concerns were not critical, however, because of the informational nature of the first Websites. The ready-made U.S. solutions, which transported international traffic over satellite networks or directed in-region traffic "hot-potato style" through multiple hubs and network access points (NAPs), suited both providers and users.
Even today, many connections throughout the region suffer delay as a result of poor routing. For example, a user in Buenos Aires accessing a site hosted in California connects to an Internet service provider (ISP) that in turn connects to an Internet backbone provider. Upon leaving the ISP network, the connection travels across the Internet "cloud." The network providers inside the cloud have no incentive or ability to optimally route the connection. Their motivation is to minimize the costs by routing across inexpensive and usually overly utilized links or by passing the session off to another less expensive and lower-quality network as soon as possible. This process, known as hot-potato routing, increases the number of hops and degrades the quality of the session.
If a user connects to a local ISP in Argentina or Brazil to access content that is hosted in the same city or country, the user's traffic is often routed to the United States, where it will be redirected at a public NAP back to its destination in South America. That occurs because of the limited partnerships at public access points and lack of peering agreements between local providers.
The ISP's backbone provider is likely an incumbent telecommunications provider with a legacy voice-based network. The legacy network's routers and links can add significant latency and packet loss to the session. The provider's network is also likely to include single points of failure that pose the risk of session failure.
The precise number of hops, amount of packet loss, and amount of latency varies with each session and the network topologies of the connection. Generally, packets passing from sites in the United States to Buenos Aires would generate 500 msec or more of round-trip latency. Compounded by multiple packets comprising a Web page, such latency can produce 8 sec or more delay in page downloads.
The Internet is entering the second phase of its evolution in Latin America. By 2000, the region emerged as the fastest-growing Internet market in the world. Companies no longer use the Web merely to market their products and services; many are developing highly complex, transaction-enabled sites. Market researcher International Data Corp. foresees e-commerce in the region growing to more than $8 billion by 2003, up from approximately $1 billion last year. Merrill Lynch predicts the Web hosting market in Latin America will reach $1.3 billion in revenue by 2005.
In light of this e-commerce growth, it is clear solutions presented by foreign hosting firms via satellite transmissions and public NAP routing no longer meet the needs of the region's businesses. This situation is opening the door for ISPs to build private networks and IDCs in the region. Today, the local hosting sector is meeting these new demands through an optical backbone that enables quality of service, private peering relationships, content distribution, and managed hosting.
Problems posed by hot-potato routing and NAP bottlenecks resulted in insufficient transport for the mission-critical applications of the second phase of the Latin American Internet. The reliability and performance of each connection was greatly affected by the logical proximity and network availability of the links. Furthermore, much of the international traffic was transmitted via satellite connections, which are expensive and lack scalability. Other options existed, like submarine cables, but these were primarily consortium ventures controlled by incumbent carriers and were voice-centric in nature.
As a result of these challenges, a huge demand for data-centric traffic capacity grew in the region. And the increasing concerns for the latency and packet-loss issues posed by satellite drove several global network providers, including 360networks, Emergia, and Global Crossing to build their own fiber-optic connections within the region, connecting to the United States and other international fiber networks. These new fiber cables have enabled new entrants in Latin America to construct pan-regional fiber backbones.
Through an international fiber-optic backbone, carriers found a highly scalable solution that allowed them to add customers quickly and cost-effectively. A provider or customer can now get an STM-1 (155-Mbit/sec) connection with 10 times the capacity on a fiber network for the same cost of 15 Mbits/sec of satellite capacity a year ago. But the customer value of these new backbones comes through the control new providers are able to guarantee through private peering arrangements at IDCs and content delivery features that better manage the flow of traffic around the globe.
As a result of the growth in number of local hosting facilities and improved intracountry networks, about 50% of the traffic in Brazil today stays local instead of traveling over pan-regional or international networks before reaching its destination.
The physical proximity also assists companies with some of the psychological challenges of transitioning mission-critical applications to the Web. The ability to touch and see Web hardware provides reassurance to organizations that are moving highly important information online. Merrill Lynch cites the "reluctance to outsource mission-critical applications remotely as a major attraction for local hosting. A local solution allows the company to bring a potential client to see first-hand the secure location of a hosting platform."
The physical proximity to the Latin American user base can also help with necessary local dedicated links. Many application service-provider designs, for instance, call for dedicated local loops between the IDC and offices with high user concentrations. While such links would be prohibitively expensive from the United States, they become affordable when run from a local location.
In this scenario, when the Buenos Aires user requests content, located, for example, in a Miami or Mexico IDC, the request travels through the user's ISP to a private optical network. The optical-network providers' routers then broadcast the requested IP address because the content is hosted on the same pan-regional network (see Figure). The fiber-optic infrastructure provides a fast, reliable connection to the content located in the Miami or Mexico IDC.
The optimal solution is for a hosting provider to operate an optical network with multiple paths and access points in each of its markets. Any traffic that enters the provider's network is quickly moved over private connections to the server. In this scenario, any user located near an access point can access any Web server anywhere on the network at the same high speed.
The hosting provider's pan-regional presence can be utilized to provide a distributed architecture for Web content as well, using technologies such as shared caching, dedicated caching, and server mirroring. This array of choices provides for a wider range of distributable content, including applications and secure content.
Peter Scott is director of business development at Diveo Broadband Networks Inc. (Washington, DC).