In the domestic VPN market the four leaders control over 80%. VPN has been developing more actively in the international destination, and within the country its driver is represented by the commercial sector … VPN Russia 2015, the First Virtual Private Networks and Channel Lease in Russia International Conference, was attended by representatives of leading analytic agencies and communications providers to discuss the stage of market development and its growing-points in future.
VPN takes over channel lease
Konstantin Ankilov, Managing partner of TMT Consulting, tells about the general situation in the market of VPN services and channel lease in Russia. According to the TMT Consulting’s research, the share of channel lease and VPN services was about 4% of the total telecommunications market in 2014, which is a shade less than RUR 60 billion.
The dynamics of this market segment is comparable to the telecommunications market in general, i.e. it showed growth within 2% last year. This year, the TMT Consulting’s analysts predicted a peak growth of the VPN and channel lease market, after which it would have had to decline. However, this peak is most likely to be blurred, as in 2014 to 2016 inclusive the market will run in place, as the analysts change their expectations.
According to Ankilov, the structure of the physical and virtual channel lease market shows the replacement of the channel lease market by VPN services resulting more in demand. By consumers’ categories, the market is close to parity, i.e.a third part is shared by operators, business and governmental customers each.
According to TMT Consulting, Rostelecom dominates historically in the VPN and channel lease market due to its extended network; at the end of the last year the operator occupied a share of 42%. The second was TTK with 16%, and slightly behind was VimpelCom with a share of 14%, followed by MegaFon with 12%. Other players occupy the total of remaining 16%.
The channel lease segment shows a negative trend, as Ankilov notes, because this service is replaced by VPN. As for the VPN services, the TMT Consulting’s analysts expect positive dynamics of the market growth in B2B segment. There are positive trends, an active application within corporate networks, especially between geographically dispersed branches, as he explains. Ankilov adds that VPN in B2G segment has no longer growing-points as such, as the market is already mostly saturated.
The growing-points are focused on the international destination of the VPN services market and within the commercial organizations sector. And so in view of stagnating market with increasing competition and emerging players we obtain new drivers for market development, as the analyst concludes.
Ilya Gudenko, Marketing and Sales Support Director of TTK Company, says that the interregional corporate networks and channels market has been grown quite rapidly, i.e. by about 7% annually over the past three years. But the key driver for this growth is unified networking for public institutions and agencies, as he points out.
These are the large federal networks incorporating over 1 thousand points of the main and local level, including in small towns and rural areas. The implementation of such projects within one lot remains in the power of the operator having a generally developed access infrastructure. This market segment is inaccessible for alternative operators, and there is practically no competition in such tendering, as Ilya Gudenko mentions.
China dominates, Turkey threatens
Sergei Shavkunov, Executive Director of J’son & Partners Consulting Agency, devotes his report to the international market. According to him, all Russian players entering the channel lease and VPN market are focused on gaining minimal routes. He notes, however, that the competition has recently intensified in the international market, e.g. China’s expansion, for instance, in the international underwater cable system will slow down the development of this market.
Despite the fact that China entered the market relatively late, it invests quite a lot in its development, as Shavkunov comments. He calls Turkey’s possible market entering another threat to the Russian operators. All that suggests that the problem of relations with Europe does exist, and here the signal delay problem is very topical, but there is a niche especially for Russian operators, as he adds.
According to the J’son & Partners Consulting’s survey, the crucial factor in choosing an international transit activity supplier has always been the price, but the network quality and SLA issues has recently increased. There also increased signal delay requirements, even on quite short routes.
According to the J’son & Partners Consulting’s expectations, while traffic transiting on Europe-Asia route, both its price and traffic volume will grow. In this case the last parameter will increase more. IP-transit occupies 85% of the international telecommunications capacity now and continues growing, i.e. in volume terms, the market will grow by threefold in coming years, as the analysts expect, as TelecomDaily says.
