Why are IDC companies keen on entering the broadband access network field?

Since the country launched the pilot business of private capital entering broadband access network at the end of 2014, more than 70 private enterprises have applied for pilot licenses from local communications administration bureaus. Among them, IDC enterprises account for a large proportion, such as 21Vianet, Dr. Peng, Tianhu Communication, Jinwanbang, Yilin Network, etc. These enterprises vary in size. Some enterprises' IDC business covers multiple provinces across the country, while others have taken the lead in regional markets. So, why are IDC enterprises so keen to enter the field of broadband access network?

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IDC enterprise broadband access prices are lower

IDC companies have their own Internet data centers, so they have a unique advantage in the transmission of network infrastructure resources. As the most concentrated place for data exchange on the Internet, IDC companies provide hosting, broadband rental, IP address rental, server rental, virtual host rental, data backup and maintenance services to most Internet users. In other words, if IDC companies can provide the above services, it means that they can get lower bandwidth resources, and thus gain an advantage in price competition.

Let's look at the broadband access network pilot business. It can be generally understood that after obtaining a pilot license, private enterprises can build their own wired network communication facilities within the city area and have absolute ownership of the self-built network. If they also have an ISP license, they can provide broadband Internet access services under their own brand.

According to the relevant provisions of the "Broadband Access Network Service Opening Pilot Plan", "private enterprises can build all or part of the wired communication network facilities from the user end to the network access end server." It can be seen that the Internet data centers built by private enterprises have played the role of a link between the backbone network of basic operators and the user end.

"Compared with ordinary private broadband operators, IDC companies have more advantages in broadband access prices, especially in serving their own existing user groups," said a local operator. IDC has two very important and significant features: its location in the network and its total network bandwidth capacity. It constitutes part of the basic network resources, just like the backbone network and access network. It provides a high-end data transmission service and high-speed access service.

One-stop access to all network services

Although the country has always emphasized "speeding up and reducing fees", it is an indisputable fact that the price of broadband access in my country is generally too high compared with that in foreign countries. The root cause is that "South Telecom and North Netcom" have not achieved interconnection.

Therefore, this also provides private enterprises with an opportunity to promote interconnection. Many private enterprises actively build their own Internet data centers, place servers in computer rooms in the north and south, that is, dual-line computer rooms or multi-line computer rooms, and access the bandwidth resources of China Telecom and Netcom at the same time, which is better in terms of network service stability, thereby solving or alleviating the slow delay (north-south network bottleneck) problem of users across ISPs accessing websites.

However, the simultaneous access to China Telecom and Netcom bandwidth resources in the north and south also increased the operation and maintenance costs of private enterprises. Dual-line access will cost about 50% more than traditional single-line access. In addition, since the server is connected to dual network cards, the routing table must be set on the server, which increases the difficulty of maintenance for ordinary users. All data packets need to be routed on the server and then sent to different network cards. When the number of visits is large, the server resources are greatly occupied.

However, for Internet access companies, the "one-point access, full network service" approach of Internet companies requires IDC room leasing and bandwidth leasing across the country to ensure the quality of the services they provide and customer perception. Unlike traditional companies' demand for Internet access, Internet companies do not have a high demand for the number of switches, and they care more about the bandwidth rental price and service stability. Therefore, corporate customers who pursue network quality and stability will prefer to choose IDC companies that can provide dual-line access.

Cloud computing provides new business opportunities

At present, more and more IDC companies have used cloud computing technology to improve information services such as data computing, storage, and transmission. Cloud computing data centers can provide high-speed, efficient, and reliable service capabilities for Internet companies, and provide data storage and computing resources for various companies. Enterprise data can be centralized on the cloud platform for unified operation and management, which will change the traditional operation model of enterprises, help enterprises transform and upgrade from low-cost strategies to innovation-driven, save production costs, and enhance the core competitiveness of enterprises.

In addition, compared with traditional IDC servers, the biggest savings of cloud data centers are "operation and maintenance costs". Traditional servers need to be purchased and operated, and require specialized IT to maintain them. There are also various water and electricity bills, rent (server space), etc., and the equipment should be updated in a timely manner after aging. The servers provided by cloud data centers are different. As long as the rent is paid on time, Internet companies do not need to worry about operation and maintenance, helping enterprise users to use IT resources flexibly and efficiently as needed.

For IDC companies that use cloud computing technology, the reduction in operation and maintenance costs means that they have more say in the entire broadband service industry chain. However, for current IDC private broadband access network companies, Internet data centers may be spread all over the country, but broadband access is limited to metropolitan area network construction, and cannot be directly connected across regions. It can only be connected to first-tier broadband operators. This seems to be a disguised constraint for private companies with nationwide Internet data centers.

In addition, most IDC companies lack end-customer brand influence in private broadband operations. Although private companies have certain advantages in the broadband access network market, they are still subject to the bargaining power of basic operators. Therefore, the road to telecommunications reform is still long and arduous.