Nice 1997 RedHerring article on ISLD. Good relationship w/CSCO
HOPPING OVER HAWAII
Digital Island promises to bypass congestion on the
Internet.
By Nikki C. Goth
The Red Herring magazine supplement
Spring, 1997
Imagine having a Web site that is expected to generate $1 billion in
commerce and another $250 million in saved business costs this year. Now
imagine that the site is practically useless for more than half your customers
because the international telecommunications infrastructure can't handle the
traffic. For Ethan Thorman, director of service marketing for Cisco Systems,
this picture was reality until last fall, when he turned to a small company
called Digital Island for help.
Eighty percent of all Internet usage now occurs in the continental United
States, and 100 percent of the data passes through at least one U.S.-based
network access point (NAP) belonging to a major communications provider
like Sprint, Microwave Communications Inc. (MCI), or American
Telephone & Telegraph. But these providers' infrastructures are not set up in
a way that adequately accommodates international traffic. Because they still
operate on the three-minute-phone-call business model, the major carriers
oversubscribe their circuits heavily. As a result, says Mark Winther, vice
president of worldwide telecommunications at International Data
Corporation/Link, "the NAPs have become choke points, no matter how big
the routers get."
Slow boat to China
The problem is particularly acute for international Internet traffic. Ron
Higgins, CEO of Digital Island, explains: "Most telcos service all of Asia by
bringing traffic back across one cable to the United States and then sending
it back out to each of the countries. And they oversubscribe that one
backhaul cable sometimes by 20 to 1." Accessing the Internet from abroad
is thus often prohibitively slow, a limitation that damages the prospect for
conducting substantial Web-based commerce in global markets. "The
oversubscription of international circuits is creating a drawbridge between
the United States and all international markets," Mr. Higgins concludes.
The problem will only get worse as traffic from around the world increases.
The Strategic Group predicts that the number of Internet subscribers in the
Pacific Rim alone will triple over the next five years. Internationally focused
sites clearly need an effective alternative to sending IP data over standard
phone lines.
Above the cloud
Digital Island (www.digisle.net) offers a solution for businesses that want to
offer high-bandwidth Web applications to an international customer base.
Mr. Higgins founded the Honolulu-based startup in 1995 with funding from
Vanguard Venture Partners and Crosspoint Venture Partners; it currently
has a staff of 12. As Mr. Higgins explains, Digital Island's Virtual Server
Distribution service provides "nonstop intercontinental transport of IP data
without passing through the continental U.S. Internet cloud." To do this, the
company contracted to purchase lines from major carriers and built its own
network of T1 and faster data circuits that terminate at local ISPs in various
international markets.
Mr. Higgins uses the example of a multinational corporation based in Tokyo
to explain Digital Island's service. "Where should the company host its Web
site?" he asks. "If they put it in Tokyo, none of the rest of the world will be
able to get to it because of oversubscribed circuits between Tokyo and the
United States. If they put it in the United States, they've got a reverse
problem because nobody in Tokyo or Europe will be able to get to it. But if
they put it at Digital Island, they've got direct connections into nearly every
market in the world. The net effect of the service is that the information on
our servers in Honolulu appears local in every market where we have a point
of presence."
For a multinational like Cisco, having Digital Island host the international
versions of its site makes sense. Mr. Thorman says that Cisco sells about 55
percent of its networking products to customers outside the United States.
Conceivably, a similar percentage of commerce and savings generated by
the Cisco Connection Online site could come from international traffic if the
site were easy enough to access. Cisco began working with Digital Island in
November 1996; Mark Tonnesen, director of information services for
Cisco, says that he is impressed by the centralization and built-in service
agreement that Digital Island offers.
So far, Cisco is the only company that has ventured forth to test Digital
Island's service. But Mr. Higgins claims that his company offers some unique
capabilities for multinationals: because Digital Island controls the network
end to end, it can reserve bandwidth for its customers to use for special
applications like videoconferencing, multicasting, and Internet gaming. The
company also provides something called IP tunnel encryption, which lets a
multinational collapse its corporate WAN into a secure network that runs
over the Internet. With this model, Mr. Higgins says, "you have to pay for
the security only for the length of time you're doing a transaction." Mr.
Tonnesen says that Cisco hasn't deployed this particular feature yet but plans
to use it soon.
Digital Island's location in Hawaii provides another advantage for global
Web site hosting. By being on the perimeter of the U.S. telecommunications
network, the company has access to all the U.S.-funded fiber-optic
deployment in the Pacific without having to get tangled up in the crowded
continental U.S. network. This in turn reduces latency in Internet traffic. "On
average, we're three to six times faster than going through the standard
public Internet," says Mr. Higgins. "And these are early results, which will
improve."
Digital Island's Virtual Server Distribution is targeted at high-end corporate
customers with sophisticated IP applications running on their sites.
Accordingly, the pricing structure is based on how much bandwidth the
companies need to reserve and in how many countries they want to provide
access. Digital Island will segment the markets individually for each
customer, allowing businesses to market their sites worldwide or to a few
specific countries.
Finally, since Digital Island can track the country where the Internet traffic
originates, it can serve requested Web pages in a specific language. Mr.
Thorman points to this feature as one of several ways in which Digital Island
adds value to its hosting service.
Mirror, mirror
Certainly, Digital Island doesn't provide the only solution to the problem of
oversubscribed lines. Businesses have been trying to resolve this issue on
their own by deploying many servers in remote locations around the world, a
method that Mr. Higgins argues is more expensive and "neither as scalable
nor as manageable as our service." Mr. Tonnesen agrees, explaining that
companies must contract with a local ISP when setting up mirror sites
abroad and that getting any feedback about the site from the ISP can be
difficult. Also, mirroring a site in another country limits companies to setting
up one international site at a time, whereas Digital Island can launch a site
simultaneously in as many countries as it has points of presence, or POPs.
Mr. Winther of IDC/Link believes that Digital Island offers an interesting
proposition for international traffic on the Web. "They built their network
from the ground up, regardless of the NAPs. And because it's one network,
they control it, and it becomes a smoother way of offering a seamless global
perspective." The question, according to Mr. Winther, is whether Digital
Island can get big quickly; the answer depends on how many POPs the
company can deploy. Its list of POPs now includes Cambridge,
Massachusetts; Hong Kong; London; Palo Alto; Paris; Seoul; Sydney; and
Tokyo. Mr. Higgins anticipates expanding the network this year to include
Berlin, Moscow, Pretoria, São Paulo, Singapore, and Tel Aviv. So far, Mr.
Tonnesen says, Digital Island has met the dates it set for the top ten POPs
that Cisco requested, and he sees no reason that its track record should
change.
Mr. Tonnesen concludes that there is little technological risk for Cisco in
having Digital Island serve the international versions of its Web site.
Admittedly, he is confident in part because Digital Island uses Cisco
products to run its network. But Mr. Thorman knows that working with
startup vendors can be risky. "Digital Island is clearly a small company, and
they'll have to perform to keep Cisco as a customer," he says. "But we think
they have a good business proposition that adds value beyond simply
providing the network. Our belief is that as long as they'll work with us, we
can work with small vendors like them."
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