There has been so much coverage lately of Google’s open mobile phone consortium that its other reported telecom obsession, a proposal to support several telecom carriers in the building of the Unity trans-Pacific submarine fiber cable, seemed all but forgotten.
Now, CommsDay is reporting that Google is one of the parties talking to Asia Netcom about supporting a trans-Pacific cable that company plans to build. It’s unclear what if anything is happening with the Unity cable.
As a buyer of massive amounts of capacity globally, Google has options, and some might suggest that its previous plans for the Unity cable were merely a stalking horse for it to convince the existing trans-Pacific cable route operators to offer it better pricing on bandwidth. But, if it becomes part of the newly reported Asia Netcom plan, perhaps it won’t take that route (pun intended) FierceTelecom.com recently talked to Alan Maudlin and Stephan Beckart, research directors at TeleGeography, about the trans-Pacific submarine cable market.
According to TeleGeography, trans-Pacific Internet traffic increased 41% between 2006 and 2007 alone. “There’s a need for new capacity, though it’s not that much a direct reflection of end user traffic,†said Beckart.
Much of the capacity right now is all on one cable, [the FLAG Telecom cable original built by Tyco Telecom, formerly AT&T Submarine Systems, but now owned by Indian carrier VSNL]. “People don’t want to be beholden to one supplier,†he said. Other existing cables include the Pacific Crossing Cable formerly owned by Global Crossing and a Japan-U.S. consortium cable. Traditionally, the trans-oceanic cables were run by consortia of companies. It wasn’t until the late 1990s that companies could raise their own money to fund new cable routes, Beckart said. Global Crossing was really the first successful privately-owned one in terms of how fast the capacity sold and what it sold for. In the early 2000s, the demand for economics and the demand for bandwidth changed.
“People are looking for a broad diversity of cables, which you can argue that you have now, but it’s really several cables and only one route from the U.S. to Japan,†Beckart said. “That’s how all the early ones were built before China became a factor, and Korea and Southeast Asia.â€
So, will the Unity cable happen at all? Maudlin doesn’t think so. He said that because Unity appeared to be a Google-led endeavor, it’s unlikely that the Unity cable would proceed if Google chooses to use or be part of another trans-Pacific cable route. Still, the trans-Pacific cable race was heating up before Google became interested.
“There were plenty of other cable plans in the works well before Google decided to head up Unity,†Maudlin said.
There are the two consortium cables that have supply contracts in place and are under construction:
1. Trans Pacific Express (TPE) – Companies involved include Verizon, China Telecom, China Unicom, China Netcom, Chunghwa and Korea Telecom
2. Asia America Gateway (AAG) – This is a large consortium including AT&T and “lots of Southeast Asian operators,†Maudlin said.
Plus, at least three other systems are being discussed:
1.FLAG Pacific – To be operated by existing trans-Pac cable operator FLAG Telecom. “There is no supply contract in place,†Maudlin said. “FLAG did award a contract to Fujitsu to build two other new cables but it only included an option for future construction of this cable.â€
2. EAC Pacific – A system proposed by Asia Netcom.
3. A new Japan-U.S. consortium cable. “[This is in the] very early discussion phase only as far as I know,†Maudlin said.
It sounds like a potentially crowded market, and cables can take 18 months to build. Could the competition lead to sharp pricing discounts? “I am not sure anyone is tying to hurry to a cable to market to avoid price declines,†Maudlin said. “Also, it's not just the number of cables in the market but the type of operators as well [private vs. consortium]. The introduction of consortium cables will have some impact on prices but not as much if there are multiple new prices systems built. Also you have new supply coming from upgrades to existing cables, too, not just new builds. It is possible that the existing cables could offer very competitive prices since they aren't focused on recouping construction costs like the new cables.â€
He continued, “The way the market stands now, you have VSNL's Trans-Pacific cable, Pacific Crossing and the Japan-US cable all adding capacity through upgrades in 2008. TPE enters service in mid/late 2008, then AAG in early 2009. There will already be some affect on price before any of the other cables get built. Overall, I think Google's ambitions here are just a small part of a bigger trans-Pacific cable boom. It will be interesting to see how this all plays out in terms of price erosion.â€
For more:
- Here’s the CommsDay report
Related articles:
- The Unity cable chatter was first reported in September
Now, CommsDay is reporting that Google is one of the parties talking to Asia Netcom about supporting a trans-Pacific cable that company plans to build. It’s unclear what if anything is happening with the Unity cable.
As a buyer of massive amounts of capacity globally, Google has options, and some might suggest that its previous plans for the Unity cable were merely a stalking horse for it to convince the existing trans-Pacific cable route operators to offer it better pricing on bandwidth. But, if it becomes part of the newly reported Asia Netcom plan, perhaps it won’t take that route (pun intended) FierceTelecom.com recently talked to Alan Maudlin and Stephan Beckart, research directors at TeleGeography, about the trans-Pacific submarine cable market.
According to TeleGeography, trans-Pacific Internet traffic increased 41% between 2006 and 2007 alone. “There’s a need for new capacity, though it’s not that much a direct reflection of end user traffic,†said Beckart.
Much of the capacity right now is all on one cable, [the FLAG Telecom cable original built by Tyco Telecom, formerly AT&T Submarine Systems, but now owned by Indian carrier VSNL]. “People don’t want to be beholden to one supplier,†he said. Other existing cables include the Pacific Crossing Cable formerly owned by Global Crossing and a Japan-U.S. consortium cable. Traditionally, the trans-oceanic cables were run by consortia of companies. It wasn’t until the late 1990s that companies could raise their own money to fund new cable routes, Beckart said. Global Crossing was really the first successful privately-owned one in terms of how fast the capacity sold and what it sold for. In the early 2000s, the demand for economics and the demand for bandwidth changed.
“People are looking for a broad diversity of cables, which you can argue that you have now, but it’s really several cables and only one route from the U.S. to Japan,†Beckart said. “That’s how all the early ones were built before China became a factor, and Korea and Southeast Asia.â€
So, will the Unity cable happen at all? Maudlin doesn’t think so. He said that because Unity appeared to be a Google-led endeavor, it’s unlikely that the Unity cable would proceed if Google chooses to use or be part of another trans-Pacific cable route. Still, the trans-Pacific cable race was heating up before Google became interested.
“There were plenty of other cable plans in the works well before Google decided to head up Unity,†Maudlin said.
There are the two consortium cables that have supply contracts in place and are under construction:
1. Trans Pacific Express (TPE) – Companies involved include Verizon, China Telecom, China Unicom, China Netcom, Chunghwa and Korea Telecom
2. Asia America Gateway (AAG) – This is a large consortium including AT&T and “lots of Southeast Asian operators,†Maudlin said.
Plus, at least three other systems are being discussed:
1.FLAG Pacific – To be operated by existing trans-Pac cable operator FLAG Telecom. “There is no supply contract in place,†Maudlin said. “FLAG did award a contract to Fujitsu to build two other new cables but it only included an option for future construction of this cable.â€
2. EAC Pacific – A system proposed by Asia Netcom.
3. A new Japan-U.S. consortium cable. “[This is in the] very early discussion phase only as far as I know,†Maudlin said.
It sounds like a potentially crowded market, and cables can take 18 months to build. Could the competition lead to sharp pricing discounts? “I am not sure anyone is tying to hurry to a cable to market to avoid price declines,†Maudlin said. “Also, it's not just the number of cables in the market but the type of operators as well [private vs. consortium]. The introduction of consortium cables will have some impact on prices but not as much if there are multiple new prices systems built. Also you have new supply coming from upgrades to existing cables, too, not just new builds. It is possible that the existing cables could offer very competitive prices since they aren't focused on recouping construction costs like the new cables.â€
He continued, “The way the market stands now, you have VSNL's Trans-Pacific cable, Pacific Crossing and the Japan-US cable all adding capacity through upgrades in 2008. TPE enters service in mid/late 2008, then AAG in early 2009. There will already be some affect on price before any of the other cables get built. Overall, I think Google's ambitions here are just a small part of a bigger trans-Pacific cable boom. It will be interesting to see how this all plays out in terms of price erosion.â€
For more:
- Here’s the CommsDay report
Related articles:
- The Unity cable chatter was first reported in September