Wholesale/transport services

Carriers Boost Transpacific Links

With capacity prices plummeting and a massive wave of high-speed broadband users coming online, Asian carriers have embarked on a fresh round of subsea cable build-outs and are in active discussions about building a new transpacific network.

NTT Communications Corp. (NYSE: NTT) has boosted its transpacific capacity to 600 Gbit/s and more than doubled the size of its PC-1 cable, while NEC Corp. (Tokyo: 6701) has been contracted to build and maintain the intra-region Asia Pacific Gateway (APG) cable that was first announced in 2009. (See NTT Touts Record Transpacific Growth, Asia Pacific Gateway Networks Uses 40G, NEC Wins APG Deal and NTT Splashes on Subsea Assets.)

Earlier in 2011 Pacnet expanded its EAC Pacific Cable, which accounts for two of the five cable pairs on the Google (Nasdaq: GOOG)-backed Unity system. (See Google Builds Undersea Cable.)

Ironically, it was the debut of Unity in April 2010 that accelerated the decline in Asia/Pacific long-haul bandwidth prices. (See Unity Cable Ready for Service.)

Transpacific prices dropped 50 percent in 2011, mainly because of the arrival of Unity, according to Byron Clatterbuck, president of global carrier solutions at Tata Communications Ltd. .

Many of the Unity shareholders -- such as Google, Pacnet and Global Transit -- lacked a large natural market and "were competing with each other" to find buyers, says Clatterbuck.

By contrast, the three-year-old Trans-Pacific Express (TPE) cable hasn't disrupted the market because its lead investors, such as China Telecom Corp. Ltd. (NYSE: CHA), China Unicom Ltd. (NYSE: CHU), KT Corp. and Verizon Enterprise Solutions were themselves also customers. (See TPE Cable Adds Japan Link and China Telecom Touts TPE.)

Clatterbuck expects prices to stabilize in 2012. "If you are an investor in Unity, you are probably saying, 'We are going to have to slow down [the price erosion]'."

But he believes the lower prices and the rapid rollout of broadband fiber networks in north-east Asia will drive more cable builds. "It’s just a matter of when that is going to happen," says the Tata Comms man. (See China Flexes Its FTTx Muscle.)

The biggest of the cables now being planned is a new U.S.-China system to replace the 12-year-old China-U.S. Cable Network (CUCN). Eric Handa, co-founder of international voice services specialist APTelecom , says CUCN has reached the end of its upgrade capacity and will probably be decommissioned in the next three to five years.

He notes that TPE is "a fairly successful system," but "alone can't do all the work that China needs. Our understanding is that there are active discussions going on right now between China and American operators," he tells Light Reading.

While nothing has been signed, the carriers are aiming for launch in late 2013 or early 2014 and can be confident of support for a new transpacific link. Handa says the CUCN had "strong support from all operators. I'd expect the same for the system that replaces it."

For the first time, China Mobile Ltd. (NYSE: CHL) is keen to join the cable club. Until now only China's fixed-line players, China Telecom and China Unicom, have invested in subsea capacity. China Mobile's interest is obviously driven by the skyrocketing demand for mobile Internet bandwidth and the impending introduction of LTE services.

"China Mobile seems to be taking a leading position on wanting to build the next transpacific cable," says Handa. "They’re looking at building their own system in conjunction with the other two operators."

Clatterbuck agrees the Chinese operators are seeking a new transpacific cable, although as the major users of CUCN they are reluctant to shut it down.

The main obstacle facing the new cable development is reaching an agreement on where to land the cable. In China, landings are controlled by the Ministry for Industry and Information Technology (MIIT) and each of the main operators, including China Mobile, would be lobbying for its own site.

On the U.S. west coast, environmental laws make it almost impossible to build a new landing station. The TPE and Unity cables used existing piping to land in Los Angeles and Oregon respectively.

— Robert Clark, freelance editor, special to Light Reading

AESerm 12/5/2012 | 5:46:42 PM
re: Carriers Boost Transpacific Links

Any word apart from the APG announcement of 12/21 on whether 40G is becoming a fit for undersea deployments?

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