Undersea cable operators eye Asian bandwidth boom

With predictions of a future shortage in bandwidth combined with the recent high-profile breakdown in a major regional undersea fibre-optic cable, Asia’s telecommunications infrastructure has come under the spotlight like never before.

A report released earlier in December by the Geneva-based International Telecommunication Union (ITU), provided ample evidence that the Internet party in Asia has only just begun. Already, said the ITU, five of the world’s top ten Internet markets, in terms of user base, are in Asia. In the region generally, however, Internet penetration is still low – leaving plenty of room for expansion.

Undersea cable operators are rushing to meet this anticipated growth in demand with new high-capacity cables. As they begin to come online, they will provide massive boosts to the region’s infrastructure.

Earlier this month, for example, Level 3 Communications Inc. landed a new undersea cable in Hong Kong. The “Tiger” cable connects Hong Kong with Japan and, when it starts carrying commercial traffic in the first quarter of 2001, will overnight increase eightfold the amount of international bandwidth heading into Hong Kong. The cable’s capacity, initially at 320G bps (bits per second), can be increased by a factor of eight to as high as 2.56T bps should bandwidth demands continue rising, Level 3 said.

This kind of massive bandwidth boost is what many Asia countries are likely to experience as a host of planned cables come online. These cables are all promising capacity in the 640G bps to 2.56T bps range – significantly higher than today’s cables, some of which have maximum capacity as small as 10G bps.

Cables connecting specific countries in the region are being planned, and undersea cables running into Asia from the U.S. are also linking a number of East Asian countries. Examples include the Level 3 Tiger cable and a new Japan-Australia cable that will provide a much faster path for Australasian traffic to Japan and then on to the United States across the Pacific.

Within the region too, new cable networks are under construction to help better carry traffic within Asia. At present much of this traffic flows across the Pacific to the United States where it is turned around and sent back to Asia. A lack of intra-regional connectivity has led to this cumbersome traffic pattern, but new systems, like the APCN 2 and East Asia Crossing cables, both of which will connect Japan, Korea, China, Taiwan, Hong Kong, Philippines, Malaysia and Singapore, are expected to keep more of the traffic within the region.

With this explosion of bandwidth, some worry that already falling prices will be pushed down lower and some of the systems will become economically unfeasible.

“The Internet penetration explosion (in Asia) is yet to come and therefore the bandwidth explosion is yet to come,” said Ross Bernard Lau, president of international operations at Qwest Communications International Inc. In addition to the coming rapid rise in capacity needs, Lau also suspects some of the announced projects will not go through and so the eventual capacity available in the region will be lower than is currently forecast.

“I really don’t perceive that there is a glut because what I think will happen is, these systems will be built, the cost of bandwidth will start tumbling down and the Internet explosion will fill the pipes,” Lau said.

Prices are already dropping and have been for some time.

“If we look at the Atlantic situation, where everything is happening at present, Internet traffic is being exchanged between the U.S. and U.K. and pricing is very cheap,” said Toshio Nakanishi, sales director of FLAG Telecom Japan Ltd., a unit of FLAG Telecom Holdings Ltd., which operates the FLAG (Fiber Link Around the Globe) cable.

“Price erosion is 20 to 30 percent per year so in 2002 prices will be half of what they are today,” Nakanishi said.

But it’s not all bad news for cable operators. Although they would supply no fixed figures, industry executives confirmed that the cables break even with less than half of the capacity sold. A larger source of worry for the executives is the potentially catastrophic effects that man-made disasters and the natural elements might have on their cables.

This was demonstrated in the break of an undersea cable off the coast of Singapore in November. The SEA-ME-WE 3 cable, a 39,0000-kilometer cable that touches down in 34 countries as it runs from Europe, through the Middle East to South East Asia and Australia, was severed – probably by a ship’s anchor or a sand dredge – and was offline for more than a week. The problem disrupted communications, especially Internet traffic, in the region, particularly to and from Australia.

Telstra Corp., Australia’s largest ISP (Internet service provider), lost around half of its entire international Internet bandwidth because of the problem.

“The major headache for people in laying these cable systems is not the technology but it’s the environment conditions more than anything,” said Qwest’s Lau. Many undersea cables in Asia have to be laid in seismically active areas.

Nowadays, however, cable operators often lay two cables along different paths between points on the network so a backup exists if one cable has a problem.

“For example, if you terminate on a landing position where there is a lot of fishing, you can have two (cables) in and two out. If one leg is cut, you can restore services on the other,” Lau said. “More generally now, cables are not being laid like the old cables, which is from point A to point B, but they are being laid in a ring structure and if one leg of a ring is cut, you just switch traffic (to the other leg).”

Similar to other industries, a headache for cable builders is access to the China market and particularly getting a cheap connection from the landing station at the coast into a nearby major city and the national backbone – a so-called backhaul circuit.

FLAG Telecom is planning a new North Asia cable for 2001 that will connect Japan, South Korea, Taiwan, Hong Kong and China, although the backhaul circuit in China remains a sticking point, said Nakanishi.

“The difficulty is Mainland China. The monopoly carrier is China Telecom so we have difficulty in getting reasonable access charges from the landing station to backhaul traffic to the cities,” Nakanishi said.

China’s entry into the World Trade Organization (WTO) may help that – the country is drawing up regulations that will permit foreign carriers to enter the domestic telecommunications market and, the foreigners hope, offer competitive services in China.