Buyer consortium targets trans-Atlantic capacity purchase

According to TeleGeography's Bandwidth Pricing Report, a consortium consisting of major European and North American carriers is rumoured to be seeking to make a bulk trans-Atlantic capacity purchase by the end of 2005. This consortium is requesting detailed information from trans-Atlantic submarine cable operators about their network architectures, operating and maintenance costs, and future costs of upgrade. With an anticipated combined requirement of more than 1 Tbps of capacity over the next three years, this move aims to lock in current market prices with long-term IRU purchases and provide these carriers with a hedge against possible future price increases. Likely respondents to this request include Apollo, FLAG (FA-1), Hibernia Atlantic, and VSNL (Tyco Trans-Atlantic). Each system not only has existing lit inventory but also plenty of spare upgradeable capacity.

This rumored mass capacity purchase clearly would be the most important event to occur in the trans-Atlantic submarine cable market in recent years. The response to this proposal will likely help determine which cable systems survive and which cables could potentially be forced into bankruptcy or perhaps even shut down. Carriers with trans-Atlantic capacity and investors with interest in the sector should monitor this situation closely. Anticipated levels of trans-Atlantic demand, as well as current and historical trans-Atlantic bandwidth pricing data, are available in TeleGeography's International Bandwidth report and International Bandwidth Pricing Database. For more information on either of these products, please visit our website at www.telegeography.com.