On September 21, 2007, Communications Day reported that Google is heading up a consortium of telecom companies that is working on a trans-Pacific undersea cable, called “Unity.” Google is joining a crowded field of telecom companies seeking to build new cables across the Pacific.

Trans-Pacific bandwidth demand has soared in recent years, due to the rapid growth of the Internet. New data from TeleGeography’s Global Internet Geography research service show that trans-Pacific Internet traffic increased 41 percent between mid-2006 and mid-2007.

Existing trans-Pacific cables provide 3.3 Tbps of lit capacity. To meet growing demand, carriers are upgrading existing cables such as Pacific Crossing-1 and the Japan-US Cable system. In addition, two new cables, Trans-Pacific Express and the Asia America Gateway, are under construction and should be complete in 2008. The cumulative effect of these upgrades and new cables will be to boost lit trans-Pacific submarine cable capacity by 120 percent to 7.2 Tbps by the end of 2008.

Even greater capacity increases may be on the horizon. In addition to the Google-led Unity consortium, Asia Netcom and FLAG Telecom are also planning trans-Pacific submarine cables, though no contracts have been awarded yet for the construction of these cables.

Although trans-Pacific bandwidth prices fell sharply during the wholesale market downturn in the early 2000s, the lease price of a 10 Gbps wavelength circuit across the Pacific is more than 10 times greater than comparable capacity across the Atlantic. According to TeleGeography analyst Alan Mauldin, “In the face of so many new cables, the trans-Pacific market is in danger of a price collapse similar to that which has plagued trans-Atlantic cable operators.”

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The number of US consumer VoIP subscribers soared from 6.5 million in mid-2006 to 11.8 million by the 2nd quarter of 2007, according to TeleGeography’s US VoIP Research Service. While the growth of network-independent providers like Vonage has slowed sharply, cable companies’ rapid voice subscriber gains have more than made up the difference. TeleGeography projects that the number of US VoIP subscribers will rise to 23.3 million by 2011, driven chiefly by the strong growth of cable providers’ IP telephony offerings.

Nevertheless, US VoIP subscriber growth is falling well behind the blistering pace set by European VoIP service providers. Both markets experienced similar growth patterns over the first few years of development, but began to diverge in 2006. Several factors help account for Europe’s much more rapid VoIP service growth, including freer access to incumbents’ local copper loops, more aggressive competition and pricing, and the active participation of incumbent operators such as France Telecom, Deutsche Telekom and BT in the VoIP market. In Europe, incumbent service providers accounted for 26%of VoIP subscribers, while in the US, AT&T, Verizon and Qwest have remained largely on the sidelines. If these factors remain in place, TeleGeography projects that by 2011, VoIP penetration in Europe will be approximately twice as great as in the US.

‘VoIP service in the US has emerged as a mainstream service that is causing traditional service providers some headaches,’ commented TeleGeography analyst Stephan Beckert. ‘However, in Europe, VoIP could fundamentally change the structure of the fixed-line market.’

TeleGeography’s US and European VoIP research services provide in-depth data and market analysis of the US and European consumer voice over IP markets, including market shares, growth rates, forecasts, and profiles of leading providers.

To download the executive summary of TeleGeography’s US VoIP, please visit: http://www.telegeography.com/products/voip/index.php

To download the executive summary of TeleGeography’s EuroVoIP, please visit http://www.telegeography.com/products/euro_voip/index.php