Google gets its cable

26 Feb 2008

The Pacific Ocean is starting to get crowded as plans for the long-rumored ‘Unity’ undersea cable were unveiled today. The cable is being jointly financed by a consortium of six companies: five telecommunications companies, including major intra-Asian operator Pacnet, and Google. The consortium has selected Tyco Telecommunications and NEC to construct the USD300 million trans-Pacific cable, linking the U.S. and Japan.

The Unity Cable system is noteworthy for Google’s involvement. Google has long been rumoured to be seeking an ownership stake in a trans-Pacific cable. Trans-Pacific bandwidth costs are nearly eight times higher than trans-Atlantic circuits. Google’s investment in the Unity cable will allow the company to acquire a significant amount of trans-Pacific capacity at cost. Google has pursued a similar approach in the US, where it has purchased dark fiber from network operators, and lit the fiber itself.

‘While Google is the first non-telecom company to take an active role in ownership of a submarine cable, it’s not likely that this is the beginning of a new trend,’ commented TeleGeography Research Director Alan Mauldin. ‘Although many non-telecom companies have high bandwidth requirements, few will venture into owning submarine cables anytime soon.’

Rapidly growing trans-Pacific bandwidth requirements and the need for greater route diversity have spurred a wave of new cable construction projects. The Trans-Pacific Express Cable System (TPE) is due to enter service in August 2008 between the US and China, Taiwan and the Republic of Korea. The Asia-America Gateway Cable System will provide service between the US and several Southern Asian countries beginning in Q1 2009. A fourth new system, led by Reliance FLAG (formerly FLAG Telecom) is also planned.

These four new cable projects will more than double the potential capacity available across the Pacific (see Figure). In fact, with the addition of these planned cable systems, potential (lit plus unlit) capacity across the Pacific exceeds potential trans-Atlantic capacity. A trans-Atlantic cable construction boom in the late 1990s and early 2000s helped bring about a disastrous collapse of bandwidth prices that bankrupted several cable operators. TeleGeography remains optimistic that trans-Pacific bandwidth demand will remain sufficiently strong to prevent a similar price collapse in the Pacific, but cautions that this market bears scrutiny.

For further information please contact:

Stephan Beckert

sbeckert@telegeography.com

+1 (202) 741-0042

International,

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