This year is turning out to be a good year for submarine cable providers, with demand greater than anticipated and bandwidth prices stabilizing and even rising on some routes, according to Bill Barney, president and CEO of Asia Netcom.
'We're finally getting a match between supply and demand,' he said at a media and analyst briefing yesterday, one of the first since the announcement earlier this month that China Netcom was selling the company to a British-US investment consortium.
Barney believes that demand for undersea cable capacity will continue to grow, fuelled by more sophisticated applications such as IPTV and greater activity in key markets such as China, India and Japan. 'We are confident that this is the upturn the industry has been waiting for,' he said.
Chris van Zinnicq Bergmann, Asia Netcom managing director for Southeast Asia and India, noted that carriers were also looking to lease much larger links than in the past, with some now looking to STM-16s (2.488 Gbps). He said that on some routes demand was up 40% to 50% in the first half of this year.
This is consistent with a report in April this year from Telegeography that the global bandwidth market is showing signs of improved health.
The growing demand is also leading to capacity upgrades. Yesterday Asia Netcom announced that it has signed an agreement with NEC to double the capacity on the southern segment of its pan-Asian system, EAC. The upgrade on the EAC2 ring that spans Hong Kong, Singapore, the Philippines and Taiwan will raise its capacity to 160 Gbps.
It will be Asia Netcom's third incremental capacity upgrade this year, with earlier upgrades doubling capacity on the northern segment of the EAC system. 'It looks like it will be upgrade after upgrade,' Bergmann commented on the outlook for bandwidth.
Meanwhile a 350-km extension to a landing station in Qingdao, China will be connected on Tuesday and in service by September, according to Barney.
The new link will provide extra capacity between China, North Asia and the US and will connect directly to China Netcom's national fiber backbone. According to Asia Netcomm, the new link will provide 20% to 40% better performance between cities in northern China and the US and other Asian markets compared to its existing route through Hong Kong.