Researcher outlines carrier challenges in Asia/Pacific Rim

June 7, 2002--Probe Research says that the current state of the carrier market may be good news for several major carriers, including AT&T and Cable & Wireless. However, a decrease in the number of players may prove an obstacle in the Asia/Pacific region, opening the door for regional carriers.

Jun 7th, 2002

June 7, 2002--Probe Research (www.proberesearch.com) says that the current state of the carrier market may be good news for several major carriers, including AT&T and Cable & Wireless. However, a decrease in the number of players may prove an obstacle in the Asia/Pacific region, opening the door for regional carriers.

A series of missteps and mishaps in global and international carriage -- plus the worldwide economic downturn -- have unsettled the carrier market. These developments include the breakup of the Concert Communications global venture by former partners AT&T and BT and a large number of recent bankruptcy proceedings, including 360networks, FLAG Telecom, Global Crossing and, most recently, Williams Telecom.

Probe Research believes much of this may be good news for AT&T, Cable & Wireless, Equant, Infonet Services, and WorldCom as competition and price erosion could finally be curtailed and account control could be enhanced. In the Orient, however, Probe views the limited rivalries as having a dampening effect on carrier and enterprise customers, producing a malaise regarding telecom service growth and choice.

According to senior analyst Frank Barbetta, "The lack of a capacity glut ostensibly could keep regional and transpacific prices high -- relative at least to U.S., European and transatlantic conditions -- particularly if demand begins to approach or to exceed supply. The bankruptcies may also disrupt the existing interconnection, capacity and partnership agreements that are critical to international carriage expansion."

Under such conditions, local companies believe there is a leadership void in the Asia/Pacific region. Barbetta suggests that Reach, the PCCW-Telstra effort, may fill this perceived void and mobile operator-intensive Hutchison could become a bigger power broker. He also believes that if Metromedia Fiber Network's assets are on the block, they may be mildly helpful to a regional operator. TeleGlobe's modest assets could also be up for grabs due to parent company discontent, with their Asia/Pacific Rim network including interests in Australia-Japan, APCN-2, China-U.S., and Japan-U.S. undersea cable systems.

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