Project Oxygen to get potential $1.4 billion from carriers

By GRACE F. MURPHY

More than 30 telecommunications carriers have signed agreements to put up $1.4 billion in possible funding for the construction of a global fiber-optic network called Project Oxygen.

ctr Group Ltd., a Woodcliff Lake, NJ-based company, hosted a December meeting in Las Vegas to present carriers with the company`s business plan and strategy for the 320,000-km network. More than 300 carriers from 150 countries attended.

The proposed network would have 265 landing points in 171 countries. The group expects to deploy eight wavelengths to achieve a 10-Mbit/sec pipe and have four fiber pairs for a total of 320 Gbits/sec minimum, according to Neil Tagere, chairman and chief executive of ctr.

The 30 carriers that signed memoranda of understanding (mous) indicated they are ready to proceed with planning of the network. Signing of a construction and maintenance agreement was scheduled for December 1, 1998. The $1.4 billion from the mous represents 10% of the estimated total cost of the project.

ctr expects the first phase of the project to become operational in 2000; the entire network should be completed in 2003. At the meeting, ctr announced an award of $125 million for the project`s marine survey. The contract will be divided between Fugro NV of the Netherlands and Science Applications International Corp. of San Diego, CA.

The network will have 38 loops, rather than a point-to-point topology. Loop construction and activation will depend on which carriers sign up first, Tagere says. Carriers will purchase capacity on the network, with ownership proportional to investment. The price of capacity is based on the revenues of each carrier.

ctr has established seven ownership levels, according to John N. Kessler, president of Newport, RI-based Kessler Marketing Intelligence Corp. Starting costs for a tier-1 international carrier (one with more than $2 billion in revenue annually) would be $45 million per year for six years for 320 Gbits/sec of bandwidth access. Tier-7 carriers, with international revenues of up to $50 million, will pay $2.5 million per year for six years for 10 Gbits/sec of access. The price averages $1 million per gigabit per second, or $2000 per 2 Mbits/sec, for 25-year use, according to ctr.

Tagere says that carriers will buy access to the network at terminal stations. "Once they decide how much bandwidth they want, then they can use that bandwidth to go to every other location, and they can change the volume and the direction of the traffic at their discretion," he says.

Kessler says the project is unique in proposed length, capacity, and scope. If supported by international carriers, the network could make an "enormous" difference in the way international traffic is handled, he says.

"International carriers that become owners of this network won`t have to pay any transit fees to go worldwide. And, all international carriers on Oxygen will have a vote--they`ll essentially be owners with irus [indefeasible rights of use], deciding on the future of the network. Another thing that makes Oxygen unique is the proposal for worldwide repair and maintenance," he says. Approximately 60 cable-maintenance ships will be devoted to the Oxygen network.

Tagere says one goal of the meeting was to stress the benefits of Oxygen for carriers. These advantages include the interoperability of the system, the flexibility of being able to change the volume and direction of traffic, and the connectivity with 171 countries. "On the input side, we can take pdh [Plesiochronous Digital Hierarchy], sdh [Synchronous Digital Hierarchy], atm [Asynchronous Transfer Mode], or IP [Internet protocol], and on the output side, it`s all atm."

Pekka Tarjanne, secretary general of the International Telecommunication Union, was the keynote speaker for the meeting. According to a ctr statement, Tarjanne noted that the move from demand-led to supply-driven business models means that the time is right for entrepreneurial infrastructure projects such as Oxygen.

ctr has yet to award a contract to system integrators and is working to sell the remaining capacity. Other tasks remaining include awarding contracts for the manufacture of cable and equipment, and acquiring licenses from countries with landing points, Tagere says. He says that when carriers sign up, they agree to work on ctr`s behalf to get the licenses in their respective countries.

The network plans to deliver full-motion videoconferencing, real-time international cable TV, full-motion video-on-demand, and such multimedia applications as remote medical diagnosis and distance-learning (see Lightwave, October 1997, page 1). Tagere says these services are included in the project to attract carriers that want to remain competitive with other technologies.

"Their current revenue sources are going to be under tremendous price pressure, so we introduced new applications, such as video, which we believe all carriers would need to increase their revenues," Tagere says. q