Global Crossing to build Japanese terrestrial fiber network

Global Crossing to build Japanese terrestrial fiber network

By ROBERT PEASE

Global Crossing Ltd. (Hamilton, Bermuda) is teaming with Marubeni Corp. (Tokyo) to build a 1200-route-km terrestrial fiber-optic network in Japan. Forming a joint enterprise called Global Access Ltd. (GAL), the two companies will connect three of Japan?s major business centers to cities in the United States, Europe, and Latin America through Global Crossing?s planned transoceanic cable, Pacific Crossing (PC-1).

GAL is the second terrestrial network announced by Global Crossing, coming on the heels of the Pan European Crossing announcement last Fall (see Lightwave, November 1998, page 1). The Pan European, scheduled for completion in the fourth quarter of 1999 at a cost of about $700 million, will provide connectivity via Atlantic Crossing (AC-1) between 18 major business centers in Europe and about 25 U.S. cities.

Once GAL is completed and operational, which is scheduled to coincide with the lighting of PC-1, the Japanese cities of Tokyo, Osaka, and Nagoya will enjoy direct connections to all cities linked by PC-1, AC-1, and Pan European. Those three cities were chosen by Global Crossing for inclusion in the network because it was determined that 80% of the in-country and international telecommunications traffic in Japan was routed through them. All three will be connected to PC-1 via cable stations at Ajiqaura and Shima.

OWe?ll be providing one-stop shopping with world-class optics,O says Jack Scanlon, chief executive officer at Global Crossing. OFor example, we?ll be able to connect Tokyo directly to Frankfurt. We?re the only ones actually doing this on a global basis and that?s what?s so powerful about our global network.O

Scanlon points out that to route traffic from Frankfurt to Tokyo today, telecommunications customers must visit three or four different vendors to make the hop. Each one has its own price scale and different set of negotiations, and there is no real benefit from a volume global buy.

OFor instance, you?ve got the Atlantic club where you could buy a circuit from Hamburg to New York,O says Scanlon. OYou have Deutsche Telecom to get you from Frankfurt to Hamburg. Then you have to get somebody to get you across the U.S. to Los Angeles. Once there, you have to go to the Pacific club to get a circuit from the Los Angeles cable station to the one south of Tokyo. Finally, you?ll need to see NTT to get you the last 200 km into Japan. That?s five stops?and we?ll do it in one.O

Construction on the GAL network, with a cost of about $110 million, began in September 1998. Like the Pan European network, multiple fibers will be placed in the pipes and the latest in Synchronous Digital Hierarchy (SDH) and dense wavelength-division multiplexing technologies are planned for use, providing ultra-high capacity and speeds. The network design includes multiple rings, providing diverse routing options and restoration or redundancies among all points-of-presence on the network.

According to Scanlon, the final right-of-way contract has been negotiated with Ibaragi Kotsu Co. and Kashima Rinkai Railway Co. in Japan. GAL will have its own network operating center (NOC) in Tokyo that will be integrated into Global Crossing?s global NOC.

Vendors for the GAL network had not been selected at press time, but Scanlon expects to have the selection process completed by April 1999. OVendors are not the problem right now,O he says. OThey?re not our initial focus. Our first concern is the rights-of-way issue and that?s where our most recent focus has been.O

Global Crossing holds a 49% interest in GAL, while its partner, Marubeni, retains the remaining 51%. The two companies have been associated in the past through the PC-1 project, of which Marubeni is a partner. Unlike the other segments of the Global Crossing network that are totally owned by Global Crossing, PC-1 includes several partnerships with Japanese companies.

OWe own 57% of the cable for PC-1 while our Japanese partners, including Marubeni, own the rest,O says Scanlon. OWe did it that way because we felt it was important to have Japanese partners in order to assist us in gaining access rights more easily in Japan. Back then, we figured we could get to Japan, but connecting from the shores to the cities is where the business was.O

Scanlon characterizes Japan?s competitive environment for connectivity within the country as Overy difficult.O An extremely limited number of suppliers, coupled with very high prices, provide few options for Japanese customers to move their communications traffic from city to city.

OIt costs you more to go the last 200 km from the cable station in Shima to Tokyo than it does to get across the entire Pacific,O says Scanlon. OSo we decided to construct a network with Marubeni and be the low-cost guys for city-to-city connectivity.O

Areas with very high-capacity lease arrangements, such as Europe and Japan, provide incentives for building new networks. Global Crossing, now about halfway to realizing its 100-city goal, plans to take full advantage of whatever opportunities fit its worldwide telecommunications goal.

OSince we?re now halfway to our goal of 100 cities, you can expect us to make additional investments in the future, both undersea and terrestrial,O says Scanlon. OIf you rank some of the places of interest, South America hops up high on the scale, followed by the Mediterranean and Southeast Asia.O

Japan provided such an environment, with a huge growth in data and the growing need for global connectivity. OGlobal data is growing at an 85% growth rate between Japan and the U.S., compared to only 13% growth in voice traffic,O says Scanlon. OThat?s a Osix-times? difference, driven mainly by Internets, intranets, and e-commerce. And the globalization of the Internet is what?s driving Global Crossing.O

Revenues for GAL will come from the sale of backhaul circuits to Global Crossing. Global Crossing will then package those circuits in complete city-to-city offerings, such as Tokyo to Frankfurt, for sale to customers. GAL also has a revenue stream in which it sells directly into the Japanese market for Japanese intracity connectivity, such as Tokyo to Osaka.

While Pan European recently consummated a major dark fiber deal with Cable & Wireless in London, there are no plans for leasing dark fiber on the GAL network. Instead, GAL will offer circuit sales in various sizes for intra-Japan and global access. q

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