Transpacific fiber projects combined
By ROBERT PEASE
In the fiercely competitive world of telecommunications, it may be a rare occasion when two or more carriers agree on any strategy. Recently, however, 11 global carriers decided that cooperation in procuring a transpacific cable system platform to showcase their individual products and services was the best technical and economical solution for remaining competitive.
The consortium, at a meeting last April in Honolulu, HI, announced plans to merge two previously announced transpacific systems. The two systems, at&t`s tpc-6 Cable Network and WorldCom`s Japan-U.S. Cable System, will be merged into a single entity to become the Japan-U.S. Cable Network, an undersea fiber-optic project that is completely carrier-owned and financed. This sets the network apart from other transpacific cable ventures, such as Pacific Crossing and Pacific Express, which are private cable systems built with the intention of leasing capacity to telecommunications carriers. The Japan-U.S. Cable Network is planned to begin operations in mid-year 2000.
Consortium member carriers involved in the new system`s planning include at&t, Cable & Wireless, gst Telecommunications, gte, Japan Telecom, kdd, mci, ntt-wn, pge, Sprint, and WorldCom. Two days after the initial announcement meeting, a meeting of potential investors was held to give carriers the opportunity to make initial capacity commitments to the project. At that time, carriers subscribed to 77% of the system`s total planned capacity.
At press time, other potential investors were determining their capacity commitments and working out the final details of their involvement in the project. Total commitments were fast approaching 100% of system capacity, sources say.
The Japan-U.S. Cable Network will consist of 21,000 route-km of optical-fiber pairs in a self-healing, open-ring configuration. A northern route will directly link mainland Japan and the United States, while a southern route will link Japan, Hawaii, and the continental United States. Landing points for the northern route are Kita-Ibaraki, Japan, and Point Arena, CA. The southern route will have landing points in Shima, Japan; Kahe Point, HI; and San Luis Obispo, CA. A third landing point in Japan is Maruyama, between the two routes. The system will initially operate at 2.5 Gbits/sec on each of 16 wavelengths per fiber pair. It will be expandable to 10 Gbits/sec, a capacity tentatively planned for around mid-2001. That equates to the ability to initially handle 967,680 simultaneous calls and, later, to handle more than seven million simultaneous calls.
The stakes are high for the consortium members to receive "initial party" status--upwards of $50.6 million--but, according to Patrick Estenes, vice president of gst International, there are certain benefits for the carrier.
"You can come in at higher or lower levels, but gaining initial status entitles you to become a member of the interim management committee, which oversees the activities of the interim procurement committee and the construction and maintenance agreement committee," says Estenes. "Typically, the carriers provide staff to those various committees to work the elements of the project...to draft up the construction and maintenance agreement by-laws, and the rules and regulations by which the system will be operated. It also oversees the technical aspect of the project under the interim procurement committee, where people are overseeing the development of the system specification and negotiations with the suppliers, as well as the actual implementation of the submarine contract itself."
At press time, no contracts had been completed in terms of equipment, contractors, or suppliers. However, a meeting was scheduled for the signing of a construction and maintenance agreement for this month. Discussions with the potential players have been ongoing.
The number of transpacific cables currently either planned or under construction may appear to indicate a capacity overload for the area, but Estenes believes the opposite is more likely the case--which explains why so many carriers are jumping on the bandwidth bandwagon.
"What`s happening is that there is already a significant shortage of capacity across the Pacific, being primarily driven by data," says Estenes. "While one project addressed the needs of China, Korea, and Japan into the United States and landed in Guam, it completely bypassed Hawaii. So it was felt by many carriers that there was enough need for capacity and route diversity to put another system which will now land at three cable stations in Japan, one in Hawaii, and two in the United States."
Most industry analysts agree there is definitely a lack of undersea fiber-optic capacity. Tom Soja, managing director of T. Soja and Associates, an analysis and consulting firm based in Brookline, MA, reiterates the mounting pressure data communications components are placing on carriers and other parties to accelerate their plans to build transpacific and transatlantic cable networks to meet capacity demand.
"There are virtually no large amounts of available transpacific capacity to speak of right now," says Soja. "At least not until the China-U.S. consortium cable gets up and running, planned for next year (see Lightwave, February 1998, page 1). New carriers coming into the business are having a tough time getting major carriers to part with their spare capacities. That`s where the opportunity exists for new consortium systems, such as the Japan-U.S. Cable Network, and private systems like Pacific Crossing, being constructed by Global Crossing Ltd."
While competition rules the telecommunications market due to diverse carrier companies with various capabilities, the consortium provides opportunities for cooperation among those same carriers in order to get the biggest return on investment.
"Nobody goes everywhere, as far as delivering capacity or services to various destinations," says Estenes. "That creates a need for people to get together to foot these large infrastructure bills, in excess of a billion dollars. No single company can do that on its own today."
That means the global carrier community will probably continue to work together. Given the size of the projects, it`s prudent to work together to find the means to provide these big bandwidth pipes across the Atlantic and Pacific, says Estenes. Other carriers seem to agree with him.
"Our companies compete in the services market, not on cable systems," says Rich Young, group manager for Sprint`s Submarine Cable Systems. "From my perspective and, I believe, that of my colleagues, we`re driven to provide the lowest unit cost for the best possible technical solution that will meet our companies` future needs in the global market. The best solution, in this case, was for two separate groups planning cable systems to merge into one carrier cable project."
Operation of the southern route is expected to begin by the first quarter of 2000, with the northern route and ring closure completed by second quarter 2000. q