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Rising Tide of Subsea Cable Providers
Undersea cable companies run silent, run deep at Telecom 99
Kate Gerwig
The undersea cable industry has been underground so far at Telecom 99, but several companies are
expected to surface in the next few days.
One of the newest players in the subsea world is Pangea Ltd. (Hamilton, Bermuda), a company that
grew out of a business school project created by four Georgetown University students. Poised at the
base of the escalator leading to Hall 1 at Palexpo, Pangea is banking its business plan on the vast
amounts of Internet traffic in Scandinavian countries and the dearth of undersea cable linking
Scandinavia to Northern Europe.
Pangea this week announced plans to build a $400 million regional undersea and terrestrial cable
system, which will link Amsterdam, Copenhagen, Dusseldorf, Goteborg, Hamburg, Helsinki,
London, Malmo, Oslo and Stockholm. Pangea anticipates putting its Scandinavian network into
commercial service December 2000.
"We think Scandinavia is underserved even though the region generates large amounts of Internet
traffic," Pangea vice president of marketing and sales Stephen Lovas said at Telecom99. Pangea
will build other regional networks, but Lovas did not disclose locations.
Pangea selected Alcatel Submarine Networks to lay the cable that will use dense wavelength
division multiplexing (DWDM) and resell capacity ranging from STM-1s to 10 Gbit/s to ISPs and
other service providers.
Several other undersea cable projects have been announced in the last six months, although the
vast majority are intended for transatlantic or Pacific routes. The amount of undersea cable on the
drawing board from providers including MCI WorldCom, Global Center, Project Oxygen and
GlobeNet, to name a few, raises the issue of whether the industry could be facing an undersea
capacity glut in a few years.
The answer depends on factors that include the amount of financing available for new systems,
whether capacity on undersea DWDM systems can be increased after they're in place and whether
new bandwidth-eating applications are developed to fill up the wavelengths.
"Undersea cable hasn't been a primary topic at the show, but it's picking up," says independent
telecom industry consultant Audrey Mandela. "If all of the proposed networks are actually built, it's
possible we maybe have a glut in about five years."
But announcing plans to build an undersea cable and actually doing it are two different things.
The financial community is brutally efficient in how it allocate capital, Brian Thompson, chairman
and CEO of Global TeleSystems Group Inc. (GTS, New York) said Tuesday. "If there is a system
that will not be going into a good return on investment position, they'll just deny them the financing."
GTS and undersea cable builder FLAG Telecom Ltd. (Hamilton, Bermuda) will announce plans
tomorrow that they will double capacity on their planned $1.2 billion FLAG Atlantic 1 undersea
cable. Throughput will be 2.4 Tbit/s on each of its two transatlantic links. FLAG Atlantic 1 will
bypass the beaches and connect directly to terrestrial networks in London, Paris and New York.
The cable is expected to begin carrying traffic in early 2001.
Even before Alcatel Submarine Networks starts laying the first cable, half of the capacity on
Flag-Atlantic 1 has been sold to service providers that include AT&T UK, Singapore Telecom,
Telecom Malaysia and Teleglobe (Montreal, Canada). Teleglobe is expected to announce this week
its plans to expand its undersea cable capacity from the U.S. to Europe and possibly Asia.
Separate from its 50/50 partnership to build the undersea cable with Flag Telecom, GTS plans to
purchase two of the fiber cables so it will own 400 Gbit/s of fully protected capacity from New York
into its trans-European fiber network. As part of the new trend in undersea fiber, Global Crossing
Ltd. (Hamilton, Bermuda) also plans to take its new undersea cable directly into cities on its
terrestrial network.
Using up capacity also depends on the bandwidth-needs of new applications. "Vendors who are
working to fatten up applications like video to fill up that capacity. Once that happens, it's likely
those pipes will get filled right up," Mandela said.
"The real question is how quickly does the technology change, and how rapidly does the demand for
capacity change," GTS's Thompson says. "That depends on whether the prices of the stuff that's
going over those cables can generate increased volumes."
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