Hello Darleen,
I've posted quite a few articles in the past two or three days concerning f-o bandwidth deployments, ranging from residential networks (FTTH) to subsea systems. Since you referenced underwater systems, I assume yu are referring to the latter.
It's all a matter of proportions. One might think that all of the oceanic crossings going in will conflict with one another and at the same time create a glut. Nothing could be more distant from the truth.
Consider that prior to the past couple of years there might have been an outlet for transoceanic traffic (from North America to Europe, as a prime example) to satisfy only 1/100th of all capacity on either side of the pond. That's an arbitrary number that I'm using only to make this point.
Hence, rates were kept high on the crossing due to the classic supply-demand model.
Now we see that capacity is set to soar by several multiples in the underwater segments, so we assume that it is nearing free. But at the same time, the degree of terrestrial (overland) system capacity is soaring exponentially, many times faster and greater than the subsea counterpart.
In the latter respect, there is less capacity across the pond, as a percentage of total potential demand on both sides of the crossing, than there was before. Far less, no matter how many 8-strand subsea systems get placed on the ocean floor. And it will be increasingly thus, going forward. Simultaneously, demand is incrasing from other influences, as well, not only the placement of more fiber on the continents. Such as, burgeoning international e-commerce, deregging going on all over the world, and the by-now commonly accepted upward spiral in traffic being caused by Internet access takeup among all populaces around the globe.
And at the same time, pricing and availability of bandwidth on the overland systems is becoming more favorable, which drives the incentive to marry both sides of the pond with capacity that is like-priced, or at least more conducive to the same pricing range, to avoid a total disconnect, as we have had to live with in the past. In this regard we might see some cross-subsidization between service offerings from the larger players, or price shifting (and other accounting games), to smooth out the bumps in international offerings, when it suits the carriers' needs.
For this reason, and to address this dichotomy of sector offerings, the larger subsea players are looking to bring door to door capacity to their enterprise and carrier customers over their own facilities, on an end to end basis. In so doing they avoid dilution that would occur through multiple tiers of resale, and can present a more cogent pricing and SLA scheme to their customers.
The SLA part and single vendor accountability for each set of offerings subscribed to in international networking is very important. More so than most casual onlookers ever stop to consider. I'm not suggesting that one should only have one carrier.
Rather, the "A" Service in question -- even if it is duplicated by another carrier's "B" offering for load-sharing or backup purposes -- would ideally be managed by a single source. The same would apply to the provider of the "B" Service. But these are not commonplace today, and fragmentation among multinational networks still runs chaotic and rampant, despite what the glossies and powerpoints state.
For smaller customers who don't warrant door to door high capacity, I don't think that we will see true parity between overland and subsea capacity pricing, but there is the constant pressure in that direction due to the cheapening of bandwidth on land.
FAC |
