gst telecomm
icgx in about a month
nettel which nortel will announce in the 4th quarter a loss of 100 million
psinet on the verge
biggest in europe filed
MORE EVIDENCE OF THE GLUT FROM EUROPE
My view the long haul fiber market is done,finished.
The easy pickings by nortel are long gone.This article to me nails the coffin on long haul gear.Which i understand was nortels forte.
So much for the mania.17 systems from zero 3 years ago!!
MAMMA MIA IT AINT PRETTY
October 30, 2000, Issue: 521
Section: WORLDVIEW
Oversupply and Demand
GRAHAM FINNIE
The bankrupting of one of Europe's most innovative bandwidth providers, Iaxis,
is a wake-up call for the Continent's long-distance facilities owners and
bandwidth providers. For many, the big question is: Who's next? It wasn't
supposed to be this way. Back in 1998, when plans for the first European fiber
networks were being hatched, entrants took a visionary position. Users were
desperate for bandwidth, it was said. All you had to do was get the fiber in the
ground and light the wavelengths, and demand would take care of itself. Up to a
point, they were right. Over the past two years, growth in European Internet
penetration has greatly outstripped U.S. growth. Between 1999 to 2001, The
Yankee Group anticipates a near-doubling in European household PC-based
Internet penetration. The Internet should generate more traffic in Europe than
the United States by about 2002.
Free or very low-cost Internet services have spread rapidly through Europe's
major countries, driving both connections and traffic per user. It's fair to assume
that traffic from the consumer Internet will at least double every year for the
next five years. Meanwhile, Europe is leading the development of applications
for both mobile devices and television.
So why are the long-distance operators struggling? Simply stated, more money
and technology were thrown at the long-distance network than it could really
absorb at once. Entrepreneurs learned what old hands have known all along:
Networks operate from end to end, not POP to POP, and the weakest link in
the chain defines the network's parameters.
Even if you count only pan-European network builders, 17 companies are either
selling bandwidth now or will be by January 2001. Compare that to the number
of pan-European networks just three years ago: zero. Nine of those 17 networks
are entirely new, consisting of 100 or more fibers each and, usually, several
spare ducts for future fiber pulls.
How much bandwidth is that? Europe's major routes probably have about 500
Gbit/s of lit capacity today-that is, fiber that has been equipped with DWDM
equipment and is actually operating. On major routes in Europe, user demand
exists for no more than about 50 Gbit/s. But if all the fiber laid by mid-2001
were to be lit, these routes would have around 1,000 Tbit/s of capacity-over
1,000 times as much as there is now. The fiber that's been laid and the DWDM
equipment that's been commissioned is unlikely ever to be fully utilized.
As a result, prices per transmitted bit continue to fall by at least 70 percent per
year. And while the price of lower-speed circuits has stabilized, there's no sign
that the price of the standard wholesale product, an STM-1 (155 Mbit/s), is
stabilizing at all.
What to do? Backbone network operators have several choices. They can push
harder into retail markets, especially the enterprise user market. They can offer
new kinds of services, such as colocation and server space, to existing carrier
customers. Or they can get closer to the ultimate customer by building
metropolitan and access networks.
However, selling in retail markets requires acquisition of a whole new skill set
that's in short supply. And it means competing with well-established operators
such as Equant. Colocation and server markets already have at least 20
pan-European providers vying for attention, prefiguring another tough
commodity market. Entering access and metro markets looks like the most
attractive of the three strategies, but it's also very expensive, full of regulatory
pitfalls and likely to take years.
The truth is that market conditions in the European long-distance market are
likely to remain difficult until some thinning out occurs on the supply side,
probably via consolidation. Expect those with the deepest pockets to survive.
Graham Finnie is a consultant to TeleGeography Inc. (Washington, D.C.) and
The Yankee Group Europe (Watford, U.K.). He can be reached at
graham@finnie.com.
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