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Technology Stocks : Nortel Networks (NT)
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To: The Phoenix who wrote (9415)1/24/2001 12:12:05 PM
From: Kenneth E. Phillipps  Read Replies (1) of 14638
 
FIBER BARONS FEAR CAPACITY GLUT

Fear of a bandwidth glut and an impending consolidation were the major
concerns of international telecom executives at the Pacific
Telecommunications Council's annual show in Honolulu this week.

Executives from global submarine cable operators expressed fears that
there was excessive capacity coming on the market and that industry risk
had become unacceptably high.

Leading the concern was Level 3 International CEO Colin Williams who
warned a forum of several hundred industry executives that they did "not
have a way to understand how demand is going."

"We're going to have the same issues as the railway industry - we have
significant over-capacity", he warned.

Level 3 had recently been trying to minimize its risk by working in joint
ventures with other operators for major terabit cables including FLAG and
Global Crossing. But Cable & Wireless' announcement earlier this month of
a new multi-terabit cable across the Atlantic, Apollo, had "blown my
thinking away", he said. Other carrier executives also fear a glut. Telstra
managing director, global wholesale business John Hibbard said he
estimated that there was only 100 gigabits of utilized capacity on current
submarine cables. "When you look at the six and eight terabit cables
coming on the market, one wonders how sort of growth you need to get
fills on these cables", he said.

But other executives said that while there may be a temporary over-supply,
burgeoning bandwidth demand would ensure that new cables were
eventually filled. Tycom director, strategic information Andy Kowalik said his
company's data showed that supply would actually trail demand on the
trans-Pacific route. But he acknowledged that with ten major players on
the trans-Atlantic route, capital markets would "pressure the viability of
weaker carriers."

americasnetwork.com
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