Teddy,
"If that be true, than the stated 5.1 Gb/s would equal 32.64 STM-1's, right?"
Yes, that is roughly what I stated, as well. But I don't trust that number 5.1 for reasons I've already stated. But we'll proceed with your approach, nonetheless.
"If we divide the $105 million by 32.64 we get $3,216,911.76 per STM-1.
I would expect some discount on a $105 mill purchase (and we think Exodus is a repeat customer too). The think i can't figure out is, why is the average price 3 times the price Barron's said?"
Don't know. What is the assumption in the Barrons article with respect to contract term? Annual? Fifteen year IRU? What?
There exists a number of variables which still need to be quantified and qualified before any benchmarks can be applied. Many of these may be contract specific, as would be the case in a constract that is drawn up on an individual case basis.
What is the term of this agreement? Does it stipulate part now, and part pledge or commitment over so many years for the remainder? Is GBLX providing total outsourcing for network management and administration for the entire term of the pact?
Another issue which makes extrapolation difficult is this: The mix of the capacities which were cited between the US Domestic part, the Underseas part across the pond, and the Overseas Terrestrial parts is too lumpy to be useful for seat of the pants analysis. It is impossible to apply a single multiplier (or to derive one in reverse, for that matter) or to even average out a number like 32+ STM-1's and treat them all equally.
While we're on the subject, STM-1 local loops are very expensive. Far more disproportionately expensive than those of the long haul parts. Has EXDS contracted GBLX to be an end-to-end provider, inclusive of all local loops both domestically and internationally, to be covered by the same price that was cited? Don't know, but if they are, then that would make a big difference.
I don't understand, or trust, Miller's numbers, by the way. Maybe that's because I read them out of context. But a drop from 12 Million in one year to just 1 Million the next year for an STM1 is something less than white noise to me. What is this price for, and upon what assumptions are these being quoted?
Was it for an IRU channel? If so, for how long? If not, then what... was it for annual rates? Monthly rates?The 12 Million sounded like it might be for an extended term IRU, and the 1 Milion for an annual rate. <??>
Let's get some perspective, here, and consider a domestic private line T3 and STM1 for a fifteen hundred mile span. If I chose to go with a LVLT or QWST (as opposed to one of the big 3) for a 1,500 mile T3 here in the states, I would expect to pay something like 25,000 per month if I committed for at least a year. [I would also expect to pay handsomely at each end for T3 loops from the ILECs as well.]
That's 300,000 per year plus the freight for local loops. The big threes are still up in the stratosphere on this, charging upwards of 35,000/mo (MCI) or 40,000+ (ATT), and close to a 500,000/annum, or more, for the privilege of riding over their fibers.
If I again used any of the newer domestic fiber carriers for an STM 1 (OC-3) for the same mileage, I would expect to be paying roughly 60,000/mo, or roughly 720,000/annum +/-. This assumes that I am a most favored customer, and that I sign up for a number of years.
After I'm done paying for my STM-1 ILEC local loops, the entire service could easily go beyond 850,000/annum with the newer carriers, or well over 1.25 Million with a Big Three.
I'm left to wonder, then, what the Million per was for that Miller cited for a transoceanic line. Don't know. It sounds like he's referring to annual rates, but for some reason that doesn't sit well with me, either.
"...can you give us an idea on the real going prices for trans Atlantic and Pacific circuits?"
I couldn't tell you what the published rates are... if there are any. These are big ticket items, as carrier offerings go, and the deals that are cut between carriers are often different in their very nature than those that are made with end users and others who are non-carriers. Swaps and other forms of settlements are often taken into account among carriers, being one reason for this.
In the few instances where I have been involved with International Broadband pipes over the past two years, there have been surreal (as much as 100% to 500%+) spreads on what might be quoted to different subscribing companies. And again, these differences are often traceable to different terms (SLAs, term, survivability, Customer Network Management, tail section circuit provisioning, etc.) that are agreed to up front.
Having said all of this to you, is it any wonder to you why I would have very little use for the Barrons article? If I can muster up anything that resembles rational pricing information in this space, I will post it. But I am not optimistic that anything that I can come up with will have widespread applicability. And this is in a way a sign of the immaturity of this market segment, as the startups go through their settling in periods, while water seeks its own level.
Regards, Frank Coluccio |
