hi Craig,
Competition? There is a discussion of that on page 17 of the Prospectus that you read before you invested your hard earned money in Global Crossing.<G>
While the high cost of building a global network and the limited availability of licenses and rights are significant barriers to entry, there are some competitors:
Basicly, there are satellite systems that might come on line sometime around 2008 (if they get funding) that might maybe be able to carry a small portion of the traffic.
There are "consortium" owned cables currently in place, being laid and in the planning stage. Interesting thing is that many of the "club members" are also Global Crossing customers (MCI Worldcom, AT&T, British Telecom....)
And of course, the closest thing to a real competitor, Project Oxygen. As soon as they find a few billion dollars they might actually start laying some fiber:
zdnet.com
Project Oxygen Misses Fund Date
By Denise Culver,
Special To Inter@ctive Week
January 11, 1999 11:29 AM ET
The new year was supposed to start on a high note for
the backbone builders at Project Oxygen, with the
completion of the first stage of funding for the global
fiber-optic network. But the self-imposed Dec. 31,
1998, deadline for funding completion passed with no
announced progress.
Officials at CTR Group, the start-up behind Project
Oxygen, attribute the delay to the slowdown of
business activity during the holidays, but at press
time they would not say when they expect funding to
be completed.
The delay could raise questions about the future of
Project Oxygen, which has yet to install Mile One of
its promised 168,000-kilometer, global fiber-optic
network, scheduled to begin service in late 2000. But
industry watchers say the project already has
changed the business model for global network
operators.
"Whether Project Oxygen ever accomplishes what it
says it will accomplish isn't what's important," says
Michael Ruddy, a senior fiber-optic analyst at Pioneer
Consulting, which recently completed a market report
on international telecom networks. "What is important
is that Project Oxygen has made the entire submarine
cable business rethink its ideas about how business
should be done. If Project Oxygen doesn't see its
business plan to fruition, some other company will
come along and take those ideas and make them
work."
Project Oxygen's biggest impact is on the way
international operators price their bandwidth, Ruddy
says. Rather than sell capacity on a point-to-point
basis as backbone operators do now, Project Oxygen
is selling capacity on an any-to-any basis, which
means its carrier or corporate customers can route
traffic to and from any of the network's planned 99
access points in 78 countries, regardless of the
distance involved.
Project Oxygen is selling 100 gigabits per second of
capacity for $200 million, 30 Gbps for $100 million, 10
Gbps for $50 million and 1.24 Gbps for $10 million.
The prices are for 25-year contracts.
Under this arrangement, a carrier that pays $200
million can put 100 Gbps of traffic onto the network
through any number of landing points on the network
and can buy additional capacity in increments of 1.24
Gbps .
Customers can change the landing points they use
and the amount of traffic they route through each of
those points at no extra cost, says Neil Tagare,
chairman and chief executive officer of CTR Group. "If
you have eight circuits total, with four going to Europe
and four going to Japan, and you suddenly realize that
you need two circuits going to Australia, you can take
two of your original circuits and redirect them to
Australia for no additional cost," he says.
Tagare sees this flexibility as a key difference for
transnational backbone customers. "Instead of having
to try to predict where your traffic is going to go, you
just buy the access and use it to go anywhere in the
network that you want it to go," he says. "That kind of
flexibility isn't found on other cables."
Along with flexibility, Project Oxygen offers
significantly lower bandwidth prices, according to
Tagare. Under the Project Oxygen pricing plan, an
STM-1 (155-megabit-per-second) circuit costs roughly
$2.5 million between any two points on the network.
Today, undersea cable operators charge anywhere
from $3.9 million to $22.8 million for an STM-1
connection, depending on the locations being
connected, Tagare says.
According to Tagare, some 40 carriers have signed
commitments to buy capacity on Project Oxygen,
representing more than $1 billion in business. But
competitors continue to ask for cold, hard proof that
the system will ever be more than just a concept.
Global Crossing Ltd., which is building a series of
regional undersea networks that it will link together as
a global net, already has service up and running on
the high-traffic trans-Atlantic route, and its project
financing is complete, says Cynthia Coulter, Global
Crossing's vice president of corporate
communications.
Global Crossing's first system, Atlantic Crossing, is a
40-Gbps system that links the U.S. with Germany,
the Netherlands and the U.K. The U.S.-to-U.K.
segment went into commercial service in May 1998,
and the full ring will be in service next month, Coulter
says, adding that capacity will be upgraded to 80
Gbps at that point.
Pending completion of its other regional routes, Global
Crossing expects to have landing points in the world's
100 biggest cities by 2000, at which point it will offer
access to 80 percent of the world's major traffic
routes.
In contrast, work on the first phase of Project Oxygen
has been held up pending completion of its first round
of financing. When and if financing is completed, work
will begin on building an Atlantic ring that will connect
North and South America, the Caribbean and Europe.
In addition to the $3 billion in first-round financing,
Project Oxygen will need another $7 billion, which
Tagare plans to raise through equity investment and
loans. The current timetable calls for completion of a
Pacific ring by mid-2001, a Mediterranean ring by the
end of 2001 and several other regional rings to create
a global network by the beginning of 2003.
"There is no question that Global Crossing is miles
ahead in terms of laying the cable and actually getting
service up and running," Ruddy says.
But Ruddy dismisses the idea raised by some
industry analysts that Project Oxygen could fall victim
to a global bandwidth glut. "There is no question that
this industry needs more companies laying cable," he
says. "We're not hearing carriers say, 'Oh, I have
plenty of bandwidth.' We're hearing carriers say that
they need the capacity, and there just isn't enough
out there to meet the needs they have."
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