Jul, 2001 : International Broadband Market to Improve Mike Drach

📅 July 9, 2001 - While many North American communications companies have been forced to downsize or declare bankruptcy in the wake of falling voice and data transmission prices, industry executives say that the international sub-sea market will experience only moderate price declines, with less catastrophic results in the business sector.
For roughly two years, the highly competitive communications industry in theEuropean and sub-sea markets has seen falling prices on a similar scale toits Western counterparts. However, industry experts noted that the AsianPacific and Latin American markets have not been hit as hard.
Whereas Pacific sub-sea networks have seen price declines of about 30percent, the intra-Asian networks have had comparatively stable prices, withdeclines of 18 to 20 percent.
There are various explanations for these trends. The high cost andsophistication required to run fiber-optic cables over ocean floors preventsthe competition from becoming too numerous. And sub-sea cables -which are composed of only eight pairs of fiber strands compared toterrestrial networks' 144 pairs - puts a limit on traffic, despite theincreased demand for it.
Asia Global Crossing, a joint venture created in 1999 between GlobalCrossing Ltd., Microsoft Corp., and Softbank, is one example of a successfulcommunications company in the Asian market. About 95 percent of the company's revenue comes from selling transmission services, in a market that someanalysts have said is oversupplied.
Because of the slowing economy in the technology sector, there is littlethreat from new competitors, and the existing competition is unlikely toexpand much in the near future. Asia Global Crossing thus expects near-termprices to continue to decline at a slower pace, while analysts expect NorthAmerican prices to drop another 40 to 70 percent over the next year.