Phone companies to lay underseas cables
Phone companies to lay underseas cables
SINGAPORE (Bloomberg): Asia's biggest phone companies will sign a pact in two weeks to build a S$1 billion underwater cable network, allowing speedier phone and Internet links in the region, three of the companies said.
The network, called APCN-2, is expected to replace the existing Asia Pacific Cable Network when it's completed in 2002, and will help the region's dominant phone companies stay ahead as competition intensifies in their telecommunications markets.
The proposal that could bring together Korea Telecom Corp., Hong Kong Telecommunications Ltd. and eight others, is also a sign that companies are gearing up for a pick up in demand for goods and services in the region.
"Phone companies realize they have to capture capacity early to maintain growth, and to maintain their dominance," said Daniel Widdicombe, a telecommunication analyst and managing director at Bear Stearns Singapore Pte. "They are rushing to tie in capacity in expectation of a huge jump in data connections."
Widdicombe expects data usage to expand between 40 percent and 50 percent annually in Asia, with more business communications and a heavier use of the Internet.
The number of Internet users in Asia outside of Japan is expected to expand 35 percent a year to 57.5 million by 2003, said International Data Corp. The market researcher also expects data revenue for the region to increase at an average of 32 percent a year to $18.5 billion by 2002, twice the pace of voice revenue growth.
"The use of wireless, data and the Internet will continue to increase in Korea, driving earnings growth," said Hong Sung Han, manager of Korea Telecom's international submarine cable division. "Korea Telecom is the most aggressive investor" in the project, he said, declining to be specific.
With a capacity of 640 gigabits -- at least twice the current capacity and equivalent to about 8 million phone lines transmitting data at the same time -- the new network will quicken data connections within the region, as well as with the U.S. The U.S. link will be through existing networks from China and Japan.
France's Alcatel SA, Lucent Technologies Inc. in the U.S. and Bermuda-based Tyco International Ltd. are among companies that have put telecommunications cables under the sea and may bid. The network will connect Japan, South Korea, China, Taiwan, Hong Kong, Malaysia and Singapore, with likely extensions eventually to other countries such as Australia.
The new network will help Asia's former phone monopolies that are now bracing for competition on their home turf that will end their control of fixed-line and data-transmission.
Singapore Telecommunications Ltd. for example, will lose its fixed-line monopoly in April 2000.
The cable network pact will be signed in China in the middle of June.
Other phone companies involved are likely to be Japan's KDD Co. and Japan Telecom Co., ChungHwa Telecom Co., Telekom Malaysia Bhd., Singapore Telecom, Indonesia's PT Indosat, China Telecom Ltd. and Australia's Telstra Corp. U.S. phone companies are also expected to join in the plans.