BANDWIDTH The State of the Market by Rex Ramsden M.A. (Cantab), F.Inst.D Over the last 18 months my company has researched the buying intentions amongst a number of major buyers of capacity in four important segments of the bandwidth market – US/Asia, intra S.E. Asia, intra Mediterranean and US/S. America. This work was done for clients who were investors or potential investors in submarine cables. For the last three years
we have also handled buying enquiries from potential purchasers in liberalising markets such as these and in the already intensely competitive markets including US/Europe, intra US and intra Europe. Added to a previous ten years of experience in the submarine cable laying business, this gives a good perspective over the lifetime to date of the industry in the fibre-optic era. 19
Making sense of the market Purchase and sale of channels of bandwidth started well over 100 years ago. Like their technological forebears, fibre-optic cables themselves are laid and may be bought and sold and, at the end of their useful lives, they are closed down. The commercial terms for the rights of use of fibre-optic cable capacity rely on methods of sharing capacity which are technologically elegant and unique. A channel of bandwidth allows the user a share in the use of the transmission medium which is distinct from ownership of the cable itself. Two very significant trends have now been operating in the marketplace. The first of these is the logarithmic reduction in the unit cost of bandwidth creation. Each new generation of fibre-optic submarine cable has a design maximum capacity, far exceeding the previous generation, for roughly the same capital cost. Cables are also designed now to have their capacities doubled or quadrupled two or three times in their lifetime without changes to the submerged plant. The second significant trend has been the division of this huge growth in