China carriers for investing in a segment of the industry that has a very chequered past with all kinds of well demonstrated financial risks . Nor am I saying that AT&T were some kind of evil empire, very often their technical expertise and commitment were the only reasons some projects actually got completed, and in a complex consortium environment a strong leader is of much value. Indeed from a personal point of view my career lead me into both conflict and co-operation with AT&T and I had a lot of respect for them either way. However, there is a bigger picture that can develop when one entity is so dominant in an important segment of the industry, particularly one that, because of its global and multinational nature, cannot be directly regulated but only occasionally influenced by regulation in user countries. Among the potential problems the subsea cable capacity market, and perhaps even the supply market face from the reemergence of a dominant cable owner operator include : • Scale of investment in subsea cables usually has a very direct relationship to the
price paid for that capacity, and as a rule, the largest investor gets the lowest unit cost giving them a significant competitive advantage in many areas but above all in the wholesale space. • Control over the system architecture including the choice and type of terminating point and its location. • Powerful Influence on the choice of system supplier and marine maintenance • As a dominant party in the main trunk cable system they can exert strong influence through setting pricing and cost sharing mechanisms for smaller operators dependent upon system branches The strength of such influence of course is not drawn solely from the largest stake in cable systems but also from leverage over all kinds of services with a bilateral element. Back in the day AT&T was almost invariably the largest bilateral service partner everyone in the industry and retaining a good relationship with them was of great importance to almost all carriers. Today China is a very important market for all carriers