From: Geoff Huston <gih@telstra.net> To: Mark Ansboury <mansboury@yesvirtual.com> Cc: Sean M. Doran <smd@clock.org>; avg@pluris.com; bgreene@cisco.com; jesse@netthink.com; map@iphil.net; nanog@merit.edu; smd@clock.org Subject: Re: connectivity outside the US Date: Sunday, June 01, 1997 6:04 PM
Supply and demand - the cables which are being commissioned in late 98 and 99 look to be 100G loop designs in bot the Pacific and Atlantic environments. The system price looks like remaining pretty constant - around $500M give or take a few hundred mil - despite a 50 fold increase in capacity. Its reasonable to expect a radical bottoming out of unit price for IRUs sometime in 99 for these cables. What does that mean? The scarcity premium in cable price which will be evident through 98 will be eliminated in 99 and insterad you'll see a return to a technology-indexed unit
What you are describing is reasonable in a truly open market environment. However, the cost of committing to $650K to $800K for E1s limits the field significantly. Especially when the carriers bid on a large portion of the available bandwidth. The availability of 100G loops will be diminished by the more financially sound carriers (i.e., Telstra). I think you know those guys. When you look at the demand between now and the year 2000 and you guys will be looking at consuming +200M of the bandwidth for IP services and God knows how much for the more traditional services. Even though the investment has remained relatively constant the market pricing has not. I don't see it being a game for the faint hearted. And the massive consumption from the likes of AT&T, BT/MCI and Worldcom will greatly influence the pricing. You may see a trend towards reducing the price for the bulk buyers/investors, but it will not likely come down as fast as your predict for the low to moderate users. Your assessment may be right, but I am not so sure we will see it before the year 2000. Mark ---------- price,
where the price will reflect the basic project costs And given the increase in cable capacity due to WDM deployment you can expect a unit price drop.
At 12:18 PM 1/6/97 +1000, Mark Ansboury wrote: The cost for
overseas cables are not going to be coming down in a big way over the next couple of years. They will more likely go up. At least for our foreseeable future. The next few years. The pent up demand is to great.