Bandwidth costs likely to triple: Asia Netcom

Bandwidth costs likely to triple: Asia Netcom

Prices for transcontinental bandwidth carried by undersea cable could triple within two years the president of Asia Netcom, Bill Barney, has warned.

A key bandwidth supplier in the Asia-Pacific region, Asia Netcom is one of two incumbent Chinese state-owned network infrastructure and backhaul providers.

Barney said current international bandwidth prices were below cost, could not be sustained and would probably triple by 2007.

"When some of the networks hit upgrades [to provide multi-protocol label switching and converged IP services], that's where it gets interesting," Barney said, adding it currently cost between $US5 million and $US10 million per 10 gigabit to expand the capacity of routers feeding off existing fibre-optic cable.

With some routes - specifically Japan to Taiwan -saturated for years to come, Barney said the rise and rise of converged IP services, particularly VoIP and secure virtual private networks, still required major router upgrades by many telco service providers on the local loop. Moreover, many converged VoIP and wireless offerings are still not up to the latency standards of TDM (time delay multiplexing), Barney said.

"On the VoIP networks, no one has got it right. We are still two years away from getting it right with soft switches," he said.

Barney also warned the price of cable itself is on the rise, adding "You cannot produce these cables for what people are selling them for," he said.

The VoIP phenomenon also has a profound effect on the level of research and development into sub-sea cable capacity, according to Barney. As many carrier technology and IT developers switched to cash in on the VoIP goldrush, more stable high-end offerings like submarine cable were being sorely neglected, he said.

"It's arbitraging; we all chase the dollar. There is no [research and development being done] on submarine networks. You haven't doubled capacity in three years. There will be knock-on effects," Barney said. These include escalating costs for corporate data centres located in currently cheap locations throughout Asia.

"It's about where you [locate] your data centres. If the price of capacity goes up three to four times, you will wind up with stranded data centres [because of the current trend to use several locations]. Look at the planning cycle for a data centre; it's two years. It's like the LAN environment versus the mainframe. At a certain stage the LAN [infrastructure] becomes more expensive than the capacity [it provides]."

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