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VIRTUALISATION How Pipe Networks' cable will bring down bandwidth prices
VIRTUALISATION How Pipe Networks' cable will bring down bandwidth prices | How Pipe Networks' cable will bring down bandwidth prices |
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| by Stuart Corner | |
| Tuesday, 26 May 2009 | |
  
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According to TeleGeography bandwidth prices on international routes can differ by several orders of magnitude. For example the $US40,000 per month that buys 155Mbps from Sydney to the US would buy 3 x 10Gbps wavelengths between London and New York; but a mere 2Mbps between Johannesburg and London. Pipe Network's PPC-1 cable will certainly increase the number of suppliers, but according to TeleGeography, its configuration will reduce its costs compared to existing systems. TeleGeography research analyst, Alan Mauldin told iTWire, "The key to lowering international capacity prices lies in lowering the unit cost of capacity. Given that Australia has relatively small capacity requirements and is geographically remote presents some challenges in doing this...Pipe's cable is a fairly short link to Guam where PPC-1 can interconnect with other international cables...Pipe is only taking on the cost/risk with this one relatively short segment and then able to leverage the capacity on other submarine cables that land in Guam to get their customers traffic to the US and other destinations. "The cables connecting Guam to Asia and the US aren't just carrying Australian capacity sales alone but are aggregating demand from a variety of other locations. As a result, the higher capacity on these cables leads to lower unit costs. Lower unit costs from Guam to the rest of the world benefit from Pipe's ability to offer lower prices." He added; "The approach Pipe has taken is similar to what Telstra did with Endeavour. Telstra didn't build their own cable to the west coast of the US; they just built it to Hawaii. This kept their costs low and allows them to benefit from the multiple other cables that land in Hawaii to route capacity to the US mainland."
This article first appeared in ExchangeDaily, iTWire's daily newsletter for telecommunications professionals. Register here for your free trial.
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