AT&T & Nippon Telegraph Join Race For China

In a forward-looking move, AT&T and Nippon Telegraph & Telephone announced Tuesday that they will join a consortium of Asian telecommunications companies in the construction of an underwater cable network linking parts of Asia, including China, directly to the United States.

San Antonio-based AT&T will work with Nippon Telegraph & Telephone , China Netcom, China Telecom, China Unicom, Chungwha Telecom, KT Corp. and Verizon Business, a unit of Verizon Communications, to build the submarine network named Trans-Pacific Express to increase global bandwidth capabilities.

The network will link China, Japan, South Korea, Taiwan and the United States by a submarine fiber optic cable with high enough bandwidth to carry up to 5.12 terabits per second over 11,000 miles. Bandwidth refers to the carrying capacity of a system. One terabit is equal to one trillion binary digits.

In reality, there is only about 1.5 terabits of trans-Pacific demand right now, explained Michael Ruddy, director of international research for Terabit Consulting, a firm specializing in analysis of international information and communications technology.

"This is a scalable project. You can start out with current capacity demand and ramp it up as demand grows."

Ruddy estimated that trans-Pacific demand is growing at a rate of 40% per year, and will be closer to 3 terabits within a couple of years. The Trans-Pacific Express is expected to be operating by then, along with Asia-America Gateway cable system, which AT&T signed on to help build last year, connecting Southeast Asia directly to North America.

Promoted as the “Olympic cable network,” the Trans-Pacific Express will be the only advanced cable network to link the United States directly with China. The China-U.S. route is set to begin operating by August 2008, just in time for the Summer Olympic Games in Beijing.

A Japan-China route will be launched in March 2009. This route is an add-on to the original system plan, likely a result of NTT joining the consortium.

“The trans-Pacific market was neglected for a long time,” Ruddy said. The VSNL Transpacific system, built in 2002 by Tyco, was the only one. It is currently operating at about 1 Tbps and is saturated at this point.

“Gearing up for The Olympic Games was really the impetus for the new Trans-Pacific Express system,” Ruddy added. Higher bandwidth will be necessary to accommodate the amount of data, voice and video transmission anticipated for the global event.

AT&T already owns or leases access to 70 submarine networks. The additions in Asia “are a minor positive and good future planning” for the telecommunications provider, said Argus Research analyst Joseph Bonner.


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