International connections
Glut in capacity of transoceanic cables is driving prices down.
By Bryant Dunetz
If you're looking for a circuit to connect a U.S. office to a site overseas, there's never been a better time to buy. While you might pay $1,500 per month for a T-1 line spanning the 250 miles between New York and Washington, D.C., you'd only need to pay $1,000 per month for a portion of a T-1 that crossed the Atlantic Ocean to link New York and London.
Overcapacity has dramatically reduced the cost of long-haul transoceanic bandwidth - that is, fiber encapsulated in a cable at the bottom of the ocean. By some estimates there are more than 250,000 miles of copper and fiber cables under the seas to connect the world's continents.
Capacity of trans-Atlantic telephone cables is nearly 12.5 times greater than it was in 1998, according to the Federal Communications Commission. And in the next few years, growth of bandwidth in the Asia Pacific region will be five times greater than growth in the Atlantic region.
This bandwidth glut has created a shopper's holiday. International telecom publication TeleGeography has tracked a steady, significant decline in trans-Atlantic prices for STM-1s. The equivalent of three DS-3s would have cost $9 million for a 25-year lease signed in 1998. But now that same STM-1 lease would only cost $1.5 million, according to the research firm that publishes its namesake report.
T-1 pricing from New York to London (chart)
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There are bargains to be found when comparing them with years past in the Pacific too, where connections generally cost twice the price of Atlantic connections. A 25-year lease for an STM-1 between Los Angeles and Tokyo now goes for as low as $2.5 million.
With prices like these, it's probably worth your time to renegotiate any existing contracts for transoceanic service.
Buying bandwidth
Pricing and ordering international telecom service is similar to buying service in this country. A typical overseas private line requires several carriers and contains a few different pricing elements. For example, a T-1 from New York to London might include a local loop in New York from Verizon, a long-haul oceanic segment between landing points from a carrier such as AT&T, Sprint or WorldCom, and a local loop in London from British Telecom. (See the chart below for pricing for this service.)
Although there are great deals to be had, you'll also find wide discrepancies in transoceanic pricing from one carrier to another. When we obtained quotes for the same level of bandwidth from a variety of global carriers, the numbers varied significantly. (See the chart below for sample prices for long-haul POP-to-POP service, which doesn't include local access charges.)
International
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The market for buying international service has expanded far beyond AT&T, Sprint and WorldCom. Several foreign carriers offer complete end-to-end connectivity. But while there are numerous resellers, only a handful of companies operate their own native undersea cable backbone, including AT&T, Equant, Flag, Global Crossing, Sprint and WorldCom.
However, several players and international alliances have crumbled in the downturn. Last year Deutsche Telecom and Sprint disbanded their Global One joint venture, and AT&T and British Telecom announced plans in October to dissolve their three-year joint venture in Concert. What's more, 360Networks, Project Oxygen and Viatel declared bankruptcy.
Such churn underscores the need to shop carefully for transoceanic connections. Choosing the lowest-cost carrier often carries an associated risk of service outages, lackluster technical support or even abrupt termination of service. There's some comfort in knowing that you can sleep at nights without worrying about the network, and naturally you pay a premium for that service guarantee. However, other network executives have landed a low-cost flexible arrangement with a carrier and are quite satisfied.
You won't go wrong with established players such as AT&T, WorldCom, Sprint, British Telecom, Deutsche Telecom, France Telecom and Telia, just to name a few. See the chart at left for a list of carriers offering long-haul service that spans the globe.
Look around and you should be able to cut an attractive deal for 56K bit/sec up through OC-X bandwidths.
But act now, because it's difficult to know how low the carriers will go or how long the buyer's market will last.
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Dunetz is president of Telco Exchange, an online marketplace for high-bandwidth communications services. He can be reached at info@telco_exchange.com.
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