connectivity outside the US (Sean M. Doran) wrote:

Examining this a bit more closely, since undersea capacity is
terribly expensive, when there is adequate capacity available
to a large aggregate of sites people want to get to, there will
be an obvious market for access to that capacity.

Actually, i do not understand why undersea capacity is so
expensive. Cable is more expensive, yes; but the paths
are much straighter, and there's no need to purchase
rights of ways (except for shore-side strips). There's
no need to dig trenches -- you just drop the cable off the

I guess the real problem with undersea capacity is more in the
fact that it was always considered a low-volume service (which
it is, in terms of voice traffic); so there's no many competitive
providers, and small-quantity pricing.


Undersea capacity is expensive for 3 reasons:
   1) It's under the ocean
   2) It's under the ocean
   3) It's under the ocean

For more information than you ever wanted and a great read check out Neal
Stephenson's article:

Transoceanic cables are actually designed with massive capacity. They're
terribly expensive to lay and maintain though, and demand for
communications has kept good pace with available space - keeping the
price of transit high.

You're right about the lack of competition. To undertake laying
a cable PTT's will join together and divy out capacity, management
responsibilities, etc., in proportion to their investment. This doesn't
leave room for small-quantity pricing, as you'd have to aggregate "massive
quantities" to reach the economies of scale necessary.

Actually if you read that article (and everyone should..) the hardest
part was the overland routes. That would indicate that it is much
easier to lay cable under the ocean...


Undersea cable was expensive - the cable economics were geared to a return
on investment linked to a high investment risk and relatively slow uptake of the
cable,due to a linear phone growth model and an E1 cable transaction unit.

More recent cable projects have large increase in available capacity for essentially
the same project cost - which will trigger a steady decline in the lease price
once the large cables come on line.