Trans-Atlantic cable operators will need new pipes by 2014 to cope with soaring demand for bandwidth - projects their business models don't allow for, TeleGeography said.
The trans-Atlantic bandwidth glut of the early 2000s is very much in the past – at the current rate, capacity will be exhausted by 2014, TeleGeography said.
Unfortunately, the glut forced cable operators to either go belly up or restructure their operating models, meaning current wholesale rates don't reflect the cost of cable construction.
“Trans-Atlantic cable operators and wholesale buyers are facing a slow-motion crisis,” TeleGeography analyst Alan Maudlin said.
The average wholesale rate is around $14,000 for a 10Gbps wavelength, which reflects only the incremental cost of the optical equipment needed.
And due to the lengthy cable construction cycles, cable operators must act now to confront this dilemma.
While new technologies such as 40Gbps transmission rates may delay the need for new cables, this will only postpone the “inevitable day of reckoning,” the research firm said.
Demand grew 38% in 2008, and will only speed up in the coming years, TeleGeography said. The amount of new capacity needed will reach nearly 10Tbps in 2014, and will more than double in the following year.