PLDT, foreign carriers may retire old int’l cable systems to pave way for $1-B project

Telecommunications giant Philippine Long Distance Telephone Co. (PLDT) and its foreign carrier partners are looking at the possibility of reducing the capacity of five international cable systems, if not totally retiring them, because these are old and expensive to maintain.

Instead, the telecommunications carriers, who are considered the biggest in their respective countries, are pouring their resources into a state-of-the-art $1-billion optical fiber submarine cable project which, when completed, will be the first ever self-healing high bandwidth system in the Asia Pacific region.

At least 44 telecommunications entities from different countries all over the region, including PLDT which poured $50 million into the project, have participated in the Asia Pacific Cable Network (APCN2) which is considered the most ambitious fiber optic submarine system with around 19,000 kms of cable landing in 10 locations in eight countries, namely the Philippines, China, Japan, Korea, Taiwan, Hong Kong, Singapore and Malaysia.

PLDT is the fourth largest investor in APCN2 (and is also a landing party with a landing station located in Nasugbu, Batangas) next only to CNW of the United Kingdom, NTT of Japan, and MCT Worldcom.

The five cable systems whose viabilities are under review are Guam-Philippines-Taiwan cable system which started in 1990, Brunei-Malaysia-Philippines (1992), Southeast Asia-Middle East-Western Europe cable system (1994) APCN1 (1997), and Guam-Philippines cable system (1999), PLDT has capacities in these systems.

According to PLDT assistant vice president Enrique Yu, the older the technology being used, the more expensive it becomes to operate and maintain. "They are looking at possible retirement of some of the older systems, one of which is already 12 years old, or reconfigurating them. They are also transferring the capacity from the old systems to APCN2," he said.

Yu said APCN2 will give PLDT a chance to conduct network re-engineering by migrating capacity from the old systems to the new network. The shift will also result in as much as 50-percent savings on the part of PLDT.

Meanwhile, Yu noted that since APCN2 started operations Dec. 21 of last year, the price of high bandwidth capacity has significantly gone down due to competition opposed by the new project.

He said that while last month, a bandwidth capacity buyer like an Internet service provider (ISP) of a multinational company has to pay as much as $18,000 to $20,000 per month for one E1 (representing 30 voice channels) for a circuit between the Philippines and the United States, the price has now gone down to $10,000 to $15,000 per month.

Unlike other optic fiber submarine cable projects (there is one — C2C- participated in by Globe Telecom, and another – Asia Global Crossing – by Digitel) which are dependent on the sale of bandwidth to users, Yu pointed out that APCN2 is self-sufficient in terms of traffic generation. "We have our own organic traffic which we can pass on through this network," he said.

APCN2 is expected to meet the region’s growing communications need and demand for high bandwidth circuits driven by Internet services and international telecommunications traffic. The systems stretches from Japan to Singapore and covers the major countries in Asia, namely: Korea, Hong Kong, China, Taiwan, and the Philippines.

The system is initially equipped for 0.08 terabits (80 gigabits), which is only three percent of its designed capacity of 2.56 terabits. "The designed capacity of APCN2 is 10 times bigger than the existing bandwidth capacity in the country and we expect our capacity to be used up in five years’ time," Yu said.

It will provide seamless interconnection with other cable networks providing connection to the US, Europe, Australia, and other parts of Asia. And with the shift from bilateral circuit to whole circuit provisioning, PLDT will also be able to easily establish points of presence (POP) in other countries.

Yu explained that PLDT’s investment in the project enables it to utilize its own circuits to establish presence in US, Singapore, and Hong Kong, and soon to Japan, Korea, and Australia.

Since most of the participants in the APCN2 consortium are already established telecom companies in their respective companies, a large chunk of their allocated capacities will be used for their own needs. The rest, they can sell to ISPs, multinationals or other buyers in their own countries, or to buyers in other countries.

In the case of PLDT, most of the capacity from its participation in APCN2 will be utilized by its corporate business group. "But this capacity that we purchased is transportable which means the ownership we have over this capacity can be activated anywhere in the region, subject to the other countries’ rules. Our market is not limited to the Philippines," Yu said.

PLDT has already activated 25 percent of what it purchased in terms of its capacity for its own use while negotiations ware ongoing for the sale of some of the capacity to other users.