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 Friday, June 26, 2009

Despite the balancing of supply, demand, and price since the turmoil of the early 2000s, the market for trans-Atlantic bandwidth faces a looming supply hurdle. The trans-Atlantic submarine cable market was a stark example of the capacity glut in the early 2000s. Six new cables entered service between 2000 and 2003, greatly exceeding near-term requirements. The excess capacity and competition crushed prices, resulting in a wave of bankruptcies and financial restructuring.

The bandwidth glut now lies well in the past: rapidly growing international bandwidth requirements restored the balance of supply and demand, and cable operators have been adding capacity to their networks since 2004. Superficially, the trans-Atlantic market now appears sound: prices have stabilized, and demand grew 38% in 2008. However, clouds loom on the horizon.

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Source: TeleGeography.