World telecom giants launch US$1.2b plan to join mainland and US

PUBLISHED : Tuesday, 01 April, 1997, 12:00am
UPDATED : Tuesday, 01 April, 1997, 12:00am

Hongkong Telecom (HKT) has joined 10 companies in launching a plan to lay the first undersea fibre-optic cable connecting China and the United States, a project estimated to cost US$1.2 billion.

It follows the signing of a memorandum of understanding in Beijing between state-owned China Telecom and an international consortium of telecommunication companies.

The agreement brings together some of the biggest names in the telecommunications business including AT&T, Sprint, MCI and SBC Communications from the US.

Asian participants joining HKT include NTT and KDD from Japan, Singapore Telecommunications and Korea Telecom.

A Chinese official quoted by Xinhua (the New China News Agency) said other participants would be welcome to join the consortium.

It is not clear how the costs of constructing the link will be shared among the group members.

It seems likely that the wealthy US and Japanese companies may undertake most of the financing.

HKT's contribution may centre more on the difficult task of laying the cable across the largest and deepest parts of ocean.

Its parent Cable & Wireless (C&W) operates the world's biggest fleet of cable-laying vessels.

C&W signed its own memorandum of understanding with Beijing for an undersea cable last November. However, a company spokesman said this related to the same project as the latest announcement.

When complete the cable will link China, the fastest growing telecommunications market in the world, with the US, which remains the largest market.

At present, calls between the two have to be routed through a third country.

According to AT&T, the cable will permit voice and data transmissions to be handled more than eight times faster than is now possible, allowing more than one billion calls to be handled simultaneously.

The cable will make landfall in China at Shanghai and Shantou, and across the Pacific land at Bandon in Oregon and San Luis Obispo in California. The network will eventually span 27,000 kilometres with feeder cables linked to other Asian countries such as Japan and Korea.

Work on the project is due to begin this year and could finish by December 1999.

Chinese officials said the signatories to the memorandum were aware of the soaring demand for high-quality, secure and economical telecommunications services in the region, and of the difficulty meeting that demand with existing cables.

The rapid build out of telephone infrastructure and lines in markets such as China is fuelling that demand.

Early last year a 540 km undersea fibre-optic cable between China and South Korea began operation. Another scheme to link China with several Southeast Asian countries at a cost of $400 million was announced last summer.

Another project has brought together 80 companies to finance an ambitious scheme to build an underwater link between Europe, the Middle East and Asia. The cost of the project is put at $1.3 billion.

Countries that act as landfall sites for intercontinental cables clearly have improved prospects to make money by acting as a hub for call traffic. This explains why countries such as Singapore have been particularly active in long distance cable projects.