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Asia Netcom feels further price pressure

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Prices for transmitting data via undersea cables will continue to erode over the next two years, despite higher demand as global companies shift call-centre and back office work to the Asia-Pacific region, according to Asia Netcom.

Higher demand from multinational corporations would not be enough to offset a glut of capacity that has haunted the industry since the bursting of the telecommunications investment bubble in 2000, the undersea cable operator said.

'Demand is starting to pick up. We're seeing multinationals coming back to Asia,' president and chief operating officer Bill Barney said. 'But oversupply is still taking some time to eat through.'

Mr Barney said some data routes were 30 per cent to 50 per cent under-utilised, forcing many telecommunications carriers to sell bandwidth at below cost.

The company expects wholesale bandwidth prices to fall 40 per cent to 50 per cent this year, with a drop of another 30 per cent to 35 per cent next year.

But price drops for retail customers would be less dramatic - with falls in the region of 20 per cent - due to tailor-made services which have higher margins.

Prices for retail customers would decline at a similar pace next year, the company said.

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