New undersea cable to accelerate data transfer by 70pc as forecasts suggest 21m more Chinese online by 2008 Asia Netcom is investing up to US$35 million on an undersea cable linking South Korea with Qingdao in Shandong province as it sees an end to the Asian bandwidth glut driven partly by China's surging internet traffic. William Barney, the president of China Netcom Communications Group Corp (Hong Kong)'s undersea cable unit, said broadband expansion in the mainland next year would be fuelled by bandwidth-consuming new applications such as internet protocol television, high-definition television and 3G multimedia services. Mr Barney predicts this will lead to international bandwidth wholesale pricing picking up in 2007. 'Wholesale assets have been put into mothballs for the last four years, but we see the market is coming back,' he said, adding that the company's focus would be switching from India to China over the next two years. Asia Netcom owns a cable linking Japan, Korea, Taiwan, Hong Kong, the Philippines and Singapore. Mr Barney said the 350km Korea-Qingdao extension would have a capacity of 40 gigabytes, which could be upgraded to 2.5 terabytes, depending on demand. The new cable will speed up internet traffic between Korea and Beijing by 70 per cent. Market research suggests that between now and 2008, there will be 21 million new internet accounts in China. There are now about 94 million internet users, with about 34 million of them using broadband connections. A recovery in wholesale bandwidth pricing was also identified by Alex Ng, Global Crossing's Hong Kong-based senior-vice president. Global Crossing was the former parent firm of Asia Global Crossing - now Asia Netcom - before it filed for bankruptcy protection in 2002. Mr Ng said many routes in North Asia, such as the Hong Kong-Japan and Hong Kong-Taipei routes, were still underused. But he said the wholesale bandwidth sector would rebound by 2007 when telecommunications carriers started using reserved capacity, easing some of the current price pressure. Meanwhile, Singapore Telecommunications' undersea cable unit has gone into receivership after being unable to survive the bandwidth supply glut and steep price erosion. It is looking for potential buyers to restructure US$650 million of debt. Mr Ng worried that if a buyer snapped up the cable assets at a large discount, 'it will drive down the cost structure in the market'. But Mr Barney said consolidation was inevitable in the industry as 'everybody is talking to everybody'.
