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Flag, GTS moves will aid global bandwidth

Question is whether ISPs are cutting deals

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Internet users accessing sites in the Far East from Europe have often found that their efforts fail for no apparent reason, with no readily available information as to whether the site is down (and "no response from server" may not mean that the server has been reached). Apart from the known problem that Windows can only cope with 32 hops, unless you feel like poking the registry, the alternatives have been to try again and hope for a shorter routing with fewer hops, or to use Unix which usually allows 64 hops. Another problem that is increasingly being noted is the difficulty of using Java in India, because applets are liable to time out because of inadequate telecoms – although this is not directly apparent to users. There are some significant telecoms infrastructure improvements now coming into being, but users will need to know just what deals their ISP has done with telecoms carriers if they are to benefit. It may seem strange that cables are providing significant extra capacity, but there are still significant limitations with satellite bandwidth – 90Megabits/second for a transponder, compared with some 600 Megabits/second for fibre optic cables. Also significant is the delay with satellites – 350 milliseconds by satellite compared with 127 milliseconds for cable from London to Japan. The result is less echo in telephone conversations, and some advantages in data transmission. One of the more important new developments is the rise of a new class of "carrier's carriers" – companies that sell capacity to carriers, but do not themselves operate what may be thought of as a retail service. Two of these are Flag Telecom and its recent partner Global TeleSystems (GTS). Flag (fibreoptic link around the globe) has a submarine cable from London via Spain, Italy, Egypt, UAE, India, Malaysia, Thailand, China, and South Korea to Japan, which links some 75 percent of the world's population. It is the first intercontinental cable to land in China. The London to Tokyo link went live in November 1997, with spurs to Jordan and Saudi Arabia are being added this year. Flag says this has increased capacity by a factor of eight from Europe to Asia. Flag notes that 20 of the top 30 telecom carriers are customers, including more recently BT, to give a total of more than 60 customers. It will have taken some ten years from conception to completion of the New York to Tokyo link, but no plans to complete a global ring from New York to Tokyo have been announced yet. Australia and New Zealand are noticeably absent from this system, although there are other cables from Europa and the US of course. It's also a bit tough on Africa and South America. Flag's main shareholders are Bell Atlantic and a group of Middle East banks, each with around 40 per cent. Flag had its origins in the Middle East's desire to have better telecoms connections to Europe. Flag also signed a 50-50 deal with GTS in January to run two fibreoptic cables (known as FLAG Atlantic-1, or FA-1) across the Atlantic, with the first expected to become operational later this year, and the other in Q1 2000. This will give an additional 1.28 Terabits/second, which equates to a hundred hours of digital video/second if that excites you, or 600,000 simultaneous telephone conversations. There are two ring loops at each end, the London-Paris ring that links to cables coming ashore in Cornwall and Brittany, and a New York ring. Barclays Capital underwrote a $550 million construction commitment for seven years. GTS has its origins in the Russian telecoms arena, and was called San Francisco Moscow Teleport. It evolved to take advantage of European telecoms deregulation in 1998 and PTT privatisation to create a fibre optic network in Europe, crossing 16 countries and operating in more than 30 cities. GTS' Hermes Europe Railtel division is building its network using rights of way held by railways, motorways, pipeline companies, waterways and power companies. London is connected to Belgium and the Netherlands by cables that became operational in 1997. GTS is quoted on Nasdaq, and is 6.9 per cent owned by Belgian railways. GTS announced a few days ago that it plans a second offering of 10 million shares. Meanwhile, the corrupt European Commission has approved the AT&T-BT joint venture to combine international operations in certain industry sectors. Although the duo carry more than 50 percent of the trans-Atlantic traffic, this represents less than 20 percent of the capacity. Globally, the Commission decided that the pair has a 30 to 50 percent share, and that there are competitors – a rather obvious conclusion if they have less than half of the market – but that's the Brussels mind for you.®

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