Fourth undersea internet and telecoms cable by 2010 will end Bermuda’s duopoly

Royal Gazette today:

By Scott Neil

A new undersea internet and telecommunications cable to end the current duopoly of Cable & Wireless and TeleBermuda International is scheduled to go into operation by 2010.

Three rival Bermuda communication companies who clubbed together earlier this year have been granted the right to a draft telecommunications licence.

It opens the way for them to construct the Island’s fourth undersea telecoms cable connection.

Will it mean cheaper internet prices?

It’s too early to say. However, those behind the new cable – KeyTech, North Rock Communcations and Transact – foresee that as a possiblity if past trends are anything to go by. But the new cable will also likely bring “value added benefits and services” for the same price as is being charged today on the Island for straightforward international connections, it is claimed.

The new initiative is a step towards breaking up the restrictive telecommunications operating practices that have been in place in Bermuda for the past 11 years.

The three companies who have formed the entity Cable Company to pursue the cable licence have, up until now, had no other choice than to pay for international bandwidth through C&W and TBI. By owning their own undersea cable connection between Bermuda and the US they will have access to their own bandwidth carrier capacity as well as the ability to sell capacity to others on the Island.

How much the new cable system will cost has not been revealed, other than that it is in the “tens of millions” of dollars. As a comparison C&W announced earlier this year it was replacing one of its ageing cables at a cost of $22 million.

C&W owns two of the current undersea cables to Bermuda. Brasil Telecom operates the third but is restricted to selling capacity only to C&W and TBI who, in turn, set the price that domestic companies such as North Rock, KeyTech and Transact have to pay.

The Cable Company has named its new submarine cable Challenger. It will attach to a cable network off the US eastern seaboard and link to Bermuda via South Shore. The southern side of the Island was chosen as the preferred landing area for the new cable because it would be the least environmentally disruptive location, said Vicki Coelho, general manager of North Rock.

Igility is the parent company of Transact, its president Aaron Smith said bringing the three competing domestic companies together to bid for the licence had been surprisingly easy.

“We shared such a mutual interest in the goal of getting another international cable to Bermuda to help local businesses and consumers alike, and since our three companies service those markets ‘downstream’ it made sense for us to work together to try to find an effective solution a little further upstream,” he said.

“The average consumer is going to see competition that currently might not be there. Many people don’t realise that all the capacity that comes to Bermuda comes in on two cable systems. Our providing a third one provides more competition and diversity coming on to the Island. How the carriers use that should allow consumers to get the benefit.”

The new cable will be 100 percent Bermudian owned. It will also have the ability to carry telecommunications traffic 10 times the capacity of that currently used by the Island.

Final planning and the availability of cable-laying ships will dictate when the new cable can be put in place and begin operating, but Cable Company is looking at a 24-month time frame.

Mr. Smith said it was difficult to say for sure if cheaper internet pricing would be an immediate benefit, but added: “History has shown that competitors and new entrants in the telecommunications market almost always lead to reduced pricing.

“It gives choices to the carriers who purchase the bandwidth from the existing cables. The expectation is that the carriers will pass on the price benefits they find to their end users.”

Alan Richardson, CEO of Logic Communications (part of the KeyTech group), added: “Apart from lower prices consumers might also expect value added benefits and services for the same price.

“The economies of this new venture may translate into business practices in a multiple of ways, not just lower prices.

“We should also bear in mind that the economies of providing broad-based world class services to a population of 60,000 people are immensely different from the 300 million population we find in the US.”

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