Hibernia Pulls Ahead in Trans-Atlantic Speed Race

30 Sep 2010

Hibernia Atlantic announced plans today to construct the industry’s first trans-Atlantic submarine cable in a decade. By building on a straighter path than other undersea cables across the Atlantic, network planners at Hibernia anticipate that the cable will shave 5 milliseconds or more off the return-path latency between New York and London. The lowest-latency trans-Atlantic cable currently active, Global Crossing’s AC-1, can deliver latency of 60.8 ms (milliseconds) to the western point of England from New York. Connecting AC-1 onward to London costs a few additional milliseconds. By contrast, Hibernia’s new Project Express cable promises to allow sub-60 ms latency from New York all the way to greater London.

In the global telecom infrastructure industry, latency is an important consideration for certain bandwidth buyers. “Financial institutions engaged in high-velocity trading are speed demons,” noted TeleGeography VP of Research Tim Stronge. “They claim that shaving off just a few milliseconds of connectivity between two trading locations can earn them tens of millions of dollars a year—so they’re willing to pay extra for the fastest path.” Hibernia will undoubtedly seek to charge a premium for access to its Project Express cable.

The trans-Atlantic was the site of a spectacular price collapse at the beginning of the 2000s that helped hasten several of the telecom industry’s prominent bankruptcies. Between 1998 and 2001, operators laid seven new fiber-optic cables across the Atlantic. Chronic overbuild during this short period forced operators to drop prices far faster than they had planned, and bankruptcy write-offs enabled the surviving operators to drop prices yet further. By 2003, trans-Atlantic bandwidth prices were 1 percent of their original value in 1997.

Bandwidth prices across the Atlantic remain among the lowest in the world. According to TeleGeography’s Bandwidth Pricing Database, the median price of a 10Gbps wavelength between New York and London is approximately $10,500 per month, compared with $230,000 for the same amount of capacity between Miami and Brazil. By building along a unique, low-latency path, Hibernia aims to break out of the trans-Atlantic commodity pricing prison. “We’ve heard of some latency-sensitive customers paying many times the average price of bandwidth in order to secure the fastest connection,” observed Stronge. “If Hibernia can sustain a price premium for Project Express, it will meet with a much happier fate than what befell other operators ten years ago.”

To find out more call us at +1 202-741-0040, or email Tim Stronge at tstronge@telegeogaphy.com.

United Kingdom, United States