Asia Global Crossing sees China links soon

Asia Global Crossing may be allowed to link its trans-Asian submarine optical fiber network to land-based networks in China by year's end, John Legere, president and chief executive officer (CEO), said here Friday. The company has a submarine cable just a few miles off the Chinese port of Qingdao as part of a fiber-optic network designed to eventually span Asia.

"I'm optimistic that sooner rather than later it will take place, and previously I thought 2002, 2003; now I'm really hoping 2001 we'll be able to do that," Legere said in an interview following an address to the American Chamber of Commerce in Hong Kong.

Private companies are not yet allowed to land telecommunication cables on the Chinese mainland, but informal discussions are taking place now that should lead to the government removing that restriction, Legere said.

Initially, Asia Global Crossing will probably provide a link from its Asian international submarine network to partners inside China that will offer bandwidth to corporate customers in major cities, most importantly Beijing, Shanghai and Guangzhou, Legere said.

"It's going to be a while before Asia Global Crossing or other foreign players are actually going to be able to be in the market touching and selling to customers. What we're really trying to do is give our customers around the world the ability to get in and terminate, and then handshake with other partners in China who will serve their other needs," Legere said.

In his speech, Legere countered the perception of a glut in bandwidth in Asia. The links around this region are primarily submarine cables, difficult and expensive to build, rather than a mesh of land-based cables like those that link European countries and regions of the U.S.

Meanwhile, the growth of home broadband access as domestic markets are liberalized will drive rapid growth in bandwidth usage for the next several years. Broadband penetration in Japanese homes, for example, so far stands at only 2 percent of households. Moreover, 20 percent of the Internet traffic generated by the additional Japanese broadband users will call on resources outside the country, driving demand for international bandwidth, he added.

Most promising is China, where the government's latest Five-Year Plan calls for 500 million additional telephone lines to be installed, representing a huge increase in demand "just waiting to pop its head up," Legere said.

In addition to familiar uses of connectivity such as home and mobile Internet access and corporate data, offerings such as online virtual-reality gaming and interactive TV features will be here soon, he said.

"The only reason they sound far-fetched now is there's not enough bandwidth," Legere said.

Asia Global Crossing's East Asia Crossing links Japan and Hong Kong via a 310M bps (bit per second) cable that in turn is connected to Global Crossing Ltd.'s globe-spanning submarine cable network. East Asia Crossing will expand to serve Taiwan beginning in about two weeks, Legere said Friday, and is scheduled to link up South Korea in the second quarter as well. Singapore, Malaysia, the Philippines and China are set to be added later.

Asia Global Crossing has the upper hand in the drive to build network capacity within Asia because it already has enough capital, a relatively scarce commodity today, Legere said. The company had its initial public offering on Nasdaq last October and next week will move to the New York Stock Exchange.

The company also wants to seek a listing in Asia in September or October, most likely on the Stock Exchange of Hong Kong or the Singapore stock exchange, Legere said Friday.

Asia Global Crossing was formed in 1999 as a joint venture of Global Crossing, Microsoft and Softbank.

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