Asia to run out of bandwidth by 2012 - Asia Netcom.

Byline: Nick Wood , Total Telecom

Asia will run out of bandwidth by 2012 as demand for broadband continues to grow, according to Asia Netcom CEO Bill Barney.

In a strategy briefing Tuesday, Barney cited statistics showing that between 1998 and 2005, total intra-Asia capacity usage increased by a massive 13,857%.

He added that at the rate that demand for high bandwidth applications in the region is growing, the 15,360 Gbps of capacity currently serving Asia will be completely used up by 2012.

"It's a wireless revolution in Asia, and it's a broadband revolution," he said.

Barney said it takes on average 12 to 18 months to deploy a new cable system.

"It's a problem for our industry, but it's a good problem to have," Barney said.

A glimpse of one possible future came on Boxing Day 2006, when an earthquake off the coast of Taiwan disrupted connections for the whole region.

Reports at the time said that some dealers on the Hong Kong stock exchange were unable to make transactions, and according to Asia Netcom, three of the Internet's biggest portals - Google, Yahoo and MSN - were "unreachable" from much of Asia.

Barney explained that its ability to reroute traffic along alternative lines meant that Asia Netcom's was the only remaining undersea cable system up and running following the earthquake.

Faced with the task of systematically restoring more than one country's Internet service, Barney said, "we got to play God, which was fun, but it's not something we want to have to do again."

Nonetheless, Asia Netcom still trails its major competitors.

"In terms of revenue streams we're behind SingTel and NTT, and in terms of submarine capacity we sit behind FLAG," Barney admitted.

Asia Netcom's strategy includes organic growth through network expansion into Vietnam, Indonesia, India and Thailand, as well as inorganic growth. The latter is illustrated by parent company Connect Holdings' $10 per share offer for Pacific Internet earlier this month.

Asia Netcom was spun out of China Netcom in August 2006; London-based private equity group Connect Holdings paid $400 million for the Hong Kong based submarine cable business.

According to Barney, 70 days after the completion of the deal, Asia Netcom's new owners, Connect Holdings, declined an offer of $1 billion-$1.2 billion from an undisclosed company that wanted to buy Asia Netcom.