Hibernian Atlantic's state-of-the-art 12,200 km cable, which is already upand running, will offer direct competition to rival telecoms firms andshould mean good news for consumers, writes Jamie Smyth, Technology Reporter.

The cost of international telecoms and internet services is set to fall further with the imminent launch of Hibernia Atlantic, a fibre-optic cable linking the Republic with the US and Britain.

The state-of the-art 12,200 km transatlantic cable will offer direct competition to Global Crossing and other telecoms companies such as Cable & Wireless and Sprint.

The cable will be officially launched in a formal ceremony on May 12th but is already operational and seeking its first users.

"We think we can reduce conventional telecoms prices by about 80 per cent," says Mr Mike Higgins, sales and marketing director of Hibernia Atlantic, a subsidiary of Columbia Ventures Corporation.

The cable, laid at a cost of $900 million (€821.9 million) by Canadian firm 360networks, was bought recently by Columbia Ventures Corporation, following 360network's filing for Chapter 11 bankruptcy protection in the US.

The final cost to it of the network asset was just $18 million, a fraction of the installation cost of the transatlantic cable, due to the massive slump in the telecoms market since mid-2000. The sector's downturn has forced many new generation telecoms carriers that emerged in the 1990s to file for bankruptcy. It is also forcing established firms to cut prices.

"We are sitting on huge capabilities and have a choice of keeping prices high and selling very few connections or changing the paradigm," says Mr Higgins, who began knocking on potential customers' doors this week to sell them telecoms capacity and bandwidth.

Hibernia Atlantic will offer firms almost unlimited bandwidth at prices significantly below current costs, he says.

The specifications of the cable are impressive. It has immediate capacity of up to 160 gigabits per second on each of its two separate fibre-optic cables. This is equivalent to handling 2.5 million simultaneous phone calls while also delivering 13,000 movies. Better still, it can be upgraded to handle a protected capacity of 1.9 terabits per second, or more than 10 times current capacity.

The firm has signed a partnership with Dublin-based video conferencing firm Spectel and hopes to persuade firms to use its low-cost bandwidth to explore a host of new applications. The cable should offer a commercial advantage to the Republic as a location for data storage, says Mr Higgins, who believes more and more US firms will use the Republic to store their data for disaster recovery.

"Companies can now run a mirror site all the way across the Atlantic," he says. The problem for Hibernia Atlantic is that the demand for international bandwidth predicted by analysts in the late 1990s has never materialised. This has left a global glut of fibre-optic cabling and global bandwidth.

As The Irish Times revealed in February, Eircom - the anchor tenant of the Global Crossing cable system, which also links the Republic to Britain and the US - is using just four of the 38 cable links it purchased in a major Government initiative signed in 1999.

In total, the Government paid $80 million to buy the right to use 160 STM1 circuits (very high capacity cable links each capable of carrying 155 megabytes) but it has found few telecoms firms are interested in buying new bandwidth.

This has caused bandwidth prices to slump to record lows. A study published by the OECD recently found the Republic had the lowest prices for international leased lines in Europe.

Analysts believe Hibernia Atlantic's cable will depress prices further. "Transatlantic connectivity is a commodity, and, like all commodity markets, is price sensitive," says Mr Enda Hardiman, managing partner of consultancy Hardiman Telecommunications. "Entry of a new operator will continue to keep prices low."

The Columbia venture will certainly not help Global Crossing. If successful it will draw customers away, says Mr Hardiman.

Mr Bernard Keogh, managing director of Global Crossing Ireland, admits there is a concern that, a few years down the line, a similar crisis will re-emerge in the telecoms sector if firms emerge from Chapter 11 and just cut prices.

The completion of three new transatlantic systems - Cable & Wireless's Apollo cable; Hibernia Atlantic; and a cable built by US conglomerate Tyco - will also increase competition, he says.

The new cables will compete for business with cables operated by Flag, Global Crossing and a conglomerate that runs a cable called Tat 14. But Mr Keogh believes bandwidth prices have bottomed out and will not fall much further. Price is also just one factor, he adds.

"Customers are also looking at where you can link them to and how stable the firm is," says Mr Keogh, who adds that Global Crossing should emerge from Chapter 11 bankruptcy protection shortly.

Global Crossing will differentiate itself from Hibernia Atlantic by linking its customers to more than 200 international cities. It has also already signed up many of its rival's potential Irish customers through the existing Government deal, says Mr Keogh.

Hibernia Atlantic will find it difficult to compete with Global Crossing's international reach. Its undersea cable only directly links New York, Boston and Dublin and it will have to negotiate deals with other carriers to offer customers a global solution. Hibernia Atlantic hopes to get around this issue by opening an international exchange centre in Dublin with a dealing desk that can link Irish firms to global bandwidth markets, according to the firm's managing director, Mr Patrick Coughlan. He previously headed 360network's Irish office.

Mr Coughlan says Hibernia Atlantic will also prove attractive to customers because of its unique position as the only transatlantic cable that lands in the Republic as opposed to the coast of Cornwall in England.

This would offer greater diversity for firms in case a problem emerged in Cornwall, he says. But Mr Coughlan agrees it will not be an easy few years in the telecoms sector.

"A lot of firms will go back into Chapter 11," he says. "But Columbia Venture Corporation is privately owned and committed for the long term."

Columbia Venture Corporation - founded by lawyer Mr Ken Petersen - will hope its strategy of buying distressed assets pays off. The firm has also recently bought telecoms assets in Iceland and Canada.

But with strong competition in the transatlantic cable sector analysts believe Columbia will need deep pockets to ride out the worst telecoms slump in history.