PIPE possibly announces new PIPE

PIPE Networks is in a trading halt right now, in what can be perceived as an announcement relating to the deployment of a new underwater pipe to Guam.

Viva La Competition is the only real message I can think of sending to Southern Cross Cables and Australia – Japan Cable, who currently maintain a duopoly on the network traffic out of Australia.

I can’t really blame them for that though, if the market will bare high prices, they are there to charge it. If you had a business, you’d also charge what the market would bare.

It doesn’t make it right for everyone else though, because they are all paying more than is needed for less of a product.

But, that’s not the fault of anyone but PIPE in this example, who have had all the time in the world to add that cable and didn’t do so (and anyone else who can lay a cable).

I guess, I’m saying I can see a reason for the high pricing, it’s not really due to greed, but more to it, lack of competition.

OPEL is the right idea, add more layers of network, you add another layer of competition, you add another layer of price competitiveness (ie. OPEL fight for Telstra dollars, PIPE fight for Southern Cross dollars).

It all seems like PIPE might have the go ahead to pour $200 million into the ocean in the form of a 1.1Tbps Fibre Optic cable, to provide international access to anyone prepared to pay a lower price then Southern Cross.

So, that would technically be a great percentage of the industry, no doubt.

I believe they might just jumble the traffic.

So, Internode might buy up 100Mbps on that cable, and use it for all Asia related traffic.
iiNet on the other hand might buy 400Mbps on that cable, and just keep 200Mbps on the Southern Cross Cable, for redundancy.

Exetel might on the other hand, use all their cards as bargaining chips and dump all the bandwidth on the cheapest supplier and keep a second as a failover.

So, what happens when iiNet, Internode, and Exetel make their changes? Southern Cross is losing income. So, they’ll want that back. How though?

Well, there’s only one way you can do better in that scenario, drop price and tempt the customers back onto your service, and encourage them to spend more with you.

We’ll of course ignore sabotage, because its both illegal and unethical, but the only other way they’d get customers back.

What does all this fighting mean for the consumer?

Well, with so many ISPs in the long run finding better prices, the consumer wins by lower prices due to lower service costs.


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