Emergia completes first fiber ring linking U.S., Latin America

Emergia, a subsidiary of Telefonica, has completed the buildout--at a cost of $1.3 billion--of what the company describes as the first fiber-optic ring around Latin America connecting to the United States.

The network covers about 16,000 miles and will provide an initial capacity of 40 Gb/s, with the potential for expansion up to 1.92 terabits per second. In addition to undersea cable, the network features about 1000 miles of terrestrial fiber-optic lines and connects major cities in Latin America, Florida and Puerto Rico, including Buenos Aires, Sao Paulo, Rio de Janeiro, Santiago, Lima, Guatemala City, San Juan, and Miami.

According to Erica Eppinger, director of Latin America for Yankee Group, Emergia will have little trouble recouping its investment because of the burgeoning demand for high-bandwidth service throughout Latin America.

“The demand before was so small. There wasn’t much data traffic, and there wasn’t much Internet traffic,” Eppinger explains. “But Latin America is growing at an extremely fast rate right now. The U.S. economy might be slowing down slightly, but the Latin American economy, for the most part, is still going strong. We’ve seen a real rise in companies buying data services looking to start e-business, outsourcing their data solutions, things like that.”

Emergia also will benefit from what Eppinger describes as the development of a secondary market for high-bandwidth capacity.

“Big carriers who have lots of money, such as Telecom Italia, can go in and buy an STM-1 and then resell it, because not everyone can afford an STM-1, but [companies like] Emergia don’t want to sell anything less than that because it’s not worth their while,” she says. “So they sell it to the big fish, which then cuts it up and sells it to the little fish.”

Eppinger adds that Emergia’s fiber ring--as well as Global Crossing’s, when it is completed--will have a significant impact on businesses throughout the region.

“It makes the physical distance between Latin American and the major Internet hubs of the U.S. and Europe almost a non-factor in terms of time and, eventually, cost, as the prices go down,” she explains. “So that means companies wanting to push their data out will have a much easier time making their business case, because it’s not going to be a barrier or hurdle any more.”