Is Transatlantic Capacity Pricing Set to Skyrocket? (LVLT)

Feb.10.06 | About: Level 3 (LVLT)

Level3 sent out a press release saying it has signed an agreement with Apollo Submarine Cable to purchase 300Gbps of additional capacity on its Transatlantic route. The press release states that prior to this transaction Level3 had 480Gbps of lit Transatlantic capacity, of which 85% was being utilized, but also that Transatlantic traffic had doubled in the past 12 months. Yesterday's deal also includes an option on a further 300Gbps of capacity.

What does that tell us about the future knock-on effects of currently explosive European broadband growth? I am going to hazard a guess that Level3 sees Transatlantic capacity pricing only going one way and is getting in early, but this is not a market I have looked at in any great detail for a long time. Any observations or alternative views are, of course, welcomed.

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