Investment in fiber returns

There have been a number of stories in the past days about big undersea fiber projects (see this, for example). Om Malik takes a thoughtful view of this new trend in this post on GigaOM:

The first sign of a new dawn: a new network by Verizon Business1 (which in reality is the old MCI) and a gaggle of Asian telecom operators including China Telecom, China Netcom, China Unicom, Korea Telecom, and Chunghwa Telecom of Taiwan.

The new cable consortium is going to build a $500 million network called, Trans-Pacific Express, and the 18,000 kilometer cable system will have capacity of up to 1.28 terabits/second, but will eventually upgrade to over 5 terabits per second. The network will land on Nedonna Beach, OR, on the US side and will hit China at Qingdao and Chongming. It will also have landings in Tanshui, Taiwan, and Keoje, South Korea.

The new network should not come as a surprise to anyone who has been following the telecom and broadband markets. The traffic between Asia Pacific (and China in specific) and the U.S. has been increasing at a steady rate, and current infrastructure is feeling a bit stretched.

By the way, there is a cool visualization of undersea fiber capacity on the original post.

Do you think that this is being driven by offshore outsourcing? Or, are there other factors at work?

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Verizon, broadband, fiber, China, India