6.7 Quake Damages Undersea Cables,
Disrupting Internet Service in Asia

JASON DEAN / Wall Street Journal 27dec2006

BEIJING — A big earthquake near Taiwan disrupted phone and Internet traffic across Asia Wednesday, highlighting the fragility of a global telecommunications system that still relies on vulnerable undersea cables to carry data.

The magnitude 6.7 temblor that struck late Tuesday off Taiwan's southern coast cut several fiber-optic cables that carry communications traffic through a key nexus in Asia, connecting Hong Kong and Southeast Asia with Japan and, ultimately, North America.

International phone service was cut off or restricted in some regions. Internet service slowed to a crawl in much of China, while service to BlackBerries and Bloomberg terminals was temporarily halted in places. Some transactions in currency and other financial markets in the region were disrupted.

Companies around the region for the most part said they found ways to work around the disruption. Stock markets were unfazed: In Tokyo, the Nikkei 225 Stock Average closed up 0.31% at 17,223.15 points, while Hong Kong's Hang Seng Index rose 2.1% to 19,725.73, a record high.

Still, the wide scope of the disruption — caused by a single natural disaster with limited physical damage — illustrate how vulnerable the systems are that support the global communications system. Telecom companies said that repairs to the damaged cables could take weeks to complete, although service will improve as companies find alternative ways to deliver service.

Nearly all the data that travels between continents does so over tiny threads of flexible glass, or fiber-optic filaments, that are bundled together and covered in insulation and other protective materials. Companies — usually consortia of telecom carriers that team up to share costs — then stretch these cables across thousands of miles of ocean, to rest on the sea floor or float above it.

Large disruptions are possible wherever they are clustered together in a handful of key hubs — for instance, there are key points near New York City and in southern Britain. The cables damaged this week run through an especially dense pathway between Taiwan and Hong Kong; the same pathway above water serves as an important shipping lane linking north Asia with southeast Asia.

The dangers are heightened in Asia. The region is one of the world's most earthquake-prone, making the cables there vulnerable. It is also the world's fastest-growing economic region, creating ever-increasing demand for communications traffic and overload.

The problem Wednesday flows partly from a slowdown in investment globally in recent years in new cables. During the telecom boom of the 1990s, companies laid huge amounts of fiber-optic cable both within and between countries in anticipation of an explosion in demand. When that growth didn't happen as quickly as expected, companies were hammered financially — with several going bankrupt — and investment in new fiber-optic capacity slowed sharply.

In the intervening years, however, use of the Internet and international phone service has grown quickly in Asia, making capacity more tight, and often technologically outdated. The number of Internet users in China, for example, soared to more than 123 million as of June, from about 8.9 million users at the beginning of 2000.

Only recently has investment by these telecom companies started to pick up. Earlier this month, Verizon Communications Inc. and a group of five big Asian telecom carriers, including three from China, announced plans to spend $500 million to build the first high-speed undersea cable system directly linking the U.S. and China. Slower cables already link the two countries, either directly or indirectly.

This week's incident "raises the question of whether there needs to be a new wave of investment" in these cables, says Duncan Clark, chairman of BDA China Ltd., a telecom consultancy based in Beijing. Mr. Clark says most of the cables that have been laid run between the U.S. and Europe or the U.S. and Asia. More cabling between Asia and Europe would make it easier to reroute international traffic in the event of such breaks, he says.

Ensuring that such cable systems can function is essential to keeping the world's increasingly integrated economy humming. The emails, Web-site content and cellular-phone calls people make are all converted into packets of digitized data that can be sent along fiber-optic filaments in super-fast bursts of light. Advanced technology lets telecom operators shoot huge volumes of such data across vast lengths quickly, in part by sending different packets simultaneously over dozens of different frequencies of light that don't interfere with each other.

Information can also be transmitted over long distances by satellite, but such wireless systems can't provide the same speed and capacity as cable systems, and satellite is more expensive. Satellites are also susceptible to service disruptions. Still, telecom carriers sometimes use satellites as a backup: state television said China Telecom Corp., China's biggest phone company, was contacting counterparts in the U.S. and Europe about using satellites to make up for the capacity shortfall, according to the Associated Press.

Hundreds of fiber-optic cables stretch across the world's oceans, each costing hundreds of millions of dollars to construct and deploy. They carry names such as the China-U.S. Cable, and the Asia Pacific Cable Network 2. These undersea networks are built by special contractors on behalf of cable carriers or groups of telecom operators from different countries who split the cost and share risk and capacity.

For the Asia Pacific Cable Network 2, a 19,000 kilometer web of high-speed lines was completed in 2001, at the cost of $1.1 billion. Dozens of companies participated in the project, which was built by Japan's NEC Corp.

These cables are easy to dislodge. Fishing nets and dragging ship anchors have damaged cables in the past. Pakistan's Internet service was disrupted for 12 days last summer after a fishing boat cut what was then the country's only undersea cable line.

Undersea cables are usually built as a loop with multiple landing points, so that when one part of the cable system is disrupted, the other lines will be able to function normally. But this week's earthquake caused a much larger disruption because it affected so many different cables — as many as eight, according to China Netcom Group Corp., a Chinese fixed-line carrier.

Repairing broken cables can be difficult. Special ships must be sent out to pull up the cable, find the break, and repair it. Asia Netcom, which operates a cable network within Asia, said it was able to restore its services late Wednesday night. But Chunghwa Telecom Co., Taiwan's biggest phone company, said it could take up to three weeks before service is normal.

Meanwhile, telecom carriers must find other paths to send their information—especially for their big corporate customers. Wednesday, that caused congestion. Chunghwa Telecom, whose service was among the most severely disrupted, said its capacity was down to 40% of its normal long-distance call volume to the U.S., and less than 10% of normal volume to southeast Asia. Later in the day, the company found alternative cables.

In Japan, KDDI Corp. began shifting traffic that normally would have been handled by the disrupted cables through U.S. and Europe, a backup plan that had been formulated for dealing with connection outages. South Korea's telecom operators also reported disruptions. By late last evening, 92 business customers of KT Corp., the nation's largest carrier, were without their leased circuits. Their service was switched to public circuits, leading to slowdowns in data speeds.

At Baring Asset Management in Hong Kong, traders got stock prices off a local data provider, since the Bloomberg terminals weren't working.

The outage even trickled down to the region's shipping and logistics industry. KL Tam, managing director of Hong Kong-based Kingstar Shipping, which manages 10 ships around the region, said he was unable to reach clients in Japan or Korea, and some in Singapore. "We have been trying other ways to communicate — but nothing much works," he said. Most of Kingstar's ships Thursday already have cargo now, but "If this continued for several days, our operations overseas would essentially stop," he said.

—Andrew Morse in Tokyo, Evan Ramstad in Seoul, South Korea and Geoffrey A. Fowler and Laura Santini in Hong Kong contributed to this article.