Buyer Pricing Guidance: The Atlantic

The Atlantic at the 100G level ranges from $4K to $6K MRC. The cables deployed at or around the time of the New Millenium vary from $3,800 to $5K. Generally, new cables like Marea and Dunant command a premium because they directly connect Ashburn Equinix to Continental Euroipe with both Ashburn Equinix and at least two Paris Equinix facilities onünet. Both bypass Ireland and the British isles. So expect to pay in the $5K to $6K range on 2 or 3 year terms. And yes, you should pay the premium because Marea, Dunant, Anjana, and Nuveem all dramatically improve resiliency. The NYC/London cooridor is congested with most UK landings in Cornwall at Bude. Furthermore, UK surveillance of undersea cables is well known. 

Any saavy buyer should be riding both NYC/London cables and also cables like Dunant and Marea that directly link Ashburn Equinix to the European continent. This physical diversity is not a luxury; it's essential. A special mention goes to EXA Express for NYC/London which is a native 100G system that offers a low latency route for carriers.

It is important to avoid the naive idea that Atlantic pricing will continue falling. The cost of 100G cards as well as the requirement to earn enough revenue to cover the subsea cable maintenance charges places a floor on pricing. In fact, it would not be surprising to see prices bottom and then stay there. At current 100G prices, it takes 20x 100Gs to generate $100K per month. So every million dollars in monthy revenue requires 200X 100Gs. That's a fibre pair. So the Atlantic wholesale Layer 1 business is extremely tough. This is why Aquacoms will probably be sold to EXA. Consequently, the Atlantic will become effectively a duopoly with EXA and Telxius competing like gentlemen, not boxers. Every industry with high fixed operating expenses and high upfront capex reaches a point where price declines bottom out, often increase, and consolidation occurs to increase the rate of return to a level acceptable to investors. 



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