Excess capacity in international telecommunications

Leland L. Johnson

Telecommunications Policy, 1987, vol. 11, issue 3, 281-295

Abstract: International telecommunications facilities--both satellite and cable circuits--in the Atlantic and Pacific Ocean basins are characterized by persistent excess capacity. Although some excess is desirable to provide flexibility and protection against system failure, the problem is so great that Intelsat has 100 satellite transponders deemed surplus to international requirements. However, plans are under way for continued expansion of cable and satellite capacity. This article examines why telecommunications organizations are investing in such a seemingly wasteful manner. Three possible explanations are explored: (a) over-optimistic traffic forecasts, (b) market structure and regulatory policy, and (c) inefficient pricing of circuits.

Date: 1987
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