Google, Facebook to Invest in U.S.-China Data Link -- Update
13 October 2016 - 7:51AM
Dow Jones News
By Drew FitzGerald
Facebook Inc. and Google owner Alphabet Inc. will partner with a
little-known Chinese company to build a ultrafast internet cable
between Los Angeles and Hong Kong, the latest sign of its U.S.
backers' insatiable appetite for bandwidth.
The 12,800-kilometer Pacific Light Cable Network would use new
fiber-optic technology to support the region's highest-capacity
route, according to TE Connectivity Ltd., the U.S. company under
contract to build the link. TE says it expects to launch the system
in 2018.
Funding the project along with the U.S. tech giants is a new
Hong Kong company called Pacific Light Data Communication Co.
"It is certainly gratifying that global technology companies
like Google and Facebook have become co-investors" in the project,
the Chinese company's chairman, Wei Junkang, said in a
statement.
Financial terms weren't disclosed. Spokeswomen for Facebook and
Google declined to comment on their Chinese partner in the project.
Pacific Light Data didn't respond to requests for comment.
Pacific Light Data is a newcomer to the industry with no
previous experience building networks. Mr. Wei earlier this year
paid $11.3 million to acquire the company's interest in the project
from China Soft Power Technology Holdings Ltd., whose chairman is
Mr. Wei's son, according to company filings.
China Soft Power, a holding company that is listed in Hong Kong
but incorporated in Bermuda, told investors on Oct. 7 that it
expected to "record a significant decrease in its net loss" for the
six months ended Sept. 30. The company reported a loss of 1.2
billion Hong Kong dollars ($161 million) on negligible revenue for
the fiscal year ended March 31.
Google, Facebook and Microsoft have invested hundreds of
millions of dollars in the underwater cables that carry most of the
world's internet traffic, an effort by the technology companies to
ensure they have enough network capacity to cheaply shuttle
information between their data centers. The investments have pushed
aside the telephone companies that have dominated the
capital-intensive market for more than a century.
Google is no stranger to the Pacific market. Pacific Light would
be its third publicly disclosed investment in a data route across
the ocean. Facebook earlier this year revealed plans to build a new
trans-Atlantic cable with Microsoft and Spanish telecom provider
Telefonica SA.
Facebook and Google have struggled to make and maintain inroads
into mainland China, where both companies' flagship websites are
usually blocked by the country's national firewall. Hong Kong is a
major regional network hub outside that firewall, however.
"If you can get a good reliable cable into Hong Kong, it really
puts the content providers in a really good position to serve those
lucrative Southeast Asian markets," said Michael Ruddy, director of
international research for industry consultancy Terabit
Consulting.
Write to Drew FitzGerald at andrew.fitzgerald@wsj.com
(END) Dow Jones Newswires
October 12, 2016 16:36 ET (20:36 GMT)
Copyright (c) 2016 Dow Jones & Company, Inc.
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