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...on the most populated and competitive routes. The North Atlantic route probably represents the best example of on-going irrational pricing behaviour. Until more rational behaviour is adopted the submarine sector will remain non-commercial.
To help understand the irrational behaviour of today it is helpful to understand the irresponsible financing behaviour of six years ago that allowed too many 'imitators' to enter the market. The quasi-monopoly supply of trans-oceanic capacity represented By club systems before the latter '90s had precluded new competition in the market. The regulatory environment and rules associated with club systems resulted in favourable treatment for the entrenched competitors making it difficult for new competitors to compete in domestic service, much less international services. Backhaul and landing stations remained the domain of ex-monopolies and products were restricted to those appropriate for voice traffic. Yet the substantial returns available in the restricted market acted as a strong lure for new players to find ways to overcome the barriers to entry.
The rise and fall
The first of a new breed of private systems across the Atlantic was Gemini, a joint venture between Cable &...
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