When Bermuda-based Global Crossing announced two months ago it was about to issue an initial public offering investors' interest was piqued. Since the company began operations in March 1997 it has grown by leaps and bounds.

The company's filings with the Securities and Exchange Commission indicate Global Crossing's backers are making a multi-billion dollar bet on the future of telecommunications technology, and especially on the growth of the Internet, and Internet type applications.

Global Crossing is laying a network of digital fibre optic cable systems around the world so as to sell capacity to international telecommunications companies.

Global Crossing wants to take advantage of the new trend toward deregulation and open competition. Instead of having to invest heavily in building their own networks the new telecommunications companies will have the option of buying capacity from Global Crossing.

The International Telecommunications Union estimates that as of April 1998 there were 1,000 international carriers in existence, representing a 186 percent increase since 1996.

The company expects international voice traffic to increase at about 13 percent a year annually. International data traffic is expected to explode, outpacing the growth of voice.

"One of the key factors contributing to the growth in data traffic is the increasing use of broadband applications such as the Internet, which has grown at a compound annual rate of 86 percent for the past five years as measured by the number of Internet hosts,'' the company stated.

Improvements in technology, such as cable modems, are contributing to a significant increase in the number of subscribers using bandwidth intensive applications. For example, in the United States, the number of cable modem subscribers are projected to increase by about 600 percent this year.

"Several additional key factors are expected to drive the rapid growth in worldwide telecommunications traffic, including the worldwide growth in the use of bandwidth-intensive applications, such as video conferencing and corporate intranets, increased globalisation of commerce, and a general decline in international tariffs.'' Earlier this year, Global Crossing began transmitting traffic through its undersea line between the US and Europe. The company is in the process of building the Pacific Crossing, a link between the US and Japan, and Mid-Atlantic Crossing, a link between New York, Bermuda, the Caribbean, Panama and Florida. Another link will connect California, Mexico and Panama.

Interestingly Global Crossing is in discussion with Bermuda's long distance telecommunications provider TeleBermuda International Ltd. (TBI) over a possible link up of systems for its Mid-Atlantic Crossing.

TeleBermuda fits right into the profile of prospective clients.

Global Crossing states it has entered into a non-binding agreement in principle with TBI in which it will buy the company's newly constructed fibre optic link from Bermuda to the US.

The deal will be made in exchange for cash and capacity on the Atlantic Crossing cable, completing TeleBermuda's vision of a direct link with Europe.

Will that deal get TeleBermuda in the same potential problems as Quantum Communications is experiencing in its attempt to get operations going in the provision of local services? Bermuda Telephone Co. Ltd. (BTC) is attempting to delay as much as possible Quantum's ability to compete with it by protesting the company doesn't own its own fibre-optic network, but instead leases it from majority owner Bermuda Electric Light Co. Ltd.

BTC is refusing to link Quantum to its network (a must if the company is to operate voice services) on the grounds the licence granted to it specifies it must own the cable it operates.

BTC contends Quantum is a reseller and not a provider. Well, this is a "delaying tactic'' -- despite denials by BTC president Lorraine Lyle -- by a company that is attempting to get its own fibre optic network off the ground before Quantum becomes fully operational. The fact is before Quantum there was no fibre optic network in operation in Hamilton. Then there was Quantum. Then there was an operating fibre optic network. Something was built which wasn't there before.

BTC has had a moribund fibre optic network but has delayed for years connecting it up due, I am told, to lack of an incentive and general inefficient operations. Isn't competition a great motivator? The same dispute could break out between Cable & Wireless and TeleBermuda over the provision of international services if the Global Crossing deal is completed. A TeleBermuda executive said he doesn't think this will happen as TeleBermuda built a fibre optic connection. If it is sold to Global Crossing, TeleBermuda will still in a sense still own something -- capacity on a network.

Let's hope this is true or else we might all die of excitement if things heat up too much more in the local telecommunications industry.

Tech Tattle deals with technology issues. Contact Ahmed at 295-5881 ext. 248, 238-3854 or techtattle ygazette.newsmedia.bm.