Taiwan quake brings bank operations to halt

Internet Services in Asia May Take 2 Weeks to Return (Update7)

By Tim Culpan and Andrea Tan

Dec. 28 (Bloomberg) -- Internet and phone companies in Asia may take at least two weeks to restore services as they struggle to fix undersea cables damaged by earthquakes off Taiwan.

Chunghwa Telecom Co., the island's biggest phone company, said four ships are heading to the damage site off Taiwan's south coast for repairs starting Jan. 2 that may take two to three weeks. China Network Communications Group Corp. said two boats have started to fix the fiber-optic lines.

Companies from Kuwait Finance House, the Persian Gulf's largest Islamic investment bank, to Nippon Yusen K.K., Japan's biggest shipping line, are suffering from the loss of online services after a 7.1 magnitude quake struck southern Taiwan on Dec. 26. Cable operators are using other lines or satellites to help alleviate the bottleneck as parts of Hong Kong, China, Singapore and India remain without access.

``In terms of lost business, that amount will exceed the amount for repairs,'' Rob Enderle, an analyst with the research firm Enderle Group in San Jose, California. ``Think of the trading organizations that exist in these geographies that trade in world markets that can't trade right now.''

The cable-repair ships will cost $25,000 per boat per day, which only covers vessel rental fees, and will depart from Yokohama in Japan, Busan in South Korea as well as Manila and Singapore, according to Chunghwa. The company is working with other operators to fix four broken cables.

`Not Happened Before'

At least six undersea cables which pass through Taiwan are broken and a seventh is damaged, said Au Man-ho, director general of Hong Kong's Office of Telecommunications Authority. Six of 10 international cables connecting Korea were affected, according to KT Corp., South Korea's largest phone company.

``If only one cable is damaged, the impact will be insignificant,'' Au said. ``All seven cables are damaged. That has not happened before.''

KDDI Corp., Japan's second-biggest carrier, said cable repairs can take ``several weeks to months.''

Undersea cables which connect North Asian countries such as Japan and Korea to Southeast Asian countries such as Singapore and Malaysia pass close to Taiwan's south coast because the alternative route through the Taiwan Strait is too shallow and not suitable for cables, said Wu Chih-ming, managing director of international networking at Chunghwa.

The repair ships will drag a large grappling hook across the ocean floor to find the broken cable before pulling it to the surface for inspection, according to Chunghwa. Cables will be repaired by cutting out damaged sections and rejoining with new pieces, with the ships equipped to conduct all necessary work.

Largest in 100 Years

``It's very difficult, technical and slow work to repair these fiber-optic cables,'' said Chunghwa's Wu. The company is turning to backup cables and may use its ST-1 satellite to provide data bandwidth, he said.

The quake which shook Taiwan Dec. 26 was the largest in the area for 100 years, and was one of 11 temblors in that area over a 24-hour period, according to Taiwan's Central Weather Bureau.

Chunghwa said today it could increase services to the U.S., Japan and China by rerouting connections. Voice traffic from Taiwan to the U.S. is up to 60 percent capacity from 40 percent yesterday, while those to Japan are at 70 percent from 11 percent. Voice capacity to China rose to 55 percent from 10 percent.

``Eighty percent of our Internet bandwidth has been successfully diverted,'' said Michael Sim, spokesman for StarHub Ltd., Singapore's second-largest phone company.

Services Return

China Network, parent of China's second-largest fixed-line carrier, said international voice services were ``mostly restored,'' while its bigger rival China Telecommunications Corp. reported voice services to Japan, South Korea, Hong Kong and Taiwan were ``basically'' restored.

PCCW, Hong Kong's largest telephone company, said the damage cut its normal telecommunication capacity by as much as half yesterday.

KT Corp. of South Korea said it restored services on 33 of its 92 leased lines by rerouting connections. The company said it plans to redirect another 17 lines through satellites.

``We have received more enquiries from telecom operators about short-term leases for transponder capacity,'' Alvin Chong, a marketing executive at Asia Satellite Telecommunications Holdings Ltd. in Hong Kong, said today, without providing more details. ``We usually see a jump in demand following events such as earthquakes, and the tsunami two years ago.''

Traffic Redirected

PT Telekomunikasi Indonesia, the nation's biggest phone company, said it directed much of its Internet traffic through the Singtel Internet Exchange (STEX) gateway. Yesterday it began to switch part of the traffic to Dubai Malaysia Cable System.

``Impact on Telkom's earnings is likely minimal,'' said Harsya Denny Suryo, the corporate secretary at Bandung, Indonesia-based Telekomunkasi. ``The problem is with customers who don't have Internet access.''

AT&T Inc., the biggest U.S. phone company, said in a statement that it's experiencing Internet delays, most notably on traffic between Singapore and Tokyo and between Hong Kong and Tokyo. Voice traffic from the U.S. to countries including Thailand, Malaysia, Vietnam, Philippines, Hong Kong, Taiwan and Brunei is also affected, the San Antonio-based company said.

Both AT&T and Verizon Communications Inc., the second- biggest U.S. phone company, said they are working with partners to restore services. Some Verizon business clients may encounter disruptions, the New York-based company said.

Phones, Faxes

``It is slowing things a bit but we have to manage,'' said Salman Younis, managing director of Kuwait Finance in Kuala Lumpur. ``I'm quite used to disaster, having worked in the Middle East for 18 years.'' The company is using phones and faxes, he said.

Nippon Yusen, which normally uses e-mail between Tokyo headquarters and its regional branch in South Korea to set shipping prices, is also using phone calls and faxes, said spokesman Atsushi Matsumoto.

Singapore Telecommunications Ltd., France Telecom SA and Pakistan Telecommunication Co. are in a group that owns the Sea- Me-We3 cables linking Europe to Asia. Operators in the APCN2 cable network that connects Japan, Korea, China, Taiwan, Hong Kong, the Philippines, Malaysia and Singapore include StarHub, China Unicom Ltd., Telekom Malaysia Bhd. and Telstra Corp.

Asia had the slowest Web connection with response time at 450 millseconds, more than double the average 200 milliseconds, according to the latest figures from Internet Traffic Report's site, which monitors the flow of global Internet data.

The tremors came on the second anniversary of the 2004 Asian tsunami, when a magnitude 9.1 earthquake off Sumatra unleashed waves that destroyed coastal villages from Indonesia to Sri Lanka, killing more than 220,000 people.

``This has really turned into a global event,'' said Enderle in San Jose. It ``showcases how much consolidation has gone on in terms of putting so much traffic through so few massive lines.''