Bandwidth over-capacity will decimate European carriers

As carrier iaxis went into administration earlier this week, many saw its demise as an inevitable result of its exposure to tumbling prices on long haul circuits. The London-based company built its business solely on these intercity links.

Telecoms watchers say the instability will continue as long as there is a mismatch between the over-capacity at major points of presence and the limited access from local premises.

Richard Elliott, founder and director of bandwidth exchange BandX, said: "There is temporary disequilibrium on certain parts of the network and iaxis was fully exposed."

Allen Timpany, chief executive of managed network services provider, Vanco, predicts major consolidation in the European telecoms market. Pointing out that there are 600-plus licensed operators, compared to 20 national providers a decade ago, he said: "Many of these will go bust or amalgamate.

"The turmoil could take five years to resolve itself," said Timpany, who added that only those companies with the deepest pockets would survive.