Post 2015 we left behind the era of submarine cables that took off in mid-1990’s, stumbled in early 2000’s and recovered cautiously post 2010 and witnessed an unprecedented surge post 2015, flagging off a golden era. Over 2010-2015, it was observed time and again that lifecycle management of large consortia cable systems were really challenging. Hence post 2015, the size of consortiums reduced significantly and settled for 3-6 members in most cases, except for the Asia-Europe corridor. Along with it, number of countries connected also reduced to 2-4, albeit with few exceptions. This was enabled by lower cost of submarine cable construction, that dropped to $25,000 to $35,000 per kilometer (1 kilometer = 0.62 miles). One of the main reasons for shrinking size of consortiums was overzealous preference for fiber pair(s) ownership instead of tranche of capacity proportional to investment, for greater independence and flexibility and deploy new optical transmission technology to multiplex more wavelengths per fiber pair and pack greater capacity in each wavelength. This led to new service innovations and optical spectrum and fractionated or virtual fiber pair became standard service offering creating affordably scalable models, allowing new consortium members to onboard midway.
The trend highlighted above is brought about by two groups of entrants in the race to build new submarine cables – the cloud and content behemoths Google, Facebook, Amazon and Microsoft, and the less noticed group of independent infrastructure developers. While the hyperscale heavyweights were duly noticed and applauded profusely, the independent infrastructure developers remained relatively unnoticed. This article aims to take a closer look at top 10 independent infrastructure developers.
The number of independent infrastructure developers over the last 4 years has grown to 10. Put together they are set to own and operate 25 submarine cables by 2021, representing a significant percentage of major submarine cables that will be operational by that time. At present 5 out of 25 submarine cables are operational. 10 submarine cables are scheduled to be operational in 2019. Interestingly the stated RFS of Q4 2019 for several cable systems could roll over to 2020 for some of the cables. Hence the larger play of independent infrastructure developers will unfold in 2020. There are 4 submarine cables whose plan of action is not available till date and that could indicate uncertain prospect, tough I would prefer to believe otherwise.
The 25 cable systems will have combined length of nearly 1,85,000 Kms. This includes cables systems as short as 256 Kms (SEAX-1) and as long as 14,720 Kms (PLCN). Construction of the 25 cable systems will entail investment of nearly $6 billion, with several cable systems declaring they are fully funded. The submarine cables will span majority of global routes - transatlantic, transpacific, Latam-US, Latam-Africa, Africa-APAC, Australia-US, intra-Europe and intra-APAC.
Yet the independent infrastructure developers differ significantly in terms of scale, geographic focus, size of investment and business model, approach to alliances. Some of them are already operating submarine cables, some are driving timelines for the submarine cable to be operational in 2019-21. Some are focused on one submarine cable while others are concurrently implementing 2-4 submarine cables. Interesting trends of collaboration and competition will emerge in 2020 once majority of the submarine cables will be operational. It remains to be seen if competitive dynamics would lead to consolidation and pave the way for mergers and acquisitions going forward.
(Suvesh Chattopadhyaya November 22, 2018)
1. RAM Telecom International (RTI)
RTI, headquartered in San Francisco, and its wholly owned Singaporean subsidiary RTI Connectivity Pte. Ltd. (RTI-C) have over the last 4 years established themselves as leading carrier neutral network infrastructure provider to telecom carriers, large multinational enterprises, content and cloud providers, and government entities.
Focused on east-west and north-south routes in APAC, they are the front runners among the 10 independent infrastructure developers to build 5 new submarine cables with combined span of 41,780 Kms that are scheduled to be operational by 2020. RTI/RTI-C is the co-investor and consortium member 3 consortium built cables (SEA-US, HKA, JGA-S). It leads one cable system - HK-G with Google, hence it's not really a consortium cable. It also leads one cable system as the sole investor - JGA-North. There is no announcement till date from RTI on its plans to develop cable administration capability and invest in NOC setup, though it is recommended that they do, logically for JGA where they are project lead, unless they plan to outsource it. Uniquely RTI is the only independent infrastructure developer to join 3 major consortium built cables, a deviation from the privately owned submarine cables by other independent infrastructure developers.
The 14,500 Kms 20 Tbps (presumably 4x50x100G), $250 million transpacific cable SEA-US (South East Asia-United States) connects Indonesia, Philippines, Guam, Hawaii and Los Angeles. It was RFS in August 2017, meaning it was designed in 2014-15. Looking at 2020, 20 Tbps presumably with 4 fiber pairs seems low capacity, given majority of cables currently under construction have 12 Tbps per fiber pair and some go as high as 24 Tbps per fiber pair. Hence SEA-US is evidently a low hanging fruit for upgrade in 2019-20. RTI announced collaboration NTT Com ENG in January 2018 to provide managed network services for RTI’s investment in SEA-US, though the scope of work remains unclear. Interestingly SEA-US has one of the lowest per kilometer cost of submarine cable built.
The 3,900 Kms 48 Tbps Hong Kong Guam (HK-G) submarine cable under construction by NEC and scheduled for RFS in Q4 2019 has Google and Japanese government led Japan ICT Fund as co-investor. It has provision of branching units for future connectivity to Taiwan, Vietnam and Philippines and possibly onboard new consortium members. In Hong Kong, HK-G will land inside datacentre owned and operated by NTT Com Asia. It’s presumably a 4 fiber pair system with 120x100G technology.
The 13,000 Kms, 72 Tbps (6x120x100G), 6 fiber pair, $300 million Hong Kong Americas (HK-A) cable system connects Hong Kong to Los Angeles. It's a consortium cable with RTI, Facebook, Telstra, Tata Communications, China Telecom, China Unicom, under construction by ASN and scheduled for RFS in 2020. Notably this is direct connectivity without stopover in Guam and Hawaii. Latency for HKA route is expected to be 20ms shorter than that of AAG, that is heavily utilized currently.
3. Pacific Light Data Communication Co. Ltd. (PLDC)
PLDC, founded in 2015 in Hong Kong, along with Google and Facebook is building the 12,971 Kms, 6 fiber pair, 144 Tbps, $400 million transpacific submarine cable PLCN (Pacific Light Cable Network), scheduled for RFS in Q4 2019. It claims to be the first to directly connect Hong Kong and Los Angeles with lowest latency of 130 ms. Though the scale of investment is not revealed yet, it is expected that the investment will provide ownership of 1 fiber-pair each to Google and Facebook. Thus PLCN is delicately positioned between a private submarine cable and consortium built submarine cable.
PLCN prides itself as one of the first submarine cables designed to implement the newly developed C+L technology for cable length exceeding 10,000 Kms, supporting 24 Tbps per fiber pair with 240x100G. PLCN design capacity of 144 Tbps is highest among the 25 cables being built by the independent infrastructure developers. PLDC has end to end ownership for design, deployment and operation of PLCN.
PLCN is designed to promote open cable system approach with provisions that allows each fiber pair in the system to be terminated by separate SLTE’s, with individual SLTE owned, operated and upgraded by the party leasing the fiber pair completely independent of the SLTE’s terminating other fiber pairs. Further PLCN incorporates Spectrum Manager, that allows the C+L band to be sliced into blocks of spectrum that can be independently assigned to separate SLTE that is owned, operated and upgraded by the party leasing the spectrum. PLCN has productized it in terms of Minimum Spectrum Unit (MSU) which is 5% of the total C+L band capacity i.e. 5% of 240x100G or 1.2 Tbps. It’s extended further as virtual fiber pair with Quarter Fiber Pair as 5xMSU or 6 Tbps and Half Fiber Pair as 10xMSU or 12 Tbps. This notably is not unique to PLCN and is supported by most the cable systems designed post 2015 or supported with upgrades.
PLCN will terminate in carrier neutral datacenters - TMH in HK, Equinix LA4 in Los Angeles. SDN-enabled activation on-demand it claims will shorten the delivery lead time considerably, a key differentiator for customers expecting cloud-speed provisioning times. It remains to be seen if PLCN develops metro fiber connectivity and establish network nodes in multiple datacentres, similar to Seabras-1 from Seaborn Networks, in Hong Kong and Los Angeles to meet the promise of shortened PoP-to-PoP delivery lead time for its customers.
5. Acqua Comms DAC (Acqua Comms)
Aqua Comms, an Irish venture established in 2014, with the objective to build, acquire or merge with submarine cable networks to provide network solutions that require exceptional reliability and performance. Acqua Comms is strictly a carriers’ carrier, targeting ISPs, telco carriers, and of course the global behemoths of cloud and content. It undertakes complete submarine infrastructure development that includes planning, implementation, operation and lifecycle management of submarine cables. The service offerings include capacity, spectrum and full and fractional fibre pairs.
A journey of merger and acquisition of transatlantic initiative Emerald Networks and Sea Fiber Networks, led to $300M, 5,536 Kms, 52 Tbps (4x130x100G), 4 fiber pair America Europe Connect-1 (AEConnect-1 or AEC-1) that was RFS in 2016. Interestingly AEC-1 seems to have the highest per kilometer cost of construction.
Aqua Comms is implementing the second transatlantic cable system - 7,200 Kms, 108 Tbps, 6 fiber pair, America Europe Connect-2 (AEC-2), that connects Denmark and Ireland to US East Coast. When combined with the extension to Norway, it's named HAVFRUE cable system. Acqua Comms is the cable administrator for the entire HAVFRUE cable system. HAVFRUE/AEC-2, together with AEC-1, CentixConnect-1 and other existing systems owned and operated by Aqua Comms, will create resilient, ring-protected infrastructure between the US East Coast, Ireland, and Northern Europe.
Network services on AEC-1 and AEC-2 will be delivered to and from carrier-neutral interconnection points at NJFX, New Jersey, and 1025 Connect in Long Island, New York, with a resilient network connection in between. The NJ and NY network interconnect will have Manhattan bypass route to increase diversity and resiliency. In Europe, services will be offered from all landing stations and carrier-neutral metro PoPs in Dublin, London, Amsterdam, and Blaajberg.
6. SAEx International Ltd. (SAEx)
SAEX, the second independent infrastructure provider based in Mauritius other than IOX, is actively and ambitiously developing two long haul submarine cables – South Atlantic Express, SAEx1, across South Atlantic to US through Brazil with scheduled RFS of Q1 2021 and South Asian Express, SAEx2, from South Africa across the Indian Ocean to India and Singapore with scheduled RFS of Q2 2021.
Both the submarine cables will be 6 fiber pair system with 120x100G per fiber pair adding up to 72 Tbps design capacity and leverage existing cable landing stations at 6 key locations for landing. With SAEx1 spanning 14,720 Kms and SAEx2 spanning 13,900 Kms, gives it second position in the group of 10 after RTI in developing submarine cables. Their differentiation is with submarine routes that are designed to avoid regions prone to geological disruption (Red-Med overland transit and earthquake belt of Pacific Ring of Fire), narrow straits and geopolitical unrest that are present on current submarine routes.
SAEx1 will have phased development to minimize time between construction and revenue service. It will be deployed initially from Cape Town to a branching unit near Fortaleza, Brazil where it will interconnect with fiber pair leased from TI Sparkle, providing onward connectivity to New Jersey at RFS. SAEX announced partnership with TI Sparkle in September 2018. Effectively SAEX has secured access on the Seabras-1 cable, on which TI Sparkle owns 3 of the 6 fibre pairs, it had purchased in a $300 million deal announced in January 2016. Once FCC approvals are obtained, a new submarine cable segment will be deployed from the branching unit near Fortaleza to a second and diverse cable landing station at Virginia Beach. SAEX confirmed the plan with MOU announced with ACA International LLC in May 2018. It will be the only submarine cable connecting South Africa directly to the USA, and added with TI Sparkle’s fibre pair from Fortaleza, will offer a truly diverse trans-Atlantic network.
At Cape Town SAEx1 will in phase two connect with SAEx2, the second submarine cable SAEX is constructing. SAEx2 will provide connectivity across Indian Ocean to Chennai, India and Singapore. SAEx2 will have 2 fibre pairs, in addition to 6 fiber pairs, between Cape Town and Mtunzini. This makes it the second submarine cable other than SAFE to provide subsea connectivity between cable systems on the east and west coasts of South Africa. It seems connectivity to Singapore could be prioritized over India. SAEx2 will have branching units facing Mtunzini, Mauritius, Madagascar.
Once interconnected and operational in Q2 2021, SAEx1 together with SAEx2 will establish an end-to-end wholly owned digital superhighway, providing a unique route from Asia to the Americas. While SAEx1 will compete with Seabras-1 + SABR from Seaborn Networks, SAEx2 will compete with IOX.