5th anniversary edition submarine telecoms industry … · 07.10.2016 · 8 9 in a changing...
TRANSCRIPT
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submarine te lecoms
INDUSTRYREPORT
ISSUE 5 | OCTOBER 2016
5TH ANNIVERSARY EDITION
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TABLE OF CONTENTSForeword ................................................................................................. 8Introduction .......................................................................................... 101. The World’s Submarine Telecoms.................................................. 12
1.1 Capacity ........................................................................................ 131.1.1 Global Capacity..................................................................... 131.1.2 Lit Capacity ........................................................................... 15
1.1.2.1 Transatlantic Region ...................................................... 151.1.2.2 Transpacific Region ........................................................ 161.1.2.3 Americas Region ............................................................. 18
1.2 System Growth ............................................................................ 211.3 Evolution of System Ownership and Customer Base ........... 24
2. Overview of System Investmentof System Investment.............. 272.1 Historical Perspective ................................................................. 282.2 The Optical Age........................................................................... 292.3 2012 to 2016 .................................................................................. 312.4 2017 and Beyond ......................................................................... 32
3. Ownership Financing Analysisp Financing Analysis ................. 333.1 Historic Financing Perspective ................................................. 343.2 Regional Distribution of Financing .......................................... 363.2.1 Multilateral Development Banks ........................................... 363.3 2012 to 2016 Financing ............................................................... 383.4 Future Planned Systems Financing .......................................... 43
4. Supplier Analysis ............................................................................. 464.1 System Suppliers ......................................................................... 46
4.1.1 Current Systems .................................................................... 464.1.2 Future Systems ...................................................................... 47
4.2 Upgraders .................................................................................... 504.2.1 Current Upgrades ................................................................. 514.2.2 Regional Upgrade Activity ................................................. 524.2.3 Market Activity ..................................................................... 53
4.3 Installers ....................................................................................... 554.3.1 Regional Capabilities ........................................................... 564.3.2 Current Installations ............................................................ 564.3.3 Regional Activity .................................................................. 57
4.4 Surveyors ..................................................................................... 594.4.1 Current Surveys .................................................................... 604.4.2 Planned Surveys ................................................................... 61
4.5 Recent Mergers, Acquisitions and Industry Activities .......... 644.5.1 Alcatel-Lucent Submarine Networks ................................ 654.5.2 Aqua Comms ......................................................................... 654.5.3 Hibernia Networks ............................................................... 654.5.4 ICPC ........................................................................................ 664.5.5 Nextgen Networks ............................................................... 664.5.6 SubOptic Trade Association ............................................... 674.5.7 Telxius .................................................................................... 674.5.8 Xtera Communications ........................................................ 67
5. System Maintenance ........................................................................ 695.1 Publicity ....................................................................................... 695.2 Reporting Trends and Repair Times ........................................ 71
6. Regional Market Analysis and Capacity Outlook ....................... 746.1 Transatlantic Regional Market .................................................. 74
6.1.1 Current Systems .................................................................... 766.1.2 Planned Systems ................................................................... 79
6.2 Transpacific Regional Market .................................................... 806.2.1 Current Systems .................................................................... 826.2.2 Planned Systems ................................................................... 84
6.3 Americas Regional Market ........................................................ 866.3.1 Current Systems .................................................................... 896.3.2 Planned Systems ................................................................... 91
6.4 AustralAsia Regional Market .................................................... 956.4.1 Current Systems .................................................................... 976.4.2 Planned Systems ................................................................. 100
6.5 EMEA Regional Market ........................................................... 1036.5.1 Current Systems .................................................................. 1056.5.2 Planned Systems ................................................................. 107
6.6 Indian Ocean Pan-East Asian Regional Market ....................1106.6.1 Current Systems ...................................................................1116.6.2 Planned Systems ..................................................................113
7. Afterword .........................................................................................1158. Works Cited ......................................................................................117
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LIST OF FIGURES
Figure 1: Global Capacity Growth on Major Routes, 2012-2016 ...13Figure 2: Average System Capacity, 2012-2016 ................................ 14Figure 3: Planned Capacity Growth, 2017-2018 ............................... 14Figure 4: Transatlantic Capacity Growth, 2012-2016 ....................... 15Figure 5: Transatlantic Capacity Growth, 2017 and Beyond .......... 16Figure 6: Transpacific Capacity Growth, 2012-2016 ........................ 16Figure 7: Transpacific Capacity Growth, 2017 and Beyond ........... 17Figure 8: Americas Capacity Growth, 2012-2016 ............................. 18Figure 9: Americas Capacity Growth, 2017 and Beyond ................ 18Figure 10: Intra-Asia Capacity Growth, 2012-2016 ......................... 19Figure 11: Intra-Asia Capacity Growth, 2017 and Beyond ............. 20Figure 12: New System Count, 2012-2016 ........................................ 21Figure 13: Global KMS Added, 2012-2016 ........................................ 21Figure 14: Planned Systems by Region, 2017-2018 .......................... 22Figure 15: Global Contract in Force Rate, 2017-2018 ....................... 23Figure 16: Ownership Breakdown 2012-2016 .................................. 24Figure 17: Planned Ownership Breakdown, 2017 and beyond ..... 25Figure 18: System Drivers, 2016 and Beyond ................................... 26Figure 19: The Picking-up Machinery in the Bows of the Great Eastern by Robert Charles Dudley (1865-66) ............. 28Figure 20: Investment in Submarine Fiber Optic Systems, 1989-2016 ............................................................................................... 30Figure 21: Route Deployment Kilometers by RFS of Submarine Fiber Optic Systems, 1989-2016 ...................................... 30Figure 22: Regional Investment in Submarine Fiber Optic Projects, 2012-2012 ............................................................................... 31Figure 23: Regional Investment in Submarine Fiber Optic Projects, 2017-2018 ............................................................................... 32Figure 24: Financing of New Submarine Fiber Optic Systems, 1987-2014 ............................................................................... 35Figure 25: Regional Distribution of Multilateral Development Banks Investment, 2004 to Present .................................................... 36Figure 26: Regional Distribution of Consortia Investment, 1987 to Present ...................................................................................... 37Figure 27: Regional Distribution of Private Investment, 1987 to Present ...................................................................................... 37Figure 28: Financing of New Submarine Fiber Optic
Systems, 2012-2016 ............................................................................... 42Figure 29: Financing of Planned Submarine Fiber Optic Systems, 2016-2018 ............................................................................... 43Figure 30: KMS of Cable Produced, 2012-2016 ................................ 46Figure 31: Number of Systems by Supplier, 2012-2016................... 47Figure 32: Future Systems, 2017-2018................................................ 48Figure 33: Systems Upgraded by Year 2012-2016 ............................ 51Figure 34: Current Upgrades, 2016 .................................................... 52Figure 35: Reported Upgrade Activity, 2011-2015 ........................... 53Figure 36: Systems Installed by Company, 2012-2016 .................... 56Figure 37: KMS Installed by Region, 2012-2016 ............................... 57Figure 38: Planned KMS, 2017-2018 .................................................. 58Figure 39: Systems Surveyed, 2012-2016 .......................................... 60Figure 40: Survey Status of Planned Systems, 2017-2018 ............... 61Figure 41: Total Cable Fault Stories by Region, 2010-2015 ............. 69Figure 42: Total Cable Fault Stories, 2010-2015 ................................ 70Figure 43: Time from Announcement to Repair, 2010-2015 ........... 71Figure 44: Average Repair Time in Days, 2010-2015 ....................... 72Figure 45: Comparison of Repair Time, Story Count, and Announcement Time, 2010-2015 ................................................ 72Figure 46: Average Estimated Repair Time in Days by Region, 2010-2015 ........................................................................... 73Figure 47: Systems in Service – Transatlantic ................................... 76Figure 48: Systems Upgraded – Transatlantic .................................. 77Figure 50: Contract in Force - Planned Transatlantic ...................... 78Figure 49: Transatlantic Route Kms Added...................................... 79Figure 51: Systems in Service – Transpacific .................................... 82Figure 52: Systems Upgraded – Transpacific ................................... 83Figure 53: KMS Added – Transpacific ............................................... 84Figure 54: Contract in Force - Planned Transpacific........................ 85Figure 55: Systems in Service – Americas ......................................... 89Figure 56: Systems Upgraded – Americas ........................................ 90Figure 57: KMS Added – Americas ................................................... 91Figure 58: Contract in Force – Planned Americas ........................... 94Figure 59: Systems in Service – Australasia ..................................... 98Figure 60: Systems Upgraded – Australasia..................................... 99Figure 61: KMS Added – Australasia .............................................. 101Figure 62: Contract in Force - Planned AustralAsia ...................... 101Figure 63: Systems in Service – EMEA ............................................ 106
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Figure 64: Systems Upgraded – EMEA ........................................... 107Figure 65: KMS Added – EMEA....................................................... 108Figure 66: Contract in Force, Planned – EMEA.............................. 108Figure 67: Systems in Service - Indian Ocean Pan-East Asia ....... 112Figure 68: Systems Upgraded - Indian Ocean Pan-East Asian .... 112Figure 69: KMS Added - Indian Ocean Pan-East Asia .................. 113Figure 70: Contract in Force - Planned - Indian Ocean Pan-East Asia ...................................................................................... 114
LIST OF TABLES
Table 1: Past Multilateral Development Bank Projects ................... 34Table 2: Recent Multilateral Development Bank Projects ............... 38Table 3: Transatlantic Systems, 2010-2016 ......................................... 76Table 4: Transatlantic Planned Systems, 2017-2018 ......................... 79Table 5: Transpacific Systems, 2000-2016 .......................................... 82Table 6: Transpacific Planned Systems, 2017-2018........................... 84Table 7: Americas Systems, 2009-2016 ............................................... 89Table 8: Americas Planned Systems, 2017-2018 ............................... 91Table 9: AustalAsia Systems, 2011-2016 ............................................ 97Table 10: AustralAsia Planned Systems, 2017-2018 ....................... 100Table 11: EMEA Systems, 2011-2016 ................................................ 105Table 12: EMEA Planned Systems, 2017-2018 ................................ 107Table 13: Indian Ocean Pan-East Asian Systems, 2005-2016 ........ 111Table 14: Indian Ocean Pan-East Asian Planned Systems, 2017-2018 ............................................................................................. 113
LIST OF SPONSORS
GlobeNet ...........................................................................................................88Hexatronic .........................................................................................................24Huawei Marine .................................................................................................44OFS .....................................................................................................................92WFN Strategies .................................................................................................62
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In a changing industry it is worthy of note that SubOptic is itself subject to change. We are seeking to open the organisation to all members in our industry and broaden the value add we can offer to our community. We will also employ a professional Event Manage-ment organisation to help implement the logistics of our next event SubOptic 2019, whilst still ensuring that SubOptic retains complete editorial and programme control.
We expect to announce the Host, location and venue for SubOptic 2019 during PTC17.
Well done to SubTel Forum for continuing this initia-tive, which has now become a regular feature for the
industry.
Yves RuggeriPresident of the SubOptic Executive Committee
SubOptic is once again pleased to support the SubTel Forum Indus-try Report, which is now celebrating its 5th Anniversary.
It fills a gap in the market place by providing an independent view of the overall industry and for the first time the majority of its anal-ysis has been produced in-house at STF.
Its views are those of the authors however and some readers may take issue with some of the conclusions it reaches, but then that is life and not all commentators have the same view of the world, which is why an independent report is essential.
Continuing the theme noted in last year’s report, the industry looks set for a buoyant few years with a number of major systems in various stages of planning and implementation, driven by a need for capacity or low latency routes. It also notes the changing face of the market as OTT play-ers such as Google, Facebook and Microsoft make a major play in this arena. Systems across the Southern Atlantic are also mak-ing an appearance for the first time, driven in some cases by the desire to remove transit via the USA.
The report also notes a slowdown in the up-grade market with a large number of new high capacity systems coming into service over the next two years. There is however still a large pool of unlit capacity available on fairly modern systems, which seem to be capable of major upgrade.
Studies presented at SubOptic 2016, seem to suggest that providing a system has performed reliably since installation, its actual lifes-pan may be in excess of the 25-year figure generally employed in the industry. Only time will confirm however, as systems approach their 25-year lifespan, what is realistically possible and obviously this introduces risk when considering upgrade, even if the system is capable of carrying the latest high capacity technology.
FOREWORD
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Wednesday, October12,2016 12:56PM
• Ian Douglas, CEO, Global Marine Systems Limited
• John Hibbard, CEO, Hibbard Consulting
• Judah Levine, President, HIP Consult
• Laureen Cook, Principal TMT Advisor, Global Telecoms, Media & Technology, International Finance Corporation
• Julian Rawle, Principal, Julian Rawle Consulting
• Hubert Souisa, CEO, SemanticNet BV
• Wayne Nielsen, Managing Director, WFN Strategies
And a special thank you to our sponsors:
• Hexatronic
• Huawei Marine
• GlobeNet
• OFS
• WFN Strategies
Happy reading!
Kristian NielsenVice PresidentSubmarine Telecoms Forum
Welcome to the fifth edition of SubTel Forum’s Annual Industry Report, with special thanks to the tireless efforts of the researchers at STF Analytics, without whom this report would not be possible.
The format of the annual Industry Report has been updated to in-clude more. We’ve attempted to make a more encompassing view of the submarine fiber industry available to you, our readers. For the first time, we have produced this report entirely in house with the assistance of STF Analytics, our recently spun out research and data analysis arm.
Within this issue, you will find the analysis of data collected by the diligent analysts of SubTel Forum and STF Analytics, whose focus now includes system capacity analysis, as well as the actual productivity and outlook of current and planned systems and the companies that service them.
In this report, we have identified $5 billion in new projects that are being actively pursued by their developers. Of those, $2 billion worth are executed contract-in-force, and $1.5 billion of those new, contract-in-force systems are slated for 2017 alone.
While the looking glass is never one hundred percent clear, we feel that the next 2 years will be busy for our corner of the world’s tele-com market – past then is anyone’s guess.
In the coming months, we will strive to make available as much new data as possible in a timely and useful fashion – as we say, an informed industry, is a productive industry.
We would also like to express our sincere thanks to this year’s many contributors for their insights and opinions, including the following:
• Paul Gabla, Chief Sales & Marketing, Alcatel-Lucent Submarine Networks
• Eric Handa, CEO, AP Telecom
• Bill Burns, Webmaster, atlantic-cable.com
• Ryan Wopschall, Business Development Manager, Fugro
• Erick Contag, CEO, GlobeNet
INTRODUCTION
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1.1 Capacity
1.1.1 Global Capacity
The world continues to consume ever increasing amounts of data, with bandwidth demand projected to almost double every two years for the foreseeable future. This demand – largely driven by a continued shift towards cloud services and the continued explosion of mobile device usage – provides numerous opportunities for the submarine fiber industry. Data center and cloud service providers continue to post strong earnings reports and grow at a rapid pace, which indicates that this bandwidth demand won’t be tapering off any time soon.
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2012 2013 2014 2015 2016
GlobalCapacityGrowthonMajorRoutes2012-2016
Americas Intra-Asia Transatlantic Transpacific
Figure 1: Global Capacity Growth on Major Routes, 2012-2016Source: STF Analytics
Over the last five years, the submarine fiber industry has added an average of 33 percent capacity annually on major submarine cable routes, including upgrades and new system builds. With global de-mand increasing at such a rapid pace, this infrastructure growth rate will not be sustainable for very long, potentially causing de-mand to far exceed supply. So far, the industry has been able to keep up — but it will have to increase activity in order to stay ahead of demand.
1. The World’s Submarine Telecoms
“According to a recent World Bank econometrics anal-ysis of 120 countries, for every 10-percentage-point in-crease in the penetration of broadband services, there is an increase in economic growth of 1.3 percentage points. This growth effect of broadband is significant and stronger in developing countries than in devel-oped economies, and it is higher than that of telephony and Internet… The impact can be even more robust once the penetration reaches a critical mass.”
- The World Bank, 2009
“Some jobs have been destroyed by the emergence of the Internet. However, a detailed analysis of a French economy showed that while the Internet has destroyed 500,000 jobs over the past 15 years, it has created 1.2 million others, a net addition of 700,000 jobs or 2.4 jobs created for every job destroyed.”
- McKinsey Global Institute, 2011
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Based on reported data, global capacity is estimated to increase up to 50 percent by the end of 2017. Multiple systems slated for the next two years will have design capacities of more than 60 terabits per second, with many others boasting bandwidth between 20 and 50 terabits per second. Looking ahead even further, 2018 already shows another strong increase in global capacity even with only a handful of systems announced so far. Nearly all of the systems cur-rently planned are being designed with 100G technology in mind, so expect an even more drastic increase as new wavelength technol-ogies begin to see widespread commercial use.
1.1.2 Lit Capacity
Since 2011, major submarine cable routes have averaged around 15 percent lit capacity. While this seems low, a large capacity buffer is required on cable systems to deal with sudden spikes in demand like handling a traffic reroute due to a cable fault.
1.1.2.1 Transatlantic Region
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TransatlanticCapacityGrowth2011-2016
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Figure 4: Transatlantic Capacity Growth, 2012-2016Source: STF Analytics
The Transatlantic region has seen very steady capacity growth over the last 6 years due to regular upgrades and a new system in both 2015 and 2016. On average, the Transatlantic route has maintained a lit capacity at 17.6 percent of total, slightly above the global aver-
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Figure 2: Average System Capacity, 2012-2016Source: STF Analytics
A further sign of evidence the submarine fiber industry is up to the task of meeting global capacity demands is that the average new system capacity over the last five years has skyrocketed. Averaging at just over 9 Tbps in 2012 and 2013, new systems now average at well over 50 Tbps. With future systems being able to take ad-vantage of higher wavelength capacities and potentially more fiber pairs, this average should continue to increase at a steady rate.
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PlannedCapacityGrowth2017-2018
Figure 3: Planned Capacity Growth, 2017-2018Source: STF Analytics
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Similar to the Transatlantic region, the Transpacific has enjoyed mostly steady growth since 2011. It has maintained an average of 15 percent lit capacity, which is in line with global averages. In recent years, it has fallen as low as 12 percent lit capacity, possibly indicat-ing a slowdown in demand in this region. However, similar to the Transatlantic region, data center and cloud services providers are looking to expand their infrastructure in this region — especially with recently announced systems.
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TranspacificCapacityGrowth2017andBeyond
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Figure 7: Transpacific Capacity Growth, 2017 and BeyondSource: STF Analytics
As one of the more competitive regions in the world, the Transpa-cific should expect to maintain its current levels of capacity growth. New systems are beginning to come into service for the first time in 6 years, and lit capacity seems to be back on track with global trends. If data center and cloud services providers continue to focus on this region, expect lit capacity growth to accelerate to the levels seen in the Transatlantic region.
age of 15 percent. The last two years have seen 20 and 21 percent, respectively, indicating rapid demand growth along in this region.
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Figure 5: Transatlantic Capacity Growth, 2017 and BeyondSource: STF Analytics
The Transatlantic region should expect to maintain its current lev-els of capacity growth over the next 2 years. With data center and cloud services providers rapidly building new infrastructure, there is a possibility that growth will increase much more dramatically than currently predicted.
1.1.2.2 Transpacific Region
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TranspacificCapacityGrowth2011-2016
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Figure 6: Transpacific Capacity Growth, 2012-2016Source: STF Analytics
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Based on publicly announced information for planned systems, the Americas region is expected to continue its surge of recent growth. Total capacity in the region is projected to increase by 84 percent, with lit capacity keeping steady at the global average of 15 per-cent. Growth in this region is fueled by growing markets in Latin America, helped by the expansion of data center and cloud services providers in these countries.
1.1.2.4 Intra-Asia Region
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Figure 10: Intra-Asia Capacity Growth, 2012-2016Source: STF Analytics
Except for a large jump in 2014 which more than doubled capacity, the Intra-Asia route has maintained steady growth. Growth along this particular route largely depends on huge infrastructure builds, something that does not happen every year. Lit capacity stays right in line with global trends at 15 percent of total annually.
1.1.2.3 Americas Region
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Figure 8: Americas Capacity Growth, 2012-2016Source: STF Analytics
The Americas region has seen tremendous growth in the last few years, tripling in total capacity along major routes since 2013. It has maintained an average yearly lit capacity of 15 percent, in line with global trends. Much of this growth has been spurred on by growing economies in Latin America, with new systems and upgrades increas-ing flow of traffic between these countries and the United States.
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Figure 9: Americas Capacity Growth, 2017 and BeyondSource: STF Analytics
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1.2 System Growth
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Figure 12: New System Count, 2012-2016Source: STF Analytics
The last several years have seen a steady decline in new systems added annually. Between the prevalence of upgrades, and econom-ic uncertainty around the world, times have been very lean for the submarine fiber industry. However, 2016 saw a noticeable uptick in system count, potentially signaling a resurgence. For the first time, every region of the world saw a new system implemented in 2016.
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Figure 13: Global KMS Added, 2012-2016Source: STF Analytics
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Figure 11: Intra-Asia Capacity Growth, 2017 and BeyondSource: STF Analytics
Keeping in line with the route’s historical trends, expect only mod-erate growth along the Intra-Asia route through 2018. With over 500 Tbps already available along this route, the 118 Tbps added over the next 2 years will not impact overall capacity much. There is no indication that demand trends along the routes are changing, so expect the annual average of 15 percent lit capacity to continue.
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ters in the Mid-Atlantic. Growth in the Americas region stems from replacing older systems in the Caribbean and increased demand for connectivity between the United States and South America.
Yes
No
GlobalContractinForceRate2017-2018
Figure 15: Global Contract in Force Rate, 2017-2018Source: STF Analytics
The period 2012 to 2015 experienced anemic growth in kilometers of cable added. Each year saw an average of well under 30,000 ki-lometers added, with 2015 adding a dismal 16,000 kilometers. As a further positive sign for the industry at large, 2016 saw an addition of over 100,000 kilometers of cable. This past year has seemingly shaken the industry out of its recent funk, largely helped by the new trend of data center and content providers wanting more direct control over their own infrastructure. The next two years promise an average of over 100,000 kilometers added as well, potentially indicating a new trend of very healthy growth.
Transatlantic,4
Transpacific,6
Americas,6
AustralAsia,19
EMEA,5
IndianOcean,3
PlannedSystemsbyRegion2017-2018
Figure 14: Planned Systems by Region, 2017-2018Source: STF Analytics
As has been the trend for several years running, the bulk of new system activity is occurring in the Pacific Ocean. Growth along Transpacific routes has been spurred by a significant interest in lower latency and increased capacity between Asia, Australia, and the United States. AustralAsia continues to experience explo-sive growth driven by emerging markets in the South Pacific. The EMEA and Indian Ocean Pan-East Asian maintain muted growth compared to historical trends, largely due to increasing political and economic instability in the Middle East and the saturation of African telecommunications markets. Transatlantic growth is pri-marily being driven by a desire to connect South America directly to Europe and Africa, alongside new interest in lower latency routes between the United States and Europe and connections to data cen-
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past. Globe-spanning infrastructure cables that almost require con-sortium ownership have fallen out of style, contributing to this trend shift.
15%
85%
OwnershipBreakdown2017andBeyond
Consortium Private
Figure 17: Planned Ownership Breakdown, 2017 and beyondSource: STF Analytics
The boom of private ownership is continued to extend well into the future, as more niche and point-to-point systems are imple-mented. Much of this is driven by intra-regional needs — typically for smaller nations looking to get connected. However, a growing number of systems are being driven by factors not previously seen in the submarine fiber industry.
1.3 Evolution of System Ownership and Customer Base
In recent years the way people use and access data has changed dramatically. This has led to some shifts in ownership paradigms in the submarine fiber industry.
43%
57%
OwnershipBreakdown2012-2016
Consortium Private
Figure 16: Ownership Breakdown 2012-2016Source: STF Analytics
A stronger recent trend towards private ownership has been ob-served compared to historical trends of primarily consortia own-ership. Business cases for smaller systems have been stronger, and the demand driving these systems has been different than in years
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2. Overview of System Investmentof System Investment
“There are just over 100,000 kilometers of submarine fibre optic cable that are already under construction with an RFS date between now and 2019. Another 90,000 kilometers are “contract-in-force” and still an-other 110,000 kilometers are planned, i.e., they have a reasonable chance of being installed. Total investment that is already committed over this period amounts to US$5.5 billion, just above the long-run average for this industry of US$1.3B per year.
Content providers are the main driver for the current-ly buoyant market. They focus on the main intercon-tinental routes, co-building, acting as anchor tenant, participating in traditional consortium cables, and most recently, collaborating with each other. They are driven by the need to ensure that their customers have sufficient bandwidth for the latest apps and to keep their data centers synchronized.
The activities of the content providers spurs growth and investment in cables around the periphery of the main trunk routes. At some point, the content pro-viders are going to assume a less frenetic approach to building network and will wait for the next generation of transmission technology. During this lull, “region-al in-fill” will continue to support the industry but it will not prevent a measurable downturn in overall investment for a while.”
- Julian Rawle, Principal, Julian Rawle Consulting
17%
83%
SystemDrivers2016andBeyond
CloudServices Infrastructure
Figure 18: System Drivers, 2016 and BeyondSource: STF Analytics
A rather striking new development has emerged in 2016. Content providers — especially cloud services and data center providers — are beginning to step into the world of submarine cable ownership. Many of these companies have such large and complex infrastruc-ture requirements that it is becoming more efficient for them to simply own their own international links rather than buy capacity from an infrastructure provider. As a result, a significant portion of systems for 2016 to 2018 are largely driven by these companies.
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British industrialists to fund and lay one in 1858. However, the technology of the day was not capable of supporting the project – it was plagued with problems from the outset, and was in operation for only a month. Subsequent attempts in 1865 and 1866 with the world’s largest steamship, the SS Great Eastern, used a more ad-vanced technology and produced the first successful transatlantic cable.
2.2 The Optical Age
In the 1980s, optical submarine cable systems were developed. The first transoceanic fiber optic system was the transatlantic TAT-8, which was ready for service in 1988. Telecommunications with high quality and high capacity became possible, and optical submarine cable networks were extended all over the world. The first gener-ation of optical systems regenerated the optical signal within the submerged repeaters. In the mid-90s, regenerators were replaced by optical amplifiers, which allowed the simultaneous transmis-sion of more than one wavelength. Currently, the main method for international telecommunications is the use of submarine cables – 99 percent of international telecommunications is carried over sub-marine cables.
Antarctica remains the only continent yet to be reached by subma-rine telecoms cable. In 2017, the Arctic is receiving its first signif-icant submarine cable system. Future such systems, both region-al and transoceanic, are in the offing. The goal of a northwest or northeast Arctic passage seems within reach.
In recent years, many submarine cable projects have been progress-ing in the world. Communication infrastructure with higher speed and larger capacity is required to support the rapid growth of the Internet —video transmission in particular — so demand for new submarine cables is increasing. This trend is expected to continue for the foreseeable future.
2.1 Historical Perspective
The submarine cable industry started in 1850, when the first sub-marine cable in the world was laid in the English Channel by Go-liath, a steam tug class vessel. It was a revolutionary event where communication beyond the ocean became possible, although the communication method was telegraph. In 1866, the first commer-cially successful transatlantic submarine cable was completed be-tween Valentia, Ireland, and Heart’s Content, Newfoundland, and submarine cable networks in the world were gradually expanded. (Ash, 2014)
Figure 19: The Picking-up Machinery in the Bows of the Great Eastern by Robert Charles Dudley (1865-66)
In 1876, the telephone was invented and communication was ex-panded dramatically. Then, in 1891, the world’s first submarine cable for telephone was built in the English Channel. In 1901, Mar-coni successfully demonstrated transatlantic radio communication, but it was not until 1923 that two transoceanic communication methods were realized – submarine cable communication and ra-dio communication.
The first attempt at laying a transatlantic telegraph cable was pro-moted by an American named Cyrus West Field, who persuaded
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2.3 2012 to 2016
From 2012 to present, more than $6.8 billion was invested in sub-marine cable projects, or an average of $1.4 billion and 38,000 route kilometers per year. Over the period, $1.4 billion was invested in 7 Americas systems, $2.7 billion was invested in 13 EMEA systems (predominately in Africa), $1.8 billion was invested in 6 Indian Ocean Pan-East Asian systems (largely due to SEA-ME-WE 5 and AAE-1), $1.2 billion was invested in 11 AustralAsia systems, $0.4 billion was invested in 2 Transatlantic systems and $0.4 billion was invested in 1 Transpacific system.
18%
35%23%
15%
5% 4%
RegionalInvestmentinSubmarineFiberOpticProjects,2012-2016
Americas EMEA IndianOceanPan-EastAsian AustralAsia Transatlantic Transpacific
Figure 22: Regional Investment in Submarine Fiber Optic Projects, 2012-2012Source: STF Analytics
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$3.0
$4.0
$5.0
$6.0
$7.0
$8.0
$9.0BILLIONS
SystemInvestment,1989-2016
Figure 20: Investment in Submarine Fiber Optic Systems, 1989-2016Source: STF Analytics
Since 1989, the industry has invested more than $40 billion in sub-marine telecoms cables — comprising more than 1.1 million route kilometers — annually averaging $1.5 billion worth of investment and 43,000 kilometers of deployed systems.
0
50,000
100,000
150,000
200,000
250,000
KILO
METERS
SystemDeployment,1989-2016
Figure 21: Route Deployment Kilometers by RFS of Sub-marine Fiber Optic Systems, 1989-2016
Source: STF Analytics
32 33
3. Ownership Financing Analysisp Financing Analysis
“Of a global population of approximately 7.4B, over 4B are without Internet Access, 2B of which are con-nected to 3G/4G but do not use the internet, and 1.6B live outside the Mobile Broadband footprint. Increas-ing Broadband Connectivity by funding access to the Internet is of primary concern to the IFC, (the private investment arm of the World Bank Group).
Submarine Systems provide increased internation-al capacity and connectivity, evolving into a drop in wholesale Terrestrial pricing over time. As fiber is laid inland, reduced connectivity pricing is passed on to Local ISP’s and ultimately the End Consumer. This stimulates Mobile Broadband Penetration and the de-velopment of new business models regarding; e-health, e-Education, e-Gov’t, e-Agriculture and e-Commerce.
Increased Broadband subscriber rates due to access to low cost, high speed international access is one of the key catalysts of economic development. The World Bank estimates that 10% increase in Broadband In-ternet Access contributes to an increase of 1.38% in GDP.”
-Laureen R. Cook, Principal TMT Ad-visor, International Finance Corporation
2.4 2017 and Beyond
From 2017 to the foreseeable future, more than $5.5 billion has been proposed to be invested in more than 41 submarine cable projects, or an average of $1.9 billion per year. Over the period, $0.7 bil-lion has been proposed to be invested in 6 Americas systems, $35 million has been proposed to be invested in 6 EMEA systems (pre-dominately in Africa), $0.3 billion has been proposed to be invest-ed in 3 Indian Ocean Pan-East Asian systems, $1.9 billion has been proposed to be invested in 18 AustralAsia systems, $0.9 billion has been proposed to be invested in 4 Transatlantic systems and $1.8 billion has been proposed to be invested in 5 Transpacific systems.
11%1%
6%
34%16%
32%
RegionalInvestmentinSubmarineFiberOpticProjects,2017-2018
Americas EMEA IndianOceanPan-EastAsian AustralAsia Transatlantic Transpacific
Figure 23: Regional Investment in Submarine Fiber Optic Projects, 2017-2018Source: STF Analytics
34 35
2011 Tonga – Fiji
Asian De-v e l o p m e n t Bank $9.7; Internation-al Develop-ment Assoc. $16.5 million
The Tonga-Fiji Submarine Ca-ble Project will provide a sub-marine fiber optic cable system linking Tonga to Fiji where an existing international subma-rine cable system will provide onward cost-effective access to the rest of the world.
The industry has invested more than $44 billion in submarine tele-coms cables since 1987. A full 90 percent of this total investment has been financed by traditional consortia, while private owners and MDBs have accounted for 5 percent of total investment each.
90%
5%5%
FinancingofSystems, 1987-2015
Consortia Private MultilateralDevelopmentBanks
Figure 24: Financing of New Submarine Fiber Optic Systems, 1987-2014Source: STF Analytics
3.1 Historic Financing Perspective
Multilateral Development Banks (MDB), such as the World Bank and its affiliates are increasingly willing to promote communica-tions infrastructure and to lend in high-risk circumstances where commercial banks will not. MDB interest rates are typically lower than commercial financings, and have a more lenient approach to waivers and default scenarios. However, social policy and develop-ment goals of those institutions can often impose additional report-ing and compliance costs. (Gerstell, 2008)
Traditional cable consortia use the prospective system for their own traffic, diversifying risk generally through Self-Finance among its members and affording a range of expertise. Private cable owners generally raise a system’s capital for construction and operation of the network, though the securing of such funding can be a chal-lenge. Private owners also typically rely on sales to third parties and private systems tend to require outside equity investment more than traditional consortia systems.
Past submarine system financings accomplished by MDBs include the following:
Table 1: Past Multilateral Development Bank Projects
Year System MDB Description2007 EASSy International
Finance Cor-poration
$18.2 million in long term loans and partnered with five major developmental institutions to provide a total of $78.7 million in LT Loans for the project run-ning along the east coast of Af-rica that connects eight coastal countries and island nations to each other and to the rest of the world. The cable’s ini-tial capacity is 20Gbps and can ultimately be upgraded to 320Gbps. The balance of the project cost — $247.1 million — was provided for by the 15 EASSy consortium members.
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13%
23%
15%19%
18%
12%
DistributionofConsortia Investment,1987-2016
Americas EMEA
IndianOceanPan-EastAsian AustralAsia
Transatlantic Transpacific
Figure 26: Regional Distribution of Consortia Investment, 1987 to PresentSource: STF Analytics
3.2.3 PrivateThe regional distribution of Private investment for 1987 to present is presented below. Private financiers have invested more than $3.5 bil-lion in submarine telecoms cables. The majority of this total investment — 44 percent — has been invested in Transpacific projects. Similarly, 22 percent of total private investment has been made in the Americas region; followed by 17 percent in the Indian Ocean Pan-East Asian, 12 percent in the Transatlantic, and 5 percent in AustralAsia.
22%
5%
17%
12%
44%
DistributionofPrivateInvestment,1987-2016
Americas AustralAsia IndianOceanPan-EastAsian Transatlantic Transpacific
Figure 27: Regional Distribution of Private Investment, 1987 to PresentSource: STF Analytics
3.2 Regional Distribution of Financing
3.2.1 Multilateral Development Banks
The regional distribution of MDB investment for 2005 to present is presented below. MDBs have invested more than $1.9 billion in submarine telecoms cables. The overwhelming majority of this to-tal investment — 83 percent — has been invested in Europe, Middle East and Africa (EMEA) projects – specifically, systems located pri-marily in Africa. Only 2 percent of total MDB investment has been made in the Americas, with 15 percent invested in AustralAsia.
83%
2%15%
DistributionofMDBInvestment,2004-2016
EMEA Americas AustralAsia
Figure 25: Regional Distribution of Multilateral Devel-opment Banks Investment, 2004 to Present
Source: STF Analytics
3.2.2 Consortia
The regional distribution of consortia investment for 1987 to pres-ent is presented below. Consortia have invested nearly $40 billion in submarine telecoms cables. The largest portion of this total in-vestment — 23 percent — has been invested in EMEA projects. Similarly, 19 percent of total consortia investment has been made in AustralAsia systems; followed by 18 percent in the Transatlantic, 15 percent in the Indian Ocean Pan-East Asian region, 13 percent in the Americas, and 12 percent in the Transpacific.
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2015 eGabon World Bank $56 million which facil-itated financing of the introduction of the ACE submarine cable and the construction of more than 1,000 kilometers of ter-restrial fiber optic — a Libreville to Franceville section that runs along the Trans-Gabon railway line; the Koulamoutou/Lastourville and Francev-ille/Bongoville/Lekoni road sections, as well as the Franceville/Moanda and Moanda/Bakumba/Lekoko sections going to-ward the border and con-necting with the Congo fiber optic project.
2016 C e n t r a l A f r i c a n Backbone
African De-v e l o p m e n t Bank
$51 million loan to coun-tries in the Central African Economic and Monetary Community (CEMAC) as part of the Central Afri-can Backbone (CAB) proj-ect, enabling the effective interconnection of the Cameroon fiber optic net-work with that of Chad, and Equatorial Guinea through the submarine ca-ble NCSCS (Nigeria and Cameroon Submarine Ca-ble System); Gabon and Congo are also to be con-nected.
3.3 2012 to 2016 Financing
From 2014 to present, submarine system financings accomplished by MDBs include the following:
Table 2: Recent Multilateral Development Bank Projects
Year System MDB Description2014 Seabras-1 International
Finance Cor-poration
$4 million in Seaborn Net-works Holding, which is building the 40Tbps sub-sea fiber optic cable. This will link Brazil (landing in Sao Paulo) directly with New Jersey in the Unit-ed States. The total proj-ect cost over the next two years will be $509 million.
2015 T u i - S a -moa
Asian Devel-opment Bank and others
$25 million in partnership with an Australian Grant of $1.5 million and World Bank of $16 million com-bined to promote a subma-rine cable system connect-ing Samoa to regional and global communications infrastructure and improv-ing international broad-band connectivity of Sa-moa.
40 41
2016 Central African Backbone
African De-v e l o p m e n t Bank
$51 million loan to coun-tries in the Central African Economic and Monetary Community (CEMAC) as part of the Central Afri-can Backbone (CAB) proj-ect, enabling the effective interconnection of the Cameroon fiber optic net-work with that of Chad, and Equatorial Guinea through the submarine ca-ble NCSCS (Nigeria and Cameroon Submarine Ca-ble System); Gabon and Congo are also to be con-nected.
P e n d -ing
Cook Islands to Samoa
Asian Devel-opment Bank $10; Gov. of New Zealand $20; Gov. of Cook Islands $2 million
The Government of Cook Islands has re-quested the ADB to sup-port a $37 million subma-rine internet cable project, which will link the islands of Rarotonga and Aitutaki in the Cook Islands to Sa-moa, where interconnec-tion to the international internet hubs in Fiji and Hawaii will occur.
Hawaiki Cable closed on the financing for the $300 million Hawaiki submarine cable system which came into force on March 31, 2016. Hawaiki funding is based on a mix of equity, consumer presales and debt. Natixis acts as senior lender for Hawaiki and is funding a por-tion of the system’s construction costs through a senior loan facility.
In the recent 2012 to 2016 period, the industry has invested nearly $7 billion in submarine telecoms cables. Traditional consortia have financed 71 percent of total investment, while private owners have invested 18 percent and MDBs have accounted for 11 percent over the period.
2016 SEA-ME-WE 5
E u r o p e a n Bank for Re-construction and Develop-ment
$50 million loan to Türk Telekom Group, Tur-key’s largest telecommu-nications company, for a branching unit in Mar-maris on the Mediterra-nean coast, in south-west-ern Turkey.
2016 S a m o a S u b m a -rine Cable Project
Asian Devel-opment Fund $25; World Bank $16; Gov. of Australia $1.5 million
$32.5 million project for a submarine cable system connecting Samoa to re-gional and global commu-nications infrastructure.
2016 Palau - Guam
Asian Devel-opment Bank $8.53
ADB has approved two loans amounting to $25 million for a submarine ca-ble project which will sup-port the development of a fiber-optic cable system linking Palau to the Inter-net cable hub in Guam.
2016 WIOCC International Finance Cor-poration
IFC will be providing a fi-nancial package of up to $20 million to fund the on-going regional expansion of the Company through the acquisition of addi-tional capacity in Africa, increase connectivity to other fiber optic systems, upgrade its capacity on the EASSy cable and purchase network equipment.
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3.4 Future Planned Systems Financing
Looking ahead for planned submarine fiber optic systems, the in-dustry has more than $5.5 billion in new projects being planned over the period 2017 to 2018. 50 percent of total investments are currently estimated to be financed by private owners, compared with 39 percent for traditional consortia and 11 percent for MDBs. However, the rate for private owner financing is anticipated to de-crease significantly to be more in line with historic trends as some planned systems extend or even miss their future contract in force (CIF) dates.
39%
50%
11%
FinancingofPlannedSystems, 2017-2018
Consortia Private MultilateralDevelopmentBanks
Figure 29: Financing of Planned Submarine Fiber Optic Systems, 2016-2018Source: STF Analytics
71%
18%
11%
FinancingofSystems, 2012-2016
Consortia Private MultilateralDevelopmentBanks
Figure 28: Financing of New Submarine Fiber Optic Systems, 2012-2016Source: STF Analytics
The rates of Consortia, Private and MDB financing realized in the recent 2012 to 2016 period are different to those since 1987. Private and Multilateral Development Bank financing have seen a notice-able increase in recent times.
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Huawei Marine
There’s a new power under ocean uniting the world in a whole new way. With unparalleled development expertise and outstanding technology, Huawei Marine is revolutionizing trans-ocean communications with a new generation of repeaters and highly reliable submarine cable systems that offer greater transmission capacity, longer transmission distances and faster response to customer needs. Huawei Marine: connecting the world one ocean at a time.
The Power of Submarine Information Transmission
46 47
TE SubCom is solidly behind ASN and NEC with just over 80,000 kilometers of cable produced, but still very much ahead of the rest of the industry. These 3 companies have been very dominant in re-cent years, being some of the few companies that can produce cable at a high enough volume to meet demand for large systems. So, while nearly all of these companies had a relatively high amount of activity, they were not always supplying large systems.
0 2 4 6 8 10 12 14 16 18
ASN
Fujitsu
HuaweiMarine
NEC
Nexans
NSW
TESubCom
Xtera
NumberofSystemsbySupplier2012-2016
Figure 31: Number of Systems by Supplier, 2012-2016Source: STF Analytics
Over the last couple of years, there has been a renewed interest in Transpacific routes and routes connecting Asia and South America directly to Europe. This will involve vast systems, requiring thou-sands of kilometers of cable. With each company able to handle only so much production, expect some of the small and medium sized suppliers to seize opportunities and help meet demand in the future.
4.1.2 Future Systems
Regional plans for the future should follow the same trends as re-cent years. Southeast Asia continues to drive demand in the Aus-tralAsia region, as emerging markets find themselves hungry for capacity. As more owners and service providers look to circum-vent the tumultuous Middle East, expect activity there to persist in its decline. The Oil & Gas industry will maintain demand off the
4. Supplier Analysis
4.1 System Suppliers
4.1.1 Current Systems
Based on each supplier’s reported activity by region for the period 2012 to 2016, companies are keeping in line with overall global eco-nomic trends, with heavy focus on the developing EMEA and Aus-tralAsia regions. Alcatel-Lucent Submarine Networks (ASN) was the busiest supplier over this 5-year period by far, while TE Sub-Com was active in every region of the world except the Transpa-cific. Most of the smaller to mid-size companies almost exclusively focus on their “home” regions — such as NEC being the most ac-tive in the Transpacific and AustralAsia regions. Huawei Marine, however, bucks the trend by being the most active in the EMEA region, specifically Africa.
0
20000
40000
60000
80000
100000
120000
ASN Fujitsu HuaweiMarine
NEC Nexans NSW TESubCom
Xtera
KMSofCableProduced2012-2016
Figure 30: KMS of Cable Produced, 2012-2016Source: STF Analytics
According to announced information on the amount of cable each company has supplied over the last 5 years, ASN takes the lead — with over 100,000 kilometers of cable produced. NEC is right behind at just under 100,000 kilometers, due to 2 Transpacific sys-tems and helping supply several massive systems in the last year.
48 49
continue to drive the telecommunications industry forward into the future. With robust competition between numerous companies, continue to expect a healthy cable supplier industry through 2018.
coasts of Africa and Australia as long as oil prices cooperate, and expect emerging markets in South America to increase activity in the Americas region as well.
Data center and content provider companies are becoming increas-ingly responsible for new system demand; especially for the Amer-icas, Transatlantic, Transpacific and AustralAsia regions. These companies, such as Facebook, Google, Amazon and Microsoft, are consuming bandwidth at an increasingly rapid pace. Rather than buying bandwidth on existing cables, a new trend has emerged where these companies are finding it easier to build and own inter-national telecoms infrastructure. expect this trend to continue for the foreseeable future due to the ever increasing popularity of these sorts of cloud services.
0 2 4 6 8 10 12 14
ASN
HuaweiMarine
NEC
TESubCom
Xtera
FutureSystems2017-2018
Figure 32: Future Systems, 2017-2018Source: STF Analytics
Overall, ASN continues to be a strong leader in the supply industry. They have been the most active, and can supply the largest volume of cable and equipment. Looking forward, TE SubCom is working to close that gap while NEC will fade a bit with their major projects coming to a close this year. However, with more and more systems announced every year, there will always be room for a savvy sup-plier to take on a promising opportunity.
Every one of these system suppliers are composed of industry vet-erans with many years of experience in the submarine fiber indus-try. Their innovative technologies and reliable production are what
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4.2.1 Current Upgrades
Upgrades have given system owners a way to stay competitive at a fraction of the cost of entirely new systems. Being able to upgrade capacity by simply swapping out easily accessible hardware has allowed many aging systems to stay competitive and keep up with capacity demands. The cost effectiveness of upgradeable capacity has even resulted in making brand new systems fiscally impracti-cal, allowing owners to stay on top of their respective markets. In short, upgrades have been a smart and effective way to keep a sys-tem relevant, even years after its saturation date. This is one of the primary reasons the Transatlantic region has only just seen news system come online after over a decade of inactivity.
02468101214161820
2012 2013 2014 2015 2016
SystemsUpgradebyYear2012-2016
Figure 33: Systems Upgraded by Year 2012-2016Source: STF Analytics
However, in the last few years, upgrade activity has come almost to a screeching halt. While upgrades give system owners a cost-ef-fective way to stay competitive, at some point systems can only be upgraded so much further. With the vast majority of systems along high traffic routes already being on the latest and greatest technol-ogy, there has simply been nowhere to go in recent times. Indeed, some systems have upgraded capacity so heavily that they run the risk of affecting their revenue as a result of massive amounts of cheap bandwidth.
There was a slight bump in upgrade activity in 2016, and it may be
4.2 Upgraders
“The appetite of businesses and consumers for new ap-plications continue to drive cable initiatives to expand connectivity and capacity in support of the worldwide internet cloud. We continue to see market drivers remain focused on both new builds between North and South America, as well as Euro-Asia and Pacific routes, and upgrades. In particular, Africa is in fur-ther development with new initiatives to upgrade the existing systems. These trends add to an increasing investment trend of web scale players in submarine cables to cope with their increasing need of data trans-mission.”
– Paul Gabla, Chief Sales & Marketing,Alcatel-Lucent Submarine Networks
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4.2.3 Market Activity
Based on public announcements, Ciena, ASN and Xtera have up-grade experience in every part of the world. Infinera, Mitsubishi Electric, Fujitsu, and Huawei Marine have proven themselves in several different regions, while the rest of the companies exhibit regional specialties. In contrast to other realms of the submarine telecoms industry, regional work experience is not nearly as critical; network expertise and familiarity with upgrade equipment is much more important, allowing for terminal equipment companies to be competitive with older telecoms firms. Shore-end expertise is a plus when selecting an upgrader, but with the wide selection of consul-tants and subcontractors, even that specialty can be acquired.
Since they joined the market some years ago, Ciena, and Infinera have managed to carve out their own niche in the submarine tele-coms industry by focusing heavily on upgrades. In general, up-grades have given traditional cable and shore end equipment man-ufacturers a new way to generate revenue, rather than relying on producing entirely new systems. While the money brought in from performing an upgrade is much less than building an entirely new system, it is perhaps a more consistent form of income.
ASN10%
Ciena34%
Infinera18%
Fujitsu2%
HuaweiMarine5%
Mitsubishi6%
NEC2%
TESubCom7%
Xtera16%
ReportedUpgradeActivity2012-2016
Figure 35: Reported Upgrade Activity, 2011-2015Source: STF Analytics
the start of a new trend as technology becomes available. However, not all systems will be able to use these brand new technologies, so there is little reason to suspect a return of 2010 to 2014 levels of activity.
4.2.2 Regional Upgrade Activity
While nearly every region has seen at least some upgrade activity, the AustralAsia and EMEA region have seen the most since 2012. This should come as little surprise, as these are two of the biggest regions in the world. A capacity upgrade can allow more customers to be served, and potentially drive out new systems by meeting or exceeding current capacity demands. As a result of owners trying to stay on top of the competition, 13 systems in AustralAsia have been upgraded, with 20 in the EMEA region. Out of all systems upgraded since 2012, these two regions account for half of all up-grades by themselves.
0%
20%
40%
60%
80%
100%
Americas AustralAsia EMEA IndianOceanPan-EastAsian
Transatlantic Transpacific
CurrentUpgrades2016
NotUpgraded 10G 20G 40G 100G
Figure 34: Current Upgrades, 2016Source: STF Analytics
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4.3 Installers
“As always, the installation market remains “interest-ing”. With five or possibly six turnkey players now competing for repeatered systems, there are more op-portunities for the independent installation contrac-tors and a period of market strength has meant strong utilisation of late.
The ability of the contractors to turn this into better margins may still be a challenge despite the welcome drop in the price of fuel since the days of four figures per tonne. As broadband becomes an essential utility in every nation, contractors need to get comfortable delivering in ever more challenging geographies where security and self-sufficiency are core capabilities.
History is on the side of the optimist. I feel and I be-lieve that the outlook in installation remains robust as demand continues to be driven by the ingenuity of the content-creators and the price of capacity continues to fall as a result of continued innovation and develop-ment in optical transmission. As ship operators, our focus has remained on driving down costs and finding ways to efficiently deploy cable more securely from the subsea threats that continue to threaten the un-seen infrastructure that the world has increasingly come to rely on.”
-Ian Douglas, CEO, Global Marine Systems Limited
With upgrade activity slowing down, expect these companies to realize fewer system upgrades in the coming years. Indeed, Infin-era has already noticeably reduced their activity and only Xtera has shown any sort of meaningful growth in this part of the industry. More concerning, the new 150G, 200G and future 400G wavelength technologies may not even be compatible with newer systems, let alone older systems. In short, the upgrade market looks to be very uncertain for the next few years. Expect more companies to reduce their market activity, or even pull out entirely.
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Based on announced systems installed between 2012 and 2016, ASN is shown to be the busiest overall by a significant margin. TE SubCom is the next busiest with Huawei Marine, NTT, Orange Ma-rine and S.B. Submarine Systems not far behind with the rest of the companies being about equal in system activity. This lines up with regional capability, as those who can serve the most regions tend to be the busiest. However, the number of cableships owned clearly does not correspond to the amount of system installations performed per company.
4.3.3 Regional Activity
Breaking down the amount of cable installed regionally for the last 5 years shows the EMEA region to be the busiest, with the Indian Ocean Pan-East Asian region not far behind. Emerging markets in Africa, the continued desire for more bandwidth and redundancy on the Europe to Asia route and the fact that it is the largest re-gion in the world all play a role in the amount of work put into the EMEA region. The Indian Ocean Pan-East Asian region has benefit-ted in particular from multiple large systems put into place within the last year. The Americas and AustralAsia regions have seen the next most amount of activity, largely due to emerging markets in South America and Southeast Asia.
0
10000
20000
30000
40000
50000
60000
70000
Americas AustralAsia EMEA IndianOceanPan-EastAsian
Transatlantic Transpacific
KMSInstalledbyRegion2012-2016
Figure 37: KMS Installed by Region, 2012-2016Source: STF Analytics
4.3.1 Regional Capabilities
Reported information shows that TE SubCom operates the largest fleet by far with 7 ships. E-Marine owns 4 while ASN, Global Ma-rine and S.B. Submarine Systems all have 3 cable installation ships to their name. Elettra owns a single cableship, with IT International Telecom, Kokusai Cableship, and NTT owning 2 each. While these numbers illustrate the part of the fleet that is exclusively owned and operated by each installer, they can also make use of “vessels of opportunity”. This allows for a high degree of flexibility to take on any type of project around the globe.
Many of these companies overlap in their regional capability. This provides comprehensive installation experience to the submarine fiber industry as a whole. With several companies being able to serve each region, a prospective cable owner can be sure that an experienced installer will be available regardless of their system’s timeline. This allows a cable owner a great deal of flexibility when planning their new system.
4.3.2 Current Installations
ASN30%
AlphaLogistics2%
Elettra2%
E-Marine2%
GlobalMarine5%HuaweiMarine
10%
IT InternationalTelecom
5%
KokusaiCableShip3%
NTT10%
OrangeMarine8%
S.B.SS10%
TESubCom13%
SystemsInstalledbyCompany2012-2016
Figure 36: Systems Installed by Company, 2012-2016Source: STF Analytics
58 59
4.4 Surveyors
“In the last year, over a dozen cable systems have reached CIF with system suppliers contracting sur-vey companies for the mapping and investigation of planned routes. Much of this activity is consistent with the last several years of industry bustle, which has kept all facets of the supply chain active, and pro-jections for the upcoming year or two indicate much of the same – something we should all be excited about.
While survey technology and methods, as they are implemented in the cable industry, haven’t changed much, other trends are apparent. Increased activity in transpacific and transatlantic systems has put empha-sis on survey companies with the capability to survey long deep-water routes, but perhaps the most notice-able trend is outside of our industry, but has its effects nonetheless.
With the oil and gas market having crashed and bare-ly showing signs of recovery, vessel-related industries (ours included) are now experiencing immense price pressure. Companies who don’t dedicatedly serve the submarine cable industry are stepping in and under-cutting the market to keep vessels busy. And while a cost competitive market has its benefits, price erosion has no long term gain. This, however, is a familiar ebb and flow of our industry, and while new projects keep coming and more seabed needs to be mapped, it’s hard to complain.”
-Ryan Wopschall, Business Devel-opment Manager, Fugro
Projections for the next 2 years indicate a shift from the trends of the previous 5 years. The AustralAsia and Transpacific regions are ex-pected to see the most amount of activity, as several large systems are laid throughout both regions in an effort to connect major eco-nomic and data center hubs in the Pacific Ocean. The Americas re-gion will continue to see steady growth, as data center and content provider companies continue to build connections to the Caribbe-an and South America. The Transatlantic region should continue to see moderate growth as a result of an increasing desire to connect South America more directly to Europe and Africa, with additional routes planned between Europe and the mid-Atlantic of the United States. By contrast, the EMEA and Indian Ocean Pan-East Asian re-gions are looking at fairly anemic growth compared to years past, largely due to economic uncertainty in Europe and political insta-bility in the Middle East and surrounding areas.
0
10000
20000
30000
40000
50000
60000
70000
Americas AustralAsia EMEA IndianOceanPan-EastAsian
Transatlantic Transpacific
PlannedKMS2017-2018
Figure 38: Planned KMS, 2017-2018Source: STF Analytics
60 61
4.4.2 Planned Surveys
Less than half of all planned systems for 2017 to 2018 have complet-ed their surveys. This is a small concern, considering completing a survey is one of the first real hurdles on the way to system imple-mentation. Even more concerning is the fact that less than half of all systems planned for 2017 alone have completed a survey. With such a delayed start, expect many of the 39 systems planned for the next 2 years — which is nearly the same amount that entered ser-vice over the previous 5 — to push their RFS date back.
0
2
4
6
8
10
12
14
16
18
20
Americas AustralAsia EMEA IndianOcean Transatlantic Transpacific
SurveyStatusofPlanned Systems2017-2018
Complete Incomplete
Figure 40: Survey Status of Planned Systems, 2017-2018Source: STF Analytics
4.4.1 Current Surveys
Based upon announced activity, Fugro, UTEC and EGS have sur-vey experience in nearly every region of the world. Gardline and Elettra are also quite diverse, while IT International Telecom and C & C Technologies focus more on specific regions.
When looking at the big picture, many of these companies over-lap – providing comprehensive global survey capability for the industry at large. While completing a survey is generally the first important step for an upcoming system, a surveyor should always be available regardless of the system’s timeline. This allows a cable owner a great deal of flexibility when planning their new system.
Gardline owns the largest percentage of the global survey fleet. EGS has the next highest percentage, while Fugro, IT International Tele-com and C & C Technologies make up the remainder. It is important to note that this does not represent the sum total of vessels available for survey work. Each survey company also has contracts with ad-ditional vessels all around the world. These “vessels of opportunity” enable rapid deployment of survey capability across the world and help to reduce long-term operation and maintenance costs.
Regarding systems surveyed from 2012 through 2016, reported ac-tivity shows that Fugro has been the busiest surveyor of the bunch. EGS is right behind them with Elettra and IT International Telecom about equal. This more or less lines up with regional capability, as those that can serve the most regions tend to be the busiest. How-ever, the number of vessels owned does not necessarily correspond to the amount of systems surveyed by each company.
EGS38%
Elettra6%
Fugro44%
IT InternationalTelecom
6%
USGovernment6%
SystemsSurveyed 2012-2016
Figure 39: Systems Surveyed, 2012-2016Source: STF Analytics
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WFN Strategies
Telecoms consulting of submarine cable systemsfor regional and trans-oceanic applications
.com
64 65
4.5.1 Alcatel-Lucent Submarine Networks
On January 14, 2016 Alcatel-Lucent and Nokia officially began combined operations. This completed a months-long merger pro-cess, which began in April 2015.
The combined company is uniquely positioned to create the foun-dation of seamless connectivity for people and things wherever they are. This foundation is essential for enabling the next wave of technological change, including the Internet of Things and tran-sition to the cloud. The combined company has unparalleled in-novation capabilities, with Alcatel-Lucent’s Bell Labs and Nokia’s FutureWorks, as well as Nokia Technologies, which will stay as a separate entity with a clear focus on licensing and the incubation of new technologies.
ASN has remained as a wholly owned subsidiary under Alca-tel-Lucent. It continues to be a strong leader in the submarine fiber industry.
4.5.2 Aqua Comms
In May 2016, Aqua Comms Limited announced that it had entered into an agreement with global private equity firm Cartesian Capi-tal Group for up to $75 million in equity capital to support global growth initiatives. The financing agreement immediately provid-ed $50 million that Aqua Comms could use to further accelerate customer growth on its existing networks. In addition, Cartesian committed to fund an additional $25 million of equity capital to be used to opportunistically accelerate expansion including potential new routes.
Aqua Comms operates AEConnect, the newest Atlantic submarine cable system and CeltixConnect, a subsea fibre-optic network con-necting Ireland to the United Kingdom across the Irish Sea.
4.5.3 Hibernia Networks
In June 2016, Hibernia Networks announced that it had complet-ed a $165 million senior secured credit facility with a new lender group. The refinancing would be used to pay down existing in-debtedness of $97 million, as well as provide incremental liquidi-
4.5 Recent Mergers, Acquisitions and Industry Activities
“One typical measure of the strength and health of any industry is the relative rate of successful mergers, ac-quisitions and IPOs, but in that regard our submarine cable industry tends to be quite different from others and indeed unique; frequent mergers and acquisitions are the exception not the norm to the ‘rule,’ and IPOs are rarely accomplished.
One reason may be the significant value gap between how we view ourselves versus how the financial mar-kets indeed view us.”
-Wayne Nielsen, Managing Direc-tor, WFN Strategies
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4.5.6 SubOptic Trade Association
SubOptic is seeking to open the organization to all members in the submarine cable industry and broaden the value add it can offer to the community.
The SubOptic organization will announce the Host, location and venuefor SubOptic 2019 during PTC ’17 in Honolulu, Hawaii in January 2017.
4.5.7 Telxius
In February 2016, Telefónica announced the creation of a new firm to house its global infrastructure assets. Initial assets included around 15,000 Telefónica telecommunication towers in Spain and other countries, as well as the Telefónica Group’s international net-work of 31,000 km of submarine fibre optic cable. The creation of Telxius is part of an optimization strategy for the Telefónica Group and enables the management of Telefónica Group’s infrastructure on a global scale with a more specialized and focused approach.
In September 2016, Telefónica announced plans to file for an initial public offering (IPO) of Telxius in the second half of 2016. The com-pany has been in talks with several banks over the Telxius IPO since May and aims to raise around $4.5-$5.6 billion.
On September 29, 2016, Telefonica SA canceled an IPO of its in-frastructure unit, Telxius Telecom SA, after demand from investors proved inadequate.
As of October 7, 2016, Telefonica SA is considering selling stakes in Telxius.
4.5.8 Xtera Communications
On November 13, 2015, Xtera Communications launched an IPO on the NASDAQ exchange. The company initially had filed to offer 5.5 million shares at a price between $9.00 and $11.00, the actual offering was 5 million shares at $5.00 each, equating to $25M. As of September 2016, stocks in the company are trading at under $0.70 per share.
ty to fund organic and inorganic strategic initiatives in support of the company’s continued growth and expansion. The new lender group was led by MUFG, and includes ING, Capital, Citizens Bank, HSBC, and CIT.
The new credit facility represented a substantial reduction in the interest rate on the company’s senior secured debt and provided for incremental liquidity enabling Hibernia Networks to accelerate the execution of its strategic objectives.
Hibernia Express, Hibernia Networks’ transatlantic cable, provides the lowest latency connections available between major commer-cial and financial centers in North America and Europe.
4.5.4 ICPC
In August 2016 the International Cable Protection Committee (ICPC) presented on the organization’s role within the ocean com-munity and highlighted its newly published and informative white paper on the subject of submarine cables and Biological Diversity of areas Beyond National Jurisdiction (BBNJ) at the United Nations.
The event was part of the 2nd Session of the Preparatory Commit-tee established by General Assembly resolution 69/292: Develop-ment of an international legally binding instrument under the Unit-ed Nations Convention on the Law of the Sea (UNCLOS) on the conservation and sustainable use of marine biological diversity of areas beyond national jurisdiction.
4.5.5 Nextgen Networks
In June 2016, Vocus Communications announced its acquisition of Nextgen Networks for AU$700 million, along with purchasing Nextgen Group’s two subsea development projects, paying AU$134 million for the North West Cable System (NWCS) and AU$27 mil-lion for the Australia Singapore Cable (ASC) project. Nextgen al-ready owns a 17,000 km fibre backhaul network in Australia.
In September 2016, the Australian Competition and Consumer Commission announced that it would not oppose Vocus Commu-nications’ acquisition of Nextgen Networks, along with NWCS and ASC.
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5. System Maintenance
System fault repairs and maintenance are key tenants in the con-tinuing health of the submarine cable industry. System faults have become a subject of heavy discussion in the recent years as public awareness and reporting procedures have become openly publi-cized. Organizations like ICPC have made extraordinary inroads with the cable owner community in this regard. Their efforts, and those of others like them, have made for a more open and free-ly discussed environment for submarine cable repairs. In short, awareness efforts have been successful and have positively impact-ed repair times across the world.
5.1 Publicity
Unsurprisingly, the two largest regions in the world generate the most media stories about cable faults. The Americas and EMEA re-gions are not only expansive, but several of the landing stations contained within each region are also in high traffic shipping areas. While the lack of stories about Transpacific cable faults is also ex-pected – considering the nature of most routes and the location of their endpoints – the small volume of stories about cable faults in the AustralAsia region is somewhat unexpected. This region con-tains a slew of cables crisscrossing major shipping lanes in a region that is also geologically active. It is likely that many cable faults for this region simply go unreported to the media.
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Figure 41: Total Cable Fault Stories by Region, 2010-2015Source: STF Analytics
On August 17, 2016, Xtera Communications, received a notice of termination of the Master Manufacturing Agreement from NSG Technology, Inc. (Foxconn) due to Xtera’s non-payment of out-standing accounts receivable, as well as unpaid material and in-ventory liabilities.
Also on August 17, 2016, Xtera received notification from The Nas-daq Stock Market indicating that the company no longer complies with the requirements of Nasdaq Marketplace Rule 5450(b)(1)(A) for continued listing on The Nasdaq Global Market because the stockholders’ equity has fallen below $10 million as reported on its quarterly report on Form 10-Q for the period ended June 30, 2016. Xtera’s stockholders’ equity as of June 30, 2016 was approximately negative $9,989,000. Xtera is currently exploring courses of action to regain compliance, and intends to submit a plan with Nasdaq before October 3, 2016 to maintain its listing.
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Figure 43: Time from Announcement to Repair, 2010-2015Source: STF Analytics
Due to reporting and general awareness of cable faults being on the rise, the time between a fault occurring and a cable owner or oper-ator announcing said fault has decreased dramatically over the last 5 years. The recent surge in media coverage has put more pressure on cable owners and operators to become increasingly transparent with cable faults. As internet connectivity becomes ever more es-sential to daily life, customers demand such transparency to help ensure service providers work diligently to address their needs.
5.2 Reporting Trends and Repair Times
With progressively faster reporting time, it is very likely that an-nouncement times will average under 5 days in the near future. This not only helps to hold cable owners and operators more ac-countable, but also provides reassurance to customers that cable faults are being addressed in a timely fashion. More accurate and transparent reporting of cable faults also helps maintenance agree-ment zones and private contractors more reliably predict where to distribute assets.
The remaining Indian Ocean Pan-East Asian and Transatlantic re-gions have had no reported cable faults within the period 2010 to 2015. While the former region simply has fewer cables to worry about — in a relatively cable safe region — the latter is one of the most established regions in the world. It is again likely that many faults in these regions go unreported. Specifically in the case of the Transatlantic region, there is almost always a cable repair ship near-by to quickly restore any damage within days or hours – likely pre-venting many faults from even being noticed.
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Figure 42: Total Cable Fault Stories, 2010-2015Source: STF Analytics
A sharp rise in the volume of media coverage for cable faults has been observed - especially in the last two years. This is likely due to an increase in reporting, rather than an increase in cable faults, and almost certainly tied to the rapid rise of internet media reporting. Our global society is more interconnected than ever, with people sharing news faster than at any point in history.
With the average customer becoming more technologically sav-vy—and quicker to complain to service providers – this has con-tributed to an increase in media coverage for cable faults. As more people are connected to the global submarine fiber network every year, the rise in reported faults by the media is expected to con-tinue. This provides much needed transparency and accountability for the submarine fiber industry.
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There has been a clear correlation observed between frequency and speed of cable fault reporting and a decrease in average repair time. Internet news media reaches more people and informs them faster than ever before. As media coverage of cable faults extends to a wider audience and provides additional transparency, this correla-tion can be expected to continue into the future. Raising awareness of cable faults will also put pressure on government agencies in charge of issuing permits for cable repair work. Many times, this is the largest hindrance for a repair operation. This increased aware-ness will have a net positive effect on permit turnaround time, and further decrease the average time to repair for a given fault.
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Americas AustralAsia EMEA TransPacific
Figure 46: Average Estimated Repair Time in Days by Region, 2010-2015Source: STF Analytics
While the Americas, AustralAsia and EMEA regions all have a rel-atively short average time to repair, the Transpacific regional av-erage outstrips all the others combined. With Transpacific systems containing some of the longest uninterrupted route segments in the world, this comes as no surprise. The longer a route segment is, the longer it takes to find and then diagnose a fault for proper repair. Most systems in the other regions are broken up into smaller seg-ments, and cable faults can be located and diagnosed much more quickly. As reporting accuracy of cable faults continues to increase, this will help bring down the Transpacific’s average time to repair. With repair crews getting better information on where faults are likely to occur, their ability to locate and diagnose a cable fault im-proves dramatically. Accountability and transparency of this sort is healthy for cable owners and operators.
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Figure 44: Average Repair Time in Days, 2010-2015Source: STF Analytics
Despite the spike in 2013, the trend for average time to repair has continued to de-crease alongside an increase in media coverage. As reporting of cable faults consistently increases in frequency and speed, this should continue to decrease the average repair time even further.
The continued downward trend in cable fault repair time could eas-ily lead to the average time to repair falling under 10 days over the next few years.
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Figure 45: Comparison of Repair Time, Story Count, and Announcement Time, 2010-2015
Source: STF Analytics
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Regional Snapshot:
Current Systems: 13
Capacity: 308 Tbps
Planned Systems: 4
Planned Capacity: 262 Tbps
6. Regional Market Analysis and Capacity Outlook
6.1 Transatlantic Regional Market
“Robust and resilient that’s how the transatlantic in-frastructure needs to be. Current cables follow a sim-ilar route between New York and London and push traffic through narrow pressure points. But the role of New York as main internet hub for cable systems is changing due to the need for diversity and connectiv-ity between datacenters. A cable from Virginia Beach, USA to Bordeaux, France would provide for more resilience, security and supply a direct path between main-land Europe and Ashburn.
With the current growth rate additional cables will be required on such a route. In the South Atlantic, al-ternative projects could provide for additional routing opportunities. If we want a truly reliable network we can resolve this situation by deploying more diverse systems as part of a more meshed network strategy to further increase the Atlantic’s resiliency, stability and capacity.”
-Hubert Souisa, CEO, SemanticNet BV
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Two major causes of the development slowdown were a glut of bandwidth — which still remains largely unlit — and the financial crash of the early 2000s which was brought on by overinvestment in the submarine cable industry. With investment on the rise again, and systems aging out in the Transatlantic route, new systems are beginning to come on line. The newest system — America Europe Connect — seeks to tap in to the exploding demand from data cen-ter and cloud services providers, with one of the key selling points being massive bandwidth available — nearly 80 Tbps potential — on a modern submarine fiber system on a route full of aging cables.
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SystemsUpgraded- Transatlantic
NotUpgraded 10G 20G 40G 100G
Figure 48: Systems Upgraded – TransatlanticSource: STF Analytics
To cover the steady rise in demand for new capacity during the down period of the submarine cable industry, upgrading existing systems became the norm starting in 2010. Today, all but 1 existing Transatlantic system is on at least 40G technology, with 62 percent of the systems on 100G. As with other markets, upgrades have been a reliable and cost-effective measure in extending the life of a sys-tem – a new upgrade costs a fraction of what a new system can cost and increases the available regional bandwidth reversely pro-portionate. In short, upgrades to the existing transatlantic systems answered the growing demand adequately at the time. However, as the need for more infrastructure is on the rise by data center and content provider companies, upgrades to existing systems no lon-ger adequately meets demand.
6.1.1 Current Systems
Table 3: Transatlantic Systems, 2010-2016
RFS System Length Capacity2000 Atlantic Crossing 2 6,185 2.5 Tbps2000 Atlantis-2 13,100 160 Gbps2001 FLAG Atlantic 1 North/South 12,820 24 Tbps2001 Hibernia Atlantic 12,111 25 Tbps2001 TAT-14 15,453 9.38 Tbps2001 TGN Transatlantic 12,670 50 Tbps2003 Apollo 12,700 64 Tbps2015 Hibernia Express 4,600 53 Tbps2016 America Europe Connect 5,536 78 Tbps
This year has seen the second new system to be brought into service across the northern Transatlantic route in the last year — both of which are the first new systems in 12 years. Growth on the Transat-lantic route skyrocketed from the late 1990s through 2003. But after that, the market saw a decade-long break from new development.
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Figure 47: Systems in Service – TransatlanticSource: STF Analytics
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Figure 50: Contract in Force - Planned TransatlanticSource: STF Analytics
There are currently 4 planned systems set to be ready for service in 2017 and beyond. None of the 4 planned systems are along the northern route between Europe and the United States, signifying another change in demand. 2 of the systems are planned between Brazil and West Africa, 1 is planned between Brazil and Europe, and the 4th is planned for Europe to the mid-Atlantic of the Unit-ed States. Brazil continues to work on getting its own international connections without going through the United States, while tech giants such as Microsoft and Facebook want connections between Europe and the Dulles, Virginia data centers.
6.1.2 Planned Systems
Table 4: Transatlantic Planned Systems, 2017-2018
RFS System Length Capacity2017 Eulalink 5,875 30 Tbps2017 MAREA 6,600 160 Tbps2018 South Atlantic Cable System 6,200 40 Tbps2018 Cameroon-Brazil 5,900 32 Tbps
During the last boom of Transatlantic system development, the av-erage system length was roughly 12,000 kms with the majority of systems all taking similar routes between Europe and the US.
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Figure 49: Transatlantic Route Kms AddedSource: STF Analytics
With the rise in demand for low latency systems, planned systems for 2017 and beyond average roughly 6,000 kms based on their an-nounced routes. The change in customer requirements from purely bandwidth to bandwidth and low latency has driven developers to develop routes averaging 50 percent shorter than previous systems, with proposed systems claiming to drop latencies dramatically in addition to providing much needed infrastructure.
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Regional Snapshot:
Current Systems: 10
Capacity: 140 Tbps
Planned Systems: 6
Planned Capacity: 320 Tbps
6.2 Transpacific Regional Market
“Times are certainly changing and no greater change are we seeing other than that of the step-change in ca-pacity levels being purchased on key routes.
Although the shift in technology from 10Gb to 100Gb has been available for some time, we are only now re-ally seeing purchasers of capacity start to commit to 100Gb links, particularly on the ‘thick’ routes of the trans-Pacific and trans-Atlantic.
We attribute this to a few key factors. Firstly, the cost of cards is becoming more realistic, demand forecasts continue to grow and finally, sellers are being more realistic in their expectations regarding the value of a 100Gb service when compared to a 10Gb service. The multiples do vary by route, but in general, we are see-ing 5.5 – 7 times the current market price of a 10Gb being offered as a 100Gb service.
In summary, we expect to see the pricing of 10Gb ser-vices stabilize and the price-points for 100Gb services continue to become more competitive. Let’s see what happens to the market pricing when super-channels / 1Tb services become available.”
-Eric Handa, CEO, AP Telecom
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The Transpacific market experienced its most significant period of growth from 2000 to 2002. Since then, only 4 systems in total have been added to the region. The industry crash of the early 2000s cer-tainly played a large part in this, but the fact that there has been no new system on the Transpacific routes since 2010 until this year is largely due to existing systems being able to upgrade their capac-ity for relatively little cost and push potential competitors out of the market. As with the Transatlantic market, until very recently the Transpacific has been almost fully saturated, with little room for growth other than route diversity and cutting down on existing latency.
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Figure 52: Systems Upgraded – TranspacificSource: STF Analytics
Even with only one new system since 2010, the region has easi-ly been able to keep up with capacity demand via the use of up-grades. With the easy availability of 100G wavelength technology upgrades – which can boost capacity nearly tenfold in many cases – it is little wonder a new cable system has only recently been able to present a sustainable business case for the region. Unlike some of the other regions, the Transpacific actually made fairly heavy use of 40G wavelength technology. Since 2013, however, it is been all about 100G. To date, all but two of the 10 systems currently serving the transpacific region have been upgraded. A single system utiliz-es 10G wavelength technology, while the rest — including the new system — have taken advantage of strictly 100G technology.
6.2.1 Current Systems
Table 5: Transpacific Systems, 2000-2016
RFS System Name Length Capacity2000 Southern Cross Cable Network 30,000 14 Tbps2000 Pacific Crossing 1 20,910 8.4 Tbps2001 Australia-Japan Cable 12,224 25.6 Tbps2001 China-US 30,444 5 Tbps2001 Japan-US 21,880 6.4 Tbps2002 TGN Transpacific 21,424 5.12 Tbps2008 Trans-Pacific Express 16,163 5.12 Tbps2009 Asia-America Gateway 20,547 2.88 Tbps2010 Unity 9,486 7.68 Tbps2016 Faster 9,000 60 Tbps
The Transpacific market’s growth has been similar to that of the Transatlantic in recent years, showing relatively little year-upon-year. New systems are added sporadically, however most of the ca-pacity increases have been from upgrades.
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Figure 51: Systems in Service – TranspacificSource: STF Analytics
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ContractinForce- Planned Transpacific
Figure 54: Contract in Force - Planned TranspacificSource: STF Analytics
There are currently 6 planned systems set to be ready for service in 2017 and beyond. Nearly all of these systems are trying to bring large capacity increases along their respective routes, but more im-portantly they are trying to edge out the competition in latency. With the average system length of all planned systems for the Transpacif-ic market being just over 13,750 kilometers, many of these systems should have fairly strong business cases in an otherwise oversatu-rated region. Despite high frequency traders driving less demand than in the past, latency is still a massively important component to a system’s business case and shaving even a few milliseconds off of a route is worth millions of dollars to the right customer. These new systems provide an added bonus of increased route diversity – es-pecially along the southern part of the region. Some of the systems that are not yet CIF are in direct competition with those systems that have achieved that milestone, so it is very likely up to half of these planned systems never make it into service.
6.2.2 Planned Systems
Table 6: Transpacific Planned Systems, 2017-2018
RFS System Name Length Capacity2017 South East Asia-United States 15,000 20 Tbps2017 Asia Pacific Express East 12,700 40 Tbps2017 New Cross Pacific 14,000 80 Tbps2018 South America Pacific Link 14,200 30 Tbps2018 Pacific Light Cable Network 12,800 120 Tbps2018 Hawaiki 14,000 30 Tbps
After a huge growth spurt from 2000 to 2002, the Transpacific mar-ket has seen moderate growth for the last 13 years.
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Figure 53: KMS Added – TranspacificSource: STF Analytics
The amount of cable in the region nearly tripled during this massive period of growth, and has seen about 60,000 kms of cable added since then. Average system length in the region is just over 19,000 kms, owing to the Transpacific region having some of the longest routes in the world. Between the massive systems required to span the region, and the easy availability of cheap capacity upgrades, the static nature of the region comes as no surprise.
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Regional Snapshot:
Current Systems: 46
Capacity: 285 Tbps
Planned Systems: 6
Planned Capacity: 222 Tbps
6.3 Americas Regional Market
“Over the past decade we have seen the launch of re-gional subsea cable systems linking specific Caribbean or LatAm geographies. Large systems such as SAC/MAC, SAM-1, and GlobeNet have implemented sig-nificant upgrades taking advantage of new DWDM technologies to address the ever growing demand for high-capacity bandwidth to service Internet hungry apps.
More recently, we are witnessing the resurgence of larger systems – both built as private cables or consor-tia. The next two years will be quite active with large scale, linear systems being deployed along the Atlantic side of our continent such as Monet, Seabras-1, and BRUSA.
The justifications for these builds vary from oppor-tunistic to lowering the cost-per-bit of Int’l capacity. Web-scale companies are not only driving most of the demand but are typically the enablers of new system builds. Demand projections also vary; current sys-tems and new builds will have ample design capacity to address projected demand in our region for years to come.”
-Erick Contag, CEO, Globenet
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6.3.1 Current Systems
Table 7: Americas Systems, 2009-2016
RFS System Name Length Capacity2009 Challenger Bermuda-1 1,448 320 Gbps2009 Greenland Connect 4,733 2.56 Tbps2010 Antel 250 3.84 Tbps2010 Suriname-Guyana Submarine Cable
System1,249 3.6 Tbps
2011 East-West 1,700 1.6 Tbps2013 ALBA-1 1,600 5.12 Tbps2014 America Movil Submarine Cable
System-117,800 50 Tbps
2015 Pacific Caribbean Cable System 6,000 48 Tbps2016 Monet 10,556 64 Tbps
Characterized by steady growth since the early 1990s, the Americas region has seen a recent explosion of growth – roughly doubling the number of systems in service over the last 10 years.
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Figure 55: Systems in Service – AmericasSource: STF Analytics
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6.3.2 Planned Systems
Table 8: Americas Planned Systems, 2017-2018
RFS System Name Length Capacity2017 Austral 1,8002017 Seabras-1 10,750 72 Tbps2017 South America Pacific Link Caribbe-
an Express3,400 60 Tbps
2017 Tannat 2,000 90 Tbps2017 Quintillion Subsea 1,200 30 Tbps2018 Brazil-USA 11,0002018 Guantánamo Bay 2 1,200
Unlike other markets, the Americas market has seen an extraordi-nary boom in cable development.
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Figure 57: KMS Added – AmericasSource: STF Analytics
Since 2001, new cable development has consistently added 2-5 per-cent more kilometers per year. Breaking from the average, there was a 7 percent increase in 2007 and a 10 percent increase in 2013. By and large, the region has seen steady growth. Looking to the future, the systems planned for 2017 show a 9 percent increase in kilometers of cable added to the market.
After ten years of steady growth, with an average of about 2 sys-tems being ready for service per year, the region is expecting an-other boom in development with 6 new systems announced to be ready for service over the next 2 years.
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Figure 56: Systems Upgraded – AmericasSource: STF Analytics
The Americas market has seen very few upgrades since the first one was accomplished in 2008. While other markets have caught fire with new upgrades, this market has enjoyed a steady increase in new systems to meet increasing demands for more bandwidth. The type of wavelength upgrade is roughly even between 10G, 40G and 100G. However, where 100G has dominated other regions, 40G has been the most relied upon upgrade in the Americas until this year. Of the remaining 67 percent of systems left not upgraded, there has been no public announcement for future upgrades. Looking for-ward, there does not seem to be a downturn in planned develop-ment for systems in the Americas.
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6.4 AustralAsia Regional Market
“2016 has been a period of high activity for submarine cables in the Asia Pacific region. Some 18 islands in the Pacific are currently in various stages of securing new submarine cables. Additionally, several longer haul cables across the Pacific are nearing completion with others in various stages of evolution.
For just Australia, there are 3 new cables coming in the east coast and up to 4 on the west coast. And there are similar developments in Asia with cables heading east and west.
Never in my whole career have I seen so much activity as the global demand for data coupled with increased recognition of the importance of great connectivity to an economy combine to drive the submarine cable in-dustry to new heights.”
-John Hibbard, CEO, Hibbard Consulting
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ContractinForce- PlannedAmericas
Figure 58: Contract in Force – Planned AmericasSource: STF Analytics
There are currently 6 systems planned to be ready for service in 2017 and 2018. Of those cables three are considered to be contract in force yet, showing moderate 50 percent CIF rate for future systems in the region. The last few years have been relatively busy com-pared to historical trends for the Americas market. With a devel-opment rate that has remained steady since 2001, the next 2 years will likely remain in line with historical norms. That said, the next 2 years are busy for the industry at large. With a finite number of cable ships to accomplish so many projects, several systems for this region could end up being delayed a year or more.
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6.4.1 Current Systems
Table 9: AustalAsia Systems, 2011-2016
RFS System Name Length Capacity2011 Batam-Dumai-Melaka 400 2.56 Tbps2011 Mataram-Kupang Cable System 1,318 1.8 Tbps2011 Submarine Cable Asia Network 4,300 1.92 Tbps2013 Asia Submarine-cable Express 7,200 15.36
Tbps2013 GOKI 4,200 80 Gbps2013 South-East Asia Japan Cable 8,986 28 Tbps2013 Boracay-Palawan 332 4.8 Tbps2013 Taiwan Strait Express 270 6.4 Tbps2014 Interchange I 1,259 320 Gbps2015 Broadband Linking the American
Samoa Territory250
2015 Sulawesi-Maluku-Papua Cable Sys-tem
2,000 40 Gbps
2015 Far East 1,844 1.6 Tbps2016 Asia Pacific Gateway 10,400 38.4 Tbps2016 Tasman Global Access 2300 20 Tbps
The AustralAsia market has been characterized by a massive amount of growth in a relatively short amount of time. Since 2007, it has been one of the busiest regions in the entire world.
Regional Snapshot:
Current Systems: 42
Capacity: 243 Tbps
Planned Systems: 21
Planned Capacity: 231 Tbps
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Figure 60: Systems Upgraded – AustralasiaSource: STF Analytics
Upgrades were very popular around the globe from 2010 to 2014, but the AustralAsia market has seen relatively little upgrade ac-tivity. One of the primary reasons for this is the lower total band-width demand compared to more developed regions until recently. Another primary reason is that unlike other markets, AustralAsia has many island nations that all need their own cable to connect to the global telecommunications network. Other markets can simply make use of upgrades on major backbones serving multiple coun-tries to meet their capacity needs, but the AustralAsia market relies almost entirely on brand new systems to meet capacity and connec-tivity requirements. A third contributing factor to the low amount of upgrade activity is that the majority of systems in this market are generally newer compared to the rest of the world – with most having been installed since 2009. This has allowed many systems to start their lifespan on the latest and highest capacity wavelength technology. To date, only 26 percent of systems in the AustralAsia market have been upgraded. Of the 11 systems upgraded, none have made use of 10G technology, 1 has been upgraded to at least 40G technology and the remaining 10 systems have taken advan-tage of 100G technology.
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Figure 59: Systems in Service – AustralasiaSource: STF Analytics
Growth from 2001 to 2005 was almost negligible, and while there was a moderate amount of activity in 2006, the real growth oc-curred from 2008 to 2009. The biggest factor contributing to growth in the region is emerging markets in Southeast Asia, with countries such as Indonesia, Singapore and Malaysia becoming information technology powerhouses.
The industry crash of the early 2000s certainly had an effect on the later timing of the region’s boom, but the rising economies of Southeast Asia and their strong desire for international connectiv-ity largely overrode such concerns. The widespread adoption of mobile and cloud services throughout the region combined with a recent uptick in data center activity will sustain large growth in the region for the foreseeable future. While the region should continue to enjoy this steady growth, not all of the 18 systems planned for 2017 are likely to be implemented. A number of these systems will be delayed to at least 2018 or simply die outright.
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KMSAdded- AustralAsia
Figure 61: KMS Added – AustralasiaSource: STF Analytics
Since 2009, the region has seen an average of around 6,500 kms of cable added per year, with an average system length of just under 4,000 kilometers. The next 2 years hint at another possible growth spurt with more and more countries in the region demanding af-fordable bandwidth via submarine fiber cables. However, as men-tioned previously, the amount of planned systems is almost likely unsustainable.
Yes
No
ContractinForce- PlannedAustralAsia
Figure 62: Contract in Force - Planned AustralAsia
6.4.2 Planned Systems
Table 10: AustralAsia Planned Systems, 2017-2018
RFS System Length Capacity2017 American Samoa-Fiji 40 Gbps2017 Asia Pacific Express Central 4,800 32 Tbps2017 ATISA 2802017 Australia-Singapore Cable 4,600 36 Tbps2017 Best Cable System 5,0922017 Interchange II 3,500 1.28 Tbps2017 Malaysia-Cambodia-Thailand 1,425 30 Tbps2017 North Asia Cable System 3,600 2.52 Tbps2017 Mythic 1,600 20 Tbps2017 Paniolo 5752017 Palau-Guam2017 Samoa-Fiji 1,3002017 Sistem Kabel Rakyat 1 Malaysia 3,500 4 Tbps2017 Solomons Oceanic Cable Network 8272017 Trident 4,600 38 Tbps2018 Asia Pacific Express West 4,600 20 Tbps2018 Hawaiki 14,000 30 Tbps2018 Moana Submarine Cable System 9,700 20 Tbps
After the huge growth spurt from 2008 to 2009, the AustralAsia market has seen a steady amount of growth in the amount of cable added per year.
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6.5 EMEA Regional Market
“Connectivity varies greatly across Africa, though is fast improving. Submarine cables reach almost every coastal African country, and over one million kilome-ters of terrestrial fiber have been deployed to connect Africa’s major cities. A good number of these networks have been deployed independently by mobile network operators, given the soaring demand for data and often limited alternative connectivity options. In other mar-kets, governments have invested in national backbones for open-access wholesale, though with varying levels of success both in terms of project implementation and the subsequent commercialization.
Metro fiber remains more limited, and generally concentrated in the commercial centers and wealthy neighborhoods of larger cities. More robust access-lev-el services, and additional ICT facilities such as data centers, could allow for the higher margin enterprise and other hosted services that would drive data traffic. Nigeria provides a case in point where congestion is a key bottleneck in many metro areas, while submarine lit capacity utilization remains at an estimated 10%.
Mobile internet has been a key driver of growth. The average annual growth in unique users over the past five years has been almost 50%; and much growth re-mains, with the number of users estimated to reach 750 million by 2020 from 275 million in 2015. Of course, many of these people remain limited to 2G ser-vices, so the challenge includes both affordable access and quality of service. Infrastructure optimization and cost rationalization will be an important focus area in achieving these dual objectives.”
-Judah Levine, CEO, HIP Consult
Source: STF Analytics
There are currently eighteen planned systems set to be ready for service in 2017 and beyond. Most of these new systems will connect small nations to mainland Asia or existing international pipelines, while a handful will span nearly the entire region. Of these planned systems, only 6 are considered CIF. This low CIF rate — especially considering several of the systems planned for 2017 have already slipped from 2016 targets — reinforces the likelihood that many of these systems are not viable. Business cases for these systems may not end up being there, owing to the small size of the countries some of these cables are planned for, or the simple inability to find available suppliers and installers. With systems these days running tens of millions of dollars even for short lengths, a few of these gov-ernments and businesses simply may not be able to shoulder the cost. MDBs have been increasingly active in this region, but even they have their limits.
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6.5.1 Current Systems
Table 11: EMEA Systems, 2011-2016
RFS System Name Length Capacity2011 Canalink 2,000 5.12 Tbps2011 CeltixConnect 131 960 Gbps2011 Europe India Gateway 15,000 3.84 Tbps2011 Gulf Bridge International Cable Sys-
tem4,719 51.2 Tbps
2011 Hawk Cable System 3,181 2.72 Tbps2011 Telecom Egypt North 2,938 20 Tbps2011 TGN Gulf 2,306 1.28 Tbps2012 Africa Coast To Europe 17,000 12.8 Tbps2012 Alasia 350 25.6 Tbps2012 Silphium 426 1.2 Tbps2012 West Africa Cable System 14,350 14.5 Tbps2014 Middle East North Africa 8,800 57.6 Tbps2014 Flores-Corvo 685 0.96 Tbps2014 Didon 173 18 Tbps2015 Nigeria-Cameroon Submarine Cable
System1,100 12.8 Tbps
2016 C-Lion1 1,172 144 Tbps2016 South East Asia-Middle East-West-
ern Europe 520,000 24 Tbps
Characterized by steady growth since the early 1990s, Europe, the Middle East and Africa have all seen a relative increase in devel-opment over recent years. This has been one of the most consistent growth regions in the world, owing to its size as well as the import-ant “crossroads” of the Mediterranean Sea and the Suez Canal.
Regional Snapshot:
Current Systems: 113
Capacity: 594 Tbps
Planned Systems: 5
Planned Capacity: 118 Tbps
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75%
80%
85%
90%
95%
100%
2011 2012 2013 2014 2015 2016
SystemsUpgraded- EMEA
NotUpgraded 10G 20G 40G 100G
Figure 64: Systems Upgraded – EMEASource: STF Analytics
In contrast to the steady development of new systems in the EMEA region, upgrades to existing cables have been relatively slow, consid-ering the potential market for said upgrades. Of the 113 cable systems utilized in the region, only 16 percent have actually been upgraded. This relatively low upgrade rate for such a large number of systems leaves some opportunity for the currently dwindling upgrade market. Many of the current systems active in the EMEA region could make use of 100G or even 40G upgrades in the coming years.
6.5.2 Planned Systems
Table 12: EMEA Planned Systems, 2017-2018
RFS System Name Length Capacity2017 Orval 560 20 Tbps2017 Ceiba-2 290 8 Tbps2017 Liquid Sea 10,000 30 Tbps2018 Silk Route Gateway 12018 Djibouti-Africa Regional Express 5,500 60 Tbps
As mentioned previously, the EMEA region is rather uniquely char-acterized as a region of steady activity, with bursts of highly ambi-tious, region-spanning systems every few years.
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SystemsinService- EMEA
Figure 63: Systems in Service – EMEASource: STF Analytics
While system count has remained relatively steady – with an aver-age of 4 systems ready for service every year since 2002 – the actual lengths of those systems can vary dramatically from year to year. The primary drivers for these growth spurts are the SEA-ME-WE systems, as well as large coastal systems ringing Africa. In actu-al number of systems accomplished, the EMEA region is the most consistent region in the world. It has a growth pattern that is seem-ingly immune to the industry’s boom and bust pattern seen over the past 15 years.
The EMEA region sees a consistent, annual addition of smaller re-gional systems. These complement the hugely ambitious projects like SEA-ME-WE 3 and 4, ACE, EIG and WACS to name a few. These behemoth projects seek to link up entire regions of the world, rather than smaller, inter-country routes and are the biggest projects the industry tackles. Each system of this kind comes in at well over 10,000 kms per route. Despite the steady system count massive in-ter-regional projects cause a huge surge in kilometers installed with 2010 to 2012 seeing the most recent growth spurt for the region.
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There are currently 5 systems planned to be ready for service in 2017 and 2018. Of those systems, only 1 is considered CIF. With only 20 percent of the systems being considered viable at the moment, the initial impression is gloomy. More concerning, the sole system that has hit the CIF milestone is a small system, under 300 kilometers. 2 of the systems planned for 2017 are systems that have previously missed a 2016 target. The 3 remaining systems were announced 2Q and 3Q 2016, leaving plenty of time to hit their proposed RFS dates. Unfortunately, the EMEA region in particular has been rife with economic uncertainty and political instability, casting a cloud over any prospective projects.
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KMSAdded- EMEA
Figure 65: KMS Added – EMEASource: STF Analytics
The rate of kilometers added per year shows an average increase of roughly 7 percent annually. Recent bursts of 28 percent, 17 percent and 14 percent have been observed in 2010, 2011 and 2012, respec-tively. The last 2 years have seen a return to the relatively steady pace and the systems planned for 2017 and 2018 look to continue the trend.
Yes
No
ContractinForce- EMEA
Figure 66: Contract in Force, Planned – EMEASource: STF Analytics
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6.6.1 Current Systems
Table 13: Indian Ocean Pan-East Asian Systems, 2005-2016
RFS System Name Length Capacity2005 South East Asia-Middle East-West-
ern Europe 418,846 12.8 Tbps
2006 Falcon 12,181 2.56 Tbps2007 Bharat-Lanka 338 960 Gbps2009 Lower Indian Ocean Network 1,091 1.28 Tbps2009 Seacom 13,601 4.2 Tbps2009 The East African Marine System 4,500 1.28 Tbps2009 TGN Eurasia 9,240 1.28 Tbps2012 Lower Indian Ocean Network 2 3,000 1.28 Tbps2014 Bay of Bengal Gateway 8,040 55 Tbps2016 South East Asia-Middle East-West-
ern Europe 520,000 24 Tbps
2016 Asia Africa Europe 1 25,000 40 Tbps
One of the newest emerging markets, the Indian Ocean Pan-East Asian region has been on a steady path of development since the boom following the submarine cable industry downturn in the ear-ly 2000’s. It has enjoyed mostly consistent growth since 2003 de-spite its small size, largely due to being an important crossroads region between the busier EMEA and AustralAsia regions.
6.6 Indian Ocean Pan-East Asian Regional Market
Regional Snapshot:
Current Systems: 21
Capacity: 248 Tbps
Planned Systems: 3
Planned Capacity: 80 Tbps
112 113
Source: STF Analytics
Even though the boom years have fallen off since 2012, this region has not stopped or slowed in its demand for more connectivity. To accommodate rising demand, the owners in the region have opted for the inexpensive option of upgrading their capacities. Starting in 2011, system owners in the region began rolling out upgrades to their systems. During the period of 2011 to 2015, nearly 25 percent of all the region’s systems were upgraded. Of the systems that are upgraded 80 percent are upgraded to 100G, the current industry gold standard for upgrades.
6.6.2 Planned Systems
Table 14: Indian Ocean Pan-East Asian Planned Systems, 2017-2018
RFS System Name Length Capacity2017 Mauritius-Rodrigues Island 5502017 Australia West Express 10,100 20 Tbps2018 DARE 5,500 60 Tbps
Diverging from historical trends in the region, planned systems for 2017 to 2018 continue in a steady growth pattern set by the previous 2 years.
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KMSAdded- IndianOceanPan-EastAsian
Figure 69: KMS Added - Indian Ocean Pan-East AsiaSource: STF Analytics
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SystemsinService- IndianOceanPan-EastAsian
Figure 67: Systems in Service - Indian Ocean Pan-East AsiaSource: STF Analytics
The region has experienced periods of rapid development, fol-lowed by a short period of dormancy. The years of growth have been largely driven by trans-regional systems such as SEA-ME-WE 3, 4 and 5, FLAG and Falcon, to name only a few. This has resulted in 3 distinct development spikes in 2005, 2009 and 2016. Local de-velopment is largely small systems linking India east to Indonesia or west to the Middle East and beyond, providing new connections for the countries that ring the Indian Ocean.
0%10%20%30%40%50%60%70%80%90%
100%
2011 2012 2013 2014 2015
SystemsUpgraded- IndianOceanPan-EastAsian
NotUpgraded 10G 20G 40G 100G
Figure 68: Systems Upgraded - Indian Ocean Pan-East Asian
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7. Afterword
The period 2011 to 2015 was very lean for the industry at large. Last year was particularly harsh, with 2015 seeing only 6 new sys-tems and less than 16,000 kilometers of cable added. Thankfully, 2016 was something of a return to form, seeing 10 new systems and over 100,000 kilometers of cable added. Coinciding with a success-ful SubOptic conference in Dubai, this was easily the best year the industry has had in some time.
The current level of industry activity looks to continue through the next 18 months, with over 30 systems and nearly 200,000 kilometers of cable planned. In 2017, the Arctic is realizing the implementation of its first significant submarine cable system. Future such systems — both regional and transoceanic — are in the offing. Every region is busy and every company has a project. Antarctica is the only con-tinent yet to be reached by a submarine telecoms cable.
The upgrade market has slowed significantly, with several compa-nies dramatically reducing their market activity. Upgrades were priced so low and 100G came about so quickly that nearly every ca-ble that wanted an upgrade already has one on the best technology available. New technology is just around the corner, but may not be available to existing systems due to various technical limitations. The high level of upgrade activity observed from 2010 to 2014 will almost certainly never be seen again. There are still several systems around the world that could take advantage of upgrades, but it re-mains to be seen if customer capacity demand along those routes will warrant such a step.
A new trend was observed this past year as data center and cloud services providers have begun to change from capacity purchasers to cable system owners. These companies have massive bandwidth requirements, with route needs that do not always line up with current infrastructure routing. The new ownership paradigm could greatly change the way cables are developed, and why. This comes at a good time for the submarine cable industry, as these companies and the services they provide are in very high demand. They will not be going away any time soon, and are likely to weather any coming economic storm.
The region enjoyed the addition of 2 major systems in the latter half of this year, and the 3 systems planned for the next 2 years add on average 5,000 kilometers of cable. Unfortunately, once these proj-ects have run their course, the region will likely be at the mercy of its neighbors for additional international connectivity. This region in particular does not generally have a strong enough telecoms presence on its own, so business cases tend to be quite weak.
Yes
No
ContractinForce- Planned IndianOceanPan-EastAsian
Figure 70: Contract in Force - Planned - Indian Ocean Pan-East AsiaSource: STF Analytics
None of the 3 systems planned for the next 2 years in this region have achieved the CIF milestone. Unfortunately, 1 of the systems has missed its proposed RFS date more than 1 year in a row and 1 of the others looks increasingly less likely to hit its 2017 RFS date with each passing month. The 3rd system — due in 2018 — is more of an intra-regional system that links up to the EMEA region. It is likely that this system will at least achieve the CIF milestone by next year. Despite the promises of continued growth after the recent boom, it appears that this region will return to its historical development trends.
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8. Works Cited
Andrew Lipman, U. P. (2015, March). SubTel Forum. Retrieved from Financing a New Private Submarine Cable Network: http://subtelforum.com/STF-81/#?page=64
Ash, S. (2014). The Development of Submarine Cables. In D. Bur-nett, Submarine Cables: The Handbook of Law and Policy (pp. 19-40). Leiden, Boston: Martinus Nijhoff.
Gerstell, G. S. (2008, March). SubTel Forum. Retrieved from Financ-ings of Submarine Fiber Optic Networks: The Building Boom and the Need for Financing: http://subtelforum.com/articles/products/magazine/
McKinsey Global Institute. (2011). Internet Matters: The Net’s Sweep-ing Impact on Growth, Jobs and Prosperity.
The World Bank. (2009). Extending Reach and Increasing Impact. Washington, DC.
The World Bank. (2015, November). World Development Indicators. Retrieved from http://data.worldbank.org/indicator/IT.NET.USER.P2
Unfortunately, while the next 18 months look to be some of the bus-iest the industry has ever seen, the second half of 2018 and beyond look much less promising. Nearly all planned activity stops after 2018, with little sign so far that it will pick up again. Historically strong markets like the United States and Europe could very well be on the brink of another major recession, which would certainly impact future growth of the submarine fiber industry. More con-cerning, the industry has seen 3 shaky IPOs in the last 12 months. However, a lot can change in two years and all the industry can do is tackle whatever is in front of it.
The immediate future will be some of the brightest times in the history of the submarine fiber industry, but the long-term prospects must be viewed with a healthy amount of caution.
Kieran ClarkAnalystSTF Analytics
Tuesday, October 11, 2016 2:54 PM
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