STF Industry Report Issue 8

SUBMARINE TELECOMS ISSUE 8 | 2019/2020
INDUSTRY REPORT
SUBMARINE TELECOMS INDUSTRY REPORT

CONTENTS
EXORDIUM......................................................... 4 5. CABLE SHIPS.............................................56
FOREWORD – ITU.............................................. 6 Insider Perspective, Stephen Nielsen............... 58
INDUSTRY REPORT METHODOLOGY............... 8 5.1 Current Cable Ships.................................... 59
1. GLOBAL OVERVIEW.................................10 5.2 Shore-End Activity...................................... 62
Insider Perspective, Eric Handa........................ 11 6. MARKET DRIVERS AND INFLUENCERS...64

1.1 History of Submarine Telecoms.................. 12 Insider Perspective, Derek Webster................. 66
1.2 Capacity...................................................... 15 6.1 Over-The-Top Providers.............................. 67
1.3 System Growth........................................... 22 6.2 Data Centers............................................... 69
1.4 Evolution of System Ownership
and Customer Base........................................... 24 7. SPECIAL MARKETS...................................72
Insider Perspective, Steve Lentz....................... 74
2. OWNERSHIP FINANCING ANALYSIS........26
7.1 Offshore Energy.......................................... 75
Insider Perspective, World Bank....................... 28
7.2 SMART Cables............................................ 76
2.1 Historic Financing Perspective................... 29
2.2 Regional Distribution of Financing............. 30 8. REGIONAL MARKET ANALYSIS
2.3 Current Financing....................................... 31 AND CAPACITY OUTLOOK...........................82
Insider Perspective, Patrick Faidherbe, AQEST... 83
3. SUPPLIER ANALYSIS.................................36
8.1 Transatlantic Regional Market.................... 84
Insider Perspective, Paul Gabla, ASN............... 37
8.2 Transpacific Regional Market...................... 90
3.1 System Suppliers......................................... 38
8.3 Americas Regional Market.......................... 94
3.2 Installers...................................................... 40
8.4 AustralAsia Regional Market...................... 98
3.3 Surveyors..................................................... 42
8.5 EMEA Regional Market............................. 102
3.4 Recent Mergers, Acquisitions and
Insustry Activities.............................................. 43 8.6 Indian Ocean Pan-East Asian
Regional Market.............................................. 106
4. SYSTEM MAINTENANCE..........................46 8.7 Polar Regional Market.............................. 110
Insider Perspective, Bruce Neilson-Watts........ 48
AFTERWORD.................................................. 114
4.1 Publicity....................................................... 49
WORKS CITED................................................ 115
4.2 Reporting Trends and Repair Times........... 50
LIST OF FIGURES............................................ 116
4.3 Club Versus Private Agreements................ 51
2 SUBMARINE TELECOMS INDUSTRY REPORT

SUBMARINE TELECOMS INDUSTRY REPORT 3
EXORDIUM
FROM THE PUBLISHER
Welcome to the 8th edition of SubTel Forum’s annual “Submarine

Telecoms Induswtry Report,” which was authored by the analysts at
STF Analytics, without whom this report would not be possible.
A
s always, the annual Industry Report We are thrilled that the Secretary General of the
serves as an analytic resource within International Telecommunication Union, Mr. Houlin
a quartet of SubTel Forum products Zhao, provided this year’s foreword, discussing the
including the Submarine Cable Map pub- state of the ITU and its submarine cable related
lished every January, the Submarine initiatives. Thanks especially to Bruce
Cable Almanac published quarterly Howe of University of Hawaii who
thereafter, and the virtual Submarine penned for ITU a comprehensive sec-
Cables of the World Interactive Map. tion outlining the uses and evolution of
The Submarine Telecoms Industry scientific cables around the world.
Report features in-depth analysis and In this annual Industry Report,
prognoses of the submarine cable we have identified $5.74 billion in
industry and serves as an invaluable new projects that are being active-
resource for those seeking to com- ly pursued by their developers. Of
prehend the health of the submarine those, $2.4 billion worth are executed
industry. It examines both the world- contract-in-force, and $1.25 billion of
wide and regional submarine cable those new, contract-in-force systems
markets, including issues such as the are slated for 2020 alone.
new-system and upgrade supply en- We utilized insights from a number
vironments, ownership, financing, market drivers, of articles from recent issues of Submarine Tele-
and geopolitical/economic events that may impact coms Forum Magazine, where necessary, allowing
the market in the future. us to better discuss various industry topics. We also
The format of the annual Industry Report has received some excellent input from a number of
been updated once again, adding sections relat- industry super stars, including:
ed to SMART cables, polar projects and offshore • Bruce Neilson-Watts, GMSL
energy. As such we have attempted to make a more • Derek Webster, Andget Limited
encompassing view of the submarine fiber indus- • Eric Handa, AP Telecom
try available to you, our readers, and for the fourth • Patrick Faidherbe, AQEST
time, have produced this report in house with the • Paul Gabla, ASN
assistance of STF Analytics, our industry research • Steve Lentz, OSI
and data analysis arm. • Himmat Singh Sandhu & Siddhartha Raja, W
Last year’s report was downloaded over 500,000 orld Bank
times or so and was quoted by numerous business • Stephen Nielsen, SubTel Forum
journals and periodicals. We are optimistic, yet con-
fident that this year’s edition stands up to the same We would also like to say a special thank you to
scrutiny. We hope you’ll agree. our sponsors who helped make the annual Industry

A Publication of Submarine Telecoms Forum, Inc.
www.subtelforum.com
ISSN No. 2640-4311
Report doable: PRESIDENT & PUBLISHER:

• APTelecom Wayne Nielsen | [email protected]
• E-Marine
VICE PRESIDENT:
• Hengtong
Kristian Nielsen | [email protected]
• STF Analytics
• WFN Strategies SALES:
Teri Jones | [email protected] | [+1] (703) 471-4902
While the crystal ball will rarely be EDITOR:
completely clear, one fact remains Stephen Nielsen | [email protected]
– that our more than 170-year-old
DESIGN & PRODUCTION:
international enterprise continues Wendy Wade | [email protected]
to be a thriving, exciting and ev-
er-evolving industry. REPORT WRITER:
In the coming months, we will Kieran Clark
continue to strive to make available
as much new data as possible in a Submarine Telecoms Forum, Inc.
timely and useful fashion – as we www.stf-inc.com
say, an informed industry is a pro- BOARD OF DIRECTORS:
ductive industry. Margaret Nielsen, Wayne Nielsen and Kristian Nielsen
Thank you as always for honor-
STF Events, Inc.
ing us with your interest in SubTel
www.stfevents.com
Forum’s 8th annual “Submarine
Telecoms Industry Report.” CONFERENCE DIRECTOR:
Christopher Noyes | [email protected] | [+1] (703) 468-0554
STF Analytics, Division of SubTel Forum, Inc.

www.stfanalytics.com
LEAD ANALYST:
Kieran Clark | [email protected] | [+1] (703) 468-1382
Wayne Nielsen
Publisher & President, Submarine
Telecoms Forum, Inc. Contributions are welcomed and should be Liability: While every care is taken in preparation
forwarded to: [email protected]. of this publication, the publishers cannot be held
responsible for the accuracy of the information
Submarine Telecoms Forum magazine is published herein, or any errors which may occur in advertising
bimonthly by Submarine Telecoms Forum, Inc., or editorial content, or any consequence arising
and is an independent commercial publication, from any errors or omissions, and the editor reserves
serving as a freely accessible forum for professionals the right to edit any advertising or editorial material
in industries connected with submarine optical submitted for publication.
fiber technologies and techniques. Submarine
Telecoms Forum may not be reproduced or trans- New Subscriptions, Enquiries and Changes of Address
mitted in any form, in whole or in part, without the 21495 Ridgetop Circle, Suite 201, Sterling, Virginia
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Copyright © 2019 Submarine Telecoms Forum, Inc.
V O I C E O F T H E I N D U S T RY
FOREWARD
Houlin Zhao, Secretary-General, International Telecommunication Union
T
he submarine telecoms cables spanning of engineering, and a similarly remarkable feat of
our oceans are the information superhigh- international collaboration. For over 150 years, ITU
ways that form the ‘backbone’ of the global has provided a neutral platform to bring cohesion to
ecosystem of information and communica- ICT innovation worldwide.
tion technologies (ICTs). Their construction prizes The submarine telecoms industry has been inte-
durability and longevity. Their capacity is unpar- gral to this work, participating in the development
alleled. Their manufacture and deployment are of ITU international standards for the design, con-
major undertakings. Submarine telecoms cables are struction, deployment and operation and mainte-
emblematic of the enormous investment required nance of submarine telecoms systems.
to connect the world. Our latest standardization project in this domain
I would like to thank the Submarine is addressing transversely compatible
Telecoms Forum for offering ITU the DWDM (dense wavelength division
opportunity to contribute to this re- multiplexing) applications for repeat-
port. The Submarine Telecoms Indus- ered submarine telecoms systems.
try Report aims to offer a global view This project is also covering the char-
of the latest innovations in submarine acterization and commissioning of
telecoms technology, the latest deploy- ‘open cable networks’, a shift towards
ment projects, evolving business rela- the separation of dry and wet plant
tionships, and prospects for the future procurement.
of the industry. This global view of the I welcome you to join the ITU stan-
industry’s technical and business dy- dardization community.
namics helps companies to build new The principles underlying the ITU
partnerships and advance in unison. standardization process ensure that
This is an objective that ITU is all voices are heard, that standardiza-
pleased to support. tion projects do not favor particular commercial
ITU is the United Nations specialized agency for interests, and that resulting standards have the
ICT. We coordinate the global allocation of radiof- consensus-derived support of the diverse, globally
requency spectrum and satellite orbits. ITU stan- representative ITU membership.
dards are critical to the operation of today’s optical, Enabling Infrastructure for Climate Action
radio and satellite networks. And we assist develop- ICT infrastructure has become enabling infra-
ing countries in the application of advanced ICTs. structure for innovation in fields such as energy,
Our global membership includes 193 Member transportation, healthcare, financial services and
States and some 900 leading companies, universi- smart cities.
ties, and international and regional organizations. This infrastructure also has significant potential
ITU is unique in the ICT standards world as to support climate action.
the only body to include governments. We are In recent years, the extraordinary breadth and
also unique in the United Nations system as the capacity of the submarine telecoms network has mo-
only body to include the private sector. We are in a tivated the initiation of an ambitious new project:
unique position to bring the benefits of ICT inno- that of equipping submarine communications cables
vation to all regions of the world. with climate and hazard-monitoring sensors to cre-
The global ICT ecosystem is a remarkable feat ate a global real-time ocean observation network.

This network would be capable of providing the engineering of the repeater and its deployment
earthquake and tsunami warnings as well as data on environment.
ocean climate change and circulation. SMART cables are expected to be field-proven by
Submarine cables are uniquely positioned to glean ongoing demonstrations and proposed pilot systems
key environmental data from the deep ocean, which in Europe, Asia-Pacific, and The Americas.
at present is grossly under sampled for monitoring The work of the Joint Task Force and experi-
the climate. Equipping cable repeaters with climate ence gained in the field will establish a minimum
and hazard-monitoring sensors – creating ‘Science set of requirements for SMART sensors. This set
Monitoring And Reliable Telecommunications of requirements will feed into ITU’s international
(SMART) cables’ – would yield data of great value to standardization work.
climate science, disaster warning and the future of The Joint Task Force has contributed a synopsis
our oceans. of its latest report to this issue of the Submarine
Realizing this vision is the primary objective of Telecoms Industry Report. Your feedback on the
the ITU/WMO/UNESCO-IOC Joint Task Force report would be most welcome.
on SMART Cable Systems, a multidisciplinary body
established in 2012. Houlin Zhao, Secretary-General
There was never any doubt that this project was International Telecommunication Union
feasible. What was required, however, was a coordi-
nated international effort to mobilize the necessary
political and business will to bring stakeholders HOULIN ZHAO was first elected 19th Secretary-General of the
International Telecommunication Union at the Busan Plenipo-
together to determine their respective roles. tentiary Conference in October 2014. He took up his post on
Chief on the Joint Task Force’s list of priorities 1 January 2015. ITU Member States re-elected Houlin Zhao
has been devising means for the private sector as ITU Secretary-General on 1 November 2018. He began his
to drive the sustainable growth of the envisaged second four-year term on 1 January 2019.
Prior to his election, he served two terms of office as ITU
SMART cable network. A variety of stakeholders Deputy Secretary-General (2007-2014), as well as two terms as
have contributions to make, but telecoms compa- elected Director of ITU’s Telecommunication Standardization
nies are at the heart of the project. They will own Bureau (1999-2006).
Houlin Zhao is committed to further streamlining ITU’s effi-
and manage SMART cable infrastructure, becom-
ciency, to strengthening its membership base through greater
ing lead contributors to the advancement of climate involvement of the academic community and of small and
science and disaster warning. medium-sized enterprises, and to broadening multi-stakehold-
Telecoms companies and cable manufacturers are er participation in ITU’s work.
the right custodians of this responsibility.
These industry players are expert in manufactur-
ing and deploying submarine telecoms cables de-
signed to last 25 years. Their knowledge comes from
many years of experience and it is essential that we
capitalize on their expertise. Cable manufacturers
are best placed to build and install SMART sensors
as an integral part of the production process, en-
suring the compatibility of SMART sensors with

METHODOLOGY
T
his edition of the Submarine Telecoms Industry
Figure 1: Worldwide Map of Submarine
Report was authored by the analysts at STF Ana- Cable Database
lytics, a Division of Submarine Telecoms Forum,
Inc. It provides submarine cable system analysis for
SubTel Forum’s Submarine Cable Almanac, Cable Map and
Industry Newsfeed. For the Industry Report, STF Analytics
utilizes both interviews with industry experts and its propri-
etary Submarine Cable Database, which was initially devel-
oped in 2013 and updated with real-time data thereafter. The
database tracks some 400+ current and planned domestic
and international cable systems, including project informa-
tion suitable for querying by owner, year, project, region,
system length, capacity, landing points, installers, etc.
The Submarine Cable Database is purpose-built by STF
Analytics’ database administration team, which is powered
by My SQL and retained on a Microsoft Azure platform.
Data is collected from the public domain and interviews
with industry experts and is the most accurate, comprehen-
sive and centralized source of information in the industry.
At present, STF Analytics’ Submarine Cable Database
chronicles the work of some 18 financiers, 477 cable owners,
22 system suppliers, 12 upgraders, 15 system surveyors and 25
system installers. In addition, it manages data for some 400+
projects, across seven regions and 840+ landing points.
To accomplish this report, STF Analytics conducts con-
tinuous data gathering throughout the year. Data assimi-
lation and consolidation in its Submarine Cable Database
is accomplished in parallel with data gathering efforts.
General trending is accomplished using known data with
linear growth estimates for up to three following years.
For capacity growth, two different ways of determining
Compound Annual Growth Rate (CAGR) are used. The first
method calculates a CAGR for a given time period – e.g., a
CAGR for the period 2014-2018. The second method calcu-
lates a rolling two-year CAGR to minimize extreme variance
while also showing a useful year-to-year growth comparison.
STF Analytics collected and analyzed data derived from a
variety of public, commercial and scientific sources to best
analyze and project market conditions. While every care is
taken in preparing this report, these are our best estimates
based on information provided and discussed in this industry.

1
GLOBAL
OVERVIEW

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
“S
ubmarine cables over the last 100 ing power doubling and in some cases tripling,
years have played a vitally im- coupled with advancements in line card and LTE
portant role in making the world technology it’s a testament to the research and
a smaller place. Today, submarine development teams around the globe in action.
cables are making the world a smaller connect- Many global submarine routes only offer 100G
ed community as a result of high speed, instant, interfaces replacing the old STM-4 and 10G’s of
and effective communications. Submarine bygone days. No doubt, 1Tb cards will be avail-
cables continue to carry the majority of financial able in no time soon.
transactions, social media, government commu- As CEO of APTelecom, its with tremendous
nication, and commerce on an unprecedented pleasure and pride to support many existing
level. Many readers most likely grew up with and new submarine cable systems in the Asia
radio or black and white television prior to the Pacific, LATAM, and Atlantic regions. From our
current technological revolution that’s taken perspective, the Arctic region will likely have a
place be it cell phones, high speed broadband system built in less than three to five years, the
at home, streaming videos and near perfect 4K Southern Hemisphere will continue to build out,
connections from half way around the world and seeking diversity creating new hubs around the
no doubt, have a true appreciation for the evo- world that rival the likes of Los Angeles, Lon-
lution that has taken place in the last 50 years. don, New York, and Tokyo. Pressure is building
APTelecom see’s submarine cables continu- for more cost-effective cables using new raw
ing to play an important role as traffic becomes materials due to build cost pressure to support
more direct (ie: less dependency on traditional those rolling out SDN and cloud-based solutions
hub and spoke routes of the USA, UK, Japan, that require five to seven paths on one partic-
etc. as local content continues to be devel- ular route in order to have secure, diverse, and
oped). For example, the Southern Hemisphere reliable transmission service linking countries
is well positioned to continue to build modern around the world.
and cost-effective, high-end transmission ca- We hope you enjoy this report and wish you
pacity to the rest of the world. This connectivity all the best as your likely downloading this PDF
will promote further trade and commerce and which at some point the bits to enable viewing
redefine routing traffic in the very near future. are being delivered over a submarine cable in
Submarine Cable capacity for reasons of di- some depths of the ocean across the planet!
versity in avoiding points of failure and ‘enabling
always on’ networks is critical for banking and fi-
nance, aviation, and various other industries that ERIC HANDA
utilize cloud computing, artificial intelligence, CEO
and are poised to seize on the upcoming 4th In- APTelecom
dustrial Revolution of automation. Networks are
critical to delivering software and services in an
advanced and in many cases near real time basis
that could have only been imagined some 50
years ago. In many areas of technology, we are
even approaching Shannon’s law limits and the
theoretical capacity that is possible over subma-
rine cables and terrestrial cables.
Looking at the current submarine cable
market, prices continue to decline in line with
Moore’s Law, yet with the increase in comput-

GLOBAL OVERVIEW
1.1 HISTORY OF SUBMARINE anic communication methods were realized - subma-

TELECOMS rine cable communication and radio communication.
“2020 is the 150th anniversary of the founding of the The first attempt at laying a transatlantic tele-
Eastern Telegraph Company, Sir John Pender’s cable graph cable was promoted by Cyrus West Field,
network which would span the entire British Empire who persuaded British industrialists to fund and lay
by the end of the century. At the end of
the 1920s this group of cable companies
Figure 2: Landing of the Eastern Telegraph Company’s Britain to India cable at
merged with the Marconi wireless inter-
Aden with the Great Eastern out to sea
ests to form Cable & Wireless. The Tele-
graph Museum in Porthcurno, Pender’s
first cable station and now a world-class
museum, will be having various events
in 2020 to celebrate their history.
The company’s first cable system was to
connect Britain to India, and this image
is the landing of the shore end at Aden,
with Great Eastern out to sea.”
—Bill Burns
Atlantic-Cable.com
1.1.1 HISTORICAL
PERSPECTIVE
Figure 3:
The first submarine
Cableship Goliath
cable in the world was
laid in the English one in 1858.
Channel in 1850 by the However, the
stream tug Goliath. technology of
It was a revolutionary the day was
event that commu- not capable
nication beyond the of supporting
ocean became possible, the project; it
although the communi- was plagued
cation method was tele- with prob-
graph. In 1866, the first lems from the
commercially successful outset and
transatlantic submarine was in opera-
cable was completed tion for only a
between Valentia, Ireland and Heart’s Content, month. Subsequent attempts in 1865 and 1866 with
Newfoundland, and submarine cable networks in the world’s largest steamship, the SS Great Eastern,
the world were gradually expanded. (Ash, 2014) used a more advanced technology and produced the
In 1876, the telephone was invented, and commu- first successful transatlantic cable.
nication was expanded dramatically, and in 1891, the The first transpacific submarine telegraph cable
world’s first submarine cable for telephone was built was completed in 1902. It ran between Australia,
in the English Channel. In 1901, transatlantic radio New Zealand, and Canada via Norfolk Island, Fiji
communication was successfully demonstrated by and Fanning Island. In 1906, the submarine cable
Marconi, but it was not until 1923 that two transoce- between Tokyo and Guam was opened to traffic,

and telegraph service with US was inaugurated. 1.1.3 HISTORY OF OIL & GAS
However, after that, telegraph and telephone traffic SUBMARINE CABLES
using radio communication increased because of In the late 1970s, Offshore Telephone deployed
the installation and operating costs. a coaxial Oil & Gas cable system followed by in the
The first transoceanic coaxial submarine cable, mid-1990s PetroCom’s FiberWeb inter-platform
including repeaters, was TAT-1 laid across the Atlantic fiber cable system. Both systems were in the Gulf of
Ocean, and went into service in 1956. In 1963, the first Mexico and both systems failed and were eventually
transpacific coaxial cable (COMPAC) connecting abandoned. (Berlocher, 2009)
Australia and New Zealand with Canada via Fiji went The first successful Oil & Gas submarine fiber ca-
into service. It was followed in 1964, by TPC-1 which ble was installed in the early 1990s in the North Sea
connected the US with Japan via Guam and Hawaii. for BP. In 1998, PetroBras developed an offshore
In 1967, INTELSAT-II was launched over the Atlantic platform system in the Campos Basin and in 2001,
Ocean, and satellite communication was inaugurated. BP developed the Central North Sea Fiber Optic
Cable, a submarine cable that linked the Scottish
1.1.2 THE OPTICAL AGE mainland with offshore platforms. In 2002, Saudi
In the 1980s, optical submarine cable systems Aramco developed the Offshore Fiber Optic Cable
were developed. The first transoceanic fiber optic System and in 2008, BP developed the BP GoM ca-
system was the transatlantic, TAT-8, which was ble system, the latter of which becoming the model
ready for service in 1988. Telecommunications for future such systems. Since 2001, the total length
with high quality and high capacity became pos- of all fiber cable in use for Oil & Gas cable systems
sible, and optical submarine cable networks were has increased by over 550 per cent. (Nielsen, 2012)
extended all over the world. The first generation As the industry focuses on utilizing new technol-
of optical systems regenerated the optical signal ogies to increase efficiency and automation as a key
within the submerged repeaters. In the mid-90s strategy to reduce cost and maintain margins, it is
regenerators were replaced by optical amplifiers, expected to drive up the demand for new offshore
which allowed the simultaneous transmission of fiber systems. Worker tracking and safety, remote
more than one wavelength. Currently, the main monitoring, improved seismic mapping, big data
method for international telecommunications is analytics and more all require higher bandwidth
the use of submarine cables; 99 percent of in- and lower latency than traditional satellite and O3b
ternational telecommunications is carried over connections can provide. The push for efficiency to
submarine cables. reduce costs and increase production help to offset
Antarctica remains the only continent yet to be weaker oil price when times are tough and maximize
reached by submarine telecoms cable. In 2017, the revenue when prices are high. As these techniques
Arctic received its first significant submarine cable and processes become more widespread, new sub-
system. Future such systems, both regional and marine fiber optic systems will be required.
transoceanic, are in the planning stages. The goal
of a northwest or northeast Arctic passage seems 1.1.4 THE MODERN ERA
within reach. Since the 1990s, the submarine fiber market has
In recent years, many submarine cable projects been characterized by rapid development in optical
have been progressing in the world. Communica- technology which has improved both network effi-
tion infrastructure with higher speed and larger ca- ciency and system design capacity. Over the last 30
pacity is required to support the rapid growth of the years, the industry has gone from measuring capacity
Internet and, video transmission, and so demand in Megabits in the early 90s to systems with hundreds
for new submarine cables is increasing. This trend is of Terabits in 2019. One of the biggest contributions
expected to continue for the foreseeable future. to this capacity increase was the development of
Wavelength-Division Multiplexing (WDM) – first

GLOBAL OVERVIEW
introduced on the SEA-ME-WE 3 system in 1999. mobile technology like 5G – provides numerous
This technique allows cable systems to send opportunities for the submarine fiber industry.
multiple optical wavelengths over a single fiber pair, Over-The-Top (OTT) service providers continue
reducing the amount of fiber needed and eventu- to post strong earnings reports and grow at a rapid
ally bringing down the cost of new cable systems. pace, which indicates that this bandwidth demand
The introduction of Dense Wavelength-Division won’t be tapering off any time soon.
Multiplexing (DWDM) allowed many more wave- For the period 2015-2019, submarine fiber design
lengths – or channels – to be added on a single fiber capacity on major routes has increased at a Com-
pair which further accelerated the increase in design pound Annual Growth Rate (CAGR) of 32 percent,
capacity on a single cable. including upgrades and new system builds. (Figure
Wavelength capacity has increased at a rapid pace 4) This is up significantly compared to this time
since the early 2000s with 10 Gbps first entering last year where the CAGR along major submarine
the market around 2003 and 100 Gbps wavelengths cable routes was just 25.6 percent. There were
appearing as early as 2010. This tenfold increase slightly fewer systems installed this year compared
in wavelength capacity in the span of less than a to 2018 but a couple very high capacity systems
decade is another major contributing factor to the and system upgrades pushed the CAGR higher.
rapid increase in available global bandwidth over With global demand increasing at such a rapid
the last 20 years. pace, sustaining infrastructure growth will be chal-
Alongside the increase in channel capacity, the lenging, potentially causing demand to exceed sup-
concept of system upgrades was developed. In the ply. To date, the industry has been able to keep up
early to mid-2000s, it became possible for system with demand— but it will be necessary to continue
owners to swap out components in the Submarine focus on increasing capacity in order to continue to
Line Terminal Equipment (SLTE) to increase capac- meet the increasing demand.
ity instead of the need to build an entirely new cable Further evidence the submarine fiber industry
system. Systems upgrades have since become the is working to meet global capacity demands is the
most cost-effective way to add capacity along a sub- average new system capacity over the last five years,
marine cable route and can be actioned in a much which has increased by 37 percent. Averaging at just
shorter time frame than developing a new system. over 31 Tbps in 2014, new systems now average at
Looking ahead, advancements in Artificial Intelli- 42.5 Tbps. (Figure 5) With future systems positioned
gence (AI) managed systems will increase the capabil- to take advantage of higher wavelength capacities
ity and efficiency of networks as they become increas- and potentially more fiber pairs, system capacity
ingly more complex.
1.2 CAPACITY 3,000 40%

CAGR
1.2.1 GLOBAL CAPACITY 2,500

35% Transpacific
The world continues to con- 2,000 Transatlantic
30%
sume ever increasing amounts
Intra-Asia
Tbps
1,500
of data, with bandwidth 25%
1,000 Americas
demand projected to almost
20%
double every two years for 500
the foreseeable future. This 0 15%

demand – largely driven by a 2015 2016 2017 2018 2019
continued shift towards cloud

services, continued explosion Figure 4: Global Capacity Growth by Region, 2015-2019
of mobile device usage and

80
growth is expected to continue to trend upwards. 70
Based on reported data and future capacity esti- 60
mates, global capacity is estimated to increase up 50

to 79 percent by the end of 2022. (Figure 6) Despite 40
Tbps
multiple systems planned over the next two years 30
boasting design capacities of more than 100 tera- 20
bits per second, overall capacity growth will plateau 10
based on currently announced planned system data
0
which indicates a CAGR of just 21 percent through 2015 2016 2017 2018 2019
2022. However, not all announced systems are far

enough in the development process to have decid- Figure 5: Average New System Capacity, 2015-2019
ed things like fiber pair counts and design capacity
so expect to see an increase in projected bandwidth
as these details are finalized and new systems are 6,000
announced. The prevalence of 200G and higher 5,000

wavelengths will also impact these numbers as
4,000
several of these currently planned systems are being
design with only 100G wavelengths in mind. 3,000
Tbps
2,000
1.2.2 LIT CAPACITY
1,000
Since 2014, major submarine cable routes have
averaged 18 percent lit of total design capacity. A 0
2019 2020 2021 2022
large capacity buffer is designed for cable systems to
deal with sudden spikes in demand, such as handling
rerouted traffic due to a cable fault. Figure 6: Global Planned Capacity Growth, 2019-2022
1.2.2.1 Transatlantic Region

The Transatlantic region has seen 600 50% CAGR
steady design capacity growth over 500 Design

the last five years at a CAGR of 29.7
Lit
400 40%
percent due to regular upgrades
and a new system each year for the
Tbps
300
period 2014-2018. (Figure 7) This
200 30%
is down from last year where the
CAGR for the period 2013-2017 was 100
35 percent. On average, the Trans- 0 20%

2014 2015 2016 2017 2018
atlantic route has maintained a lit
capacity at 21.8 percent of total for
this five-year period, well above the Figure 7: Transatlantic Capacity Growth, 2014-2018
global average of 18 percent. The
last two years have seen 20.5 and 22.4 percent, markets of North America and Europe.
respectively. Transatlantic routes are the most Capacity growth in the Transatlantic region
competitive globally – especially those connecting is expected to continue over the next few years
the two biggest economic hubs in the world of through 2022, fueled by new routes across the
New York and London – and carry traffic between South and Mid Atlantic, which are under consid-
the highly developed economies and technology eration. (Figure 8) Based on publicly announced

GLOBAL OVERVIEW
planned system information this

route will observe a CAGR of 26.1
percent for the period 2018-2022. 2,000 50% CAGR
Additionally, OTT providers con- Design
tinue to focus on building new infra- 1,500 40%

Lit
structure across the Atlantic, which
raises the probability that growth
Tbps
1,000 30%
will increase more dramatically than

currently predicted. 500 20%
1.2.2.2 Transpacific Region 0

2018 2019 2020 2021 2022
10%
Like the Transatlantic region, the

Transpacific has observed moderate Figure 8: Transatlantic Capacity Growth, 2018-2022
design capacity growth at a CAGR of
25.1 percent for the period 2014-2018.
This is about the same as last year
600 60% CAGR
where the CAGR for the period 2013-
Design
2017 was 25.6 percent. The region has 500
50%
maintained an average of 15.3 percent 400
Lit
lit capacity during this time – below 40%

Tbps
300
global averages. (Figure 9) In 2014, lit
30%
capacity was as low as 12 percent, indi- 200
cating a short-term capacity overbuild 100

20%
in this region that has only recently
0 10%
begun to recede with 2017 and 2018 2014 2015 2016 2017 2018
observing lit capacities of 17.7 and

18.5 percent, respectively. Like the Figure 9: Transpacific Capacity Growth, 2014-2018
Transatlantic region, OTT providers
are looking to expand their infrastruc-
ture in this region — especially with 1,500 40% CAGR
recently announced systems.
Design
As one of the more competitive 1,200 35%
regions in the world – with a diverse Lit

900 30%
number and type of both systems
Tbps
and customers – the Transpacific is 600 25%

expected to increase from its CAGR
of 25 percent to 30 percent through 300 20%
2022 based on publicly announced

0 15%
system information. (Figure 10) 2018 2019 2020 2021 2022
New, high capacity systems are be-

ginning to come into service, and lit Figure 10: Transpacific Capacity Growth, 2018-2022
capacity seems to be back on track
with global trends. If OTT provid-
ers continue to focus on this region, expect lit
capacity growth to accelerate to the levels seen in
the Transatlantic region.

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1.2.2.3 Americas Region
The Americas region has seen 500 60% CAGR
significant growth in the last few
Design
years, more than doubling in total 400
50%
Lit
capacity from 130 Tbps to 415 Tbps
300
along major routes. This region has
Tbps
40%
observed a CAGR of 38.9 percent for 200
the period 2014-2018. (Figure 11) This
30%
is up slightly from last year where the 100
CAGR for the period 2013-2017 was

0 20%
36 percent. 2014 2015 2016 2017 2018
The region has maintained an aver-

age yearly lit capacity of 16.8 percent, Figure 11: Americas Capacity Growth, 2014-2018
slightly below the global trend. Much
of this growth has been spurred on by
growing markets in Latin America, 800 50% CAGR
with new systems and upgrades in- 700
Design
creasing flow of traffic between these 40%
600
Lit
countries and the United States. 500 30%
OTT providers have been especially
Tbps
400
interested in the Brazil-US route, 300 20%
adding several high capacity systems 200
in 2017 that have increased the total 10%
100
capacity along this route by over 50
0 0%
percent. Typically, OTT providers 2018 2019 2020 2021 2022
have partnered with traditional tele-

coms carriers that add this capacity Figure 12: Americas Capacity Growth, 2018-2022
to the general market but moving

forward OTT providers are begin-
ning to build cables entirely for their 300 80% CAGR
own use. It is unclear whether OTTs 250

70%
Design
will one day monetize these exclusive 60%
200 Lit
use cables. 50%
Based on publicly announced 150 40%
Tbps
information for planned systems, the 30%

100
Americas region is not expected to 20%
continue its surge of recent growth 50
10%
as no systems are currently planned 0 0%
for 2021 or 2022. (Figure 12) Based on 2014 2015 2016 2017 2018
publicly announced planned system

Figure 13: Intra-Asia Capacity Growth, 2014-2018
information this route will observe a
CAGR of 19.5 percent for the period
2018-2022. opment cycle. Growth in this region is fueled by
While no system is currently planned for 2022, growing markets in Latin America – typically Brazil,
there is still time for some to be announced as cable Argentina and Chiles – and helped by the expan-
systems typically have a two to three-year devel- sion of OTT providers in South America. However,

GLOBAL OVERVIEW
growth has slowed down since 2018 –

potentially because the growth spurt 1,000 60% CAGR
observed from 2016-2018 which
50% Design
added seven cables and 360 Tbps of 800
capacity has satisfied capacity needs 40%

Lit
600
for the immediate future.
Tbps
30%
400
1.2.2.4 Intra-Asia Region 20%
The Intra-Asia route has main- 200

10%
tained minimal to moderate design
0 0%
capacity growth since 2014 with a 2018 2019 2020 2021 2022
CAGR of 24.3 percent for the period

2014-2018. (Figure 13) This is down Figure 14: Intra-Asia Capacity Growth, 2018-2022
significantly from last year where the
CAGR for the period 2013-2017 was $120
100G
39 percent.
$100
Growth along this route largely de- 10G
pends on huge infrastructure builds $80

Thousands USD
connecting major hubs throughout

$60
Asia and Southeast Asia – something
that does not happen every year. $40
Lit capacity stays in line with global $20

trends at 18 percent of total.
$0
Nearly 300 Tbps capacity is already
i
re
i
ba
re
ba
za
o
g
po
um
po
ul
on
n
um
le
available along these routes and 520

y
do
yo
ga
Pa
ne
ta
ga
K
M
ok
on
or
in
yd
g
ao
e-
in
e-
-S
on
-T
i-F
-L
or
-S
-S
ill
-S
on
LA
YC
yo
-H
m
LA
ap
se
YC
nd
ia
LA
ar
Tbps will be added through 2022 add-
N
ng
N
M
To
Lo
M
Si
ing a sizeable increase of nearly 200

percent – departing from the route’s Figure 15: Monthly Lease Pricing on Major Routes
historical trends. (Figure 14) There
is no indication that demand trends The Transatlantic market is shifting from con-
along the routes are changing in any meaningful way, necting population centers for traditional telephone
so expect the annual average of 18 percent lit capac- carriers to connecting data centers for OTT pro-
ity to continue. viders. As OTT providers like Amazon, Facebook,
Based on publicly announced planned system Google and Microsoft continue to expand their
information this route will observe a CAGR of 22.7 infrastructure and drive cable development, contin-
percent for the period 2018-2022. ue to expect new cables that do not follow the more
traditional routes between New York and London
1.2.3 CAPACITY PRICING such as those from Virginia Beach to France and
It all starts in the Atlantic. Transatlantic routes Spain, Brazil to Europe and Brazil to Africa.
have set trends throughout the history of the Like the Transatlantic routes, Transpacific routes
submarine fiber industry and will continue to do will be shaped by the market shifting towards inter-
so in the future. The New York – London route is connection of data centers instead of connecting
the most commercially competitive in the world population centers. Cloud service providers are de-
and will continue to be so through the foreseeable veloping infrastructure in a major way all throughout
future as it is the oldest route and carries traffic East Asia and the Pacific with numerous new data
between the two biggest economic hubs. center builds announced for places like Indonesia,

Singapore and Hong Kong. Multiple cloud $5
providers such as Alibaba, Amazon Web Ser-
vices and Google Cloud have all announced $4
new data center facilities in Indonesia (Mah,

$3
Millions USD
2019), Singapore’s colocation market is ex-
pected to grow 14 percent by the end of 2019
$2
and nearly double in size by 2023 (Wong,
Singapore’s Colocation Market to Nearly $1
Double by 2023, 2019) and the amount of
hyperscale data center capacity has increased 0
by 42 percent over the past year in Hong
i
ba
re
ba
za
or
o
g
um
n
po
ul
on
um
le
ap
y
do
yo
Pa
ne
ta
ga
K
-M
ng
M
on
ok
or
yd
g
ao
in
Kong (Wong, Hong Kong’s Cloud Data Cen-
e-
Si
re
on
-L
-T
i-F
-S
-S
n-
ill
-S
o
YC
LA
yo
-H
m
LA
ap
se
do
YC
ia
N
LA
ar
ng
n
N
M
To
Lo
M
Si
ter Boom, 2019)
Capacity pricing for routes in the Amer-
Figure 16: Median 100G IRU Pricing on Major Routes
icas region will depend heavily on
economic health in South America.
While these routes may never see the
20
same level of demand as the Trans- Transpacific
atlantic and Transpacific, they are Transatlantic

15
becoming increasingly important to Indian Ocean
OTT provider infrastructure plans
10 EMEA
and global economic development as
these companies look to increase their AustralAsia
presence in places like Brazil, Argenti- 5

Polar
na and Chile to take advantage of the Americas
growing economies in this region. 0
2015 2016 2017 2018 2019
Intra-Asia routes will continue
to provide paths between three
Figure 17: New System Count by Region, 2015-2019
major cities – Tokyo, Singapore and
Mumbai. While the Tokyo – Singa-
pore route should remain relatively unchanged in Overall, there seems to be a healthy global capaci-
the future, the Singapore – Mumbai has the most ty market, but this is dependent on OTT providers’
potential for growth. As new cables and telecoms plans for their excess capacity and how cost-effective
development turn towards India’s growing technol- system upgrades and new cables will be implemented.
ogy sector, this region is prime for growth.
EMEA to Asia routes have been well established 1.3 SYSTEM GROWTH
for decades and carry traffic between Europe and Prior to 2017, the world experienced slow growth
Asia. However, they are high latency and expensive in new system deployments due to economic un-
to operate. Threats to the commercial viability certainty and more cost-effective system upgrades.
of this route will be planned systems that bypass With a greater demand in new markets and route
the Suez Canal to avoid the sustained economic diversity, system deployments experienced a boom
and political instability in the Middle East and in 2017. In all, 45 new systems will have been added
Arctic routes that connect Europe to Asia via to the global network during the period 2017-2019 –
much shorter pathways. Should these alternatives however, new system growth is on the decline since
become truly competitive, these routes will be the peak in 2017 indicating a slowdown in system
negatively impacted. deployments. (Figure 17)

GLOBAL OVERVIEW
The period 2014-2016 saw an

100
average of under 30,000 kilometers Transpacific
added annually, with 2015 adding only 80 Transatlantic
15,800 kilometers. Over 100,000 Indian Ocean

60
Thousands of KMS
kilometers of cable was added in 2017
EMEA
while 2018 and 2019 added just over 40
AustralAsia
60,000. (Figure 18) These past three
years have raised the industry out of 20 Polar
its previous slump, largely fueled by Americas

0
OTT providers system deployments 2015 2016 2017 2018 2019
fueled by their desire for more direct

control over their own infrastructure.
Figure 18: KMS Added by region, 2015-2019
The next two years will
potentially add over
124,000 and 870,000 Transpacific
kilometers of addition- 18%
12%
Transatlantic
al cable – a potential 9%
indicator of continued Indian Ocean 44%
healthy growth. 12% EMEA 56%
12%
Continuing recent
trends, significant AustralAsia
12%
system growth through Polar
25%
2022 will take place in
Americas
the Americas, Transat- No Yes
lantic and Transpacific
regions. This growth Figure 20: Global Contract in
Figure 19: Planned Systems by Region, 2020-2022
is spurred on by the Force Rate, 2020-2022
infrastructure demands
of OTTs, and the desire for routes in the South At- growth compared to historical trends, largely due to
lantic and from Europe to Virginia Beach to provide sustained political and economic instability in the
direct access to Ashburn, VA data centers as well region and the saturation of African telecommuni-
as new infrastructure across the Pacific to replace cations markets. However, the EMEA region does
aging cable systems. These new routes will provide show higher growth compared to a year ago indicat-
both traffic diversity and connect growing markets ing increased market activity – especially around the
in South America and Africa directly. Mediterranean and East Africa.
Despite new cable growth along Transpacific One of the first major hurdles to overcome is the
routes, overall growth in the Pacific Ocean has con- Contract in Force (CIF) milestone. A system is typi-
tinued to slow down, with only 12 percent of future cally considered CIF when it has secured all project
systems taking place in the AustralAsia. Growth funding and has begun cable manufacturing. CIF
in AustralAsia has continued to slow with reduced rates are reasonably healthy, with 44 percent of the
system counts observed year-upon-year since 2016. 34 planned systems for the period 2020-2022 having
This region will continue to trend downwards, as achieved this milestone. (Figure 20) This is a notice-
nearly all Pacific Island nations have now been con- able increase over last year’s rate of 38 percent, indi-
nected. (Figure 19) cating a positive change in financing and investment
The Europe, Middle East and Africa (EMEA) availability. For 2020, 55 percent of planned systems
and Indian Ocean Pan-East Asian maintain slow are already CIF – a further positive sign.

GLOBAL OVERVIEW
1.4 EVOLUTION OF SYSTEM

OWNERSHIP AND CUSTOMER 200
Single
BASE
In recent years the way people use 150
Multi
and access data has changed significant-

ly – shifting from local or personal data
100
storage to cloud-based file services and
applications. This has led to some own-
ership paradigm shifts in the submarine 50
fiber industry as data and application

services become more distributed and 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
cloud based.
Historically, there have been two
Figure 21: Single vs Multiple Owner Cable Systems, 2009-2019
different types of system ownership –
Consortia and Private. A Consortium is
a group of companies coming together 40
to build a cable system in such a way 35 Single
that the risk is spread out amongst
30
the members and system management Multi
25
decisions need to be made by commit-
tee so as not to negatively impact any 20
one member significantly. Private cables 15
by contrast are comprised of a single or 10

very few owners and while this reduces 5
the complexity of managing a system 0
it greatly increases the financial risk to 2020 2021 2022
any single company.

The traditional Consortium model Figure 22: Ownership Type, 2019-2021
has largely become a thing of the past.
As the “buy in” for a cable system these days trends systems indicates that cable owners are less willing
towards a full fiber pair rather than a number of to take on the risk of a cable system by themselves.
wavelengths, the need for all owners to agree on Additionally, as OTT providers have entered the
how their system is managed has reduced sub- market, they have been partnering with traditional
stantially. This new paradigm allows for individual carriers and increasing the number of multiple own-
owners to manage their fiber pairs how they see fit er cables – though this will change moving forward.
without worrying about impacting other owners The prevalence of single ownership will return the
on the cable system. This reduces administrative future, as more niche and point-to-point systems
complexity and streamlines network operations. are implemented. Based on currently announced
As a result, cables should now be considered either systems, Single Owner cables will climb from 47
Single Owner or Multiple Owner. percent of new system builds in 2020 to 67 percent
Historically, Single Owner cables have made by 2022. Much of this is driven by OTT providers
accounted for 60 to 62 percent of all cable builds. who need to control their own infrastructure and
However, this percentage has been steadily declining may not necessarily have route needs that align with
from 60 percent in 2016 down to 57 percent in 2019. traditional carriers. (Figure 22)
(Figure 21) Multiple Owner cables help to spread
out financial risk so the increase in these types of

OWNERSHIP FINANCING ANALYSIS
APTelecom a global data tele-
Pre-Sales communications carrier and

consultancy business with
expertise in Emerging Markets
– (Asia and Africa), coupled with
vast industry experience in the
Post-Sales commercialization of submarine

cable systems and capacity
sales on all major routes. AP-
Telecom combines superior
quality cost-competitive tele-
Performance-Sales com movement products with
strategic advisory and cloud
solutions.
Telecom Movement Cloud Solutions Emerging Markets Consulting

International markets for leased APTelecom Capital Solutions pairs its Our extensive experience and suite of
access are fragmented and uniquely own telecom industry expertise with proprietary solutions enable us to
complex. APTelecom bridges the gap the investment banking and capital provide a variety of strategic advisory
by providing intelligence and transpar- markets capabilities, and offers a suite and management support services
ency for telecom and enterprise of products and execution services that enable growth and facilitate
network buyers via our proprietary rooted in a strong tradition of unwav- critical decision making when clients
multi-operator network access ering dedication to quality and client need it most.
platform. service.
Pre-Sales Quick Facts

With a combined 100 years in the submarine cable industry, APTelecom is the • Founded in 2010
preeminent cable system presales sales specialists, with the capability to deliver • Telco License Holder
qualified presales to any system looking to seek funding or expansion. APTele-
com has proven capability of selling capacity for new builds and established • Privately Funded
systems ranging from Asia, Africa, Americas, Europe, and the Middle East. • Global Coverage
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infrastructure assets and needs, and in the provision of proprietary information, advice,
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and expertise to support critical decision making and project planning execution. Put
simply, APTelecom's ability to seamlessly transcend the gap between operational
requirements and broader strategic and capital needs, and to provide best practices
strategy and execution that deliver exceptional results.
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23
2
OWNERSHIP
FINANCING
ANALYSIS

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
T
he global economy is increasingly The importance of telecommunications in-
digital. The internet and other informa- frastructure, particularly submarine cables and
tion and communication technologies landing stations is also increasingly highlighted
(ICTs) are changing the way individuals, in discussions around national security. In ad-
businesses and governments operate. Their dition to action taken on cybersecurity and the
resilience to natural disasters, and their ability protection of critical online infrastructure, the
to recover in the aftermath, is thus critical to the physical protection of the internet’s underlying
resilience of the economy. This chapter dis- infrastructure should also be a policy and indus-
cusses the impact of climate events on various try-wide priority.
types of digital infrastructure. It highlights key The private sector, as owners of much of
considerations for governments and digital in- the infrastructure, will need to take the lead in
frastructure owners to make their infrastructure investing in resilience of their assets, while the
more resilient, while maintaining affordability public sector plays the role of a facilitator and
of services. We find that digital infrastructure develops the right enabling environment for
is vulnerable to various climate risks, but that investment in resilience of critical infrastructures.
technology choices and network design can im- The public sector’s policy leadership on climate
prove redundancy and resilience of networks, by resilience of critical infrastructures is necessary
design. Certain infrastructures warrant greater in driving actions across sectors, and foster-
ex ante investment in their resilience considering a holistic approach to climate adaptation,
ing their criticality in the broadband value chain resilience, and disaster recovery. Given below
(submarine cables or landing stations) while are some high-level recommendations for the
others could follow repair and recovery options building of greater resilience in global telecom-
(mobile network antennas, poles, and towers). munications infrastructure.
The private sector’s motivations to invest in
resilience are driven by (i) economic incentives
to reduce the risk of their investments by mit- HIMMAT SINGH SANDHU
igating against climate risk; (ii) serving their & SIDDHARTHA RAJA
client’s needs, adhering to Service Level Agree- World Bank
ments, and upholding their reputation; and (iii)
serving the interests of their area of operation
by providing a critical service during emergen-
cies.31 This last motive ensures the public good
provided by this privately-owned infrastructure,
acknowledging its mission-critical nature for an
economy.

2.1 HISTORIC FINANCING

PERSPECTIVE 150
Single
Like the ownership model, system
120 MDB
financing is broken down into Multiple
Owner versus Single Owner with the Multi
90
addition Multilateral Development
Banks (MDB). A Multiple Owner 60
system is typically self-financed where
the individual companies come up with 30
the financing by themselves – gener-
ally without having to seek outside 0
2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
financial aid or rely on capacity pre-
sales. A Single Owner system is usually Figure 23: Financing of Systems, 2009-2019
financed through a combination of an
investment bank capital and capacity
pre-sales. Both Multiple Owner and Single Owner 5% Single
5%
systems can receive funding from an MDB.
MDB
MDBs such as the World Bank and its affiliates
are increasingly willing to promote communications
Multi
infrastructure and to lend in high-risk circumstanc-
es where commercial banks will not. MDB interest
rates are typically lower than commercial financ-
ings and have a more lenient approach to waivers
and default scenarios. However, social policy and
development goals of those institutions can often 90%
impose additional reporting and compliance costs.
(Gerstell, 2008) Even so, MDB investment has been
sporadic since 2009, accounting for only a handful Figure 24: Financing of System, 1987-2019
of systems. (Figure 23)
Generally, Multiple Owner cables use a prospec-
tive system for their own traffic, diversifying risk ple Owner systems, while Single Owner and MDB
generally through self-finance among its members systems have accounted for five percent of total
and affording a range of expertise. Single Owner investment, each. (Figure 24)
cables generally raise a system’s capital for con- In the recent 2015 to 2019 period, the industry
struction and operation of the network, though the has invested nearly $8 billion in submarine tele-
securing of such funding can be a challenge. Single coms cables. Multiple Owner systems account for
Owner cables also typically rely on sales to third 68 percent of total investment, while Single Owner
parties and these systems tend to require outside systems are responsible for 23 percent and MDBs
equity investment more than Multiple Owner sys- have accounted for 9 percent over this time period.
tems. However, this is changing as more OTT pro- Single Owner and MDB financing have seen a no-
viders build systems for themselves as they generally ticeable increase over the last five years compared
do not need to rely on outside sales and use their to historical trends. (Figure 25)
systems for internal infrastructure.
The industry has invested more than $50 billion
in submarine telecoms cables since 1987. Over 90
percent of this total investment has been by Multi-

2.2 REGIONAL DISTRIBUTION
OF FINANCING Single
23%
2.2.1 MULTILATERAL MDB
DEVELOPMENT BANKS
The regional distribution of MDB investment Multi
for 2004 to present is presented below. MDBs have
invested more than $3.2 billion in submarine tele- 9%
68%
coms cables. Most of this total investment — 55
percent — has been invested in EMEA projects
with a focus on systems located primarily in Africa.
Only 11 percent of total MDB investment has been
made in AustralAsia, with 17 percent invested in
the Americas, 15 percent in the Transatlantic and 2
Figure 25: Financing of Systems, 2015-2019
percent in the I ndian Ocean Pan-East Asian region.
(Figure 26)
15% 17%
2.2.2 MULTIPLE OWNER SYSTEMS Transatlantic
2%
The regional distribution of Multiple Owner
Indian Ocean
investment for 1987 to present is presented be- 11%
low. Multiple Owner systems have invested $31.8 EMEA
billion in submarine telecoms cables. The largest
AustralAsia
portions of this total investment — 30 percent —
has been invested in AustralAsia projects. Similar- Americas
55%
ly, 21 and 18 percent of total consortia investment
has been made in EMEA and Indian Ocean Pan-
East systems, respectively. The Transpacific region Figure 26: Distribution of MDB Investment, 2004-2019
has received 15 percent of Multiple Owner invest-
ment, the Transatlantic has received nine percent
and the Americas has received seven percent. 15%
7% Transpacific
(Figure 27)
Transatlantic
Over the last ten years, Multiple Owners have 9%
invested nearly $15 billion primarily focusing on 30% Indian Ocean
the AustralAsia, EMEA and Indian Ocean Pan-
East Asian regions at 26, 26 and 24 percent, re- EMEA
18%
spectively. Systems in these regions are typically AustralAsia
much longer in cable length than in other regions
and tend to connect more landings which helps 21% Americas
account for their large investment percentage. The
Transpacific region has seen the next most invest- Figure 27: Distribution of Multiple Owner Investment, 1990-2019
ment from Multiple Owner systems at 13 percent
while the Transatlantic and Americas regions have 3.2.3 SINGLE OWNER
each received about five percent of the total dollar The regional distribution of Single Owner invest-
investment from Multiple Owner systems since ment for 1990 to present is presented below. Single
2009. (Figure 28) Owners have invested $18.3 billion in submarine
telecoms cables. Most of this total investment has

been in Americas and Transatlantic

$15
systems at 26 and 23 percent, respec- Transpacific
tively. Similarly, 19 percent of total 12
Transatlantic
private investment has been made in
$9
the EMEA region followed by 15 per- Indian Ocean
Billions USD
cent in AustralAsia 11 percent in the $6
EMEA
Indian Ocean Pan-East Asian and one AustralAsia
percent in Polar projects. (Figure 29) $3
Americas
Over the last ten years, Single
$0
Owner systems are responsible for 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
$8 billion worth of investment pri-

marily focusing on the AustralAsia, Figure 28: Distribution of Multiple Owner Investment, 2009-2019
Americas and EMEA regions at 32,
26 and 24 percent, respectively. The
next most is the Transatlantic at eight Transpacific
4%
percent followed by the Indian Ocean
Transatlantic
Pan-East Asian and Transpacific each 26%
at four percent with Polar projects ac- 23%
Polar
counting for just two percent of all in-
vestment. While Single Owners have Indian Ocean
more development flexibility than 1%

15% EMEA
Multiple Owner systems, it seems 11%
Figure 29: Distri-
the focus has been on more specific, AustralAsia bution of Single
19%
regional or point-to-point systems. Owner Investment,
Americas
(Figure 30) 1990-2019
2.3 CURRENT FINANCING

Since 1990, the industry has $15
invested $50 billion in submarine Transpacific
telecoms cables — comprising more 12
Transatlantic
than 1.4 million route kilometers
$9 Indian Ocean
— annually averaging $1.64 billion
Billions USD
worth of investment and 47,000 $6

EMEA
kilometers of deployed systems. AustralAsia

(Figure 31) (Figure 32) $3
Americas
From 2015 to present, nearly $8.5
$0
billion was invested in submarine 2009 2010 2011 2012 2013 2014 2015 2016 2017 2018 2019
cable projects, or an average of $1.7

billion and 56,400 route kilometers Figure 30: Distribution of Single Owner Investment, 2009-2019
per year. Over the period, 23 percent
was invested in AustralAsia systems, 17
percent each in EMEA and Indian Ocean Pan-East From 2014 to present, submarine system financ-
Asian systems, 16 percent in Transpacific systems, ings accomplished by MDBs include the following:
14 percent in Americas systems, 12 percent in Trans- Table 1: Recent Multilateral Development Bank
atlantic systems and 1 percent in Polar systems. Projects
(Figure 33)

32
Billions USD
1%
0
5
10
15
20
25
19
9
0
$1
$2
$3
$4
$5
$6
$7
$8
16%
19 0 19
9 9
19 1 19 0
9 9
17%
19 2 19 1
9 9
16%
19 3 19 2
9 9
19 4 19 3
9 9
19 5 19 4
9 9
19 6 19 5
9 9
19 7 19 6
9 9
17%
19 7
19 8
9 9
14%
19 8
20 9
0 9
20 9
20 0 0
0 20 0
20 1 0
0 20 1
20 2 0
23%
0 20 2
20 3 0
0
Figure 31: System Investment, 1990-2019

20 3
0
Figure 32: System Deployment, 1990-2019

20 4
0 20 4
20 5 0
0 20 5
20 6 0
0 20 6
20 7 0
0 20 7
20 8 0
Polar
0 20 8
EMEA
20 9 0
1 20 9
1
Americas
20 0
1 20 0
1

AustralAsia
Transpacific
20 1
1 20 1
Transatlantic
1
Indian Ocean
20 2
1 20 2
1
20 3 20 3
1 1
20 4 20 4
1 1
20 5 20 5
1 1
Figure 33: Regional Investment in Submarine Fiber Systems, 2015-2019

20 6 20 6
1 1
20 7 20 7
1 1
20 8 20 8
19 19
2014 – Seabras-1 // International Finance Corporation

$4 million in Seaborn Networks Holding, which is building the 40Tbps subsea fiber optic cable. This will link
Brazil (landing in Sao Paulo) directly with New Jersey in the United States. The total project cost over the next
two years will be $509 million.
2015 – Tui-Samoa // Asian Development Bank and others

$25 million in partnership with an Australian Grant of $1.5 million and World Bank of $16 million combined to
promote a submarine cable system connecting Samoa to regional and global communications infrastructure
and improving international broadband connectivity of Samoa.
2015 - eGabon // World Bank

$56 million which facilitated financing of the introduction of the ACE submarine cable and the construction of
more than 1,000 kilometers of terrestrial fiber optic — a Libreville to Franceville section that runs along the
Trans-Gabon railway line; the Koulamoutou/Lastourville and Franceville/Bongoville/Lekoni road sections, as
well as the Franceville/Moanda and Moanda/Bakumba/Lekoko sections going toward the border and connect-
ing with the Congo fiber optic project.
2016 - Central African Backbone // African Development Bank

$51 million loan to countries in the Central African Economic and Monetary Community (CEMAC) as part of
the Central African Backbone (CAB) project, enabling the effective interconnection of the Cameroon fiber op-
tic network with that of Chad and Equatorial Guinea through the submarine cable NCSCS (Nigeria and Camer-
oon Submarine Cable System); Gabon and Congo are also to be connected.
2016 – SEA-ME-WE 5 // European Bank for Reconstruction and Development

$50 million loan to Türk Telekom Group, Turkey’s largest telecommunications company, for a branching unit in
Marmaris on the Mediterranean coast, in south-western Turkey.
2016 - Samoa Submarine Cable Project // Asian Development Fund $25; World Bank $16;
Gov. of Australia $1.5 million
$32.5 million project for a submarine cable system connecting Samoa to regional and global communications
infrastructure.
2016 – Palau-Guam // Asian Development Bank $8.53

ADB has approved two loans amounting to $25 million for a submarine cable project which will support the
development of a fiber-optic cable system linking Palau to the Internet cable hub in Guam.
2016 - WIOCC // International Finance Corporation

IFC will be providing a financial package of up to $20 million to fund the ongoing regional expansion of the
Company through the acquisition of additional capacity in Africa, increase connectivity to other fiber optic
systems, upgrade its capacity on the EASSy cable and purchase network equipment.
2019 - Improving Internet Connectivity for Micronesia Project // Asian Development Bank
The ADB Board of Directors has approved a total of $36.6 million in grants to help fund the delivery of the Im-
proving Internet Connectivity for Micronesia Project. This project will help install a submarine cable connection
between Micronesia and a proposed transpacific cable system.
2020 – Cook Islands to Samoa // Asian Development Bank $15; Gov. of New Zealand $20;
Gov. of Cook Islands $2 million
The Government of Cook Islands has requested the ADB to support a $37 million submarine internet cable
project, which will link the islands of Rarotonga and Aitutaki in the Cook Islands to Samoa, where interconnec-
tion to the international internet hubs in Fiji and Hawaii will occur.

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SEPTEMBERREPORT
SUBMARINE TELECOMS INDUSTRY 3535
2018 | ISSUE 102
3
SUPPLIER
ANALYSIS

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
Submarine networks A few other factors contribute to the

fast-growing need for submarine networks:
never sleep… • An ever-increasing number of users con-
necting to fixed and mobile internet;
T
he trend has been confirmed over • Internet services that are increasingly
the last couple of years: the number bandwidth-intensive;
of new submarine cable projects and • The growing volume of connected objects
capacity requirements are increasing (including Internet of Things) that contrib-
steadily, and fast. On several strategic routes, ute to filling existing pipes.
where installed capacities are already very
large, we expect growth rates higher than In the coming years, 5G network deploy-
50% per annum. ments around the world will also have a sig-
Capacity requirements are mostly driven by nificant impact on capacity requirements for
web players, who play a growing part in fuel- subsea systems: more and more users connect-
ing both the number of projects and volume of ed to the mobile Internet, with consumer band-
investments. width services.
While in the early 2000s, traditional telecom Submarine networks customers are therefore
carriers were the main investors in submarine looking for solutions to optimize the cost of
network infrastructure, we have seen a profound building new bandwidth, and in that respect,
transformation of the sector in recent years: it SDM (Spatial Division Multiplexing) is the latest
is now a volume market, with a world market trend, as it allows to multiply the number of
growth rate of over 10%, driven by the consid- fiber pairs running in a submarine cable, hence
erable needs of 2.0 players. offering customers the lowest cost per bit. More
OTTs, whether independently or as part of a generally, the submarine networks industry is
consortium, have become major players in our continuously looking for technical and opera-
submarine cable networks industry. Their key tional advances that allow to build more cost-ef-
objectives: optimize their network infrastructure, fective and resilient systems.
provide superior quality of service to their users The submarine systems market was worth
and improve connectivity between their data $2.6 billion in 2016 and is expected to exceed
centers deployed around the world. $6 billion by 2023.
However, we witness at the same time a grow-
ing demand for regional and local connectivity,
the goal being to bring high-bandwidth con-
nectivity to people all around the globe, even in PAUL GABLA
remote areas, allowing them to benefit, beyond Chief Sales & Marketing
basic communications, from modern services Officer
such as tele-learning, tele-medicine among oth- Alcatel Submarine
ers. In these cases, building large pipes is not Networks
the priority, and business cases are somewhat
irrelevant. In that sense, submarine networks
contribute to public service missions.

SUPPLIER ANALYSIS
3.1 SYSTEM SUPPLIERS

ASN
3.1.1 CURRENT SYSTEMS Hexatronic
Based on each supplier’s reported Huawei
activity by region for the period 2015- NEC
2019, companies are keeping a heavy PadTec
focus on the Americas, Transatlantic
Nexans
and Transpacific. ASN and SubCom
NSW
were the busiest suppliers over this
SubCom
five-year period. Most of the smaller to
mid-size companies almost exclusively Xtera
focus on their “home” regions — such 0 2 4 6 8 10 12
as NEC being the most active in the Figure 34: Number of Systems by Supplier, 2015-2019
Transpacific and AustralAsia regions.
Huawei Marine, however, bucks the
120
trend by being the most active in the
EMEA region, specifically Africa. 100
According to announced infor-
mation on the amount of cable each 80
Thousands of KMS
company has supplied over the last 5

years, SubCom takes the lead — with 60
over 100,000 kilometers of cable
40
produced. NEC produced the next
most at 68,000 kilometers, with ASN 20
rounding out the 3 busiest companies
at 49,000 kilometers produced. These 0
ASN Hexatronic Huawei NEC PadTec Nexans NSW SubCom
3 companies have been very dominant
in recent years, being some of the few
Figure 35: KMS of Cable Produced by Supplier, 2015-2019
companies that can produce cable at a
high enough volume to meet demand
for large systems. So, while some companies had a 3.1.2 FUTURE SYSTEMS
relatively high amount of activity, they were not al- Regional plans will differ slightly compared to re-
ways supplying large systems. (Figure 34) (Figure 35) cent years. The AustralAsia region is no longer driv-
Hexatronic, Nexans, NSW and PadTec are diver- ing the bulk of new system demand as the Pacific
sifying their portfolios to include other markets be- island nations are nearly all connected. In contrast,
sides submarine fiber – such as offshore wind power there is renewed focus on crossing the Atlantic – al-
– as these markets can be more lucrative for them. beit taking slightly different routes than the his-
Overall, their participation in submarine telecoms torically dominant London to New York. As more
is low for the period 2015-2019. owners and service providers look to circumvent
Over the last couple of years, there has been a the tumultuous Middle East, expect activity there
renewed interest in Transpacific routes and routes to persist in its decline. The Oil & Gas industry will
connecting Asia and South America directly to maintain demand off the coasts of Africa and Aus-
Europe. This will involve vast systems, requiring tralia if oil prices cooperate and expect emerging
thousands of kilometers of cable. Moving forward, markets in South America to increase activity in the
the industry will have to rely on only three compa- Americas and south Transatlantic regions as well.
nies to tackle large projects. OTTs are becoming increasingly responsible for

new system demand; especially for the
Americas, Transatlantic and Transpa- ASN
cific regions. These companies, spe-
cifically Facebook, Google, Microsoft
and Amazon, are consuming band- Huawei
width at an increasingly rapid pace.
Rather than buying bandwidth on
NEC
existing cables, these companies have
found it easier and increasingly nec-
essary to build and own international SubCom
telecoms infrastructure.
Overall, SubCom will continue to 0 1 2 3 4 5 6 7 8
be a strong leader in the supply indus-
try. They have been the most active Figure 36: Planned Systems by Supplier, 2020-2022
and can supply the largest volume
of cable and equipment. Looking 5%
IT Telekom Malaysia
forward, NEC may be ramping up
production again while Huawei will 18%
31% Huawei SubCom
fade a bit with no major projects
currently on the docket. (Figure 36) GMSL S.B.S.S.
5%
Every one of these system suppli- E-marine Orange
ers are composed of industry veter- 2%
ans with many years of experience in 13% 2% Elettra Baltic Offshore

the submarine fiber industry. Their 10%
3% ASN
innovative technologies and reli- 8% 3%
able production are what continue

to drive the telecommunications Figure 37: Systems Installed by Company, 2015-2019
industry forward into the future.

With robust competition between illustrate the part of the fleet that is exclusively
numerous companies, continue to expect a healthy owned and operated by each installer, they can also
cable supplier industry. make use of “vessels of opportunity”. This allows
for a high degree of flexibility to take on any type of
3.2 INSTALLERS project around the globe.
Many of these companies overlap in their regional
3.2.1 REGIONAL CAPABILITIES capability. This provides comprehensive installation
Reported information indicates ASN, SubCom experience to the submarine fiber industry. With
and Global Marine Systems Limited (GMSL) own several companies being able to serve each region, a
the largest portion of the global cable ship fleet. prospective cable owner can be sure that an expe-
ASN owns 7 cable ships, while SubCom and GMSL rienced installer will be available regardless of their
own 7 each. Combined, these 3 companies account system’s timeline. This allows a cable owner a great
for nearly half of the global fleet. E-Marine owns deal of flexibility when planning their new system.
the next most at 5 ships, followed by Orange with 4.
ASEAN, NTT WEM and S.B. Submarine Systems 3.2.2 CURRENT INSTALLATIONS
all have 3 cable installation ships to their name. Based on announced systems installed for the
Elettra, International Telecom (IT) and Kokusai period 2015-2019, ASN is shown to be the busiest
Cable Ship (KCS) own 2 each. While these numbers overall by a significant margin. SubCom is the next

SUPPLIER ANALYSIS
busiest with Orange, GMSL and IT 80

International Telecom not far behind
with the rest of the companies being 70
about equal in system activity. This 60
compares well with regional capability,
50
as those who can serve the most re-
Thousands of KMS
gions tend to be the busiest. However, 40
the number of cable ships owned clear- 30
ly does not correspond to the amount
20
of system installations performed per
company. (Figure 37) 10
0
3.2.3 REGIONAL ACTIVITY
an
tic
fic
a
s
si
ce
n
a
ci
EA
A
la
r
The amount of cable installed by ic
pa
la
al
at
er
EM
Po
tr
an
ns
ns
m
us
a
di
A
a
region for the period 2015-2019 shows
Tr
A
Tr
In
the Americas region as the busiest by Figure 38: KMS Installed by Region, 2015-2019
far. Except for the Arctic region, all
regions around the world saw a health
150
amount of new cable added – owing
largely to the industry success of 2017
and the continued momentum of 2018 120
and 2019. The Americas have benefit-

Thousands of KMS
ted from emerging markets in South 90

America, the continued desire for
more bandwidth and redundancy on 60
the United States to Brazil route — es-
pecially when driven by demand from 30
OTT providers — and the fact that it is
one of the largest regions in the world. 0
The Indian Ocean Pan-East Asian re-
an
ic
fic
a
nt
as
si
ce
ci
EA
A
la
r
ic
a
la
al
gion has benefitted from multiple large

at
er
sp
EM
Po
tr
an
ns
m
an
us
di
A
Tr
A
Tr
In
systems put into place from 2017-2018.

The EMEA region has experienced a
downward trend in recent years, as eco- Figure 39: Planned KMS by Region, 2020-2022
nomic and political instability in the
region have caused prospective cable owners to seek installed throughout the region to connect major
alternative routes – though it maintains a moderate economic and data center hubs in the United States,
level of growth. The Transpacific and Transatlantic East Asia and Southeast Asia. The Transatlantic,
regions overtake the EMEA region due to renewed Indian Ocean, EMEA and AustralAsia regions will
interest for new routes and improving route diver- see moderate growth, as OTT providers and private
sity. Lastly, a new system was installed in the Arctic companies continue to add infrastructure to these
region for the first time in 2017. (Figure 38) regions. The Americas region is expected to see a
Projections for the next three years indicate a marked decrease in activity as it has been one of the
new trend differing from that of the previous five. busiest over the last couple years and has already re-
The Transpacific region is expected to see the most ceived numerous new cable systems that likely meet
activity by far, as several large systems are set to be the region’s need for the foreseeable future. There

are early plans for new Polar systems,
but they are the most uncertain – 5%
5%
owing to the technical challenges
5%
and expenses incurred from dealing Gardline Other
5%
with ice. (Figure 39)
7% 47%
IT US Govt
3.3 SURVEYORS
Fugro Elettra
3.3.1 CURRENT SURVEYS 12%
EGS ASN
Based on announced activity, EGS
and Fugro have survey experience 14%
in nearly every region of the world.
Gardline and Elettra are also quite
diverse, while smaller companies Figure 40: Systems Surveyed by Company, 2015-2019
focus more on specific regions.
When looking at the big picture,
many of these companies overlap
– providing comprehensive global
survey capability for the industry at
large. While completing a survey is
generally the first crucial 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.
Of systems surveyed for the
period 2015-2019, reported activ-
ity shows that EGS has been the
busiest surveyor by a large margin
and accounts for nearly half of all
survey activity by itself. Fugro has
performed the next most amount
of surveys with Elettra and Interna-
tional Telecom rounding out the top
4. This compares well with regional Figure 41: Survey Status of Planned Systems, 2020-2022
capability, as those that can serve the

most regions tend to be the busiest. pleted a survey. This means that only a handful of
(Figure 40) systems planned for 2020 are on track as the time-
line for manufacture and installation of a typical
3.3.2 PLANNED SURVEYS submarine cable system is about 18 months from
Completing a survey is one of the first real hur- survey end to system completion. This time last
dles on the way to system implementation and only year, 47 percent of systems planned for the follow-
29 percent of planned systems for the period 2020- ing year had completed their survey. (Figure 41)
2022 have performed this task. Additionally, only 39
percent of all systems planned for 2020 have com-

SUPPLIER ANALYSIS
3.4 RECENT MERGERS, ACQUISITIONS restructuring is to resize and refocus the organiza-
AND INDUSTRY ACTIVITIES tion on its core Business Groups to reduce complex-
ity and increase cost effectiveness.
3.4.1 ALCATEL SUBMARINE NETWORKS The restructuring project affects 939 positions
In October of 2018, French optical transports and will see the creation of 296 jobs. The main im-
solutions firm Ekinops confirmed that it was hold- pact would be in Germany, France, Switzerland and,
ing preliminary talks with Nokia about the possible to a lesser extent, Belgium, Norway and Italy.
acquisition of Alcatel Submarine Networks (ASN).
There have been no further public announce- 3.4.6 PADTEC
ments made since. On January 22, 2019, IPG Photonics Corporation
announced that it had signed a definitive agree-
3.4.2 GLOBAL CLOUD XCHANGE ment to acquire the submarine networks division of
On September 16, 2019 Global Cloud Xchange, Padtec SA, a communications equipment company
a subsidiary of Reliance Communications (RCom), based in Brazil.
filed for Chapter 11 bankruptcy after missing pay-
ments of around $350 million. RCom has already 3.4.7 SUBCOM
pledged to raise around $3.1 billion through the sale On November 5, 2018 Cerberus Capital Manage-
of non-core assets to alleviate its levels of debt. ment completed its acquisition of TE SubCom and
On September 25, 2019, Bill Barney stepped down rebranded the company to SubCom. David Cough-
as CEO of RCom to focus on the restructuring of lan was appointed as CEO of the new company.
Global Cloud Xchange. He remains the CEO of
Global Cloud Xchange. 3.4.8 SUBMARINE TELECOMS
FORUM, INC.
3.4.3 GLOBAL MARINE SYSTEMS LIMITED On August 1, 2019, SubTel Forum was officially
On October 22, 2018 HC2 Holdings announced awarded the certification of Accredited Provider of
that it was exploring strategic alternatives, including Continuing Education and Training, a process that
a potential sale, for its Global Marine Subsidiary. As was first started some two and a half years earlier.
part of the process, Global Marine engaged Deut- They have partnered with Offshore Analysis &
sche Bank Securities Inc. and ABN AMRO Bank Research Solutions (OARS) to develop the train-
N.V. as joint advisors to explore strategic alterna- ing program. OARS, founded in 2007, is a staffing
tives for the business. and training company survey consulting and data
There have been no further public announce- services company based in Houston, Texas. They
ments made since. specialize in offshore project services with a long
history in oil & gas, submarine telecom, renewables,
3.4.4 HUAWEI and hydrography.
In June of 2019, Huawei Technologies announced SubTel Forum and OARS are developing a rigor-
plans to sell its submarine cable business – Huawei ous training program designed to standardize the
Marine – after the company was blacklisted by the approach and reporting of client representation
United States as a security risk in the ongoing trade during the implementation of submarine cable
dispute with China. Hengtong Optic-Electric Co systems. The program is set to be released in early
Ltd signed a letter of intent with Huawei Technolo- 2020.
gies to buy its 51 percent stake in Huawei Marine.
3.4.9 UNITED STATES CABLE
3.4.5 NEXANS SECURITY FLEET
On January 24, 2019 Nexans announced a restruc- On July 12, 2019, the U.S. House of Representa-
turing of its European operations. The goal of this tives passed the National Defense Authorization

SUPPLIER ANALYSIS
Act for Fiscal Year 2020 (H.R. 2500) which would

reauthorize the existing Maritime Security Program
and newly authorize similar programs for tank ves-
sels and cable vessels.
H.R. 2500 would also authorize two new pro-
grams patterned on MSP – one for tank vessels, the
“Tanker Security Fleet,” and one for cable vessels,
the “Cable Security Fleet.” Both programs appear
to respond to concerns that there is a risk to nation-
al security because of a lack of U.S.-flag vessels to
transport fuel and to repair submarine telecommu-
nications cables.
The Cable Security Fleet was added as an amend-
ment to H.R. 2500 by voice vote and was sponsored
by Rep. Rob Wittman. The amendment would
permit enrollment of two vessels commencing
in fiscal year 2021 to be paid $5 million per year.
Unlike MSP and the Tanker Security Fleet, persons
qualified as “section 2” U.S. citizens (i.e. persons
eligible to register a vessel in the United States at
least majority-owned by U.S. citizens) would have
a preference where vessels of equal military utility
are offered. Like the tanker program, cable vessels
would not have their annual stipend reduced when
under charter to the U.S. Government. Unlike the
tanker program (and MSP), vessels enrolled in the
program will have U.S. domestic trading privileges
(i.e. “Jones Act” privileges) when operating pursuant
to a national security call-up.
3.4.10 WFN STRATEGIES

In May 2019, U.S. Secretary of Commerce Wilbur
Ross presented WFN Strategies with the Pres-
ident’s “E” Award for Exports at a ceremony in
Washington, D.C. In total, Secretary Ross honored
48 U.S. companies with the President’s “E” Award,
the highest recognition any U.S. entity can receive
for making a significant contribution to the expan-
sion of U.S. exports.

SUPPLIER ANALYSIS
HENGTONG MARINE
亨通海洋
Connecting the World Connecting the Future

4
SYSTEM
MAINTENANCE

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
“W
ithout doubt, the headwinds the telecom sector. The current batch of vessels,
facing the submarine tele- most of which are based on 1990s technolo-
com maintenance industry gy will need to be replaced by DP2 platforms
continue to build. Older with more powerful and effective ROVs. It does
lower capacity cables look towards retirement require more dialogue and knowledge-sharing
while the younger generation of high capacity between the power & telecom sectors but with
builds continue to satisfy our unabated appe- increased demand for access and rights to the
tite for low latency bandwidth. We count cable sea floor from different stakeholders, there are
ships, make assumptions about their capability overlaps and inevitable compromise results.”
based on age and ask ourselves “What next?”
Well the good news is that the number of
cable ships is increasing, albeit slowly. The bad BRUCE NEILSON-WATTS,
news is they are getting older and from a fleet Managing Director
of 47 (give or take), only 4 have been built in the Global Marine Systems
last decade as direct replacements. But despite Limited
our disparaging mindset about ageism, the
global fleet continues to support the market.
Statistics may indicate time to repair is increas-
ing in some parts of the world but look a little
deeper and we will find that protectionism aka
cabotage and increased regulation is the root
cause of delay. This creates domestic opportu-
nity and new players emerge to solve any emer-
gent issues.
With increased competition, unit costs to
maintain or repair cables continues to fall as it
has for the past twenty years in tandem with
capacity pricing. But salaries, steel and fuel are
commoditized and we are reaching the limits of
what can be achieved through rigorous procure-
ment practice, but there are emergent indica-
tors of change. The next generation of repair
platforms will benefit from improvements in
marine technology: they will operate with fewer
people, burn less fuel, be more powerful and
flexible enough to work across industry sectors.
A modern ‘repair’ vessel will offer services to the
telecom, renewables and oil & gas markets. It is
already happening. The traditional cost-sharing
models are changing, allowing the vessel oper-
ators to streamline investment risk and use their
vessel more effectively and efficiently than in the
past. With the global proliferation of wind farms,
new ideas and ways to solve collective problems
are being addressed which can hopefully result
in lowering the unit cost of wet maintenance in

SYSTEM MAINTENANCE
4.1 PUBLICITY
Unsurprisingly, two of the largest regions in the 11 2
Indian Ocean
world generate the most media stories about cable 42
faults. The Americas and AustralAsia regions are TransPacific
not only expansive, but several of the landing sta-
36
tions contained within each region are also in high EMEA
Figure 1: Total Cable Fault Stories, 2013-2019
traffic shipping areas and in the case of AustralAsia,

there are multiple cables within geologically ac- AustralAsia
tive areas. The EMEA region has the next greatest Americas
number of stories largely due to its sheer size and 48
high number of cables. Historically, the AustralAsia
and EMEA regions have had poor reporting but
they have experienced increased coverage since
2017. (Figure 42)
The remaining Indian Ocean Pan- 35
East Asian and Transatlantic regions
have had no reported cable faults with- 30
in the period 2013 to 2019. While the
former region simply has fewer cables 25
to manage — in a relatively cable safe
20
region — the latter is one of the most
established regions in the world. It is
15
again likely that many faults in these
regions go unreported. Specifically, in 10
the case of the Transatlantic region,
there is almost always a cable repair 5
ship nearby to quickly restore any 2013 2014 2015 2016 2017 2018 2019
damage within days or hours – likely

preventing many faults from even
being noticed.
A sharp rise in the volume of me- 20
dia coverage for cable faults has been
observed since 2013. 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 inter-
net media reporting. Our global society 15
is more interconnected than ever, with
people sharing news faster than at any
point in history. Since 2015, there have
been between 19 and 32 stories each
year. (Figure 43)
10
As the average customer is becom- 2013 2014 2015 2016 2017 2018 2019
ing more technically proficient – and
Figure 44: Average Time Between Fault and Announcement, 2013-2019
quicker to complain to service provid-
ers – this has contributed to an increase

in media coverage for cable faults. 30
As more people are connected to the
global submarine fiber network every
year, the rise in reported faults by the
media is expected to continue. This 25
provides much needed transparency
and accountability for the submarine
fiber industry.
Due to reporting and general aware- 20
ness of cable faults being on the rise,
the time between a fault occurring and
a cable owner or operator announcing
15
said fault is trending downwards since 2013 2014 2015 2016 2017 2018 2019
2013 with the current average being
about 10 days. (Figure 44) The in- Figure 45: Average Reported Repair Time in Days, 2013-2019
creased media coverage has prompted
cable owners and operators to become
more transparent with cable faults. As inter-
15
net connectivity continues to be an essential
Transpacific
element in our lives, customers will demand 24
transparency from service providers to ensure EMEA
they work diligently to address service perfor-
mance concerns. AustralAsia
14
4.2 REPORTING TRENDS Americas
AND REPAIR TIMES
With progressively faster reporting time, 15
it is very likely that announcement times
will average under 10 days in the near future.
This not only helps to hold cable owners and
Figure 46: Average Estimated Repair Time by Region, 2011-2019
operators more accountable, but also provides
reassurance to customers that cable faults are
being addressed in a timely fashion. More accurate observed in 2019. Several faults this year happened
and transparent reporting of cable faults also helps far north in the Americas during the wintertime with
maintenance agreement zones and private contrac- ice and weather considerably delaying successful
tors more reliably predict where to distribute assets. repairs or in remote regions in the Pacific that have
The average time to repair has been trending lengthy travel times. This year was likely an outlier,
downwards from 30 days alongside media cover- and overall the trend should still be downwards.
age for the period 2013-2019. As reporting of cable There has been a rising correlation observed be-
faults consistently increases in frequency and speed, tween frequency and speed of cable fault reporting
this should continue to decrease the average repair and a decrease in average repair time. Internet news
time even further. The downward trend in cable media reaches more people and informs them faster
fault repair time could easily lead to the average than ever before. As media coverage of cable faults
time to repair falling under 20 days over the next extends to a wider audience and provides additional
few years. (Figure 45) transparency, this correlation can be expected to
However, another spike in average repair time was continue.

SYSTEM MAINTENANCE
Figure 47: Traditional Club

Agreements Map
Raising awareness of cable faults will also put 4.3 CLUB VERSUS PRIVATE AGREEMENTS
pressure on government agencies in charge of issu- Marine maintenance is a shared service where
ing permits for cable repair work. Many times, this several cable owners share the service of resources
is the largest hindrance for a repair operation. This within a defined operational area. The agreement
increased awareness will have a net positive effect can either be private where the contractor and cable
on permit turnaround time, and further decrease owner agree prices and conditions on a bilateral ba-
the average time to repair for a given fault. sis, nothing except for the sharing and priority rules
While the Americas, AustralAsia and EMEA are linked to any of the other cable owners. For the
regions all have a relatively short average time to club agreement conditions and prices are linked
repair, the Transpacific regional average is longer with all the other participating cable owners.
than all the others combined. With Transpacific
systems containing some of the longest uninter- 4.3.1 TRADITIONAL CLUB AGREEMENTS
rupted route segments in the world, this comes as The way that the Maintenance Zone operates is
no surprise. The longer a route segment is, the lon- that each owner nominates a representative to act
ger it takes to find and diagnose a fault for proper as the main point of contact between itself and the
repair. Most systems in the other regions are bro- marine service provider and the depot operator.
ken up into smaller segments, and cable faults can This representative is called the Maintenance Au-
be located and diagnosed much faster. (Figure 46) thority for the system and will provide instructions
As reporting accuracy of cable faults continues to to the ship during the repair and the depot oper-
increase, this will help bring down the Transpacific’s ator before and after the repair. The Maintenance
average time to repair. With repair crews getting Authority will also retain the detailed as laid records
better information on where faults are likely to for the system and update them after each repair.
occur, their ability to locate and diagnose a cable
fault improves dramatically. Accountability and 4.3.1.1 2 OCEANS CABLE
transparency of this sort is healthy for cable owners MAINTENANCE AGREEMENT
and operators. 2 Oceans Cable Maintenance Agreement
(2OCMA) operates in the South of Atlantic and
Indian oceans from Cape Town (South Africa) using

Figure 48: Private Maintenance
Agreements Map
the facilities of Telkom SA depot. 2OCMA is sup- 4.3.1.3 MEDITERRANEAN CABLE

ported by vessels and facilities from Orange, and MAINTENANCE AGREEMENT
possesses base ports in Cape Town, South Africa. Mediterranean Cable Maintenance Agreement
(MECMA) operates from the Mediterranean Ma-
4.3.1.2 ATLANTIC CABLE rine Base of La Seyne-sur-Mer (Southern France)
MAINTENANCE AGREEMENT on 71,000 km of cables in the Mediterranean zone
The benchmark for all maintenance services and including the Black and Red seas. MECMA is
the most popular worldwide is the Maintenance supported by vessels and facilities from Orange and
Zone. The first Maintenance Zone was set up in the Elettra, and possesses base ports in Le Seyne Sur
North Atlantic in 1965 and is called Atlantic Cable Mer, France and Catania, Italy.
Maintenance Agreement (ACMA). ACMA defined
and continues to set the standards for structure and 4.3.1.4 NORTH AMERICAN ZONE
operating procedures that all other Maintenance CABLE MAINTENANCE AGREEMENT
Zones around the world now follow. North American Zone Cable Maintenance Agree-
ACMA operates) in the Atlantic, South East Pa- ment (NAZ) covers an area from the Bering Sea and
cific and Northern Europe zones. The agreement Alaska in the North to the Equator in the South and
utilizes Global Marine depot facilities in Portland from the Americas to approximately 167º West Lon-
UK and Bermuda, Orange marine’s facilities in gitude. NAZ is supported by vessels and facilities
Brest (Northern France) and Subcom facilities in from Global Marine Systems Limited, and possesses
Curacao (Dutch Antilles). Global Marine vessels base ports in Victoria, Canada.\
are nominally based in Curacao and Portland whilst
the Orange Marine vessel is based in Brest. 4.3.1.5 SOUTH EAST ASIA/INDIA OCEAN
CABLE MAINTENANCE AGREEMENT
South East Asia / Indian Ocean Cable Mainte-
nance Agreement (SEAIOCMA) stretches from

SYSTEM MAINTENANCE
Djibouti to Guam and from Taiwan to Australia and 4.3.2.3 E-MARINE

covers an area of approximately one-third of the E-marine covers the maintenance of cables pri-
earth’s oceans. SEAIOCMA is supported by ves- marily in the Arabian Gulf, Red Sea, Indian Ocean
sels and facilities from ACPL, IOCPL and Global and Arabian Sea. E-marine possesses base ports in
Marine Systems Limited, and possesses base ports Hamriya, UAE and Salalah, Oman.
in Singapore; Colombo, Sri Lanka; and Manila,
Philippines. 4.3.2.4 SOUTH PACIFIC MAINTENANCE
AGREEMENT
4.3.1.6 YOKOHAMA ZONE CABLE The South Pacific Maintenance Agreement
MAINTENANCE AGREEMENT (SPMA) covers the southern Pacific region east-
The Yokohama Zone has been one of the major ward to the Hawaiian Islands. SPMA is supported
cable maintenance zones in the Asia-Pacific region, by vessels and facilities from SubCom and possesses
covering cables in Northern Asia and Northwest a base port in. American Samoa.
region of the Pacific, and adjacent to the NAZ and
SEAIOCMA zones. Yokohama Zone is supported
by vessels and facilities from KCS, KTS and SBSS,
and possesses base ports in Yokohama, Japan; Keoje,
Korea; and Wujing, China.
4.3.2 PRIVATE MAINTENANCE

AGREEMENTS
There are several types of contracts in place for
providing private marine maintenance services
globally. Private agreements are typically offered by
the ship operators and are usually tailored (within
the limits of the overall economic model) to the
needs of the individual system owner.
4.3.2.1 ATLANTIC PRIVATE

MAINTENANCE AGREEMENT
The Atlantic Private Maintenance Agreement
(APMA) covers an area encompassing the Atlantic
and Mediterranean. APMA is supported by vessels
and facilities from ASN and SubCom, and possesses
base ports in Calais, France and Cape, Verde, Cura-
cao.
4.3.2.2 ASIA PACIFIC MARINE

MAINTENANCE SERVICE AGREEMENT
APMMSA is supported by vessels and facilities
from SubCom, and possesses base ports in Taic-
hung, Taiwan.

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5
CABLE
SHIPS

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
T
he SS Great Eastern, a massive 22,500- cable – not design systems. The cable ships are
ton steam ship crossed the Atlantic employed in a variety of ways. Some models are
Ocean in 1866. In its wake, the six-mast dedicated and outfitted for laying cable. Others,
behemoth unspooled 4,300 km of usually smaller and more maneuverable, only
cable, creating the first trans-continental con- repair breaks. Many today are design to serve
nection and forever changing the world’s com- dual purpose. The ships service laying large,
munications. The ship was a monster of its time trans-continental systems, small regional con-
(almost 700 feet in length). It had been original- nections, or to reach out to oil platforms. The
ly christened Leviathan a year earlier and was cable ships are an inseparable part of the sub-
designed as a passenger and cargo ship. After a marine telecoms industry – without which, the
failed launch due to structural issues, the own- dream of a global network would be impossible.
ers were forced into bankruptcy and sold the
ship at auction. Instead, it was loaded with cable
and became one of the earliest ships of its kind. STEPHEN NIELSEN
More than 150 years later, fleets of cable ships Submarine Telecoms
are the workhorses of the still-evolving subma- Forum
rine telecoms industry. While technology has
changed and ships are driven by diesel instead
of steam and wind, still do the job in basically
the same way, if with incomparably greater pre-
cision and forethought.
The shipside of the industry is also a diverse
field, with some providers owning dedicated
ships, or hiring other companies that only lay

CABLE SHIPS
5.1 CURRENT CABLE SHIPS

2
2 E-marine KTS
5.1.1 FLEET DISTRIBUTION 2
11
SubCom owns the most ships at seven, 3 Orange KCS
followed closely by ASN, Global Marine 3
GMSL ASEAN
and Orange with six each. Combined,
these four companies account for half of 4 7
ASN S.B.S.S.
the entire fleet. This has allowed each of
them to implement projects around the 6 SubCom NTT WEM
6
globe, and to handle nearly every chal- 6 Other
lenge that arises.
E-marine owns the next most at four
ships with NTTW WEM and S.B.S.S.
Figure 49: Cableship Fleet Distribution by Company
owning three each. ASEAN, Kokusai
Cable Ship and KT Submarine own two
cable ships while the remaining 11 cable
ships in the fleet are all owned by sepa- 1
5
rate companies. ASN, SubCom, GMSL Mediterranean
and Orange all have a diverse global pres- 6 20 Indian Ocean
ence, while the rest of the above compa-
nies cater to a regional focus. (Figure 49) Worldwide
As the Atlantic and Pacific oceans are
the busiest and highest traffic maritime Atlantic
regions in the world, most of the global
cableship fleet is stationed in these two 19 Pacific
regions. (Figure 50) Many of the world’s
most important telecommunications
routes cross these two oceans, requiring Figure 50: Cableship Fleet Distribution by Region
multiple maintenance vessels to be on
hand and installation vessels available for
new routes. The Indian Ocean and Med-
4
iterranean regions are slightly-less busy
and have a smaller coverage footprint.
Therefore, fewer ships are necessary to Installation
handle the workload required by these
regions, resulting in a significantly small- 26 22 Maintenance
er portion of the fleet stationed there.
Not Dedicated
The overall distribution of cableships
dedicated to maintenance agreements
versus those available for installation
jobs is almost even. Of the global fleet,
21 are dedicated to club and private
Figure 51: Dedicated Cableship Purpose
maintenance zones, 26 are dedicated to-
wards installation work. The remaining
4 are not dedicated to a sole purpose.
(Figure 51)

Cableships are stationed around the world 8
in strategic locations reflecting established
7
fault profiles to be able to cover all parts of the
6
world easily.
5
5.1.2 GROWTH AND AGE OF 4

CABLE SHIP FLEET 3
While an average of one cableship has been
2
added per year since 1999, there has been a clear
1
downward trend in new ships being commis-
sioned. The large spike in additional cableships 0
99
00
01
02
03
04
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
from 2001-2003 was in anticipation of explosive
19
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
market growth that failed to materialize. Because Figure 52: Cableships Added by Year, 1999-2019
of a far less busy industry, no cableships were add-
ed to the global fleet from 2004-2010. (Figure 52) Age Distribution of Cable Ship Fleet
Most of the cableship fleet is between 15 and 25
25 years old, with the average age being 23. All

but six cable ships are 16 years or older, and one 20
is as old as 47. This indicates that there is room

Number of Cable Ships
15
for modernization and calls into question the
ability of an aging fleet being able to handle all 10
planned installation activity. As the older ships

begin to phase out – there are 12 over 30 years 5
old – there are not enough planned cable ships

to replace them which will impact installation 0
0 10 20 30 40 50 60
and maintenance availability. (Figure 53) Age
Figure 53: Age Distribution of Cableship Fleet

5.1.3 NEW CABLE SHIPS
In September of 2017, KDDI Corporation The KDDI Cable Infinity was successfully delivered
announced plans to construct a new submarine to Kokusai Cable Ship – a subsidiary of KDDI Corpo-
cable-laying ship. It is scheduled for launch in fiscal ration – in June of 2019. Details for this ship are below:
year 2019.
By utilizing the expertise accumulated through expe- Table 2: KDDI Cable Infinity Specifications
rience in laying and repairing communications cables, CABLESHIP SPECIFICATIONS
the new submarine cable-laying ship will be Japan’s first
ship capable of supporting electric power cable installa- Gross Tonnage 9,500 tons
tion, in addition to the cables used in communications,
observation and resource exploration. Length 113 meters
In addition, by improving the sailing distance
Breadth 21.5 meters
and speed over those of previous KDDI ships, the
marine area covered by the ship will expand beyond Ship Complement 80 persons
the current Asia-Pacific region to span the entire
globe. Furthermore, the use of retractable azimuth Service Speed 14.5 knots
thrusters will improve the weather resistance in
Pulling Power 80 tons
adverse conditions, as well as the performance of
stationary maintenance operations.

CABLE SHIPS

CABLE SHIPS
As of this report, no new submarine fiber cable

ships are currently planned. This is a potential cause
for concern as ships being aged out are not being
adequately replaced.
5.2 SHORE-END ACTIVITY
5.2.1 CURRENT SHORE-END ACTIVITY

The amount of shore-end installations by re-
gion for the period 2015-2019 correlates closely to
the number of systems per region over the period.
The EMEA, AustralAsia and Americas regions are
characterized by numerous systems that connect 3
or more landing points. The Indian Ocean Pan-East
Figure 54: Landing Distribution by Region, 2015-2019
Asian, Transatlantic and Transpacific are typically
characterized by systems taking more direct routes
between fewer landing points. (Figure 54)
5.2.2 FUTURE SHORE-END ACTIVITY

The amount of shore-end installations by region
for the period 2020-2022 diverges compared to
the number of systems per region over the period.
Systems in AustralAsia will continue with historical
trends, providing numerous shore-end installation
opportunities. New Transpacific systems will, on
average, connect more landing points than normal-
ly observed. New systems in the Americas will, on
average, connect fewer. However, the overall distri-
bution will stay about the same as compared to the
last five years. (Figure 55) Figure 55: Landing Distribution by Region, 2020-2022

Turnkey Solutions
for Submarine Cables

6
MARKET
DRIVERS
AND
INFLUENCERS

SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20

INSIDER PERSPECTIVE
W
hen I went to school, I had books If we look at just the potential Data Cen-
and access to a Library. My chil- ter Impact from the arriving ‘The Internet of
dren went to school with Laptops things’ (IoT) as a segment model and think of
and access to the Internet. That what a future revolution might look like with
is a revolution in just one generation which has today’s crop of emerging technology combined
social and industrial impact. with the context of a data driven society &
The revolutionary connected infrastructure commercial world then the Data Center land-
that delivered that revolution is predominantly scape will see change.
fibre, the nervous system of the internet. We The Data Center sector is very young and in
hear the term ‘Cloud’ and the perception that industrial revolution/human terms is still a tod-
data and processing is performed in the ether. dler, aware of the world around it and its place
In reality, the ‘Cloud is on the ground’ and within it while exploring all avenues before
mainly in specialized facilities call Data Centers. finding or being placed on a path. Predicting
The Cloud and the Internet would not be able the future is always going to be subjective and
to function without Data Centers which are the a risky activity.
heart and lungs supporting all infrastructure What is clear is that our increasing depen-
including the CPU brains inside servers within dency of all things digital and the massive
rack enclosures. growth of digitalization are driving volumes
What is a Data Center? I do not want to and with volumes we will see more commod-
quote the Wikipedia definition of a ‘Data Cen- itization of that Data. Data as a commodity
tre is a facility used to house computer systems demands ‘Data-as-a-utility’.
and associated components, such as telecom-
munications and storage systems. It generally
includes redundant or backup power supplies, DEREK WEBSTER
redundant data communications connections, Andget LimitedLimited
environmental controls.’
The question of ‘what is’ I want to expand as
follows: “a Data Centre is”
• Data Driven Critical infrastructure
• A Data Factory that processes digital
workloads
• Moving Photons & Electrons (the Straw-
berry) processing Applications & Services
• Engines of an outsourcing digital revolution
• An Asset Class

MARKET DRIVERS AND INFLUENCERS
6.1 OVER-THE-TOP
PROVIDERS
OTT providers are an increasingly
integral part of the submarine cable
system development process. Face-
book, Google, Microsoft – and now
Amazon – are moving from capacity
purchasers to cable owners. Not only
are these new players now driving
where cables are going, they are help-
ing to push along new innovations
inside of the cable systems themselves.
New transmission technology to
handle higher capacity wavelengths,
increased fiber counts for more over- Figure 56: OTT vs Non-OTT Cable Systems, 2016-2019
all system capacity and streamlined

network management and the push for
open systems leading to shared system
architecture are just a small sampling
of new technologies and ideas these
providers are backing.
Another major change OTT provid-
ers have brought to global networks is
shifting the focus from city to city con-
nections to data center to data center
connections. Unlike traditional cable
owners, companies like Facebook,
Google and Microsoft do not neces-
sarily need to build infrastructure in Figure 57: Systems Impacted by OTT Providers, 2015-2019
locations with a variety of interconnect
options. Instead, they favor locations The dramatic growth in demand is creating
that provide economic and cost saving benefits to significant challenges for telecommunications
reduce the operational expenditure impact of their companies, Internet Service Providers (ISPs) and
data center facilities. The arrival of a major OTT OTT Providers. The top segment of many markets
provider not only brings new telecoms infrastruc- is becoming dominated by large OTT players, such
ture to a region but also the cloud services that as Google, Amazon, Microsoft and Facebook who
company provides. have become key stakeholders and require large
amounts of bandwidth between their data centers
6.1.1 CURRENT SYSTEMS IMPACTED in various continents.
A new paradigm emerged in 2016, with OTT OTT providers were the driving force behind 31
providers stepping into the world of submarine ca- percent of systems that went into service for the
ble ownership. Many of these companies have such period 2016-2018 – which is down from 43 percent a
large and complex infrastructure requirements year ago. (Figure 56)
that it has become more valuable for them to own Several factors led to these companies making
their own cable systems rather than buy capacity the decision to build their own infrastructure. One
from a carrier. of the biggest eye-openers was Hurricane Sandy

hitting New Jersey, USA – a major
cable landing hub – in 2012. This storm
wiped out critical infrastructure, flood-
ed cable ducts and caused a huge loss of
connectivity to Europe for several days
– ultimately resulting in millions of
dollars in lost business. The aftermath
of this storm highlighted the need for
increased route diversity and more
direct control over critical infrastruc-
ture. This help to spur on the surge of
OTT backed submarine cable systems.
(Figure 57)
Additionally, major OTT provid-
ers had been growing at such a rapid Figure 58: OTT vs Non-OTT Cable Systems, 2020-2022
pace that their need for additional

bandwidth was beginning to outpace
their ability to purchase it in a timely
manner. Building their own infrastruc-
ture provided both greater control
over assets and removed the need to
“compete” against other carriers and
businesses also trying to buy capaci-
ty circuits. As a result of owning and
operating their own critical infrastruc-
ture, OTT providers can now turn on
additional capacity in a matter of days
instead of weeks or months when buy-
ing circuits from a traditional carrier.
While transoceanic cable systems Figure 59: System Investment Driven by OTT Providers, 2020-2022
are expensive – well over $100 million
USD just to get across the Atlantic
– these assets represent business potential in the to the high financing threshold of these companies
billions for major OTT providers. Even the annual – expect this percentage to increase as new cables
operations expenditure to manage and maintain the are announced, and other projects die off. Without
cable is a fraction of potential revenue. these kinds of backers, future systems will have a
much harder time proving their business case and
6.1.2 FUTURE SYSTEMS IMPACTED securing funding.
For the period 2020-2022, 21 percent of planned While the top tier OTT providers are continuing
systems are being driven by OTT providers. (Figure to develop new systems, there are numerous other
58) This indicates that currently observed levels companies in this part of the Information Technol-
of and OTT driven systems might not continue – ogy sector. A second wave of these companies may
though this is still a significant chunk of industry decide they need similar infrastructure plans and
activity driven by just four companies. However, follow in the footsteps of their respective market
as systems driven by major OTT providers have a leaders. This could trigger a second wave of and
much greater chance of being implemented – due OTT driven systems and allow the submarine fiber

market to continue enjoying

its current level of activity
even after the top tier provid-
ers begin to reach the end of
their infrastructure buildout
plans. However, no new OTT
providers have officially or
publicly expressed interest
in building submarine cable
infrastructure.
Of the nearly $7 billion in-
vestment for planned systems
over the next several years,
Figure 60: Enterprise Public Cloud Provider Usage, 2019
nearly one-third that amount Source: Flexera RightScale 2019 State of the Cloud Report
is tied up in OTT backed
systems. Again, while these
companies are not sole owners
on every cable system they are
a part of, this still represents
a significant dollar value that
would very likely not exist
without their involvement.
(Figure 59)
While only 52 percent of
announced cable systems end
up entering service (Clark,
2019), OTT backed systems
have thus far proven largely
immune to this trend as they Figure 61: Enterprise Public Cloud Provider Adoption Rate, 2017-2019
generally do not announce a Source: Flexera RightScale 2019 State of the Cloud Report
system until it is already CIF.

It is therefore probable that up to half of non-OTT ing over submarine telecommunications cables. As
driven systems will not achieve the CIF milestone a result, data center providers have become more
and further highlight the dominance of the OTT involved with the submarine fiber industry, espe-
providers on the submarine fiber industry. cially around cable landing stations where they can
capitalize on interconnection and colocation oppor-
6.2 DATA CENTERS tunities – especially in those areas where multiple
cables come ashore to a single location.
6.2.1 CLOUD ADOPTION In January 2019, Flexera surveyed 786 enterprise
Cloud adoption is at an all-time high as compa- technical professionals about their cloud computing
nies continue to shift towards both cloud storage adoption. Of these respondents, 94 percent have
and cloud computing to drive their business. Am- adopted the use of cloud computing in some fashion
azon Web Services and Microsoft Azure lead the with organizations leveraging five different cloud
way in enterprise adoption with no sign of slowing services on average. Spend on enterprise cloud is
down. (Figure 61) These cloud services are global in growing significantly with companies planning to
nature and inevitably their traffic will end up travel- spend 24 percent more on public cloud in 2019 vs

2018. In all, 13 percent of respondents spend more haul connectivity to a data center – which was not
than $12 million on public cloud services on an always close by – and from there negotiate inter-
annual basis while 50 percent spend more than $1.2 connection services to other carriers and providers.
million annually. (Flexera, 2019) This added network latency and complexity – both
These numbers show that the cloud comput- of which are greatly reduced when data center and
ing market continues to accelerate overall. As this cable landing station facilities are integrated more
market grows, so will data center providers and the closely. As new ideas and technologies are devel-
need to provide robust telecommunications net- oped towards this effort, network efficiency and
works that allow enterprise customers to efficiently reliability will increase.
manage their traffic anywhere in the world. A key
part of this will be the integration of data centers
with cable landing stations to more efficiently pro-
vide backhaul and interconnection opportunities on
international telecommunications routes.
6.2.2 DATA CENTER MARKET

EXPANSION AND INTEGRATION
The cost for implementing a new data center can
be steep. Depending on overall size and location
building a new data center can cost anywhere from
$6.5-$10 million per megawatt (MW). (Diaz, 2019)
In 2019 alone, data center provider Equinix plans to
spend nearly $2 billion to open 12 new International
Business Exchange (IBX) and expand 23 existing
IBX facilities. (Lima, 2019) Non-OTT data center
providers, Equinix, Digital Realty Trust and Interx-
ion, will continue to benefit from submarine cable
construction activity as proximity to a cable land-
ing station can provide numerous interconnection
opportunities that can help make the high cost of a
new data center build worth it.
While non-OTT data center providers do ben-
efit from submarine cable infrastructure, they are
not driving new builds and are strictly interested
in the interconnection opportunities that being
involved with cable landing stations provides. For
Equinix and other carrier-neutral providers, loca-
tions with only a single cable system are not attrac-
tive growth options.
In the future, expect data center providers to
continue integrating more closely with submarine
cables. Bridging the gap between terrestrial and
submarine traffic is one of the most critical com-
ponents of international connectivity. Traditionally,
submarine fiber systems would come ashore at a
cable landing station, negotiate deals for back-

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“T
he last two years have seen the This makes planning and investment difficult,
announcement of only a few whether for entirely new production facilities or
new offshore fiber optic projects improvements to existing facilities. Communica-
serving the oil & gas industry, tions systems, which are often seen as operating
along with the completion of projects initiated costs rather than strategic investments, fall into
prior to 2015. Despite this hiatus, fiber optic the latter category and struggle to gain traction.
communications for offshore assets have proven Nevertheless, the major energy producers are
their merit and will continue to be developed. beginning to adjust to this volatility and some
Several of the major oil & gas producers remain new investments are proceeding. A consortium
committed to using fiber optic communications of companies forming the Mozambique Rovu-
to serve offshore developments. As new oil & ma Venture has made a public request for high
gas developments are entering the planning speed fiber optic services. While the primary
stages, further interest in fiber optic communi- objective is to serve the onshore gas compres-
cations can be expected. sion plant, it is assumed that a subsea cable will
The level of investment in communications be needed to reach this remote location. As the
infrastructure for offshore oil & gas produc- Rovuma gas fields are located offshore, connec-
tion assets has always been dependent on the tions to offshore assets may be added there in
overall investment in those assets. From 2011 the future. Another recent development is in
to 2014 the price of oil remained around $110 Guyana, where ExxonMobil has issued an RFI for
per barrel. Offshore developments were attrac- environmental and regulatory support for a fiber
tive. Communications upgrades, which could optic project to serve the Stabroek field.
improve productivity, were more easily justified. However, the number of publicly announced
The drop in the oil price, which occurred during projects does not tell the whole story. Sever-
the second half of 2014, put some projects on al of the energy producers remain committed
hold and resulted in the dissolution of more to fiber optics and consider them an essential
speculative projects. A reduction in telecommu- part of any new development. A few undersea
nications projects then resulted from the overall telecommunications systems have been installed
drop in offshore activity. with stubbed Branching Units for future offshore
During the period from 2015 to 2017, proj- connections. A number of developing but as
ects started in 2014 or earlier were completed, yet unannounced projects provide a reason for
including: additional connections to the BP Gulf optimism.
of Mexico System, the North West Cable Sys- The subsea telecommunications industry has
tem in Australia, a private system in Newfound- also undergone a shift over the last five years,
land, and further development in the North most notably as a result of the Over The Top
Sea. By 2017, the reduction in active projects (OTT) providers driving a significant portion
became clearly noticeable, as seen in the few of investment in new cables. Smaller, regional
construction announcements during 2018 and cable systems continue to be developed, but
2019, which included continued network expan- must often search for revenue. As a result of
sion in the North Sea and ENI’s completion of a these shifts, the two industries will need to find
fiber optic cable installation in Mexico. new ways to work together. Shared infrastruc-
Since 2014, the price of oil has been marked ture, that is cable systems that provide end-to-
by substantial volatility and no new “bench- end capacity as well as connections to offshore
mark” price has been established. From a low of assets, may become more popular. The Gulf of
less than $30 per barrel in mid-2016, the price Thailand, Tampnet North Sea and Vocus North
has recovered to an average of about $57 per West Cable System are all examples of this.
barrel through the first three quarters of 2019. Availability of resources is another challenge,

SPECIAL MARKETS
with undersea cable factory capacity and cable

ships being close to full utilization for several STEVE LENTZ
years now. Director of Network
Early and careful planning will be essential, as Development
will flexible business models with multiple rev- Ocean Specialists, Inc.
enue sources, but this will come as no surprise
to anyone familiar with either of the two indus-
tries. In conclusion, I believe that fiber optics for
offshore oil & gas production will remain a small
but viable piece of the overall subsea cable sys-
tem marketplace. “
7.1 OFFSHORE ENERGY

The offshore energy industry pro- $120
vides its own and separate sub-sec-

tion of the global submarine fiber $100
industry. Offshore Energy Telecoms
is a niche market, but it has become $80
increasingly important as offshore
platform operators have started to $60
require higher capacity and more
reliable telecommunications systems.
$40
This market space is primarily driven
by the offshore oil & gas markets and
$20
is very closely tied to the price of oil.
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3
3
Q
Q
7.1.1 OIL PRICE HISTORY
Figure 62: WTI and Brent Crude Combined 5-Year Price History, 2014-2019
The Brent Crude and West Texas
Intermediate (WTI) crude oil grades
are the most popularly referenced pricing bench- 62) This steep decline — which started in the latter
marks for oil around the world. Brent Crude is a half of 2014 — is the primary reason 2015 saw few
blend of oil extracted from the North Sea while new systems implemented. Ongoing international
WTI is a blend of several United States domestic trade disputes and global regulatory changes have
oils produced and mixed mainly in the Midwest and contributed to the relatively stagnant pricing. Many
Gulf Coast regions. The Brent Crude benchmark is systems either died outright or were pushed back to
widely used on a global level while the WTI is the 2019 and beyond.
main benchmark for oil in the United States.
Looking at the average quarterly price of a barrel 7.1.2 SYSTEM GROWTH
of oil via the West Texas Intermediate benchmark, Over the past five years, system investment has
oil prices reached their peak in 2014. Prices soared been on an upward trend despite the crash in oil
to well over $105 per barrel during this time. After prices around 2014 and due to the industry’s push
that, prices sharply declined and finally bottomed to employ new technologies. There was a noticeable
out at just over $30 per barrel in Q1 2016. (Figure decrease in new system activity observed in 2017 –

this time a likely result of the 2016
12
price crash – but as prices recovered,
2018 implemented seven systems. No 10
new systems have been implemented
so far in 2019 and all previously an- 8
nounced systems for this year are no
longer in development. This is likely 6
a result of the price of oil weakening
4
once again and uncertainty surround-
ing global trade disputes.
2
Despite no system activity in 2019,
there are plans for several new sys- 0
tems through 2022. (Figure 63) Newly 2017 2018 2019 2020 2021 2022
planned systems are larger in scope

than have historically been observed. Figure 63: Offshore Oil & Gas Systems per Year, 2017-2022
As the Oil & Gas industry embraces
new technology and data driven pro- of climate monitoring, tsunami warning systems or other
cesses, more offshore facilities are being connected research purposes.
than ever before. Systems that would previously have
only connected the main hub facility are now branch- 7.2.1 INTRODUCTION
ing out to connect secondary platforms so that these Tsunamis crashing onto the shore, causing enor-
advances can be implemented on a larger scale. mous damage and taking lives. Rising sea levels
There is expected to be over $2.6 billion worth swallowing island and coastal communities. Warm-
of potential investment in submarine fiber systems ing oceans stirring up extreme weather and melting
through 2022 – more than doubling existing invest- ice caps. Better monitoring and study of the deep
ment amounts. However, as there is currently a high oceans can help us better prepare for and mitigate
amount of uncertainty and an extremely busy com- all these issues, yet at present scientists and disas-
mercial submarine fiber market driven by Over-The- ter managers have few ways to do so. That could all
Top (OTT) providers, it is highly likely that some change, thanks to the submarine cables that already
of these planned systems will be delayed past their exist in the world today.
current RFS date. These cables crisscross oceans and seas world-
wide, enabling global telecommunications. These
7.2 SMART CABLES cables are also in a perfect position to collect scien-
The following section is provided by the Joint Task tific data from the oceans in which they reside by
Force for SMART Cables. The Joint Task Force is serving as a “backbone” for environmental sensors
composed of members from the International Telecom- that can be integrated into the cables. The sensors
munication Union, the Intergovernmental Oceano- can then transmit the data to worldwide research
graphic Commission of the United Nations Educational, centers, providing the world with data on tsunami
Scientific and Cultural Organization (UNESCO/IOC) and earthquake warnings, ocean temperature, and
and the World Meteorological Organization (WMO). ocean bottom pressure.
This section was written by Bruce M. Howe, who is the For instance, earthquakes on the ocean floor
Joint Task Force Chair as well as Professor and Chair of can cause destructive tsunamis; the 2004 Boxing
Ocean and Resources Engineering, University of Hawaii Day tsunami in the Indian Ocean caused billions
at Manoa. Science Monitoring And Reliable Telecom- of dollars of damage and over 240,000 fatalities.
munications (SMART) cables are those cables that have By integrating sensors into cable systems that can
additional environmental sensors added for the purposes detect both the causal earthquake and the resulting

SPECIAL MARKETS
Figure 64: Typical SMART

Cable Design
tsunami wave while enabling the transmission of the International Telecommunication Union (ITU),
the sensor data to land-based early warning centers, the Intergovernmental Oceanographic Commis-
managers can receive advance warning long before sion of the United Nations Educational, Scientific
the resulting tsunami arrives on land. and Cultural Organization (UNESCO/IOC), and
False tsunami warnings pose their own problem. the World Meteorological Organization (WMO)
Since the U.S. tsunami warning system began in established the Joint Task Force (JTF) on SMART
1949, 75% of the evacuations of Hawaii’s coastlines cables in late 2012.
have been unnecessary, with direct and indirect JTF is now advancing the SMART cables ini-
costs of millions or tens of millions of dollars per tiative (see (Howe, et al., 2019)). This article will
event. This is also true for other coastlines in the discuss the technical, financial, legal and implemen-
Pacific basin and elsewhere. tation aspects of SMART cables as well as the work
In addition to the benefits of tsunami warnings, being done to bring the overall initiative to fruition.
sensors on cables can provide crucial data on ocean
temperature and deep ocean circulation, both of 7.2.2 SMART FUNDAMENTALS
which have global impact. Measurements of ocean The fundamental premise of SMART cables is
bottom pressure—which provides information on integrating environmental sensors into commercial
the flow of water in the ocean—and temperature submarine telecommunications cables. The crucial
will help researchers understand and predict how objectives are: (a) to obtain long-term ocean bottom
sea levels will rise as the world warms and land ice measurements of temperature (to measure climate
melts into the oceans. These measurements will also trends), pressure (to capture sea level rise, ocean
contribute to a better understanding of ocean circu- currents, and tsunamis) and seismic acceleration
lation patterns such as the deep currents transport- (for earthquake and tsunami warning, and seismolo-
ing heat between the polar regions, which are now gy), (b) to have little or no impact on the operation
known to be a major cause of Antarctic ice melting. of the telecommunications system that hosts the
The concept of integrating environmental sensors sensors, (c) to require no special handling or deploy-
into commercial submarine telecommunications ment methods, and (d) to be sufficiently reliable
cables is called Science Monitoring And Reliable that 95% of all sensors operate for a minimum of 10
Telecommunications (SMART) cables—an initia- years with no maintenance.
tive led by the Joint Task Force (JTF) sponsored by SMART cables would make use of the global sub-
three United Nations agencies. Although the con- sea fiber optic network. More than 1.2 million km of
cept has existed in some form for several decades, cable and 400 independent subsea cable systems all

over the world are operated, maintained,
and periodically renewed by the telecom-
munications industry. Although it is im-
practical to place sensors into deployed
cables, sensors can be introduced during
manufacturing into the repeaters on new
cables (see Figure) during replacement
or expansion operations, which occur
on 10-25 year time scales. This provides
the opportunity to introduce sensors on
new cable systems on this time frame to
slowly build an enduring, sustained ocean
and earth observing network.
Figure. Repeater housing showing two
possible sensor mounting locations: (a)
on the end of repeater housing under the
bell housing or (b) in an external pod.
Seismic accelerometers are mounted
inside the pressure housing (c).
7.2.3 PAST TO PRESENT

The GeO-TOC system, installed in node has multiple sensors within, connected in-line
1997 midway between Guam and Japan using the with the telecommunications cable (but no telecom
retired TPC-1 communications cable, anticipated traffic, just data). The result provides evidence that
the development of SMART cables by almost two SMART cables are close to being feasible using
decades yet included all essential SMART cable currently available technology.
features: a three-axis accelerometer, pressure sensor, Another in-line ocean bottom sensing system
and precision thermometer. These were incorpo- with pressure and acceleration was developed by
rated into an in-line pressure housing which was de- the University of Tokyo (Shinohara, Yamada, Sakai,
ployed from a cable ship in a conventional manner. & Shiobara, 2016). In 2015, this was deployed off
In the first decade of the 2000s, attention shifted Sanriku with three nodes and a length of 105 km.
to regional scale observatories such as NEPTUNE/ This simpler and lower cost design was commercial-
ONC in Canada, DONET in Japan, and the OOI ized using an industry standard repeater housing; it
Regional Cabled Array (RCA) in the United States. could be adapted as an initial demonstration and/or
Bespoke components were developed for intercon- be a starting model for a SMART repeater.
nection, power delivery, and communications. Sen-
sors are installed on separate platforms connected 7.2.4 NEW DEVELOPMENT
to the nodes using ROVs. Each of these employed As described, many of the necessary SMART
commercial telecommunications cable and repeat- system attributes are already developed or “close”.
ers for the backbones. More work needs to be done on high voltage iso-
Following the Tohoku earthquake and tsunami lation, serial add/drop communications, reduced
of 2011, Japan undertook rapid development of the size and power, sensor integration, and overall
S-net system incorporating many of the functions guaranteeing fail-safe operation of the repeater in
essential to a SMART cable, with 150 observation the event sensor faults. These are very much sur-
nodes along 5,700 km of cable divided into six inde- mountable engineering tasks, though all of must be
pendent subsystems (Kanazawa, et al., 2016). Each done in a manner that is consistent with the 25-year

SPECIAL MARKETS
expected operating life and 8,000-m deployment The submarine cable community can assist this
depth of a commercial repeater (Lentz & Howe, process by developing specifications and stan-
2018). In the initial wet demonstration and/or pilot dardized components to be included on telecom-
systems, requirements can be relaxed but the ulti- munications cables. This will provide all parties
mate goal is to have system suppliers fully integrate involved with a clear understanding of the capa-
SMART capability into their qualified proprietary bilities of dual-purpose cables, thus reducing the
designs, so a prospective buyer can simply check potential for concerns by otherwise cooperative
a box to select it as a system option; (Webster & nations that such projects could stray from their
Dawe, 2019), discuss this from a buyers perspective. stated scientific goals.
Successful operation of shorter SMART cables
will be needed before sensor functions can be in- 7.2.6 COSTS
troduced into the longest cables. Regional systems Based on a 10-year life cycle for cables (a quite
with lengths of a few hundred km up to several conservative assumption), we calculate that an
thousand km are ideal for the inclusion of sensor eventual steady state of 30 systems comprising 160
capabilities because these systems have sufficient Mm of cables (4 times around the world), and 2000
design margin and can usually accommodate addi- SMART repeaters with sensors would cost $40M/
tional fibers to carry sensor data. Ocean spanning year. This equates to 3 systems per year and 200
cables of more than 6,000 km are more challenging repeaters, with each repeater costing about $200K
and will be for the future. and $20K/year. By sharing the submarine cable
Data from SMART cables are expected to be infrastructure and associated costs with telecom,
open and freely accessible. Data generated by SMART cables can collect sustained, globally dis-
SMART cable sensors will be transmitted to a shore tributed, and fixed in space, ocean observation data.
station where it may be stored in raw form, pro- With longer timelines and a broader range of
cessed, and transmitted onward to data repositories, goals, government-backed cables represent a good
national agencies, and academic institutions. opportunity for SMART cables. For example, the
Tsunami Act 2017 gives NOAA the responsibility
7.2.5 LEGAL OUTLOOK to consider “…integration of tsunami sensors into
Because SMART cables combine science and tele- Federal and commercial submarine telecommuni-
communications into a single cable, they do not fit cation cables.” Early engagement with potential
neatly into existing international legal frameworks. projects is important for ensuring that future
SMART cable projects will be carried out in the cables’ configurations are compatible with SMART
exclusive economic zones of individual cooperating requirements and to arrange funding. Multilateral
nations—the coastal regions of an individual nation development banks are a possible source of fund-
over which the nation has legal jurisdiction—and the ing, as they fund connectivity projects between
high seas. As the dual-use cables concept turns from developing countries as well as projects related to
development to deployment, the collective inter- climate and disaster mitigation; they see the advan-
national understanding of their legal status will be tage of “two for the price of one.”
refined based on concrete examples, routes, and uses. For comparison, the US NOAA DART Tsunami
JTF pilot projects are explicitly intended to buoy program budget is $27M/year, comparable to
validate the technology and business case for du- the incremental cost for a SMART cable that spans
al-purpose cables and create a climate where ocean- the Pacific region where most of the US DART
ographic sensor-enabled telecommunications cables buoys are located. The Argo program, with 4,000
are a recognized part of maritime infrastructure. In expendable floats, costs about $32M per year to
doing so, they will habituate the industry to such maintain. The NSF funded OOI cost approximately
projects and reduce the perceived legal and business $400M for the fabrication phase, with operating
risk of this concept. costs of approximately $44M annually. NOAA esti-

SPECIAL MARKETS
mates it spends approximately $430M annually to protection needs but important societal needs and
operate and maintain its ocean, coastal, and Great development goals.
Lakes observing systems. Indonesia is adopting SMART cables as an ele-
ment of their cable-based tsunami warning system
7.2.7 ONGOING AND FUTURE PLANS that is currently under design. In this case, the
The first deployment is anticipated to be a geographical extent of the Indonesian archipelago
demonstration system that does not interface with dictates sharing infrastructure and cost with tele-
the telecommunications portion of a cable, but com in order to obtain the necessary spatial cover-
instead focuses solely on sensor functionality. Off- age at an affordable cost.
the-shelf components may be used to reduce de- Other cables with SMART/science capability are
velopment costs, even if these are physically larger being considered: for cables along Latin America
than would be for a fully developed SMART cable. and in the Caribbean, and from Chile to Asia (the
The demonstration system could be deployed as a InterAmerican Development Bank is supporting
branch of a commercial cable system, connected to efforts to include SMART capability) and even Ant-
an existing cabled observatory, or reuse a portion arctica; and across the Arctic Ocean.
of an out-of-service cable. The National Institute As the phased implementation of SMART cables
of Geophysics and Volcanology (INGV) obtained progresses, confidence will grow and deployment
funding in June 2019 to deploy a wet demo on their around the globe will become ubiquitous.
Catania ocean observatory.
Following the demonstration system, full develop- 7.2.8 CONCLUDING REMARKS
ment of SMART-enabled repeaters must be under- We have presented an overview of the Joint Task
taken by one or more system suppliers. The resulting Force (JTF) on SMART cables and its activities. The
repeater design will undergo qualification tests and sea future will likely see ITU supporting this communi-
trials after which it will be available for use in commer- ty with international standards (ITU-T Recommen-
cial telecom systems. An initial pilot system is being dations) to ensure interoperability and to reduce
planned between New Caledonia and Vanuatu. It is costs by using common specifications worldwide.
explicitly SMART, 300-km long, with two repeaters. SMART cables are already technically feasi-
A majority of the required funding has been obtained ble, and we are in the process of proving this via
as part of a French innovation project (Radio New demonstration and pilot systems. Their estimated
Zealand, 2019). Additional funding is being sought. costs are similar to those of existing ocean observ-
After these confidence-building measures, de- ing systems. Their benefits to society are clear: in
ployment of a major SMART cable system will take the short term, improved tsunami warning sys-
place. A regional cable, ~2,000 km in length and tems can save lives. In the long term, monitoring
containing ~20 repeaters, is ideal as it is manageable the ocean will help mitigate the effects of climate
both in scope and cost. Successful operation on this change. The submarine cable community has a
scale will provide a conclusive demonstration of chance to contribute with the JTF to this global
the value of SMART cables and ensure they have effort by proactively supporting the effort, sur-
no impact on the telecommunications performance mounting challenges as they arise, within the UN
of the cable system. A system being proposed by Decade of Ocean Science for Sustainable Devel-
ANACOM (Telecom regulatory agency, Portugal) opment and taking action to advance societal goals
connecting Lisbon-Azores-Madeira-Lisbon ex- within the UN Global Compact.
plicitly includes optical fiber sensing and SMART If we don’t act now, before we know it, we will
capability. Such a system will convert the currently be facing global temperature rises above 2 degrees
“deaf, dumb and blind” cables into environmentally Celsius and meters of sea level rise. There will be no
aware systems that can proactively mitigate man- turning back. These are real dangers that will forever
made and natural hazards serving not just cable change our world. There is no excuse for inaction.

OUT
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INDUSTRY-LEADING ANALYSIS
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8
REGIONAL
MARKET
ANALYSIS
AND
CAPACITY
SUBMARINE TELECOMS
INDUSTRY
REPORT 19|20
W
ithin the submarine cable in- On top of this unique challenge, Region-
dustry, Regional Systems are at al Systems are also a very interesting and
the same time a unique chal- strong barometer of our global submarine
lenge and a strong indicator of cable market evolution from a geographic
the tendency of the global market. and an economic perspective.
Because they connect various and different Geographically, the impact of regional sys-
countries and markets, they bring much tems isn’t indeed limited to the region itself. In
more complexity and problems to particular, the success of a regional system may
be solved than any single point- surely affect the regions role in the larger cable
to-point system. This is one of net. As an example, this is particularly obvious
the main reasons why they with the whole European Nordic region with
present a unique and difficult more and more projects being announced and
challenge. developed in the last months in Denmark and
Each country is obvious- Norway thanks to those implemented previ-
ly different with its spe- ously in Finland. And one can already antic-
cific population, habits, ipate that this will help to contribute to the
social norms, services future development of the Arctic region.
needed and specific ex- Economically, because most of the Region-
pectations from any new al Systems are at the moment developed and
submarine cable landing in proposed by the Content Providers which are
the country. looking for connecting their own Data Cen-
On top of that, laws are never ters, they fully confirm this trend of our in-
the same from one country to anoth- dustry that has been in place for the last five
er and getting a permit for each landing years. Any change of this trend will certainly
of a regional system is always a new adven- be seen through a change in the ownership
ture. To bring more complexity, the laws may and approach of the Regional Systems.
change during the lifetime of the project and In summary, each region is unique, and a
the politicians and governments in power in Submarine Cable System will not only affect the
each respective country may also change. region it belongs to but others as well. Then,
But the markets that the new systems are compiling the following studies of the regional
supposed to link are also subject to poten- systems will provide the trends for the Subma-
tial big changes. The local economy of each rine Cable System Industry in its entirety.
country may flourish or not and accordingly,
the demand in data to be transferred may PATRICK FAIDHERBE
vary. As an example, some systems have Managing Partner
indeed been recently promoted on the basis AQEST
of a similar growth for each of the market
they were connecting but as one of this
market was suddenly hit by an economic and
financial crisis, the whole business model of
the system was suddenly drastically modified
and had to be reconsidered accordingly.

8.1 TRANSATLANTIC
REGIONAL MARKET
REGIONAL SNAPSHOT:
 Current Systems: 18
 Capacity: 697 Tbps
 Planned Systems: 4
 Planned Capacity: 490 Tbps

8.1.1 CURRENT SYSTEMS 25
Growth on the Transatlantic route sky-
rocketed from the late 1990s through 2003.
After a 12-year drought, the Transatlantic 20
region has seen a new cable every year for
the last 5 years. (Figure 66)
Two major causes of the development
slowdown were a glut of capacity and the 15
financial crash of the early 2000s which was

brought on by overinvestment in the sub-
marine cable industry. With investment on 10
the rise again, and systems aging out in the
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Transatlantic route, new systems are begin- Figure 66: Systems in Service -Transatlantic
ning to come online. The MAREA system
installed in 2017 tapped into the exploding
demand from OTT providers, with one of the key Mid-Atlantic of the United States and across the
selling points being massive bandwidth available — South Atlantic, the Transatlantic route has enjoyed
160 Tbps potential — on a modern submarine fiber steady growth.
system on a route full of aging cables. Additionally,
this cable provided an alternative path to increase 8.1.2 FUTURE SYSTEMS
route diversity, and more directly connect Europe During the last boom of Transatlantic system de-
to important data centers in Ashburn, Virginia. The velopment, the average system length was roughly
SACS and SAIL cables installed in 2018 continue 12,000 kms with most systems taking similar routes
this push for alternative routes and connect South between Europe and the US.
America and Africa directly. With the rise in demand for low latency sys-
Due to increasing capacity demands along the tems, planned systems for 2019 and beyond aver-
north Transatlantic between the New York and age roughly 8,000 kms based on their announced
Europe, and the desire for new connections to the routes. (Figure 67) The change in customer re-
Table 3: Transatlantic Systems, 2001-Present
RFS YEAR SYSTEM CAPACITY (TBPS) LENGTH (KMS)

2001 FA-1 North/South 24 12820
2001 GTT North/South 25 12111
2001 TAT 14 9.38 15453
2001 TGN Atlantic 50 12670
2003 Apollo 64 12700
2015 GTT Express 53 4600
2016 AEC-1 78 5536
2017 MAREA 160 6600
2018 SACS 40 6300
2019 HAVFRUE/AEC-2 108 8179

REGIONAL MARKET ANALYSIS: TRANSATLANTIC
quirements from purely bandwidth to 250

bandwidth and low latency has driven
developers to plan routes averaging 29
percent shorter than previous systems 200
from the early 2000s, with proposed
Thousands of KMS
systems claiming to drop up to 40ms
latency due to being shorter by an aver-
150
age of 4,000 kilometers in addition to
providing much needed infrastructure.
However, some of the proposed South
100
Atlantic systems are considerably larger
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
than the more traditional Transatlantic
systems and will address different needs Figure 67: KMS Added - Transatlantic
than the region is used to.
There are currently four planned
systems set to be ready for service for the period
2020-2022 in the Transatlantic region. Only one
25%
of these planned systems are along the northern
route between Europe and the United States,
further illustrating the desire to move away from No
traditional Transatlantic routes. There are two sys-
tems planned between Brazil and Africa and one Yes
system planned between Brazil and Europe. Brazil
continues to work on getting its own international 75%
connections without going through the United
States, while tech giants such as Microsoft and
Facebook want connections between Europe and
Figure 68: Contract in Force – Transatlantic, 2020-2022
the Ashburn, Virginia data centers.
Three-fourths of planned Transatlantic systems
have achieved the all-important CIF milestone.
(Figure 68) This indicates healthy growth in the re-
gion and solidifies the idea that new cables and new
routes are highly desired.
Table 4: Transatlantic Planned Systems

2020 Dunant - 6400
2020 EllaLink 72 10119
2020 SABR 60 6200
2021 SAEx1 72 14720

ISO 9001:2015 certified designer and impl
for commercial, governmen
THROUGHOUT
lementer of submarine fiber cable systems
ntal and oil & gas companies
T THE WORLD.
8.2 TRANSPACIFIC
REGIONAL MARKET
REGIONAL SNAPSHOT:

8.2.1 CURRENT SYSTEMS
25
The Transpacific market has been like
that of the Transatlantic in recent years,
showing relatively little growth year-up- 20
on-year. New systems have been added
sporadically, however most of the capac-
15
ity increases have been from upgrades.
Lately, OTT providers and those seeking
route diversity have been driving new 10
system growth.
From 2002-2015, only four systems
5
were added to the region. (Figure 69)
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
The industry crash of the early 2000s
certainly played a large part in this lim- Figure 69: Systems in Service - Transpacific
ited growth, but the fact that there had
been no new systems on the Transpacific
routes from 2010-2015 is largely due to existing Transpacific systems. As a result, there is a potential
systems being able to upgrade their capacity for explosion of growth possible through 2022.
relatively little cost and push potential competitors
out of the market. 8.2.2 FUTURE SYSTEMS
As with the Transatlantic market, until very No systems were added at all to this region from
recently the Transpacific has been almost fully 2010-2015. Since then, the region has experienced
saturated, with little room for growth other than steady growth with at least one system added each
route diversity and cutting down on existing latency. year for the period 2016-2019 and eight systems
Lately, however, new systems are being explored in a planned through 2022.
similar manner to the Transatlantic with the region The amount of cable in the region nearly tripled
seeing at least one new cable every year since 2016. during this period of growth and has seen over
Demand from OTT providers and desire for route 120,000 kms of cable added since then. (Figure 70)
diversity are the primary drivers behind these newer Average system length in the region is just under
Table 5: Transpacific Systems, 2001-Present

2008 TPE 25.6 16163
2009 AAG 28.8 20547
2010 Unity 76.8 9486
2016 Faster 60 9000
2017 SEA-US 20 15400
2018 Hawaiki 67 15000
2018 NCP 80 13618
2019 JGA North 24 9500
2019 PLCN 144 12900

REGIONAL MARKET ANALYSIS: TRANSPACIFIC
16,500 kms, owing to the Transpacific 400

region having some of the longest routes
350
in the world. Between the massive
systems required to span the region, and 300
the easy availability of cheap capacity
Thousands of KMS
upgrades, the historically static nature 250
of the region comes as no surprise. Re-

200
cently, however, there has been a notice-
able uptick in system activity. 150
There are currently eight planned sys-
100
tems set to be ready for service for the
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
period 2020-2022 and only 25 percent of
them have achieved the CIF milestone – Figure 70: KMS Added - Transpacific
a far cry from last year’s 56 percent CIF
rate. (Figure 71) Nearly all these systems
are trying to bring large capacity increases along
their respective routes, but many of them are di- 25%
rectly competing along the same or similar routes.
With the average system length of all planned
systems for the Transpacific market remaining No
around 16,500 kilometers, shorter cable lengths
are not necessarily possible for systems that are Yes
exploring new routes.
75%
These new systems provide a bonus of increased
route diversity – especially along the southern
part of the region. A few of the systems that are
not yet CIF are backed by OTT providers. This
Figure 71: Contract in Force – Transpacific, 2020-2022
takes them out of direct competition with other
planned systems and removes some of the financial
risk from having to sign on outside investors.
Table 6: Transpacific Planned Systems

RFS Year System Capacity (Tbps) Length (kms)
2020 BtoBE 108 16000
2020 HKA 80 13000
2020 Jupiter 60 14000
2021 SAPL 30 17600
2021 Southern Cross NEXT 72 12500
Asia South America Digital
2022 Gateway - 25000
Australia - New Zealand -
2022 Chile - 12000
2022 H2 Cable - 21700

8.3 AMERICAS
REGIONAL MARKET
REGIONAL SNAPSHOT:

80
Characterized by steady growth since
the early 1990s, the Americas region has 70
continued to enjoy frequent additions
over the last 10 years – going from 34 60
cables in 2008 to 50 cables in 2018.
After ten years of steady growth, with 50
an average of about two systems being 40

ready for service per year, the region is
currently undergoing another boom in 30
development with fours systems im-
plemented in 2017, five systems in 2019 20
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
and eight additional systems planned to
be ready for service by the end of 2020. Figure 72: Systems in Service - Americas
(Figure 72)
8.3.2 FUTURE SYSTEMS and an 8 percent increase in 2019. By and large, the
Unlike most of the other markets, the Americas region has seen steady growth until 2017 when an
region has consistently observed medium to high unprecedented 12.5 percent growth rate was ob-
levels of growth. served. Looking forward, this higher than average
Since 2005, new cable development has consis- growth rate will not continue through 2021, with
tently added an average of just over 4 percent more the number of planned kilometers for 2020 only
kilometers per year. Breaking from the average, resulting in a 3 percent increase in kilometers added
there was a 7 percent increase in 2009, an 11 per- and no new systems currently planned for 2021 or
cent increase in 2014, a 12.5 percent increase in 2017 later. (Figure 73)
Table 7: Americas Systems, 2010-Present

2014 AMX-1 50 17800
2015 PCCS 60 6000
2016 Guantánamo Bay Cable - 1500
2017 Junior - 390
2017 Monet 60 10556
2017 Seabras-1 72 10750
2017 Tannat 90 2000
2019 ARBR 48 2700
2019 Austral 16 2900
2019 Crosslake Fibre - 58
2019 Curie - 10000
2019 Guantánamo Bay Cable 2 - 1200

REGIONAL MARKET ANALYSIS: AMERICAS
There are currently seven systems 250

planned for 2020 though only 29 percent
of those cables have achieved their CIF
milestone. (Figure 74) Additionally, there 200
are no cables planned for 2021 and be-
Thousands of KMS
yond. The last few years have been rela-
tively busy compared to historical trends
150
for the Americas region and may have
satisfied infrastructure needs for now.
With a development rate that has re-
100
mained steady since 2001, productivity in
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
2020 will be higher than historical norms
should most of these planned systems Figure 73: KMS Added - Americas
come into force. However, the next 12-18
months 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. 29%
No
Yes
71%
Figure 74: Contract in Force – Americas, 2020-2022
Table 8: Americas Planned Systems

2020 AU-Aleutian - 1456
2020 Galapagos Subsea System - 1000
2020 Hudson Bay Link - -
2020 Kanawa 10 1746
2020 Ketchikan - Prince Rupert - -
2020 Malbec - 2500
2020 Tannat Extension 90 -
2020 WALL-LI - 95

8.4 AUSTRALASIA
REGIONAL MARKET
REGIONAL SNAPSHOT:

80
The AustralAsia market has been char-
acterized by a massive amount of growth 70
in a relatively short amount of time.
60
Since 2007, it has been one of the busi-
est regions in the entire world – though 50
recently it has slowed down.
40
Growth from 2001 to 2005 was neg-
ligible, and while there was a moderate 30
amount of activity in 2006, the real 20
growth spurt occurred from 2008 to
2009. (Figure 75) The biggest factor 10
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
contributing to growth in the region is
emerging markets in Southeast Asia, with Figure 75: Systems in Service - AustralAsia
countries such as Indonesia, Singapore
and Hong Kong being the recipients of
new data center growth as mentioned in section OTT provider driven systems promises to sustain
1.2.3 of this report. growth in the region for the foreseeable future. The
The industry crash of the early 2000s certainly region should continue to enjoy this steady growth
influenced the later timing of the region’s boom, for at least the next year as all four systems planned
but the rising markets of Southeast Asia and their for 2020 are likely to be implemented.
ardent desire for international connectivity largely It is important to note that at this time last year,
overrode such concerns. The widespread adoption eight systems were planned for the next two years
of mobile and cloud services throughout the region in the AustralAsia region compared to only four sys-
combined with the recent surge of data center and tems for 2020 and none for 2021 and beyond. This
Table 9: AustralAsia Systems, 2014-Present

2016 APG 54 10400
2017 ATISA 7.2 280
2017 MCT 30 1425
2017 SKR1M 6 3500
2017 Tasman Global Access 20 2300
2018 ASC 40 4600
2018 Hawaiki 67 15000
2018 SEAX-1 - 250
2018 Tui-Samoa 8 1470
2019 Indigo Central 36 4850
2019 Indigo West 36 4600
2019 NATITUA 10 2500

REGIONAL MARKET ANALYSIS: AUSTRALASIA
reinforces the view that the AustralAsia 350

region is beginning to slow down from its
historically rapid growth. 300
8.4.2 FUTURE SYSTEMS 250
Thousands of KMS
After the huge growth spurt from
2008 to 2009, the AustralAsia market 200
has seen a steady amount of growth in

the amount of cable added per year. 150
Since 2010, the region has seen an

100
average of 9,000 kms added per year,
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
with an average system length of 5,000
kilometers. The next year – 2020 – may Figure 76: KMS Added - AustralAsia
be one of the last significant opportuni-
ties for growth in the region as there are
currently no systems planned for 2021 and beyond.
As submarine cable systems typically require a 25%
two-year development cycle from the time they are
announced, it is unlikely many systems will be an-
nounced for 2021 by the end of this year. (Figure 76) No
There are currently four planned systems set
Yes
to be ready for service for the period 2020-2021.
Two of these cables are relatively smaller projects,
connecting island nations to major hubs while the 75%
other cables span large swathes of the region or are
back by OTT providers. Of these planned systems,
75 percent are considered CIF. (Figure 77) This
Figure 77: Contract in Force – AustralAsia, 2020-2022
healthy CIF rate indicates that the growth rate for
the region’s immediate future may be sustainable.
However, considering how busy the industry in
general is through 2020, some of these systems may
be delayed due to supplier and installer availability
constraints. The remaining system that is not yet
CIF is an OTT backed system and will almost cer-
tainly be completed.
Table 10: AustralAsia Planned Systems

2020 Coral Sea 20 4700
2020 HK-G 48 3900
2020 Manatua 10 3600
2020 SJC2 144 10500

8.5 EMEA
REGIONAL MARKET
REGIONAL SNAPSHOT:
 Capacity:817 Tbps

150
Characterized by steady growth since
the early 1990s, Europe, the Middle East
and Africa have all seen an increase in
development over recent years. This has 120
been one of the most consistent growth
regions in the world, owing to its size as
well as the important “crossroads” of the 90
Mediterranean Sea and the Suez Canal.
While system count has remained
relatively steady – with an average of
60
3 systems ready for service every year
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
since 2002 – the actual lengths of these
systems can vary. (Figure 78) The primary Figure 78: Systems in Service - EMEA
factor behind these growth spurts are the
SEA-ME-WE systems, as well as large
coastal systems ringing Africa. In actual number the steady system count, inter-regional projects like
of systems accomplished, the EMEA region is the this cause a huge surge in kilometers installed with
most consistent region in the world. It has a growth 2010 to 2012 seeing the most recent growth spurt
pattern that is seemingly immune to the industry’s for the region.
boom and bust pattern seen over the past 15 years.
The EMEA region sees a consistent, annual addi- 8.5.2 FUTURE SYSTEMS
tion of smaller regional systems. These complement As mentioned previously, the EMEA region is
the large, multi-region projects like SEA-ME-WE, uniquely characterized as a region of steady activity,
ACE, EIG and WACS to name a few. These large with bursts of highly ambitious, region-spanning
projects span multiple regions of the world, rath- systems every few years.
er than smaller, inter-country routes and are the The rate of kilometers added per year shows
biggest projects the industry tackles. Each system an average increase of 6 percent annually. Recent
of this kind comes in at well over 10,000 kms per bursts of 28 percent, 15.5 percent and 18 percent
route — sometimes beyond 20,000 kms. Despite have been observed in 2010, 2012 and 2017, respec-
Table 11: EMEA Systems, 2014-Present

2015 NCSCS 12.8 1100
2016 C-Lion 1 144 1172
2017 AAE-1 40 25000
2017 Ceiba-2 8 290
2017 Greenland Connect North 4.8 680
2017 SEA-ME-WE 5 24 20000
2019 Eastern Light - -
2019 Orval 20 560

REGIONAL MARKET ANALYSIS: EMEA
tively. However, the last 5 years have seen 350

a lower average annual increase of only
3.8 percent. While 2020 and 2022 could 300
add up to 7.5 and 3.7 percent more cable
2021 is projected to add less than half a 250
Thousands of KMS
percent. (Figure 79) Unlike the Ameri-
cas and AustralAsia regions, the EMEA 200
region is not looking at a considerable

drop-off in system activity after 2020. 150
There are currently nine systems

100
planned to be ready for service for the
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
period 2020-2022. Currently, 44 percent
of these systems have achieved the CIF Figure 79: KMS Added - EMEA
milestone. (Figure 80) With nearly half
of these nine systems being considered
viable now, the initial impression positive. Unfor-
tunately, the EMEA region continues to be rife
with economic uncertainty and political instability,
casting a cloud over any prospective projects. 44%
No
56%
Yes
Figure 80: Contract in Force – EMEA, 2020-2022
Table 12: EMEA Planned Systems

2020 BlueMed 240 1000
2020 DARE1 36 4747
2020 Eagle 120 16650
2020 Englandcable 240 700
2020 Equiano 120 -
2021 IFC-1 120 492
2021 Orient Express - 1300
2022 PEACE 60 12000
2022 Simba - -

8.6 INDIAN OCEAN
PAN-EAST ASIAN
REGIONAL MARKET
REGIONAL SNAPSHOT:

35
The Indian Ocean Pan-East Asian
region has been on a steady path of 30
development since the boom following
the submarine cable industry downturn 25
in the early 2000’s. It has enjoyed mostly
20
consistent growth since 2003 despite
its small size, largely due to it being an 15
important crossroads region between the
busier EMEA and AustralAsia regions. 10
The region has experienced periods of
5
rapid development, followed by a brief
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
period of dormancy. The years of growth
have been largely driven by trans-region- Figure 81: Systems in Service - Indian Ocean Pan-East Asian
al systems such as SEA-ME-WE 3, 4 and
5, FLAG, Falcon and AAE-1 to name a
few. This has resulted in 3 distinct development tems in 2017, and the five systems planned for the
spikes in 2006-2007, 2009 and 2015-2017. (Figure 81) period 2020-2022 potentially add nearly 44,000
Local development is largely small systems linking kilometers of cable. (Figure 82) With Australia look-
India east to Indonesia or west to the Middle East ing for more route diversity from its western coast
and beyond, providing new connections for the and an increasing desire for connectivity between
countries that ring the Indian Ocean. Asia and Europe, this steady growth could contin-
ue beyond 2021. Additionally, OTT providers are
8.6.2 FUTURE SYSTEMS exploring routes from the United States to India
With two new systems added in 2017 none in 2018 and will potentially bring more system development
and 4 systems planned through 2021, new system to the region.
development will continue at a sporadic pace. This Two of the systems planned through 2022 in this
continues to follow the feast-or-famine style of sys- region have achieved the CIF milestone. (Figure 83)
tem development that is the historical norm. Two systems are planning to link South Africa to
The region enjoyed the addition of 2 major sys- India, two other routes are smaller, intra-regional
Table 13: Indian Ocean Pan-East Asian Systems, 2010-Present

2011 EIG 3.84 15000
2011 MACHO - -
2012 LION-2 1.28 3000
2012 SEAS 2000
2016 BBG 55 8040
2017 AAE-1 40 25000
2017 SEA-ME-WE 5 24 20000
2019 MARS 16 700

REGIONAL MARKET ANALYSIS: INDIAN OCEAN PAN-EAST ASIAN
systems while the last system seeks to 300

provide yet another submarine cable
between Singapore and Europe. Business
250
cases for these systems may be difficult
to prove, hampering efforts to secure
Thousands of KMS
funding. While these systems would 200
expand route diversity in the region two

of them are competing with each and it 150
is very likely at least one of these systems
will not hit their target RFS date.
100
05
06
07
08
09
10
11
12
13
14
15
16
17
18
19
20
21
22
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
20
Figure 82: KMS Added - Indian Ocean Pan-East Asian
40%
No
60% Yes
Figure 83: Contract in Force - Indian Ocean Pan-East Asian,

2020-2022
Table 14: Indian Ocean Pan-East Asian Planned Systems

2020 IOX 54 8850
2020 METISS 24 3000
2021 Orient Express - 1300
2021 SAEx2 72 13900
2022 Eagle 120 16650

8.7 POLAR
REGIONAL MARKET
REGIONAL SNAPSHOT:

REGIONAL MARKET ANALYSIS: POLAR
8.7.1 CURRENT SYSTEMS 8.7.2 FUTURE SYSTEMS

The first true Polar submarine fiber system in These systems are focused on routes in the far
industry history was installed in 2017. Previous north of Canada, linking up local communities or
systems, such as Svalbard, had only ever brushed the bridging the gap between Europe and Asia. Arctic
Arctic region. At 1,200 kilometers over 6 landing Connect is an attempt to link Europe to Japan by
points, Quintillion Subsea Phase 1 marked the first going over top of Russia.
successful and fully Arctic submarine fiber system One of the main goals for Polar systems connect-
in the world. ing Europe to Asia is to dramatically reduce exist-
Interest in Polar projects has been at an all- ing latency. Currently, data must either go through
time high the past few years, as cable developers the United States, or through the Suez Canal and
are looking to take advantage of the dramatically Indian Ocean. This has required systems totaling
shorter routes that can be achieved through the at least 20,000 kilometers in the past. However,
Arctic Circle. The Quintillion Subsea system has future Europe to Asia Arctic routes are planned
proven that a fully Polar system can be done for for about 10,000 kilometers — potentially cutting
future systems that look to tackle this particularly latency in half. Additionally, systems exploring Arc-
difficult region. tic routes avoid the troubled Middle East region
Polar systems have particular challenges to over- and circumvent potential privacy concerns in the
come during their development cycle, and only have United States.
small windows of time throughout the year during
which work can be accomplished. This both extends
the development timeline and increases the cost.
Table 15: Polar 2017-Present

2017 Quintillion Subsea 30 1200
Table 16: Polar Planned Systems

2021 Arctic Connect 30 10500
2021 EAUFON 30 1800
2021 Katittuq Nunavut 2400

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AFTERWORD
Kieran Clark
T
he OTT providers such as Amazon, Face- nologies could prove attractive enough to build new
book, Google and Microsoft are completely systems on routes with cables less than 10 years old.
transforming the submarine cable market. Lit capacity has continued to stay within histor-
They are no longer reliant on Tier 1 network op- ical norms with some key routes even observing an
erators to provide capacity and are increase in lit capacity percentage. This
simply building the necessary infra- means that despite new cables being
structure themselves. This is likely to built with huge amounts of capaci-
have a long-term impact as the largest ty there is not necessarily a capacity
consumers of bandwidth are essen- overbuild. Many of the OTT backed
tially exiting the market and creating systems – where a huge chunk of this
their own network. new capacity is coming from – are not
Oil & Gas companies are increas- selling capacity to the open market
ingly making a push for fiber con- which should further reduce fears of
nected platforms as they continue a capacity glut. In fact, the lack of a
to adopt new technologies and mod- sizeable chunk of new capacity being
ernize their production process to added to the global network could
increase productivity and reduce their prompt traditional telecoms carriers to
operating costs. This is made possible using the re- build additional systems themselves to keep up with
liable, high bandwidth connectivity that only fiber their growing capacity needs.
systems can provide. Close cooperation between As always, the ability to predict the future of this
submarine cable suppliers and offshore Oil & Gas industry is tenuous at best. Submarine telecoms have
companies will be necessary in order to develop traditionally had a boom and bust cycle resulting in
cutting edge networks that can meet both opera- high year-to-year volatility. While there are numerous
tional and economic requirements – all of which indicators that point towards healthy growth for the
will provide additional business opportunities to next 18 months even a slight push in the wrong direc-
the submarine fiber industry. tion can have a massive impact. Political disputes like
The submarine fiber market continues to grow the recent Huawei concerns with the United States are
through 2020 at a similar rate to that observed a prime example of the kind of situations that could
since 2016. Some regions have begun to slow their negatively impact this industry.
pace with fewer systems planned beyond 2021. While a specific, short-term outlook will always
There are some overbuild concerns considering the be difficult to predict, over the long term the world
rapid pace of system development over the last few will always need more capacity and new cable
years, but many cable systems that are reaching the systems to feed society’s ever-increasing need for
end of their economic and technological lifespans bandwidth.
will need replacing.
As systems continue to age out on established Humbly yours,
routes like New York to London – where 77% of
currently in-service systems are older than 15 years
– there will be several opportunities to replace this
aging infrastructure with modern cable systems.
Kieran Clark is the Lead Analyst for STF Analytics, a division of
Additionally, the advent of new and disruptive tech- Submarine Telecoms Forum, Inc.

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LIST OF FIGURES
Figure 1: Worldwide Map of Submarine Cable Database........................................................................................ 7
Figure 2: Henry Ash Lithograph of Cableship Faraday laying an Atlantic cable in 1884
from Nova Scotia to Ireland, and on to England and France................................................................................. 13
Figure 3: Cableship Goliath.................................................................................................................................... 13
Figure 4: Global Capacity Growth by Region, 2015-2019...................................................................................... 15
Figure 5: Average New System Capacity, 2015-2019............................................................................................. 16
Figure 6: Global Planned Capacity Growth, 2019-2022......................................................................................... 16
Figure 7: Transatlantic Capacity Growth, 2014-2018.............................................................................................. 16
Figure 8: Transatlantic Capacity Growth, 2018-2022.............................................................................................. 17
Figure 9: Transpacific Capacity Growth, 2014-2018............................................................................................... 17
Figure 10: Transpacific Capacity Growth, 2018-2022............................................................................................. 17
Figure 11: Americas Capacity Growth, 2014-2018................................................................................................. 20
Figure 12: Americas Capacity Growth, 2019-2022................................................................................................. 20
Figure 13: Intra-Asia Capacity Growth, 2014-2018................................................................................................. 20
Figure 14: Intra-Asia Capacity Growth, 2019-2022................................................................................................. 21
Figure 15: Monthly Lease Pricing on Major Routes................................................................................................ 21
Figure 16: Median 100G IRU Pricing on Major Routes........................................................................................... 22
Figure 17: New System Count by Region, 2014-2018............................................................................................ 22
Figure 18: KMS Added by region, 2014-2018........................................................................................................ 23
Figure 19: Planned Systems by Region, 2019-2021................................................................................................ 23
Figure 20: Global Contract in Force Rate, 2019-2021............................................................................................ 23
Figure 21: Single vs Multiple Owner Cable Systems, 2009-2019........................................................................... 24
Figure 22: Ownership Type, 2019-2021.................................................................................................................. 24
Figure 23: Financing of Systems, 2009-2019.......................................................................................................... 29
Figure 24: Financing of System, 1987-2019............................................................................................................ 29
Figure 25: Financing of Systems, 2015-2019.......................................................................................................... 30
Figure 26: Distribution of MDB Investment, 2004-2019......................................................................................... 30
Figure 27: Distribution of Multiple Owner Investment, 1987-2019........................................................................ 30
Figure 28: Distribution of Multiple Owner Investment, 2009-2019........................................................................ 31
Figure 29: Distribution of Single Owner Investment, 1987-2019........................................................................... 31
Figure 30: Distribution of Single Owner Investment, 2009-2019........................................................................... 31
Figure 31: System Investment, 1990-2019.............................................................................................................. 32
Figure 32: System Deployment, 1990-2018............................................................................................................ 32
Figure 33: Regional Investment in Submarine Fiber Systems, 2014-2018.............................................................. 32
Figure 34: Number of Systems by Supplier, 2014-2018......................................................................................... 39
Figure 35: KMS of Cable Produced by Supplier, 2015-2019.................................................................................. 39
Figure 36: Future Systems by Supplier................................................................................................................... 40
Figure 37: Systems Installed by Company, 2015-2019........................................................................................... 40
Figure 38: KMS Installed by Region, 2015-2019..................................................................................................... 41

Figure 39: Planned KMS by Region, 2020-2022..................................................................................................... 41
Figure 40: Systems Surveyed by Company, 2014-2018.......................................................................................... 42
Figure 41: Survey Status of Planned Systems, 2019-2021...................................................................................... 42
Figure 42: Total Cable Fault Stories, 2013-2019..................................................................................................... 49
Figure 43: Total Cable Fault Stories, 2011-2019..................................................................................................... 49
Figure 44: Average Time Between Fault and Announcement, 2013-2019............................................................. 49
Figure 45: Average Reported Repair Time in Days, 2013-2019............................................................................. 50
Figure 46: Average Estimated Repair Time by Region, 2011-2019........................................................................ 50
Figure 47: Traditional Club Agreements Map......................................................................................................... 51
Figure 48: Private Maintenance Agreements Map................................................................................................. 52
Figure 49: Cableship Fleet Distribution by Company............................................................................................. 59
Figure 50: Cableship Fleet Distribution by Region................................................................................................. 59
Figure 51: Dedicated Cableship Purpose............................................................................................................... 59
Figure 52: Cableships Added by Year, 1997-2019.................................................................................................. 60
Figure 53: Age Distribution of Cableship Fleet...................................................................................................... 60
Figure 54: Landing Distribution by Region, 2015-2019.......................................................................................... 62
Figure 55: Landing Distribution by Region, 2020-2022.......................................................................................... 62
Figure 56: OTT vs Non-OTT Cable Systems, 2016-2019........................................................................................ 67
Figure 57: Systems Impacted by OTT Providers, 2015-2019.................................................................................. 67
Figure 58: OTT vs Non-OTT Cable Systems, 2020-2022........................................................................................ 68
Figure 59: System Investment Driven by OTT Providers, 2020-2022..................................................................... 68
Figure 60: Enterprise Public Cloud Provider Usage, 2019...................................................................................... 69
Figure 61: Enterprise Public Cloud Provider Adoption Rate, 2017-2019............................................................... 69
Figure 62: WTI and Brent Crude Combined 5-Year Price History, 2014-2019........................................................ 75
Figure 63: Offshore Oil & Gas Systems per Year, 2017-2022................................................................................. 76
Figure 64: Typical SMART Cable Design................................................................................................................. 77
Figure 65: SMART Cable Deployment Costs Over Time........................................................................................ 78
Figure 66: Systems in Service -Transatlantic........................................................................................................... 86
Figure 67: KMS Added - Transatlantic.................................................................................................................... 87
Figure 68: Contract in Force - Transatlantic............................................................................................................ 87
Figure 69: Systems in Service - Transpacific............................................................................................................ 92
Figure 70: KMS Added - Transpacific...................................................................................................................... 93
Figure 71: Contract in Force - Transpacific............................................................................................................. 93
Figure 72: Systems in Service - Americas................................................................................................................ 96
Figure 73: KMS Added - Americas.......................................................................................................................... 97
Figure 74: Contract in Force - Americas................................................................................................................. 97
Figure 75: Systems in Service - AustralAsia.......................................................................................................... 100
Figure 76: KMS Added - AustralAsia.................................................................................................................... 101
Figure 77: Contract in Force - AustralAsia............................................................................................................ 101
Figure 78: Systems in Service - EMEA.................................................................................................................. 104
Figure 79: KMS Added - EMEA............................................................................................................................ 105
Figure 80: Contract in Force - EMEA.................................................................................................................... 105
Figure 81: Systems in Service - Indian Ocean Pan-East Asian.............................................................................. 108
Figure 82: KMS Added - Indian Ocean Pan-East Asian........................................................................................ 109
Figure 83: Contract in Force - Indian Ocean Pan-East Asian................................................................................ 109

LIST OF FIGURES (continued)
List of Tables
Table 1: Recent Multilateral Development Bank Projects....................................................................................... 33
Table 2: KDDI Cable Infinity Specifications............................................................................................................. 60
Table 3: Transatlantic Systems, 2001-Present......................................................................................................... 86
Table 4: Transatlantic Planned Systems................................................................................................................... 87
Table 5: Transpacific Systems, 2001-Present........................................................................................................... 92
Table 6: Transpacific Planned Systems.................................................................................................................... 93
Table 7: Americas Systems, 2010-Present............................................................................................................... 96
Table 8: Americas Planned Systems........................................................................................................................ 97
Table 9: AustralAsia Systems, 2014-Present......................................................................................................... 100
Table 10: AustralAsia Planned Systems................................................................................................................. 101
Table 11: EMEA Systems, 2014-Present............................................................................................................... 104
Table 12: EMEA Planned Systems......................................................................................................................... 105
Table 13: Indian Ocean Pan-East Asian Systems, 2010-Present........................................................................... 108
Table 14: Indian Ocean Pan-East Asian Planned Systems.................................................................................... 109
Table 15: Polar 2017-Present................................................................................................................................ 112
Table 16: Polar Planned Systems.......................................................................................................................... 112

REFERENCES Figure 16: System Surveyor Activity, 2013-2018........................
17
BP. (2018). BP Energy Outlook - 2018 Edition. BP. Retrieved
from https://www.bp.com/content/dam/bp/en/
corporate/pdf/energy-economics/energy-outlook/
bp-energy-outlook-2018.pdf
ExxonMobil. (2018). Exxon 2018 Outlook for Energy.
ExxonMobil. Retrieved from https://cdn.exxon-
mobil.com/~/media/global/files/outlook-for-ener-
gy/2018/2018-outlook-for-energy.pdf
Giorgio Biscardini, R. M. (2017). 2017 Oil and Gas Trends.
Retrieved from Strategy&: https://www.strategyand.
pwc.com/trend/2017-oil-and-gas-trends
LIST OF FIGURES
Figure 1: WTI 30-Year Price History, 1988-2018.........................
7
Figure 2: Brent Crude 30-Year Price History, 1988-2018...........
7
Figure 3: WTI and Brent Crude 30-Year Price History, 1988-
2018..............................................................................
8
Figure 4: WTI 5-Year Price History, 2013-2018...........................
8
Figure 5: Brent Crude Five-Year Price History, 2013-2018.........
8
Figure 6: WTI and Brent Crude Combined Five-Year Price
History, 2013-2018........................................................
9
Figure 7: Henry Hub Five-Year Price History, 2013-2018...........
9
Figure 8: System Investment by Year, 1998-2018......................
13
Figure 9: System Owners, 2013-2018.........................................
13
Figure 10: Number of Systems by Year, 2013-2018...................
14
Figure 11: Number of Systems by Year, 2018-2022...................
14
Figure 12: Systems by Region, 2018-2022.................................
14
Figure 13: Dedicated vs Managed Systems, 2018-2022............
15
Figure 14: System Supplier Activity, 2013-2018.........................
16
Figure 15: System Installer Activity, 2013-2018.........................
16


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SUBMARINE TELECOMS ISSUE 8 | 2019/2020

SUBMARINE TELECOMS INDUSTRY REPORT

FOREWORD – ITU.............................................. 6 Insider Perspective, Stephen Nielsen............... 58

INDUSTRY REPORT METHODOLOGY............... 8 5.1 Current Cable Ships.................................... 59

1. GLOBAL OVERVIEW.................................10 5.2 Shore-End Activity...................................... 62

Insider Perspective, Eric Handa........................ 11 6. MARKET DRIVERS AND INFLUENCERS...64

2 SUBMARINE TELECOMS INDUSTRY REPORT

Welcome to the 8th edition of SubTel Forum’s annual “Submarine

4 SUBMARINE TELECOMS INDUSTRY REPORT

Report doable: PRESIDENT & PUBLISHER:

STF Analytics, Division of SubTel Forum, Inc.

Copyright © 2019 Submarine Telecoms Forum, Inc.

6 SUBMARINE TELECOMS INDUSTRY REPORT

SUBMARINE TELECOMS INDUSTRY REPORT 7

8 SUBMARINE TELECOMS INDUSTRY REPORT

10 SUBMARINE TELECOMS INDUSTRY REPORT

SUBMARINE TELECOMS INDUSTRY REPORT 11

12 SUBMARINE TELECOMS INDUSTRY REPORT

1.1 HISTORY OF SUBMARINE anic communication methods were realized - subma-

SUBMARINE TELECOMS INDUSTRY REPORT 13

14 SUBMARINE TELECOMS INDUSTRY REPORT

1.2 CAPACITY 3,000 40%

1.2.1 GLOBAL CAPACITY 2,500

the foreseeable future. This 0 15%

continued shift towards cloud

SUBMARINE TELECOMS INDUSTRY REPORT 15

growth is expected to continue to trend upwards. 70

Based on reported data and future capacity esti- 60

mates, global capacity is estimated to increase up 50

2022. However, not all announced systems are far

announced. The prevalence of 200G and higher 5,000

1.2.2.1 Transatlantic Region

steady design capacity growth over 500 Design

35 percent. On average, the Trans- 0 20%

16 SUBMARINE TELECOMS INDUSTRY REPORT

planned system information this

Additionally, OTT providers con- Design

tinue to focus on building new infra- 1,500 40%

will increase more dramatically than

1.2.2.2 Transpacific Region 0

Like the Transatlantic region, the

lit capacity during this time – below 40%

cating a short-term capacity overbuild 100

observing lit capacities of 17.7 and

regions in the world – with a diverse Lit

and customers – the Transpacific is 600 25%

2022 based on publicly announced

New, high capacity systems are be-

SUBMARINE TELECOMS INDUSTRY REPORT 17

THE LATEST IN A SERIES OF BI-MONTHLY

CAGR for the period 2013-2017 was

The region has maintained an aver-

have partnered with traditional tele-

to the general market but moving

own use. It is unclear whether OTTs 250

information for planned systems, the 30%

publicly announced planned system

20 SUBMARINE TELECOMS INDUSTRY REPORT

growth has slowed down since 2018 –

capacity has satisfied capacity needs 40%