This article takes a closer look at 15 submarine cables facing challenges, that have either prevented them from reaching CIF or the implementation not reaching RFS or operational cables whose mainstream acceptance or economic lifespan is threatened by under-utilization.
The journey to success for submarine cables makes fascinating storytelling of determination, commitment and perseverance along with struggles for fund raising, deal making and rigors of project management. It’s become more gripping in the last five years, when entrepreneurial ventures of Independent Infrastructure Providers (IIPs) with singular accountability for risk and reward took center stage to develop new open cable systems, disrupting the era of consortium cables that had the comfort of risk averse shared investment and followed the contours of collective convenience. That said the next gen consortium cables with mix of IIP, OTT and Telco Carriers haven't always had smooth sailing and despite collective horsepower have faced rough seas to land ashore and flag success.
Along with inspiring success stories there are episodes of unrewarded struggle for new submarine cables that are not told or talked about, usually. The struggle is quite unique for every submarine cable despite the commonality of challenges. This article takes a closer look at 15 submarine cables facing challenges, that have either prevented them from reaching CIF or the implementation not reaching RFS or operational cables whose mainstream acceptance or economic lifespan is threatened by under-utilization. It attempts to explore what-didn't-work and, in some cases suggests, what possibly could be done. I certainly expect each of the cable system analysed here to overcome every challenge that comes on its way and be a great success story. It remains a realistic possibility that, after period of hibernation, the initiatives are revived as need for more and diverse subsea routes gain further traction.
1. ACE: Led by Orange and deployed along the west coast of Africa, ACE cable system remained inexplicably incomplete till RFS in December 2012. The 17,000 kms cable system boasts of cable landing in highest number of African countries, that’s 20, particularly the north western cluster of francophone countries, for many of whom it was the first ever submarine cable. It was built till the tiny island country of Sao Tome and Principle located to the right of Gabon. In 2015 Orange revived plans to extend ACE for another 5000 kms to reach Cape Town and joined hands with MTN to land in the newly build CLS in Duynefontein. This extension skipped landing in DRC, Angola and Namibia, that could happen later if BUs are placed. By Dec 2017 the extended cable system reached the Duyenfontein BMH. However, extension thereafter till the CLS remained stalled. Reportedly some regulatory issue arose possibly with ESCOM, the electricity public utility of South Africa, with respect to proximity of cable landing site to nearby Koeberg Nuclear Power Station. It’s believed the stalemate has been resolved and construction of fronthaul and CLS have resumed targeting RFS in Q1 2020. ACE landing in South Africa will make a big difference to subsea connectivity market, with SAT3 nearing end of life. WACS+ACE will make a great combination for protected connectivity along western coast mirrored by SEACOM+EASSy along eastern coast. There is however a looming threat for the paired cable systems to be overshadowed by super massive Equiano from Google, 2-years down the line.
2. Africa-1: With much fanfare the C&MA for the massive 20,000 kms consortium cable system was announced in December 2018 by consortium members - STC, MTN Group, Telecom Egypt, Telkom South Africa, PCCW Global and Etisalat. However there was no subsequent announcement on CIF or landing party agreement sign-off. As one of the few consortium cables planned in recent times, its "T" architecture spans from Marseilles and Karachi with stopover in Djibouti and branching south to Kenya and South Africa. It's relevance has been questioned by industry observers and I wrote about it earlier this year. The fact that it terminates in Karachi, Pakistan and does not land in India limits its relevance for the APAC market considerably and raises questions on who the beneficiaries of the cable system are! It purportedly seems to provide a mirrored subsea route for PEACE, that also terminates in Karachi. While consortium cables in general are set to lose relevance in the next 3-4 years outgunned by IIP led cable systems, there hasn’t been any IIP or OTT led cables along the eastern coast of Africa, yet. Simba from Facebook has raised considerable interest and fueled speculative storytelling, reportedly on plans to encircle Africa, but it seems formal announcement is still some months away. Surprisingly enough Africa-1 is no longer listed in Telegeography Submarine Cable Map!
3. PEACE: With the tagline – shortest direct route from China to Africa and Europe, the 12,000 kms 6FP 96T PEACE cable system is uniquely private venture led by Hengtong Optic-Electric and turnkey contract with Huawei Marine. Role of PCCW Global as commercial arm of PEACE remains inquisitively interesting. Quoting from their website – the first Chinese neutral submarine cable, it’s under deployment, making steady progress and scheduled for RFS in 2021. It lands in Marseilles with Orange and with stopovers enroute in Egypt and Djibouti, a branch forks to Kenya and it terminates in Pakistan with forked landing in Karachi and Gwadar with onward terrestrial cross-border connectivity with China. It’s anybody’s guess that funding for the cable system was never a challenge. Neither did they require anchor tenants to sign-up to pave the way to CIF. However, its acceptance in the wider subsea connectivity landscape with Carriers and OTTs remains questionable. That however is understandably inconsequential. Further termination in Pakistan would pose the same challenge as Africa-1 with access to India and APAC largely cut-off, unless otherwise though interconnect in Karachi with other cable systems like AAE-1, SMW4 and/or SMW5. However, interconnect arrangement with PTCL and/or TWA, and its commercial attractiveness remains questionable. It seems rules of the game for developing a new submarine cable and its uphill journey to see the light of the day is not applicable for PEACE. That's contrary to the headline, but mindset management will certainly be a tough job, except for landing party Telco Carriers. All said and done it will a closely watched cable system that is set to reach RFS, peacefully.
4. NCP: As 13,618 kms $450M consortium built transpacific cable system NCP has generation gap with most other cables discussed in this article, having started its journey in 2013. It’s 7FP 80T configuration is reminiscent of it, with 2FP assigned for intra-Asia connectivity. The consortium members are Chunghwa Telecom, KT Corporation, China Telecom (CT), China Mobile (CM), and China Unicom (CU) and notably Microsoft. It’s possibly the only cable system to witness involvement of CT, CM and CU with majority ownership of 50%. Equally intriguing is the ring topology of cable landing in Chongming (CT) and Nanhui (CU) and terrestrial connectivity to Lingang (CM) in China. Microsoft as key co-investor has 16.7% ownership that presumably translates to 1FP ownership in express route and wavelengths in intra-Asia segment. Isn't that somewhat incongruent with the fact that Microsoft interest would be primarily in Japan, Korea and Taiwan. It is also the landing party in US at Microsoft Infrastructure Group LLC (MIGL) CLS in Hillsboro, Oregon, with the SLTE hosted in Flexential DC. BU cable landing in South Korea, Taiwan and Japan and transpacific termination in Oregon, US are RFS since May 2018. However, the status of cable landing in mainland China and that of the express route from CT CLS at Chongming to MIGL CLS in Oregon remains unconfirmed till date. That raises questions in the context of China-US trade tensions, though it got FCC cable landing license in January 2017. Hence, it’s considered to be partially RFS. NCP while being compared to FASTER, Jupiter, BtoBE and HKA, has become a case study while discussing what can go wrong in transpacific submarine cable build and who the consortium members should be, to get landing permits.
5. PLCN: The much talked about 13,000 kms transpacific cable system from Hong Kong directly to Los Angeles with Google as the landing party in US and Facebook funding two branches to land in Philippines, is nearly fully built. It prides itself as the first cable with C+L band technology from Subcom that doubles the capacity per FP to 24T/FP, with carrier neutral termination in TMH, HK and Equinix LA4, LA. Despite top-notch technical credentials and being close to RFS with most of cable laying already completed, it has got into serious trouble, with US authorities. In Aug 2019 WSJ news article reported that US officials are seeking to block the cable system in a national security review that could rewrite the rules of subsea connectivity between US and China. The Justice Department which leads multi agency panel that reviews telecommunication matters has signaled staunch opposition because of concerns over the role of Chinese investor, Beijing based Dr. Peng Telecom & Media Group Co. If US authorities decide to reject PLCN application, it would be the first time it has ever denied submarine cable license on national security grounds, and it could signal regulators adopting new, tougher stance on China projects. However, optimism still prevails that PLCN would be able to defend its case with US authorities to grant license. It remains to be seen if Google and Facebook will come forward to make it happen. The transpacific subsea route does require multiple cable system options to thrive competitively.
6. DARE1: A two-provider consortium led by Djibouti Telecom, it will land in Djibouti, Somalia and Kenya, with an optional branch to Tanzania. Two cable landing in Somalia - Mogadishu and Bosaso with different Somali providers is a unique attribute though only one provider, Somtel, has signed the C&MA, till date. Spanning 5,400 kms the ~$200M regional short-haul cable system is as long as a transatlantic cable system. With CIF announced in Dec 2017, turnkey construction by Subcom started in Q1 2019 only after Telkom Kenya signed up as the landing party in Kenya. Initial RFS of Q2 2019 is missed, and Q4 2020 seems more realistic. It certainly is a daring initiative, given its not very clear who this cable system will benefit. Kenya has felt the need for second subsea gateway for some time with crowded cable landing in Mombasa being susceptible to catastrophic outage. Thus Kenya-Ethiopia-Djibouti terrestrial fiber connectivity from Liquid Telecom could be paired with subsea connectivity over DARE1 for never before protected connectivity to Djibouti. Liquid Telecom and Telkom Kenya could join hands to swap capacity and open opportunities to cross-connect with any of the 14 cable systems that stopover in Djibouti, to reach Europe, Middle East or Asia. A foggy possibility that’s been floating around is PEACE going for FP acquisition in DARE1 to reach Mombasa, Kenya. How else will this cable system gain relevance, unless the objective at play is ego gratification!
7. SAIL: Funded by Camtel, the monopoly incumbent operator of Cameroon, connecting Kirbi, Cameroon to Fortaleza, Brazil, it was RFS in Sep’2018. It also has alliance with Telxius owned BRUSA and SAM-1 to extend connectivity to US. The 6000 kms 4FP 32T system (~$300M) is seriously an overkill for Cameroon with overall IPT requirement that is highly unlikely to exceed 1T, till date. Does it make sense for the cable system to stagnate underutilized for first ten years and gain usage progressively thereafter! It possibly does if monetizing the submarine cable and deriving ROI is not anybody's priority. Further its intriguing to think how was it agreed to fund this cable system of questionable relevance, unless it was unquestionable monopolistic dominance at play and possibly an opportunity to showcase Huawei Marine’s prowess to construct long haul transcontinental submarine cable system! With China Unicom as the landing party in Brazil (but in Telxius CLS), it does point to raft of uneasy questions, that are best left unanswered. Perhaps going forward once sufficiently reliable terrestrial connectivity from Kenya to Cameroon is available, possibly along railway tracks, interconnecting SAIL and PEACE could lead to a new storyline around OBOR.
8. SACS: Developed by Angola Cables, SACS connects Angola and Brazil and was RFS in 2018. Angola Cables also has investment in MONET from Fortaleza Brazil to Boca Raton Florida US with ownership of 2FP. It promises a never before low latency route from Angola to US. However due to limited market size of Angola and insufficient connectivity to South Africa, with WACS as the only option, the capacity provisioned on SACS remains an enigmatic query. Harmonious terrestrial cross-border connectivity to neighboring countries isn’t prevalent either, and that certainly merits strengthening, to grow the addressable market for SACS. Possibly a 3000 kms submarine cable extension to Cape Town, South Africa would make SACS more relevant as the only cable system to provide South Africa to US connectivity, given SABR and SAEX have not made much progress till date. Looking at African region, there seems to be an uncanny similarity between SACS, SAIL and DARE1. These aside, notably praiseworthy are the consistent marketing efforts from Angola Cables to create visibility, acceptance and forge collaborative ventures to promote SACS.
9. IAX & IEX: Led by none other than Reliance Jio, the market disruptor with 355M 4G subscribers, ambitious FTTH rollout underway and landing AAE-1 and BBG, at least IAX from Mumbai-Chennai-Singapore was expected to be declared CIF in the course 2019. With CLS ownership in Mumbai and Chennai, the nearly $120M venture was expected to be a showcase of India led submarine cable system, after 16 years. However, it did not unfold as anticipated, and that has led to wide speculations. Reliance Jio has meanwhile remained tight lipped and there hasn’t been any official announcement till date. Some believe the resounding silence is possibly a precursor to glitzy big bang announcement. The OTT co-investors it is believed are tired of waiting endlessly and are scouting for other submarine cables in planning and development. But, does Reliance Jio really need OTT’s to co-invest! Some industry observers also believe, Reliance Jio has possibly put big ticket investments on hold. However, optimism with some amount of patriotism still prevails that it would be declared CIF in Q1 2020 and that will ring the bell for other cable systems in planning to follow the suit. IEX from Mumbai to Marseilles is more ambitious investment and more likely to involve OTTs as co-investor, provided of course OTTs are comfortable enough to join hands with Reliance Jio that has established close ties with Microsoft. Else it could get deferred indefinitely and even superseded by other cable systems that are progressing confidently towards CIF in 2020.
10. WASACE1: The Brazil to Portugal/Spain cable system being developed by Spanish company Hemisphere Cable Company (HCC) was relaunched in December 2018 with NEC as the turnkey supplier. It seemed C&MA is signed given NEC agreed to lend its name, however CIF hasn’t come through yet or any other announcements that indicate progress. Nothing was revealed about funding and/or cable landing arrangements. Generally, cable systems where the landing parties are not revealed evokes apprehension. With stated intent to offer only FP, it seemed an ideal choice for OTTs looking for direct South America to Europe connectivity without going through US. However, there has been complete silence for more than a year. The industry does expect visibility and marketing activities to make the new submarine cable's presence felt and bolster the optimism of reaching the finishing line. This is more noticeable due to market visibility garnered by EllaLink that also connects Fortaleza, Brazil to Sines, Portugal has been perceptibly regular with messaging, participation in industry events and winning industry recognition. WASACE1 and EllaLink would form a much-needed protection pair. Hence a second revival of WASACE1 is certainly awaited.
11. IOX: The India-Mauritius-South Africa cable system has been on the runway for nearly 5 years, but yet to take off. Can this long wait in the current market landscape sustain an organization to stay put patiently! Doesn’t it require funds to stay afloat! That aside, IOX landing point in East London in South Africa and Puducherry in India have had questionable rational, as they are not well-known cable landing points, with backhaul connectivity options. Further it requires new CLS to build at both ends. Who will undertake the heavy lift of CLS build! Presumably IOX South Africa and IOX India, as licensed operating entities established in these countries. That’s no mean task given both these countries are yet to see precedence of such greenfield approach though many are reportedly in the fray. One possible solution to address the cable landing conundrum is for forked landing in Puducherry and Chennai, along with East London and Cape Town, for the obvious advantages for onward interconnect for Singapore and Brazil-US. Also, alliance with a licensed operator with CLS merits thoughtful consideration. Further who will provide diverse long-haul connectivity to Johannesburg and Cape Town in South Africa and to Chennai, Bangalore and Hyderabad in India! Does this create a picture that would enthuse an investor and evoke optimism!
12. SAEX: The sheer span of 27,000 kms Singapore-South Africa-Brazil-US cable system with $800M investment proposal for 6FP cable system is possibly the largest in recent times. Only 25,000 kms AAE-1 comes close, but with 19 consortium members. Hence the grandeur of scale makes it look unrealistic and overambitious. It’s yet another venture struggling for more than 5 years. Is it possible that IOX and SAEX could collaborate and build a 12FP cable system where each party has 6FP for the South Africa-India span! Extending the collaborative rationale, acquiring 6FP from Chennai to Singapore could be feasible as 3-4 new HFC cable systems are moving closer to CIF in H1 2020. Similarly, SAEX and SABR could collaborate to build the Cape Town to Fortaleza segment. Interconnect in international waters can bring the advantage of deep-sea route across the span, something that SAEX upholds as its differentiator. Considering this daring collaborative venture would be stitched together, can it bring down the cost from $800M to a point that makes FP from Singapore-South Africa-US exceptionally attractive and entices OTTs to sign-up! Collaboration of this order hasn't has precedence remain untested. Further it involves trade-off with independence and freedom that an entrepreneur would not be willing to let go off. Let’s remain hopeful that growing need for diverse routes will make this submarine cable venture viable sooner than expected and get long term infrastructure investment funds interested.
13. SEAX: They had planned three subsea cables. However, along the way the initiative went through change of ownership about year and half back. The new management reportedly had rift with the founder CEO on the business model and decided to part ways. Thereafter the initiatives faded off, literally. SEAX-1 was designed to be unrepeatered 76FP cable system contracted with Huawei Marine connecting Malaysia, Singapore and Indonesia. Planning looked good to land the cable in well-known carrier neutral DC to offer DF IRU. Plans in Malaysia were ambitious to build 250 kms of terrestrial backhaul to Kuala Lumpur and Cyberjaya. Reportedly the backhaul build became an insurmountable challenge with respect to right of way permits. SEAX-2 was set to be the first submarine cable to offer direct connectivity from Singapore to US West Coast. SEAX-3 had an interesting route to India with landing planned up north from Chennai in Digha, that's close to Kolkata. What happened to it! Even their website does not talk about it. Will it revive!
14. SABR: The South Africa to Brazil cable system was planned by Seaborn Networks, that owns and operates Seabras-1 from Rio De Jeniro to New Jersey, nearly three years back. However, it never reached CIF, the sacrosanct milestone for crossing the point of no return. In Cape Town, South Africa it was reportedly in talks with MTN and Liquid to land in the CLS they planned to build. In the last year and half, there hasn’t been any new development reported. It is this unexplained silence that breeds speculations, some of which ironically turn out to be true. It was widely expected that SABR along with Seabras-1 would accomplish what SACS+MONET and SAIL+BRUSA aspired for – direct connectivity from Africa to North America. Will it be revived anytime soon! Are there any market trend indicators that shows this transcontinental subsea route is likely to gain traction going forward!
15. EAGLE: This ambitious Eurasian cable system is/was planned by GCX to replace the aging FLAG cable system. It has remained long enough on the drawing board amidst discussion with multiple turnkey suppliers. GCX was on the block for quite some time awaiting acquisition post filing voluntarily for bankruptcy proceedings in the US. They are also vying for resurrection and get back on track as they reportedly have reasonably healthy cashflows to sustain operations. However, they don’t seem to be in a position to develop the monolithic cable system that to some extent resembles SAEX. Hence not many seem to believe in GCX will be able to raise funding for EAGLE! Some even dismiss it as marketing stunt to appear progressive while admitted to ICU and on life saving drugs. If it is steered out of troubled times EAGLE spreading wings to take flight remains a believable possibility.
Now it’s time to conclude and that’s the hardest part of this article. From the review of 15 cable systems it’s evident that some may not get off the drawing board. Some cable systems awaiting take off may not reach CIF and eventually see the light of the day. Some that are past CIF and under construction but with question mark on addressable market may gain from protectionist promoters but will remain alienated from mainstream acceptance. Some that are operational but struggling to identify requirements they could meet will remain underutilized and lose relevance as operational cost gets closer and eventually overtakes revenue generation. This is not pessimistic foresight, rather an inevitable reality that has had its play in the submarine cable landscape. Despite all odds entrepreneurial ingenuity can find solutions when others give up. Hence, it’s possible that great turnarounds, pathbreaking alliances and collaborative ventures could pave the way for some of these cable systems to become reality and for others to witness growing utilization that grants it a new lease of economic longevity.
Esteemed submarine cable professions, revered entrepreneurs, veteran consultants and turnkey suppliers that have lend their names to these cable systems are respectfully welcome to share meaningful and informative insight they are eligible to disclose for the purpose of knowledge sharing that other submarine cable professionals and enthusiasts including myself are interested to know.