Isn’t that a meaningful question for planners and architects of global network strategy, that want to leverage emerging market trends in submarine cables and cost optimize network acquisition. Does it also have an element of pride and prejudice around ownership and control of network assets. This topic is certainly gaining traction across the subsea connectivity landscape with active conversations and commercial proposals for Submarine Fiber Pair exchanged in industry events. This article aims to take a closer look at growing traction for Submarine Fiber Pair ownership and factors driving it.
Attractiveness of Submarine Fiber Pair is open connectivity it offers with independence to go for SLTE vendor preferred by the buyer or that is aligned with buyers’ terrestrial packet optical network. It can scale to 400G, 500G wavelengths and beyond, with vendor specific innovations in photonics and more complex modulation schemes. Other than capacity upscaling, Submarine Fiber Pair ownership does not carry the responsibility of cable administration. Annual O&M payout takes care of it. Further it does not require the buyer to own CLS and be responsible for cable landing.
Conservatively 8-10 new 12FP and 16FP long haul submarine cable systems are poised to make CIF announcements in the next 12 months. SubCom, ASN and NEC are supplying the turnkey solution for these cable systems, with the promise of 24FP systems in next 12 months. These high fiber count submarine cables with spatial parallelism to increase submarine data transmission capacity without demanding punishing performance from the repeater optics is set to usher a new era of hyperscale subsea connectivity. Business model these submarine cables are set to realize are no longer based on projected 100/200/400G capacity sales. They take into account sale of fiber pairs, full and fractional. Interestingly, this is not too different from equity participation or part ownership of the cable system. Further sale of fiber pair to one or more anchor customers is crucial to raise funding.
Open submarine cable systems currently in design or deployment stage are developed purposefully to encourage fiber pair sales. This is aided by disaggregation of wet plant and dry plant. Though arguably, progress in dry plant technology with innovations in SLTE has been ahead of the progress in wet plant, where the progress is primarily towards C+L band repeaters, that increased capacity per fiber pair to 24T and even 30T with potential to scale up to 40T. This however could dissuade buyers interested in Submarine Fiber Pair with requirement roadmap of 8-10T over 5 years. Instead a 12FP or 16FP cable system with 12T per fiber would be more attractive. On the softer and aspirational side of network acquisition, Submarine Fiber Pair brings heightened sense of ownership and control of a physical asset as compared to shared resource like capacity. Some industry experts also highlight usage of power wasted in gain flattening with photonic control for such amplifiers to light up more fiber pairs. This is one more reason 12FP or 16FP cable systems with amplifiers operating in linear performance region has gain better traction in the market and they also lead to lower cost per bit transported.
Even with capacity sales, differentiated by price, latency and route diversity, two distinct business models are shaping up - direct sales for 10G and above and channel sales for below 10G with capacity aggregators as channel partners. In this context, the upgrade cycles for year-on-year capacity augmentation is also being reviewed for long term network acquisition roadmap. Many providers with sizable demand growth, are evaluating options of fractional fiber pair ownership or IRU as long-term solution to create regional subsea network footprint and sing along the industry jingle – capacity demand continue to skyrocket. Telstra investment in HKA and PLCN exemplifies this trend.
With long term network acquisition strategy gyrating towards Submarine Fiber Pair ownership, it is set to be the new denomination of long-haul transoceanic connectivity. However, in the backdrop of the larger connectivity landscape, it will be niche market, available on select subsea routes, and solicited by crème de la crème of subsea connectivity buyers with large as well as hyperscale requirements. Hence OTTs, IIPs, Carriers, inter-governmental collaborations are expected to be the target audience likely to go for Submarine Fiber Pair. At some point in time, possibly beyond 2022, Financial, Manufacturing bigwigs and leading Higher Education Institutions would also consider going for Submarine Fiber Pair, though a few are already moving ahead. Further consolidating capacity leased over multiple submarine cables into one Fiber Pair on a given submarine cable isn’t going to happen. Clearly it would require more than one Fiber Pair for redundancy. Hence the price point for Submarine Fiber Pair must reach a level where it becomes viable to go for two, to meet diversity and resiliency requirements.
Nearly all the new submarine cable systems are and will be funded, designed, deployed, operated and of course owned by Independent Infrastructure Providers (IIP) with OTT as co-owners or anchor customers. OTTs and IIPs driving the photonic innovation along with more complex modulation schemes is pushing the envelope with never-before industry-firsts in submarine data transmission. It remains to be seen if the OTTs in their quest for end-to-end ownership acquire photonic component manufacturer to design their own submarine repeaters.
When an OTT participates in a new submarine cable initiative, they are essentially buying one or two fiber pair. Telco carriers often will find it challenging to put together business case to justify requirement for complete fiber pair. Hence, they are likely to opt for fractional fiber pair with Half Fiber Pair and Quarter Fiber Pair options. Submarine Fiber Pair is expected to gain more traction for subsea routes will have multiple 12/16FP cable system. Routes like Singapore-Chennai and Marseilles-Mumbai, are set to witness high availability of Submarine Fiber Pair that when combined with competitive dynamics will lead to unprecedented price point. It will be lapped up by OTTs, Telco carriers and few IIPs interested in India play.
While OTTs with billions of dollars of infrastructure budget are starting with Submarine Fiber Pair, for Telco carriers it’s an uphill upgrade journey. As the capacity usage across a given subsea route gets closer to 1Tbps with robust growth forecast, leasing a block of optical spectrum begins to look relevant as the next step to capacity lease. Optical spectrum as subsea connectivity service has gained traction in the last two years. Nearly all new cable systems commissioned in the last 3 years, other than consortium cables, support optical spectrum, offered as managed or unmanaged service. Managed service option has had greater acceptance with OTTs providers, where the service provisioning is managed by the IIP NOC. As unmanaged service, Optical Spectrum is terminated in SLTE provided by the OTT or Telco Carrier that is willing to take on service provisioning. Optical Spectrum translated to multi-terabit capacity, also has its limitations, and does not provide unfettered independence for upgrades and experimentation with technology. That’s when Submarine Fiber Pair ownership gains traction.
Submarine Fiber Pair ownership also has regulatory bearing. The buyer must be licensed service provider in the countries that Submarine Fiber Pair connects. The workaround that OTTs and even IIPs have adopted is to forge telco partnerships for countries where taking license might have unfavourable ramifications. Given the greater scrutiny on OTT activities and trade practices by regulators worldwide, OTTs may have to tread carefully with Submarine Fiber Pair ownership on some subsea routes. Comparatively global telco carriers with licensed entities in multiple countries may have a leeway with Submarine Fiber Pair ownership.
Growing demand for Submarine Fiber Pair will also be influenced by several short haul high fiber count unrepeatered submarine cable deployments underway crossing seas, channels and even lakes. These more often than not have 96FP cables solely focused on Fiber Pair sale or lease. Another contributor to the rise of Submarine Fiber Pair ownership will be the submarine HVDC cables for regional electricity grids like COBRAcable that has 48FP cable integrated.
Growing traction for Submarine Fiber Pair will impact consortium-built submarine cables adversely. Shorten their economic lifespan remaining and restrict relevance for captive requirements of the landing parties. Unarguably they will be headed for sunset, some sooner than expected, or at best be the 3rd or 4th diverse route. With 100G and 200G wavelengths being widely prevalent with commoditized volumetric play, some consortium members are pushing for changing the C&MA to go ahead with 400G upgrades independent of other consortium members. Those that have been part of consortium cables will know, such demands are seen as domineering conduct and resisted by other consortium members. 400G upgrade is being trialled in some of the cable systems, though no success story is reported so far. Does this lead to a logical conclusion! Further, telco retreat from big ticket investment in submarine cables marks end of the era of consortium cables, except possibly for few intra-Asia cable systems. Even SMW6 and Africa1, the two visible consortium cables in making are reportedly facing uncertainty with RFS stretched to 2023. Even merger of Africa1 with PEACE cables system is being talked about, reportedly brokered by Chinese interests. It remains to be seen if Simba and Equiano can forge a unique OTT-Telco consortium for cable landing multiple countries in Africa.
With an estimated 200 Submarine Fiber Pairs available across major transoceanic routes in the next 3 years, Submarine Fiber Pair ownership will garner unprecedented traction and commercial viability for subsea superhighways. Facilitating the trend are mini neutral datacentres being built adjoining CLS for Submarine Fiber Pair buyers to host their SLTE. JV announced by RTI and GTA to build 2MW GNC in Guam upholds this trend. This new era of transoceanic network economics with Submarine Fiber Pair will go beyond OTT forte, and find wider acceptance globally, as emerging markets get up to speed with developed countries faster than ever before.