This question has intrigued me for the last 6 months - does India have sufficient number of subsea or submarine cables landing on its western and southern shores that provide the underlying foundation of global connectivity infrastructure to boost the resurgent economy. Does it have the critical mass to be the catalyst and enabler for next-gen business ecosystem that are heavily dependent on connectivity superhighways. Undeniably the mesh of trans-oceanic fiber optic cables crisscrossing the globe are the bedrock for accelerated proliferation of globalization and digital transformation for everything it means and stands for, both inside-out and outside-in. This article takes a closer look at the subsea cable infrastructure in India, its uniqueness, the competitive providers and the roadmap.
To take stock of where it stands today, currently there are 18 subsea cables (20 if Seacom and MENA are considered seperate cables) landing in 15 cable landing stations in 4 cities across India. The journey started with FLAG that was commissioned in 1997 and the latest after 20 years being AAE-1. Out of 18 subsea cables, 7 subsea cables (9 considering Seacom and MENA) terminate in India. Out of these 7/9 subsea cables, 2 are very short length cables. These are WARF and BLCS. The former, owned by Global Cloud Xchange, connects Maldives and Sri Lanka to India landing in Trivandrum. The later, owned by BSNL, connects Sri Lanka to India, landing in Tuticorin.
4 subsea cables have two landing points – SMW3 (Mumbai & Cochin), SMW4 (Mumbai & Chennai), IMEWE (2 in Mumbai), and BBG (Mumbai & Chennai). Notably for SMW3 both the landings are with Tata Communications. It also includes 2 subsea cables that are distinguished in terms of fiber pair ownership. These are GBIC/MENA and TGN-EA/Seacom where MENA owns a fiber pair on GBIC from Oman to India and Seacom owns a fiber pair on TGN-EA from Egypt to India. The ownership of the GBIC/MENA cable landing station may change post the announcement from Airtel. Extrapolating, this could be considered to provide Reliance Jio partial ownership of Chennai-Singapore i2i cable where it owns 1 fiber pair.
Looking at the way forward, 4 new cable landing stations are reportedly under planning or construction in Digha (BSNL), Andaman (BSNL), Vishakhapatnam (Reliance Jio), and Puducherry (IOX). In fact, IOX, the 18th subsea cable from India to South Africa, is scheduled to be operational from new cable station in Puducherry in 2019. The 19th would be the 1400 Kms subsea cable to Andaman, being built by BSNL, that is scheduled to be RFS in 2019. This is a significant and strategic development as it will bring south-east Asian destinations Yangon in Myanmar and Penang in Malaysia within 700 to 1000 Kms, and that would mean Singapore is also reachable. The 20th is India Cloud Xchange (ICX) from Global Cloud Xchange which will deliver a direct Mumbai-Singapore route to bypass current outage prone terrestrial routes between Mumbai and Chennai. A notable exception amongst the new subsea cables is SMW5 that lands in Pakistan, Sri Lanka and Bangladesh, but skips India. Reportedly there is branching unit near Mumbai and that could be utilized going forward. Contextually there are fringe benefits accrued from cross-border terrestrial connectivity with SAARC countries, though they are not comprehensive enough to complement the subsea cables. Notably cross-border connectivity to Bangladesh established by Tata Communications and Airtel is significant, as it opens the doors for eventual terrestrial connectivity through Myanmar, Thailand and Malaysia to Singapore. A collaborative initiative of SAARC fiber ring to provide a friendly platform to trade subsea capacity has been in discussion for quite some time, but that’s yet to shape up.
It’s well understood that subsea cables unlock options for network connectivity with respect to route preference or diversity, landing station preference, and latency. At the same time, capacity on subsea cables must be available at competitive price for it to be attractive enough to be considered by customers, domestic and overseas, as a key enabler to propel their growth and expansion overseas. For capacity on subsea cables to be available at competitive price, there needs to optimal balance of supply and demand.
What does supply mean in this context. Quite simply, it's the number of subsea cables, landing on western coast and eastern coast of India, the lit capacity and also the design capacity. The supply position on subsea cables looks encouraging with 11 subsea cables landing in Mumbai and Cochin. In the eastern or more appropriately south-eastern coast, there are 5 sub-sea cables landing in Chennai. Why is this apparent imbalance and what led to it. Part of the answer lies in legacy, with Mumbai being the city where the first subsea cables in India landed (SMW2 followed by SMW3). Further Mumbai has been the epicenter of BFSI activities. Finally Mumbai is facing multiple global hubs of connectivity in Middle East and Europe including Fujairah/UAE, Jeddah/Saudi, London/UK, Marseilles/France, Palermo/Italy. Comparatively Chennai that developed as the key hub of Software services BPO business, is facing only one connectivity hub which is Singapore. This is possibly the closest we can come to explain the asymmetry in number of subsea cables landing in Mumbai and Chennai.
Along with number of subsea cables, there needs to be a healthy multi-provider play in the market that generates the dynamics of progressive price decline, without the perils of monopoly, duopoly or even oligopoly. How far is this objective met. Off the 18/20 subsea cables, 15 subsea cables are landing with and controlled by two providers - Tata Communications and Airtel. While Tata Communications lands 10 subsea cables, Airtel lands 4 . Reliance Jio has control over 3 subsea cables (AAE-1/BBG/i2i). Global Cloud Xchange (erstwhile Reliance BlobaCom) also controls 3 subsea cables (FLAG/FALCON/WARF), even though FLAG lands with Tata Communications. Possibility of alliance or even acquisition between Reliance Jio and Global Cloud Exchange have been doing the rounds for sometime in the continuing wave of provider consolidation. The rest, including Vodafone (lands BBG), Sify (lands GBIC/MENA) and BSNL (lands BLCS) have control on 1 subsea cable each.
Finally comes the question of price. The two key price benchmarks are Mumbai-Marseilles and Chennai-Singapore. The first observation is, despite the asymmetry in the number of subsea cables and the distance involved, the pricing across these two routes are nearly the same. Further the prices are largely subsea cable agnostic. A few of the cable route segments, notably FLAG-EA and AAE-1 (connectivity to Hong Kong bypassing Singapore) and BBG (landing in Penang for diversisity with Singapore) may command a moderate premium in some cases. 10G pricing reportedly swings from $25k to $35k MRC subject to volume and term of contract. 100G pricing though reportedly offered to cloud and content providers that include likes of Microsoft, Google and Amazon, are not available for disclosure yet unless Telegeography has published any benchmarks. These prices are comparatively high compared to transpacific and of course transatlantic routes. They are however comparable to Australia-US and South Africa-UK.
In conclusion India has a vibrant subsea cable ecosystem with diverse duistribution of cable landing stations and competitive market landscape. More subsea cables and cable landing stations are in the pipeline for the next 2 years. It is expected that growing consumption of subsea cable capacity will bring the price points closer to the global benchmark of 10-for-10, sooner than expected.
(The views expressed by the author in this article are his own and not necessarily relates to the organization the author is attached to)