15 submarine cables land in India and cater to international connectivity requirements. The number looks reasonably impressive, but their readiness and economic longevity to meet the hyperscale requirements does not evoke confidence. The majority built by large telco consortiums were developed over the last two decades to meet collective requirements of the consortium members, and they were the exclusive landing parties in their respective home countries. The four well-known telco carriers that are landing party in India have had a blissful journey activating STM1/STM4/STM16 links for their walled gardens of business and leveraged the regulatory framework to their advantage.
In last 5 years the scenario changed and STM1/STM4/STM16 gave way to 1G/10G/100G, but the market dynamics remained the same.The notable exceptions were TIC and i2i from Tata Communications and Airtel respectively, that scaled seamlessly, made possible to a large extent by single ownership, though other single ownership submarine cables lost relevance.
At present the total installed or operational submarine capacity is estimated to be of the order of 20 Tbps (excluding fiber-pair sales) that is growing at 25% CAGR, thus adding 5 Tbps year-on-year. This capacity growth when considered as 50x100G, isn’t much given that it’s provisioned across 8 cable systems, the remaining 7 cable systems arguably having marginal contribution. However, when it comes to services like spectrum and fractional/virtual fiber pair, that are set to gain traction in the next 3-years, none of the cable systems is ready. This article attempts to highlight the insufficiency of most of these cable systems to meet the hyperscale requirements and the hence the need for new submarine cables.
Most of the operational cable systems predate the era that witnessed rise of OTTs and their hyperscale connectivity requirements, the explosive growth of mobile broadband customers and skyrocketing data consumption triggered by onslaught of Reliance Jio. Possibly some cable consortiums even ignored it, given the participating Indian telco carriers did not have a voice strong enough to assert that India is on a different growth trajectory from most other countries where the cable system lands. Thus, the cable systems are not fit to meet the scale of requirements that OTTs ask for. Further with 2, 3 or 4 fiber-pairs mostly and anywhere from 9 to overwhelming 54 consortium members, the landing parties in India have access to or ownership of a fraction of cable system capacity, that increases in small steps with every upgrade.
Evidently these cable systems don’t support fiber pair lease, physical or virtual fiber pair, or spectrum, that is set to gain traction much sooner than expected. It's futile blaming as the next gen subsea connectivity service were not in the scene when most of these cable systems were designed. Further, they don’t land in open access CLS where the provider or OTT acquiring subsea capacity, spectrum or fiber pair has the provision to host SLTE and the independence to decide on the fiber backhaul provider. With growth in hyperscale connectivity requirements continuing unabated and the their metro and domestic long-haul capacities reaching multi-terabyte already, signals an urgency to develop new cable systems and at the earliest. With the fact that development lifecycle for submarine cable system is no less than 4 years, new developments must begin - as of yesterday, with at least 3-4 routes from Chennai to Singapore and 3-4 routes from Mumbai to Marseilles.
As the insufficiency of existing submarine cables to address the growing requirements in India becomes increasingly evident, development of new submarine cables is gaining momentum perceptibly, moving from market whispers to active discussion, with curtain raise on new announcements imminent. Further, a unique market play is shaping up with respect to terrestrial fiber infrastructure that goes hand in hand with submarine connectivity. Over the course of the last 6 months the major telco carriers, MNOs and even the incumbent operator have announced plans to hive off their fiber infrastructure in independent subsidiaries with the objective to monetize them effectively. Further the new wave of market consolidation has created large pool of distressed fiber assets that are ready and in fact eager to welcome proposals of acquisition. Put together, this indicates terrestrial fiber infrastructure and the subsea connectivity market in India has reached a point of inflexion. This has triggered a new group of independent infrastructure providers (IIP) backed by PE funds to spot a never before opportunity to challenge the telco dominance of pan India fiber network infrastructure and plan for network architectures that combines the strengths of individual providers and offer it as one-stop-shop democratized solution. Some of the IIPs are developing new submarine cables and/or poised to acquire distressed submarine cable assets. What makes the latter half of 2019 particularly exciting, is to see if some of these never-before infrastructure initiatives in India are able to able to stand one their legs and meet their business objectives.
With respect to submarine cable systems currently operational, most of them will have their economic lifespan cut short by newer cables that will be RFS in 2022 with design capacity close to or more than 100 Tbps. In fact a new 8-fiber-pair cable system with 120x200G or 60x400G per fiber pair will have more capacity that all the other cable systems put together.
8-fiber-pair cable system looking at next 5-10 years seems legacy specification, that has possibly lost its sheen. While majority of new submarine cable designs are based on 12 or 16 fiber-pair cables, those that are audacious enough like Google are actively evaluating 24-fiber-pair systems. The objective is lower unit cost and bring economics of submarine fiber pair ownership to a point that will make it more attractive business proposition as compared to developing a new submarine cable. Some industry observers also see it as an approach to eliminate competition. Interestingly the new submarine cable developments are targeting RFS of 2022. A collective consensus seems to prevail that if the cable system is not RFS in 2022, it will miss the bus and lose relevance in the market. In this backdrop let’s take a closer look at the status of the currently operational submarine cables.
SMW3: It’s been a highly faithful cable system and mainstay of international connectivity from India in early 2000’s. It’s also one of the longest cable system design from Germany to Australia and Japan, 39 cable landing in 33 countries. It served its purpose diligently for Europe-India-Asia connectivity and was leveraged heavily by the consortium members for a long time. At 20 years since RFS, its nearing retirement, with little or no new capacity activations.
FLAG EA: One of the first privately owned cable system that changed hands during the Internet bubble burst of early 2000. Under GCX ownership, it’s perceived more as a distressed asset. While at 22 years since RFS, it's one of the oldest and ready for retirement.
SAFE: First cable to connect South Africa, India and Malaysia. Deviating from conventional cable landing in Mumbai, it's the first cable system to land in Cochin. It remained largely underutilized and ignored due to slow growth in demand and the subsea route was not considered a mainstream connectivity pathway and that holds good till date. Commissioned in 2002, it’s unlikely that its economic lifespan will reach the operational lifespan of 25 years.
i2i: First private point-to-point submarine cable from Chennai to Singapore that was jointly developed by Airtel and Singtel. Subsequently Airtel acquired complete rights of the cable in 2007 and became the sole owner. As the first and only eight-fiber-pair cable system, it’s still going strong and fully relevant today’s connectivity requirements. It’s also the first cable that leased submarine fiber pairs. Commissioned in 2002, it offers spectrum and fiber pair for hyperscale connectivity requirements. Its economic lifespan is likely to match the operational lifespan of 25 years, though it’s preference as primary subsea route would progressively transition to secondary subsea route beyond 2022 once new cable systems are operational.
TIC: As close cousin of i2i, it was first fully private submarine cable from Chennai to Singapore developed by Tata Communications. Along with i2i, TIC upholds the trend that India usually part of APAC region, has had higher demand of international connectivity to the East (Chennai-Singapore) as compared to West (Mumbai-Marseilles). As six-fiber-pair system commissioned in 2004, it offers spectrum and fiber pair. It's likely to complete the complete the economic lifespan of 25 years, albeit with declining preference as primary subsea route.
SMW4: As worthy successor to SMW3, it’s also been a highly leveraged cable system and mainstay of international connectivity from India to Middle East, Europe and Asia. Connecting Marseilles to Singapore, with 16 cable landing in 14 countries. Unlike SMW3, it has two cable landing points and cable landing parties in India – Mumbai with Tata Communications and Chennai with Airtel. It has served its purpose diligently for Europe-Middle East-India-Asia connectivity. While at 14 years since RFS, it's progressing towards early retirement, as it is unable to go beyond nx100G connectivity.
BLCS: Not many would recognize this cable system that stands for Bharat Lanka Cable System for it has had marginal relevance for mainstream international connectivity. It can however take pride as the consortium cable with just two consortium members - BSNL and SLT. With span of 325 Kms, its possibly the only unrepeatered cable to land in India.
FALCON: It's a privately-owned cable system, with an interesting twist. The 11 countries in Middle East and North Africa (MENA) region where is lands, the licensed providers in the respective countries are the landing party. It had limited relevance as it spanned only till Egypt, till GCX built HAWK cable system from Egypt to Marseilles. FALCON however upholds the architecture in MENA region for the new cable systems being planned by the OTTs.
WARF: Yet another nondescript cable system owned and operated by GCX that lands in Trivandrum, at south eastern cost of India, and connects Maldives and Sri Lanka. While it makes marginal contribution to international connectivity from India, it does play an important role for Maldives.
IMEWE: Connecting Mumbai to Marseilles and landing in 8 countries enroute. Its unique design for India has a forked architecture with two landing points in Mumbai with Airtel and Tata Communications. Its capability tapers off with 100G wavelengths. Hence not suited for the terabit-scale requirements of OTTs going forward.
TGN-EA/SEACOM: An interesting cable system with multi-segment built, it's owned by Tata Communications. Similar to IMEWE with Mumbai-Marseilles connectivity, except for SEACOM, the branch off to Eastern Africa till Cape Town. Both TGN-EA and SEACOM lease fiber pair on TE-North to reach Marseilles from Egypt.
EIG: Connecting Mumbai to UK and landing in 11 countries enroute. While Airtel is the landing party in India, the incumbent BSNL is also a consortium member and has considerable capacity holding that it is believed has remained unutilized. Some EIG consortium members formed sub-consortiums to involve other providers and share the investment. This has enabled Sify to have capacity inventory in EIG. Once again, its capability tapers off with 100G wavelengths.
GBIC/MENA: An interesting cable system where the segment from Gulf of Oman to Mumbai is owned by Airtel by way of acquisition in 2018, however Sify is landing party in Mumbai and owns the CLS. Given the legacy of cable landing monopolies, it’s an intriguing to figure out how Airtel gets access to GBIC/MENA. Correlating with similar challenge Sify faces to access EIG, an arrangement of reciprocal access seems to be the logical solution.
BBG: The Fujairah-Mumbai-Chennai-Malaysia cable system, landing in 5 countries, from the beginning had a sense of incompleteness as India and APAC countries have limited connectivity requirement to Middle East. Further Middle East being part of EMEA region has historically preferred connectivity to Europe. Some industry observers have felt the cable system as fulfillment of a telco carrier’s ambition to lead a submarine cable initiative.
AAE-1: Landing in 19 countries connecting Hong Kong to Marseilles, is the largest submarine cable to be constructed in almost 15 years. Size however has ceased to be differentiator for submarine cables and large consortiums seen to exemplify collective indecisiveness.
New Submarine Cables in the horizon
New Cable led by Jio: Supposedly named IAX and IEX, the cable systems are still in the wraps, but believed to be done deal. With Google and Facebook as consortium members, it is set to span Singapore-Chennai-Mumbai-Djibouti-Egypt-Marseilles. It’s close to CIF, with IAX (Singapore-Chennai-Mumbai) expected to go first. Needless to say, it will land in Jio CLS in Chennai and Mumbai. It remains to be seen how Google and Facebook light up their fiber pairs. With Jio as the flag-bearer of the new cable system, smart workaround will be devised for regulatory compliance of fiber pair lease. While this cable is expected to have initial design capacity of 192 Tbps (guess the number of fiber-pairs!), god forbid what happens if there is cut or any other disruption. Multiple terabits can’t be toggled with optical protection switching. This points at the possibility of another cable system on same route, but with subsea route and CLS diversity.
New Cable led by IIP: This is yet another unnamed cable system is making steady progress. After several design iterations, it has settled for shortened span, with further extensions planned for future. It’s no brainer that it would involve OTTs, likely to be Google and Facebook. This cable system is likely to face dilemma to decide on the approach to cable landing. Clearly there are two options – construct CLS from scratch or lease CLS as-a-service from a provider, preferably not a legacy telco. Both the options have its advantages and disadvantages. Constructing CLS ground up has the advantages of ownership and independence for a span of 25 years. It can also land additional submarine cables. It provides flexibility to build multi-provider backhaul connectivity options. For a cable system expected to be of the order of $400 million, two CLS in Mumbai and Chennai represent no more than 5% of the total project cost. On the other hand, it comes with additional cost and unforeseen challenges other than navigating multiple approval processes. Hence a judicious decision needs to be made.
CACN: This cable system owned by the incumbent operator BSNL from Chennai to Andaman and Nicobar Islands, has the potential to enable new subsea connectivity routes to Singapore, Thailand and Malaysia. However, no one really wants to deal with BSNL given their precarious position. Even the financial position to proceed with deployment is being looked at apprehensively. As a distressed asset it could be a good buy, with Singapore being 1400 kms from Port Blair where the cable lands in Andaman and Nicobar Islands. Shrouded in uncertainty, it remains to be seen if the cable system can reach RFS.
IOX: Connecting South Africa to India, it’s in the making for last three years with target RFS of Q4 2019. However, the uncanny silence seems to indicate they have run aground in the murky waters of funding. It is believed, the cable system is not CIF yet and hence unlikely to meet the target RFS.
Apparently, there are 2-3 other submarine cables in planning, but not much is known about them, only whispers are flying. Hopefully they will be visible in the next 4-8 months. With all these cables, set to target RFS in 2022, there will be no less the 44 fiber-pairs available in the Singapore-Chennai-Mumbai route. With half of it used by OTTs, 22 fiber-pairs will be available as ready-to-use inventory. What about pricing, it’s likely to vary between $15-20 million with cost-plus model. No wonder Telegeography in a recent webinar with Ciena on SDM Cable Systems said – fiber pair will be the new 100G wavelength going forward, along with the new paradigm that submarine cable systems will be considered based on overall capacity of the cable system rather than capacity of single fiber pair. The Marseilles-Mumbai route will be less dramatic compared to Singapore-Chennai-Mumbai. Only one cable system, led by Reliance Jio is expected to reach CIF in 2019. The other cable system targeting Egypt-bypass with terrestrial forking from Israel and joining back in Arabian Sea close to Oman and proceeding to Mumbai is still on the drawing board but believed to be backed by European PE funds and Independent Infrastructure Developers.
With this tour of the submarine cables landing in India, their vulnerabilities and new submarine cables in various stages of deployment, subsea connectivity in India is set to get a major boost in 2022 and beyond. It’s worth revisiting the position around year end and see how many managed to get airborne.