This article aims to take a closer look at a bunch of subsea routes with potential for new submarine cables where, response to the question - why should someone build a submarine cable on this subsea route, leads to logical conversation, if not winning argument. It gains relevance in the backdrop of high fiber count cables shifting market focus from Wavelength ownership to Fiber Pair (FP) ownership. Further this shift in subsea connectivity paradigm is set go beyond OTT play to wider provider community led by forthcoming demonetization of FP economics.
Highly attractive deals for $/FP compared to opex for capacity inventory over 5-10 years will expand the addressable subsea connectivity market in the course of next 2-3 years. Further some of these subsea routes are covered with two or more underutilized and aging consortium cable systems, singly or as interconnected segments, that are outright expensive with high O&M charges. Arguably they are on the verge of losing relevance as new cable systems with higher T/FP and higher FP/Cable being planned and developed by Independent Infrastructure Providers (IIP) become RFS.
- Mumbai-Chennai: This certainly is not a new subsea route; SMW4, BBG and eventually SMW6 will provide subsea connectivity between Mumbai and Chennai. However, that’s not enough considering growth forecast for Europe-India-APAC corridor in the next 10 years. Further new submarine cables on Chennai-Singapore and Mumbai-Marseilles route, that are expected to be RFS in 2022-23, will look for onward connectivity to Europe and APAC respectively. It will create demand for Mumbai-Chennai FP, that is not available in SMW4, BBG or even SMW6 as they are not architected for it. Hence the need for a dedicated point to point submarine cable from Mumbai to Chennai has been felt for last 1 year, as terrestrial long-haul connectivity even with three diverse routes, laddered interconnect and ASON could not meet reliability expectations. With subsea route length of 3000 kms, it would be a $120M initiative. With 16FP system, it would be $7.5M/FP. With modest 12T/FP, it would be 0.625M/T. That’s nearly same as the prevailing price for 100G on long haul intercity routes, but with much better performance and reliability. With such attractive economics, why someone isn’t developing such a cable system, despite Tata Communications, Airtel and Reliance Jio having CLS in both the locations. Well, more than one Singapore-Chennai-Mumbai cable system is under development. However, they would position Mumbai-Singapore or Chennai-Singapore FP instead of promoting Mumbai-Chennai FP. I remain hopeful an OTT-Telco joint venture will take it up in the next 12-18 months.
- Chennai to Perth: This is a totally new subsea route that will provide express route connectivity from Chennai to Perth, which will be shorter compared to Chennai-Singapore-Perth route. 6300 kms of nearly straight subsea route makes it a $250M venture and $15M/FP with 16 FP cable system. With top-4 Tier-1 and top-4 Tier-2 OTT activities growing steadily in India and Australia the Chennai-Perth route is expected to gain traction going forward. In addition to its significance as standalone subsea route, it would open Marseilles-Egypt-Djibouti-Mumbai-Chennai-Perth route to connect Europe to continental Australia with low latency and low risk subsea route. It reminds of Australia West Express (AWE) cable system from Djibouti to Perth, launched 3-years back, that failed to take off, that some viewed retrospectively being ahead of time. I’m hopeful an OTT-IIP join venture will take up this route in near future.
- Muscat to Perth: In this last one week this subsea route has been the talk of the town with maverick serial entrepreneur Bevan Slattery announcing the 9700 kms 4FP 54T Oman Australia Cable (OAC) from Muscat to Perth. The landing party in Oman is not disclosed yet, though speculation points at Omantel, that remains interested to grow the count of submarine cables beyond 15 that it has in its arsenal. In Perth it certainly will land with INDIGO for cross-connect with INDIGO West and INDIGO Central for onward connectivity to Singapore and Sydney. At the same time questions are being raised on the relevance of the estimated $400M super-loop cable route and weather the assertive announcement is intended to create distraction from pressing challenges and competitive dynamics. It remains to be seen if Bevan will be able to walk the talk.
- Singapore to Hong Kong: This for sure is not a new subsea route, with 6 submarine cables with consortium build – AAG, APG, ASE, EAC-C2C, SJC and SJC2 (Q2 2020) already connect Singapore to Hong Kong. However, none offer FP ownership as a service and hence terabit-scale subsea connectivity is not commercially viable in most cases, except for OTTs. This 3000 kms subsea route would be $120M venture i.e. $7.5M/FP with 16 FP cable system. Many industry observers believe this route is best suited for the first ever deployment of 24FP system, that would create unprecedented economics for FP ownership with $5M/FP. Reportedly some submarine entrepreneurs are working for last one year and are in advanced stages of planning, however there hasn’t been any public announcements yet. Most of the industry insiders that I have spoken to remain optimistic that this route has potential for high fiber count submarine cable built.
- Chile to Hawaii/Guam/Hong Kong: In the last 4-5 months there has been several news articles that talk about interest of Chilean government to establish direct subsea connectivity with Asia for trade promotion and the abhorred proclamation – make Chile the Digital Hub of Latin America. The best option to reach is APAC is submarine connectivity to Guam with span of 16,000 kms as several submarine cables land and are scheduled to land in Guam that provide connectivity to Singapore, Hong Kong, Tokyo and Sydney. However, would Chilean government want strong-armed US intervention in the submarine cable. Possibly it will, provided there is sizable investment from an US entity either as co-investor or anchor customer. Reportedly Chinese and French governments have also shown interest to provide capital for the cable system, pitching Huawei with ASN. An alternate approach being considered is landing in Hong Kong instead of Guam, albeit with subsea route of 19,000 kms, though the local news media in Chile reported 24,000 kms route to Japan and 22,800 kms route to Shanghai. However, Hawaii it seems has taken the lead with South America Pacific Link (SAPL) cable system being developed by Ocean Networks, to connect Valparaiso/Chile and Oahu/Hawaii a span of 11,000 kms, other than Florida, Panama and Ecuador. At Hawaii SAPL will interconnect with existing systems like SEA-US, AAG and Hawaiki. Is an investment of $400-500M is really justified with $30M/FP. Some leading subsea entrepreneurs have had lukewarm interest to invest but remain apprehensive, till the far end landing point is decided by the Chilean government by June 2020. Thus, for all practical purposes it’s a project that could see light of the day by 2025.
- South Africa to Brazil: This remains a contentious subsea route, just like other Africa-Brazil submarine cables - SACS and SAIL. As such South Africa and Brazil do not have trade ties to justify such a cable system. Further the marketed attractiveness of the subsea route lies in extension from - Fortaleza or Rio de Janiero to Florida or Virginia in North America with BRUSA, MONET or SEABRAS-1 and similar extension from South Africa to Singapore and/or India with SAEx2 and IOX. However, this subsea route did not get traction as the wider premium deep-sea submarine route from Singapore to Virginia Beach, is yet to gain traction in the market. It’s for this reason SABR from Seaborn Networks and SAEx1 from SAEX are not able to make a breakthrough. However, committed submarine cable entrepreneurs continue to pursue the mission impossible. I hope they able to get OTTs interested in this subsea route and make it a big success story.
- South Africa to Singapore: This route is part of the larger 27000 kms Singapore-South Africa-Brazil-US subsea corridor that SAEX is targeting. Like South Africa to Brazil, it is yet another contentious subsea route, struggling to gain traction and acceptance. SAFE did provide a subsea route from South Africa to Malaysia, however it remained sparsely used and largely underutilized. That’s possibly is the reason SAFE never had a successor planned to replace it. The OTTs have had lukewarm interest in the subsea route but did not sign-up as anchor customer for FP ownership. Is out-of-the-box collaboration possible wherein SAEx and IOX decide to join hands to develop a 12FP or 16FP cable system with each party owning 6FP or 8FP. They could even co-build the India branch, which is of common interest to both. It seems the lukewarm optimism will simmer for some more time before a new subsea cable on this route becomes reality.
- Djibouti to Marseilles: Djibouti is a country primarily known due to eight (8) consortium built submarine cable making stopover and that has made it a key hub for EMEA and the interconnect gateway between Asia, the Middle East, Europe and Africa. Hence this route is significant with respect to Europe-Djibouti-Oman/Dubai, Europe-Djibouti-Mumbai and Europe-Djibouti-Singapore. This means a Djibouti-Marseilles cable system is likely to encourage Djibouti-Oman/UAE and Djibouti-Mumbai and Djibouti-Singapore cable systems. However, this 7000 kms subsea route as $250M initiative hasn’t evoked much interest with submarine cable entrepreneurs till date though some have studied the feasibility of submarine cable build, but eventually decided to wait and watch.
- Djibouti to Oman/UAE: For the Middle East region connectivity to Europe and APAC continue to gain importance. With several Europe-APAC cable systems having stopover in Djibouti and Djibouti being the gateway to Africa, a submarine cable connecting Djibouti to Oman/UAE is likely to enrich subsea connectivity options for Middle East. Omantel promoted Gulf2Africa or G2A, came close to it, though it stopped short of Djibouti and instead had two landings planned for enigmatic Somalia. However, the initiative did not reach CIF. It’s time Omantel along with Djibouti Telecom and Ethio Telecom revive and redesign Gulf2Africa and plan for Oman-Somalia-Djibouti connectivity, and even extend one FP from Djibouti to Addis Ababa.
- Bangladesh to Singapore: With upbeat economic growth bandwidth requirement in Bangladesh continues to soar and set to grow from 1.5T in 2019 to 4T in 2023. Thus, Bangladesh does require new cable systems other than SMW4 and SMW5. Reportedly BSCCL has decided to join SMW6 consortium with ownership of fractional fiber pair. BSCCL had the option to go with SIGMAR being developed by Campana Networks that connects Myanmar to Singapore with 600 kms submarine extension from Cox Bazar, with provision for FP ownership. It decided not sign-up for SIGMAR as they were not comfortable with perceived uncertainty on operational assurance over the lifespan of the cable system. Strained political ties Bangladesh and Myanmar also influenced the decision. Its high time Bangladesh ends monopoly regime and open the gates for participation of the NTTN and IGW license holders, some of which are keen to invest in new submarine cables and have undertaken desktop studies. The milestone will be a submarine cable from Cox Bazar to Singapore, a subsea route of 3200 kms. With 8FP 12T/FP system at $120M, it leads to $1.25M/T, that is significantly less that what the NTTN providers are currently spending on IPT. It remains to be seen if grit and determination of entrepreneurial zeal can confront BTRC, the regulator, and make it issue license for submarine cable landing.
- Singapore to US West Coast: This transpacific route that has gained traction in last 8-months with ongoing political turmoil in Hong Kong and escalating China-US trade tensions. While several consortium cables like AAG and BtoBE (Q2 2021) are available that connect Singapore to US West Coast through Hong Kong or Japan, an express route from Singapore to LA is not available yet. The express subsea route is made challenging by intervening archipelagos of Indonesia and Philippines. There was however an attempt with SEAX-2 few years back, but it did not progress beyond drawing board planning. A yet unannounced cable system is said to be making steady progress. The OTT backed initiative is reportedly on track to announce CIF in H2 2020. It’s likely to offer hot selling FP. However, the world of submarine cables has its underbelly of murky dynamics where win-lose play is orchestrated behind the scenes to promote vested interests and that determines who gets to acquire FP in the a given subsea route.
- Hong Kong to Sydney: It’s not a new subsea route. Hong Kong-Guam and Guam-Sydney will be available by Q2 2020 with HKG and JGA-South from RTI. Reportedly some OTTs have already signed up to it. However, some may not consider it an express route with stopover in Guam. Further some may not be comfortable with US landing and would prefer express subsea route from Hong Kong to Sydney without stopover in Guam. The H2 Cable the sister-cable of Hawaiki Cable was in the news 4 months back for signing up with SubCom for the 9700 kms subsea route. However, it’s well understood that announcing a plan to build a submarine cable does not in anyway mean the cable system will be built anytime soon. Raising funds of the order of $350M would be a formidable challenge.
Having looked at these subsea routes, do we see a new trend in submarine cable built shaping up, particularly in the EMEA-India-APAC corridor, that of short-span high-fiber-count submarine cables which foster collaboration for FP ownership and FP swap. Will it lead to new business dynamics to develop longer span subsea connectivity by interconnecting submarine cable system akin to modular architecture! While FP swap seems to be win-win reciprocal arrangement, some consider it collective or cartelized weakness.
It's time to conclude. The subsea routes considered are those where some ongoing movement to explore, plan and develop new submarine cable systems is seen in public domain or have come up in privileged conversations. In some or arguably most cases a phenomenon of spot jogging is seen, where there are marketed activities, but movement is perceptibly absent. In others indefinite silence follows flashy announcement. Some make a determined comeback and go ahead with implementation. It’s through the meandering pathways of light and shade, of hope and hopelessness that new submarine cable development goes through, for 2, 3, 4, 5 years and even more in some cases before it gets funded and gains anchor customers. That’s the reason entrepreneurial endurance of submarine cable entrepreneurs is highly admired, and I remain hopeful they would develop new submarine cables over the subsea routes discussed here in the next 2-3 years.