FINANCE & LEGAL
EXORDIUM BY WAYNE NIELSEN
elcome to Issue 99, our Finance & Legal edition.
Every year I am continually amazed with the significant depth and serious detail provided by our various authors; this finance and legal issue is certainly no exception.
My quest to see the world started in 1976 when I was 18 and a Senior at Guilford High School in Rockford, Illinois. The Comparative Poli Sci and Econ (COPOLECS) class had been developed by a somewhat peculiar teacher named Chuck, who every year would single handedly chaperone 20 or so kids during Easter break to the Soviet Union. Annually he would cajole the apprehensive parents into letting 2
him take their precious teenagers to a place rarely experienced by corn fed mid-westerners, Moscow and Leningrad, monetarily supported as a goodwill gesture by Mr. Brezhnevâ€™s government. Chuck gave me a job in his ice cream store, so I could earn the money to go, and loaned me my first readings from Milton Friedman and Solzhenitsyn. So, we went and survived and experienced some incredible memories and learned untold numbers of lessons, then graduated, and in my case moved away and rarely looked back. The first real job I ever had after college brought me a lot to Europe, and the best boss I ever had, Rex Ramsden, brought me and my now family next to Southampton in the early 90s, and let me travel across
the continent and into the Middle East and even parts of Asia. And since that time added a couple more continents and even the Arctic.
My friend and colleague, Charlie, was in town this week and he told me about his quest to the USSR as a guest of Mr. Khrushchev some years earlier than me. He and I traded long ago stories for quite a few minutes; he, too, was significantly impacted by the opportunity. Having grown up in Saudi Arabia as an oil kid he had plenty of cool travel opportunities. Charlie still travels for our work, as well as regularly teaches physics to kids in a high school his daughter graduated from several years ago; he still goes back and supports the Parent Teacher Organization and teaches what he can.
I was recently contacted by a teacher from the Albemarle High School in Charlottesville, Virginia, who was looking for a spare piece of cable or something to show her AP Computer Science class. I didn’t have a spare laying around, but suggested I send her some cable maps, which after a few confirming emails she accepted, and so we sent her a box of some 100 maps for her kids. A few weeks went by and we forgot about the exchange until a couple of days ago a brightly colored thank you card came from her and it was signed by her 25 or so students. I imagine her kids having our cable map somewhere on their bedroom walls. I’m not sure its as good as my old Farrah Fawcett poster, but it’s still a pretty cool feeling. I’ve never really considered myself much of a teacher, but I suppose we all are teachers from time to time.
I turned 60 last month and I wonder who is coming up next to carry the proverbial torch. I’m not worried, just curious. But milestones like a birthday help you focus somewhat, help you consider the direction we are all headed. So, this milestone year I plan to follow in Thor Heyerdahl’s steps on Easter Island, as well as run the Rapa Nui Marathon among the moai. Then I will volunteer at the Rwamagana Lutheran School in Rwanda where we sponsor a student, and which will
afford me the added opportunity to commune with and learn from the memory of Dian Fossey on a mountainside near the Karisoke Research Station. I’ll take some R&R in New Orleans and at my beach, and probably end up in my home village in the New Forest. I’ll also work a hell of a lot, too, but that’s okay; I’m lucky enough to still be jazzed about what we do!
We all have our milestones. Some are positive; some are not. Wishing you only positive milestones for the months ahead. Happy reading,
Wayne Nielsen Publisher 3
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STABLE AND SUSTAINED GROWTH
By Wayne Nielsen
By Kieran Clark
SUBMARINE CABLE TELECOM AND NATIONAL SECURITY REVIEW 2018-2020: WHAT’S ON THE HORIZON? By Andrew D. Lipman, Ulises R. Pin and Denise S. Wood
Dancing With Financiers: When The Submarine Industry Goes Into Flirting Mode By Laure Duvernay
Liability For Damage To Underwater Cable Under Canadian Maritime Law By Jean-Marie Fontaine
Will North Korean Atmospheric Nuclear Testing Damage Submarine Fiber Optic Telecommunications? By Thomas S. Popik, George H. Baker, and William R. Harris
Evaluating Submarine Cable Supply Contracts
Collaborating To Support Marine Licence Applications From The Subsea Cable Sector
By Jennifer Gibbons and Mike Conradi
By The UK Marine Management Organisation’s
Interview With The Suboptic 2019 Program Chair
Back Reflection: The “Light Years” Of The Bubble 1998-2005
Dr. Stuart Barnes
By José Chesnoy
From The Programme Committee By Marc-Richard Fortin And Steve Dawe
From the Conference Director By Christopher Noyes
Advertiser’s Corner By Kristian Nielsen
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17 Jul-17 Aug-17 256 615,327 670,313 563 92,291 92,367
Sep-17 1,180,000 90,588
Web Traﬃc Jan-17 Web Traﬃc - HitsJan-18 797,319 Dec-17 Feb-18 Web Traﬃc - Unique Visits 88,566 1,198,387 1,129,856 1,009,587 120,841 125,364 120,458 Magazine Downloads Issue 93 Mar-17 Issue 94 May-17 Issue 95 Jul-17 Issue 96 Sep-17 Issue 97 Nov-17 Issue 98 Jan-18
WEB HITS ANNUAL TOTAL
Oct-17 1,130,000 112,000
Nov-17 1,208,518 115,622
Feb-17 Mar-17 Apr-17 May-17 Jun-17 Jul-17 Aug-17 405,904 697,859 689,251 721,547 715,256 615,327 670,313 87,896 95,269 85,265 88,594 87,563 7,622,776 92,291 92,367 1,182,409 Web Hits Annual Total 106,149 Avg Monthly 92,040
69,632 72,693 70,542 78,000 80,743 81,759
510,519 589,621 475,025 526,983 456,782
Sep-17 1,180,000 90,588
Oct-17 1,130,000 112,000
Nov-17 1,208,518 115,622
Dec-17 1,198,387 120,841
Jan-18 1,129,856 125,364
Feb-18 1,009,587 120,458
Almanac Downloads Issue 21 Issue 22 Issue 23 Issue 24 Issue 25 Industry Report Issue 6
Aug-17 670,313 92,367
Sep-17 1,180,000 90,588
Oct-17 1,130,000 112,000
Nov-17 1,208,518 115,622
Dec-17 1,198,387 120,841
Jan-18 1,129,856 125,364
Feb-18 1,009,587 120,458
Feb-17 May-17 Aug-17 Nov-18 Feb-18
1,182,409 Web Hits Annual Total 106,149 Avg Monthly
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STABLE AND SUSTAINED GROWTH BY KIERAN CLARK
oming off one of the strongest years the industry has ever had, 2018 looks to continue the trend. With cash-rich Over-The-Top (OTT) providers continuing to fund an increasing number of systems and the demand for international data continuing to reach new heights, there seems to be little signs of slowing down. Trends have changed little from last year, and securing financing continues to get easier as
the market continues to grow at a rapid pace.
Welcome to SubTel Forumâ€™s annual Finance and Legal issue. This month, we look at the industryâ€™s current finance and ownership status and see what the future might bring. The data used in this article is obtained from the public domain and is tracked by the ever evolving STF Analytics Submarine Cable Database, where products like the Sub-
marine Cable Almanac, Submarine Cable Map and Submarine Telecoms Industry Report find their roots. It has been a full year since our last look at the financial situation of planned systems around the world. New systems have been announced and planned systems have gone into service, while others have been delayed or changed. Quite a lot can happen in one year, and this year was no different.
Systems Announced RFS 2018-2021 25
Figure 1: Systems Announced RFS, 2018-2021
Since our last Finance and Legal issue, we observed that of the 27 planned systems announced to be ready for service in 2017, only 15 were accomplished. However, this is a large step up from 2016, which saw only 6 systems move from planning to reality. Several of the remaining systems were delayed to 2018 for various reasons, while the remainder of systems scheduled to be ready for service in 2017 simply died outright. Combined with a net addition of 3 systems announced for the future compared to a year ago, this shows signs of a relatively healthy market. In total, 53 systems are currently planned through 2021 â€“ with 22 systems planned for 2018 alone. (Figure 1)
System Ownership Type 2018-2021 16 14 12 10 8 6 4 2 0
Figure 2: System Ownership Type, 2018-2021 Continuing the comparison to last year’s numbers, the way systems are being financed sustains a shift towards single owners. (Figure 2) This trend was first observed in 2015 and has since continued to move in this direction. Over the next several years, only 32 percent of systems will be owned by a consortium, with the remaining 68 percent having a single owner. While consortium ownership reduces the financial risk to any single owner should a cable system fail, single ownership provides potentially greater flexibility and speed to the cable development process. To provide additional context to this shift in ownership type, many of the new systems over the next several years are relatively smaller systems that serve specific needs. A large portion of the systems planned for 2018-2021 connect various island nations in the Pacific
to existing international pipelines or serve specific purposes such as connecting data centers within an OTT provider’s international infrastructure. With OTTs continuing to drive cable demand because of the need for more control over the development process and a desire for faster system installations to keep up with their bandwidth and routing requirements, this trend is expected to continue over the next several years. While single owners continue to increasingly dominate the submarine fiber market, the way a system is being financed has changed noticeably from last year. In 2015, an even split between Debt/ Equity and Self-Financed systems was observed. For 2016, a new
factor was added with a noticeable percentage of systems backed by Multilateral Development Banks (MDBs). Throughout 2017, the percentage of financing types skewed towards Self-Financed systems. However, in 2018 there appears to be a shift back to Debt/Equity financing – an 11-percentage point increase over last year. (Figure 3)
System Financing Type 2018-2021 MDB 8%
Figure 3: System Financing Type, 2018-2021
Systems Announced by Region 2018-2021 Transpacific 14%
Indian Ocean 3% EMEA 16%
Figure 4: Systems Announced by Region, 2018-2021 This shift back towards Debt/Equity financing indicates that system owners and financiers are more willing to take on the uncertainty of Debt/Equity financing, provided a planned system can provide a strong business case.
Breaking the next several years down regionally, the Americas region shows the most system activity. Nearly one-quarter of planned systems for 20182021 will be developed in this region – up from last year. This reflects efforts from OTT providers to connect their infrastructure between North and South America, as well as the new push for route diversity and replacement of aging assets. The Transatlantic region accounts for the next most global activity at 19 percent of total – which is again largely fueled by OTT, route diversity and age concerns – and is up significantly from a year ago. System activity in the Transpacific is slightly up from last year and follows similar trends to the Americas and Transatlantic regions. The AustralAsia region has seen a huge decline in activity from a year ago, with system activity cut almost in half largely due to the majority of island nations in the Pacific having already been connected to
the global network. The EMEA and Indian Ocean PanEast Asian regions both continue to see muted growth as a result of sustained regional instability and the largely “pass through” nature of the Indian Ocean.
For the first time, significant planned system activity is observed in the Arctic, with 7% of all planned systems taking place in this region. This signifies an important dynamic shift as companies and governments look to take advantage of the much shorter – and therefore lower latency – routes that can be achieved by going polar. (Figure 4) The true measure of a cable system’s viability – and the strongest indicator that a system will be completed – is whether or not it is Contract In Force (CIF). At this time last year, 42 percent of future systems had achieved this important milestone. One year later, the CIF rate has remained at 42 percent. (Figure 5) Combined with a slight increase in the number of planned systems compared to last year, this seems like an encouraging sign for overall industry health. In March of 2017, 48 percent of all systems planned for that year were CIF. This year shows a slight im-
Systems CIF 2018-2021
Figure 5: Systems CIF, 2018-2021
provement, with 52 percent of systems planned for 2018 achieving the CIF milestone as of this writing. This slight increase paired with the continuing trends that led to a well performing 2017 should indicate sustained market health for at least the near future. Unfortunately, the majority of systems that have not achieved the CIF milestone for this year are relying on Debt/Equity financing and may simply be having trouble getting funds together despite the overall shift towards Debt/ Equity through 2021.
Financing for systems continues to be the largest hurdle for many prospective owners â€“ a fact that is unlikely to go away any time soon. Even with these difficulties, the next 18-24 months look to keep the momentum from 2017 going and continue to keep the industry busier than it has been since the industry crash of the early 2000s. While the cash-rich OTT providers are driving an increasing number of planned systems, there is some question as to how long this trend will last, casting a cloud of uncertainty beyond the next 2 years. However, a lot can change in that time and a cautiously optimistic outlook is the most suitable for now.
Kieran Clark is an Analyst for Submarine Telecoms Forum. He joined the company in 2013 as a Broadcast Technician to provide support for live event video streaming. In 2014, Kieran was promoted to Analyst and is currently responsible for the research and maintenance that supports the SubTel Forum International Submarine Cable Database; his analysis is featured in almost the entire array of SubTel Forum publications. He has 4+ years of live production experience and has worked alongside some of the premier organizations in video web streaming. 15
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SUBMARINE CABLE TELECOM AND NATIONAL SECURITY REVIEW 2018-2020: WHAT’S ON THE HORIZON? BY ANDREW D. LIPMAN, ULISES R. PIN AND DENISE S. WOOD
As the global demand for data continues to grow at an extraordinary rate, a changing geopolitical climate and increased focus in on cybersecurity and national security concerns, including ownership of critical infrastructure, will continue to impact submarine cable development in the coming years. With more than three billion current Internet users, Internet traffic is anticipated to reach 30 gigabytes per
capita by 2021. Given their capacity, speed and security, submarine cables, carrying over 99 percent of all international communications, remain the preferred medium for transporting Internet traffic. Some recent changes that are leading to greater unification in the regulatory environment, particularly in the European Union (“EU”), appear to point toward harmonization of regulatory requirements with respect
to trans-Atlantic submarine cable routes. However, an increasingly politicized environment resulting in heightened economic nationalism also creates impediments to investment in, and deployment of, submarine cable networks, particularly in the United States and the EU. This article provides a high-level overview of some of the regulatory considerations on the horizon that may
impact submarine cable licensing and operations in the coming years.
I. HEIGHTENED ECONOMIC NATIONALISM IN EUROPE AND THE UNITED STATES
Certain countries, including the United States and several EU members, are becoming increasingly economically nationalistic, spurred by drivers such as trepidations about terrorism, foreign policy and, in some instances, sluggish economic recovery or promotion of local economy. For example, in the U.S., there was some recent debate about whether to extend the Jones Act to ships that lay and repair submarine cables, thereby requiring that ships be built in the U.S. and have a majority of the crew as U.S. citizens. However, parties in opposition have strongly argued that such measures would have a detrimental impact on the efficient protection of critical submarine cable infrastructure that
spans the globe, and the proposal has been halted for the time being.
The emergence of China as a new counterbalance to American hegemony in the world and its well-publicized acquisitions of critical technologies in the West coupled with the highly politicized environment in the United States and Europe has resulted in economies less open to foreign investment, particularly with respect to China, the Middle East and Russia.
II. CHANGES TO THE U.S. REGULATORY LANDSCAPE
The marked increase in economic nationalism and protectionism in the United States has resulted in heightened national security review of transactions involving foreign investors and which involve critical infrastructure, such as submarine cables. Combined with the recent reversal on net neutrality rules in the United States and regulatory changes in the EU, international and
intercontinental submarine cable owners and operators must navigate an increasingly complex legal and regulatory landscape. A. U.S. NATIONAL SECURITY REVIEW
Because most subsea cable applications have some level of foreign ownership or participation, submarine cable landing license applications are subject to review by “Team Telecom,” an ad hoc task force comprised of the Departments of Defense, Homeland Security, and Justice, including the Federal Bureau of Investigation, in addition to potential review by the Committee on Foreign Investment in the United States (“CFIUS”). As the specter of cyberterrorism increases internationally and the United States becomes increasingly more protective of its critical infrastructure, the process for obtaining national security approvals has become more onerous. The Team Telecom review process involves more scrutiny in
recent years and has become even more time consuming during the Trump Administration. This national security review adds significant time concerns and uncertainty to the process of landing a new cable or obtaining control of a cable touching the United States. The Federal Communications Commission (“FCC”) will rarely grant a submarine cable landing license in fewer than six months where Team Telecom review is required, and in recent years a twelve-plus-month review period has not been uncommon.
National security issues have become more complex in recent years with the increase in globalized supply chains and the increase in the number of transactions involving emerging technologies and sensitive data of U.S. citizens. For example, U.S. sensitivities to Chinese investments in sensitive technologies such as semiconductors have resulted in certain transactions being blocked on the basis of national security concerns. This can be seen percolating into the telecommunications arena as well, for example, in the form of significant delays in applications by Chinese carriers or in projects otherwise touching China.
Team Telecom review often results in required letters of assurances or network security agreements as a condition for FCC license approval. These agreements are viewed as critical to facilitating surveillance programs conducted by U.S. national security and law enforcement agencies, for example, the National Security Agency, as well as for preventing foreign governments from gaining visibility into U.S. telecommunications and surveillance systems. Provisions of such agreements frequently include limitations on equipment types used, or requirements to establish a network operations center (“NOC”) located domestically and operated by screened U.S. citizens.
While there are very few reported cases of applications denied based on Team Telecom/CFIUS concerns, applications often languish for months without progress, given that Team Telecom is not constrained by any statutory timeframes for review. In an open proceeding, the FCC proposed a 90-day shot clock on Team Telecom review in a relatively recent reform proceeding, but this process is moving at glacial pace in Washington D.C. In
addition, new legislation to revise CFIUS regulations is currently being considered and may broaden CFIUS authority for review to include matters that are currently only considered by Team Telecom, smaller minority investments, or arrangements involving the contribution of intellectual property or certain types of services with sensitive implications. A more transparent process with clear guidance regarding review timeframes would provide greater certainty for telecommunications companies with foreign ownership interests as well as their investors. B. NET NEUTRALITY
Net Neutrality – the concept that Internet service providers must treat all data on the Internet the same, regardless of content – is an issue of broad and current interest vis-à-vis access to broadband networks, including ultra-high broadband networks, such as submarine cables. The United States has recently taken a step back with respect to the paradigm of open network access, despite adoption of EU-wide net neutrality rules in Regulation
2015/2120, which prohibit blocking, throttling or discrimination with respect to online content, applications and services.
In December 2017, the FCC reversed the landmark Obama-era net neutrality rules, which aimed to establish a level playing field on the Internet by preventing broadband companies from slowing down or providing paid-for priority for certain types of traffic. This controversial decision in a highly contentious proceeding has sent the message that under the current Administration, there is more of a free market, less regulatory approach; though its ultimate impact on the regulatory environment remains up for debate with potential appeals looming and legislation being proposed to reverse the decision.
The ongoing debate regarding net neutrality in the U.S. and resulting impact it could have on other regulatory frameworks over time remains an issue to watch given that the divergent treatment of Internet content delivery could influence the demand for capacity on submarine cables. While the inconsistencies between the U.S. and EU net neutrality regulatory schemes and potential effects on price structuring and other business decisions will, in large part, be borne by last mile and Internet Service Providers, the impact could also trickle down to content transport mechanisms. A laissez-faire capitalistic mechanism that allows parties to sell priority access to those with the means to pay a premium for increased speed and lower latency on one end of a network and a protectionist prohibition on discrimination with respect to content provision on the other, could make it difficult for a trans-Atlantic cable operator to set consistent pricing rules and expectations.
III. CHANGES IN EU TELECOMMUNICATIONS REGULATION The European Union is working to unify and harmonize a number of regulatory frameworks that impact the telecommunications sector. Most notably, the General Data Protection Regulation (“GDPR”) is a significant overhaul to EU data protection legislation and aims to protect its residents’ personally identifiable information and “right to be forgotten.” The EU is also moving toward a unified Electronic Communications Code providing EU-wide telecommunications regulation and has proposed a Cybersecurity Act to address security issues impacting critical infrastructure across the EU. On one hand, the unification of EU regulations addressing data protection and electronic communications are welcome changes for international and intercontinental submarine cable owners and operators, simplifying the number of regulatory regimes touching a cable system. On the other hand, however, these regulations impose onerous requirements and harsh penalties for noncompliance, reaching new technologies and services not contemplated under prior regulatory frameworks. Finally, similar to the United States, the EU has recently begun moving toward more protectionist measures with respect to critical infrastructure and access to these networks by foreign nationals. Adoption of new EU-wide national security rules will be a significant consideration of submarine cable operators when designing new networks and acquiring existing systems touching Europe.
A. GENERAL DATA PROTECTION REGULATION (“GDPR”)
The GDPR, which is intended to unify data privacy requirements across the EU, takes effect May 25,
2018. The GDPR establishes a technology neutral, uniform framework for data protection legislation across the EU, replacing individual countries’ separate data protection laws. This framework levels the playing field with respect to data protection regulation in the European Union, easing the burden for entities that offer services in multiple countries, which will no longer need to comply with multiple regulatory regimes but instead only need to interface with a single data protection authority in most cases.
The GDPR applies widely to organizations that collect and process data for their own purposes (“controllers”) as well as to organizations that process data on behalf of others (“processors”). Specifically, with respect to entities domiciled in the EU, the GDPR applies to the processing of anyone’s personal data collected in the context of the activities of such organization. In addition, entities established outside the EU are also subject to the GDPR with respect to the processing of personal data that applies to EU residents.
Under the GDPR, companies may only collect and process personal data that has not been rendered irreversibly anonymous for specified legitimate purposes and processing must be limited to the data necessary to fulfil such purpose, only for as long as necessary. Companies that collect “sensitive information” that pertains to, for example, an individual’s health, race, sexual orientation, religion, political beliefs or trade union membership, are subject to additional processing constraints and may need to implement additional safeguards, such as encryption, to protect the data. Telecommunications companies with capacity on international submarine cable routes must take measures to ensure the security, integrity and confidentiality of personal data
and must maintain detailed internal records of processing activities to ensure compliance with the GDPR. In particular, providers must assess whether they would fall within the broad purview of the GDPR, even if their networks do not directly touch the EU and must understand the types of data that may be collected and must be protected in their roles as data controllers or providers. Failure to comply with the GDPR may result in significant fines of up to EUR 20 million or 4 percent of a company’s global turnover. In addition, consumers may bring civil litigation against entities for breach of the GDPR. The tension between the cybersecurity and privacy frameworks established in the United States and Europe is readily apparent. On the U.S. side, the government has a significant national security interest in gaining additional visibility into networks, particularly those involving critical infrastructure with foreign ownership, and seeks access to information and content that flows through networks touching U.S. territories. Conversely, European regulators have declared long-arm jurisdiction to protect the individual liberties and fundamental privacy rights of their residents, in particular with respect to the processing of their personal data.
Submarine cable operators thus find themselves in a difficult position having to simultaneously comply with incongruent regulatory requirements, which could, in turn, lead to an increase in litigation. For example, a case involving Microsoft will make its way to the Supreme Court of the United States this year, arguing that because its data was stored in Ireland, it did not have to release requested information to U.S. law enforcement officials. It follows that the increased risk of litigation associated with cybersecurity, privacy requirements and
legal compliance issues in multiple jurisdictions requires additional resources to be allocated within an organization, which could thereby drive up the cost of bandwidth. B. EU ELECTRONIC COMMUNICATIONS CODE
In addition to a harmonized data protection framework under the GDPR, the EU is moving in the near term into a unified Electronic Communications Code (i.e., an EU-wide telecommunications regulation aimed at promoting investment, competition and innovation and preparing Europe for 5G services and ultra-high broadband connectivity). The Electronic Communications Code proposes measures such as: introducing new provisions to support the roll-out of very fast networks capable of gigabit per second speeds; broadening the scope of the legislative framework to cover new communications tools, such as ‘overthe-top services;’ proposing changes to radio spectrum management; and providing affordable functional Internet access to end-users. EU leaders set a deadline of June 2018 for an agreement with the European Parliament under the ordinary legislative process. As with the GDPR, a unified electronic communications
code would subject submarine cable operators with multiple landing points within the EU to a single regulatory regime, where they would otherwise have to comply with the regulations of each individual member state in which they intend to land. However, the devil is in the details and until a more defined European Electronic Communications Code is promulgated, it is difficult to assess the particulars with respect to its impact on existing and prospective submarine cable operators.
C. NATIONAL SECURITY REVIEW IN EUROPE
For acquisitions of telecommunications network assets by non-EU nationals, countries such as Germany, Italy and France are increasingly requiring critical infrastructure national security filings similar to those required by CFIUS in the United States. As with the CFIUS process, these reviews have the potential of exacerbating nationalism and potentially blocking network acquisitions by foreign investors on the grounds of cybersecurity. In addition to the national measures, the European Commission’s draft Regulation 2017-2025 “Cybersecurity Act” aspires to address
and prevent network and information security incidents and provide guidance on security of critical infrastructure across the EU. While the proposed measures do not impede further national actions in terms of national security matters, if adopted, the Cybersecurity Act would likely provide greater uniformity and predictability for telecommunications companies in terms of compliance with a cybersecurity framework and transaction review process. However, if the U.S. national security review framework serves as a model, this additional European review is likely to inject additional uncertainty and delay into transactions involving the acquisition of telecommunications networks and critical infrastructure in Europe, including submarine cables landing in EU member countries.
The demand for international and intercontinental submarine cable capacity shows no sign of abating in the near term. The recent changes in national security review procedures as well as data protection and content delivery regulations in the U.S. and EU are just a few examples of the complex legal and regulatory environment that must be navigated by entities that own or operate international submarine cables as well as those providing content or services over the cable systems.
Andrew D. Lipman is a Partner at Morgan Lewis and practices in most aspects of communications law and related ﬁelds, including regulatory, transactional, litigation, legislative, and land use. Andy’s clients in the private and public sectors include those in the areas of local, long distance, and international telephone common carriage; Internet services and technologies; conventional and emerging wireless services; satellite services; broadcasting; competitive video services; telecommunications equipment manufacturing; and other high-technology applications. Additionally, he manages privatizations of telecommunications carriers in Europe, Asia, and Latin America. To open the US local telephone market to competition, Andy has been involved in most new legal and regulatory policies at the Federal Communications Commission, at state public service commissions, in Congress, and before courts. He helped shape crucial provisions of the Telecommunications Act of 1996 and used similar approaches to promote the opening of foreign markets. He also obtained one of the ﬁrst competitive local service and interconnection agreements in continental Europe and the ﬁrst competitive ﬁber network application in Japan. Ulises R. Pin is a Partner at Morgan Lewis and represents US and foreign communications and technology companies on corporate, ﬁnancial, and regulatory matters. He also advises private equity ﬁrms, venture capital funds, and ﬁnancial institutions on investments in the telecommunications, media, and technology (TMT) sectors. Ulises represents clients before the Federal Communications Commission and government agencies in Mexico, Latin America, Europe, and Asia. He has substantial experience in cross-border transactions. Ulises’s practice covers all sectors of the TMT market, including wireline, wireless and international communications, Voice over Internet Protocol (VoIP), infrastructure projects (land and submarine networks), satellite services, and emerging technologies. He counsels on complex cross-border transactions, including mergers, acquisitions, and divestitures; public offerings; joint ventures; and private and public equity investments. He also represents public and private companies in international corporate and ﬁnance transactions across industries, including telecommunications, technology, energy, retail, and real estate. Additionally, Ulises drafts and negotiates telecommunications and technology contracts on behalf of telecommunications operators, equipment manufacturers, and large telecommunications users Denise Wood is an Associate at Morgan Lewis and advises domestic and international companies on various regulatory, transactional, and litigation matters in the telecommunications, media, and technology industry. Her clients include technology companies; providers of wireless, satellite, Voice over Internet Protocol (VoIP), and broadband services; competitive local exchange carriers; and interexchange carriers. 23
DANCING WITH FINANCIERS: WHEN THE SUBMARINE INDUSTRY GOES INTO FLIRTING MODE BY LAURE DUVERNAY
he submarine telecommunications industry comes with an intrinsic and interesting paradox: undersea systems currently carry a vast majority of the worldwide telecommunication traffic and they are one of the largest infrastructures on earth. At the same time, however, they remain mostly invisible to the naked eye and their purpose unknown to the public. Most of us in the industry can indeed testify to often facing polite incredulity when explaining the role of submarine cables compared to that of the much more famous satellites.
This relative lack of exposure may seem trivial and some of us in the field enjoy the confidential nature of the submarine world but there is at least one domain in which its mystery has a significant impact: financing. For the financial community, absence of visibility indeed often translates into higher perceived risks and longer due diligence if only because of a lack of in-
ternal expertise amongst potential funders. Consequently, when raising money, considerable time is spent educating on the ins and outs of the undersea industry before actually getting into the deeper structuring discussions. This is only one of the hurdles submarine cable systems developers have to overcome when dealing with commercial banks, export credit agencies or infrastructure funds alike. This article will elaborate on the other obstacles as well as detail how suppliers can facilitate, if not totally alleviate, their customersâ€™ sometimes Sisyphean task of bringing a project to life.
ENTICING THE FINANCIAL COMMUNITY: A WORK IN PROGRESS Cable developers may have different reasons to reach out to investors and lenders. Some may be private players needing
to strengthen their backbone and counting on external funds to make their project a reality, others may want to make the most of the leverage effect despite an economic situation allowing standalone financing, while a few others may just use financing as a further means to differentiate wouldbe suppliers. Yet, no matter the situation the financial communityâ€™s prerequisites are seldom in line with the reality and timing of submarine systems development. Among the many hurdles, here are the main ones:
â€˘ The need for significant presales. One of the first questions financiers will ask is: where are the presales and where do they come from? This can be easily accounted for in the context of project finance in which the risk is actually taken on the future cash flows and the sources of future revenues need to be analyzed thoroughly. Presales are undoubted-
Content Providers‘ demand 2002 -2017 – Source :TeleGeography ly crucial to the credibility of a business plan, but the question is more in their amount. This often creates a dilemma between the need to satisfy potential funders through securing future customers early in the process and that of preserving operational phase price-driven revenues to ensure the optimization of the model. The resulting compromise may— or may not—be considered satisfactory by fund providers still reluctant to take market risk in a domain they don’t fully fathom. This is even more true because the relatively small numbers of cables actually going live on a project finance structure every year make it just short of impossible to resort to a comparable methodology to assess a new transaction.
• The secretive nature of the submarine telecommunications business. In a small circle in which members have known one another for decades and several cables sometimes compete on the same route, information is key if not a killer. Yet, for financiers to transform an initial curiosity in a somewhat exotic business into a profitable transaction they need
open communication about the projected funding plan, sources of revenues, status of discussions with potential customers, etc.… The demands and constraints on project business plans are real and require a need for discipline, transparency and the concrete materialization of verbal agreements—all sometimes not that obvious in an industry with quite a bit in common with a family business.
• A complex legal environment. This partly accounts for the prudence with which submarine transactions are managed: if the development of undersea systems bears a lot of similarities with that of other large infrastructures, their geographical reach is often significantly wider than for power plants or wind turbines, for example. The related legal framework is therefore much more complex and the corresponding legal risks, on permits in particular, are studied cautiously by lenders and equity providers alike. • The 2000’s legacy. Some financial institutions still bear the trauma of the burst bubble and look
at new submarine transactions with suspicion regardless of the contemplated structure. Credit committees sometimes still refer to the likes of 360networks and need to be convinced that the growing role of the content providers as well as the reduced Capex necessary to build a cable compared to the late 90s, are only few of the parameters preventing a new bubble.
These obstacles combined can help explain the extensive period necessary to raise financing for a project. Reaching financial closing constitutes a massive milestone, nonetheless, and once the contract has come into force, the construction phase is generally much smoother. That is with the notable exception of weather-challenged areas of the world for which the laying window must be respected strictly for fear of losing one full year. In any event, stakeholders supporting the development of the cable must be armed with patience and resources to actually benefit in the longer term from the fruits of their efforts.
SUPPLIERS AS GOBETWEENS, AND PARTNERS? From the financiers’ point of view, the submarine industry is thus seen as an appetizing pastry –fees can be huge; there’s no philanthropy here— that could make you sick if not eaten properly. In this context, suppliers have a role to play, first because they have a definite advantage in making their world better known in their own financing sphere, and, as established entities they are in a good position to do so.
In addition, they can create a financing ecosystem for clients with a proven business plan by having them benefit from their own partnerships. The client angle, i.e., the existing relationship that will trigger banks to step in, often seen as the sponsor’s or anchor’s, can thus also be that of the supplier. This is of course true for export finance, in which the supplier is always needed to onboard export credit agencies and allow for more favorable terms, but the supplier
angle may also play a role in situations not necessarily involving state support. Banks would then look at the development of a project in the context of a broader relationship with the supplier also including flow business such as performance bonds or foreign exchange lines. Project finance could therefore be considered as a side business, even though its returns will materially overwhelm those of the traditional businesses in the case of success.
There is another beneficial effect to the onboarding of new financial players as it expands the range of funding possibilities and introduces healthy competition between financiers. This is to the advantage of cable developers who can then, if all goes well, pick and choose the best terms and conditions for their project. Of note, the timing of selecting the right financial partner for a given phase is extremely sensitive: too late, a window of opportunity with a valuable teammate may be lost, too early and an unsuitable one may be chosen. In any event, exclusivity should
be treated with caution especially in advisory and especially too much in advance for fear of cutting the project from other sources of support that may be more compatible with its later evolutions.
In a nutshell, suppliers may facilitate financing and shorten the implementation time frame through leveraging of their own financial pool. What must be noted, though, is that development time is long for any undersea cable anyway. That an externally funded project will take even longer should not be surprising. It is not uncommon for example to see unofficial partnerships between funders, suppliers and developers be created in a maturing phase spanning a few years before the best structure is defined. A lengthy maturation time is probably a necessity too: if traditional finance does not buy in, it is likely because the commercial strategy needs to be worked on more to ensure the long-term viability of the project. In that respect, there is no miracle reci-
pe and those actively willing to step in despite an immature business plan should be cautiously dealt with. As a matter of fact, a few players out there have set up slightly dubious financing schemes. If most cable developers are expert in the submarine industry, fewer fully master the intricacies of financial markets and may consequently become prey to proposals coming at best with ludicrous fees, and at worst with long term detrimental consequences. One way of mitigating this risk is to rely on external trusted sources equipped with the relevant professionals before making potentially questionable choices. Suppliers with resources dedicated to accompanying clients during the financial development of their project can give a hand in this domain with successful results. Once again, the client-supplier relationship is leveraged, but this time from an internal point of view. The need to get optimized access to the financial community as well as sometimes limited exper-
tise at the developers’ level entail a modification of the interactions between suppliers and some of their customers. The amplitude of the ad hoc partnerships created naturally depends on the initial situation and funding needs of the projects. They can span from light upstream support to a role closer to that of a financial advisor. In most cases, however, this is a win-win situation as suppliers contribute to securing their own pipeline while developers benefit from free advice. A greater integration of the traditional financial circles within the submarine industry should therefore be welcomed and efforts allotted in this regard. Success in making our industry more attractive will be measured by the quality of the potential funders seriously investigating the undersea business with a long-term perspective. Given the strikingly low numbers of funds and banks registered at the major submarine fairs worldwide, there is still room for maneuver.
Laure Duvernay is the Director of Project Finance and Business Development at Alcatel Submarine Network (ASN) and has more than 15 years’ experience in the high tech and finance industries. She left the banking world in November 2015 to return to ASN where she had started her career in 1999. She is a Telecommunications engineer and graduated cum laude from the Institut d’Etudes Politiques de Paris with a Masters in International Finance.
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LIABILITY FOR DAMAGE TO UNDERWATER CABLE UNDER CANADIAN MARITIME LAW BY JEAN-MARIE FONTAINE
anada has a coastline that encompasses three oceans as well one of the longest and busiest lake and river system in the Great Lakes and Saint-Lawrence seaway. This coastline and internal waterways are crisscrossed by underwater telecommunication cables crucial to the transfer of data from one part of the country to another, while at the same time being used by thousands of ships every year, including fishing vessels, container ships, bulk cargo carriers and passenger ships. Acci-
dents involving vessels and underwater cables are therefore almost inevitable and Canadian Courts have had to consider the liability of vessel owners and operators for damages to underwater cables caused by the vesselâ€™s anchor or fishing equipment. This article proposes to explore the liability of vessel owners and operators for damage to underwater cables, the responsibility of cable operators to protect against such damage and finally, the availability of limitations of liability
to ship owners and operators under Canadian Law.
LIABILITY OF MARINERS
Canadian Courts have not been very forgiving of vessel owners and operators, whether they be large and sophisticated commercial cargo ships or smaller fishing vessels, in circumstances where they damage underwater communication cables. A recent decision of the Supreme
Court of Canada in Société TELUS Communications v. Peracomo Inc. 1 , which involved a fishing vessel whose owner cut a telecommunication cable in the Gulf of the St. Lawrence, illustrates well the obligations of vessel operators, the corresponding obligations of cable operators and the circumstances in which limitations of liability would apply.
Owners and operators of a vessel have a duty of care requiring that they act prudently in the operation of vessels. There are at least three components to this duty of care that have been identified by the Courts, namely (i) an obligation to be appropriately informed of hazards to navigations through the use of upto-date navigational charts and by consulting notices to mariners issued by Canadian authorities 2(ii) an obligation not anchor or fish in or near areas where underwater cable are located and, (iii) should they realize that they caught an anchor in their equipment, an obligation to drop the equipment in order to save the cable. The Canadian case law and regulations require that mariners be aware of notices issued by the Federal government, sailing directions and other documents that would warn of dangers, areas where they should not be fishing or drop anchors. This of course creates a corresponding obligation of cable operators to inform hydrographic authorities of the position of the cable and mariners in the area, such as associations of fishermen, of the presence of the cable.
Not only must a vessel operator be aware of the presence of underwater cables where they are marked on the hydrographic charts, a vessel that drops anchor near an underwater cable will be liable, should it drag its anchor and thereby damage the telecommunication cable. In Pembi-
na Resources Ltd. v. ULS International Inc. 3, a case involving damage, not to a telecommunication cable but rather to a natural gas pipeline, the ship owner was held liable for the fracture to that pipeline caused by the dragging anchor of the ship4. The judge noted:
Permitting a ship to drag anchor so as to come into collision or become entangled with somebody else’s property and cause damage thereto is prima facie evidence of negligence in the absence of a reasonable explanation or proof of exonerating circumstances5. As we will see further below, there are few exonerating circumstances that stand the test of the Courts.
Where an anchor or, more likely, a fishing net, trawler or cages become entangled with an underwater cable, it is the obligation of the vessel operator to abandon the anchor or other gear without cutting the cable. If the vessel operator can establish that an anchor or other gear was sacrificed, the vessel operator would have the right to be indemnified by the cable owners6.
Overall, there are few circumstances where a vessel operator will escape liability for damaging an underwater cable where that cable is accurately identified on marine charts which have been the subject of warnings in government publications.
RESPONSIBILITIES OF CABLE OPERATORS
While Canadian law has held vessel operators to a strict standard, that does not mean that cable operators are without responsibility and by extension potential liability. A cable operator has an obligation to take reasonable measures to
avoid foreseeable accidents. These measures are normally divided into two groups:
i) an obligation to inform mariners of the presence of the underwater cable; and ii) an obligation to take reasonable measures to protect the cable from foreseeable harm. The obligation to inform requires that a cable operator petition the Canadian hydrographical authorities to indicate on nautical charts the presence of the underwater cable as soon as it is laid, with the precise as-laid position. As most cables are laid with a certain amount of slack and can move following repairs, or with the effect currents, it also behoves cable operators to inform hydrographic authorities of any changes to the change of the aslaid position of the cable. Failure to do so may constitute a defence to the vessel owner that damaged the cable or at the very least, grounds for contributory negligence of the cable operator.
This is what was argued in Bell Telephone Co. of Canada v. The ship “Mar-Tirenno” 7. The judge however noted that the position of the cables was clearly indicated on navigational charts as well as on official publications covering navigation and piloting on the St. Lawrence. He concluded that all persons navigating the area are required by law to know, and are therefore presumed at law to know, of the existence and location of the cables and the prohibition against anchoring in the area8.
Likewise, in Peracomo, the trial judge went over in great detail the steps taken by the cable operator to advise various fishing associations of the presence of the cable when it was installed9. Moreover, the Federal government had published Notice to Mariners, Notices to Shipping, radio-navigational warnings, Sailing
Directions and other documents, all of which warned local users against fishing in the area surrounding the cable.
The second obligation that is often cited by vessel operators is the obligation to protect the cable against foreseeable hazards. This is done in one of two ways, either by burying the cable or by armouring the cable. Burial is the most often cited (unimplemented) precaution that could have avoided a break of the cable, especially where the damage resulted from a smaller anchor dragging over the cable or from a trawler that
skims the surface of the seabed or riverbed where the cable is situated. While vessel operators have raised the alleged failure of a cable operator to bury a cable on several occasions, there is yet to be a single case where a Court has concluded that the cable operator had an obligation to do so. However, the position of the courts is heavily dependent on the specific circumstances of the case. It depends factors such as the cost of burial, the composition of the riverbed, traffic in the area and whether burial could have avoided the incident. By way of example, in the Peracomo case, the Plaintiff alleged that
TELUS, the cable operator, should have buried the cable. It relied, among other things, on a desktop study produced three years prior to the installation of the cable that recommendation burial one metre below the river bed. The Court concluded however that burial one meter or so deep would not withstand the drag of a large anchor and that as the cable in a tidal area, there was no guarantee that over time, the cable would not be exposed due to tidal action. Moreover, the cable was damage not because the fishermanâ€™s cages ran over it but rather because he decided to cut the cable when he saw that it was caught in his fishing gear10.
over time. Even if burial of a cable may not have been considered a necessary precaution in light of the foreseeable risks originally identified, the evaluation of those risks can evolve. If a port develops and more vessels anchor close to the pipeline or, if fishing grounds expand and more fishing vessels operate in the area of the cable, what may not have been a sufficiently serious risk at the time of installation may, over time, become foreseeable. Moreover, developments in technology and industry standards may mean that what was at the time of installation an exceptional measure may become an industry standard.
It is of interest to note that in this case the judge noted that incidents involving this cable were rare (the evidence indicated that such cables were torn up once every 19.5 years). One can assume that it weighed on the Courtâ€™s conclusion that taking additional measures, such as burying the cable even after it was laid or replacing single armour by double armour was not justifiable in the circumstances.
A similar argument was raised, again unsuccessfully, by the vessel owners in Pembina. It argued that the pipeline owner operated the pipeline without taking any cognizance of the probability of the damage to the submerged pipelines. It pointed out that no studies were made regarding the feasibility of re-routing or burying the pipeline as a reasonable safeguard against the damage from ships anchors. The Court however concluded that while burying the pipeline may have avoided the incident, it could only have been accomplished at great cost and was not a reasonable and viable means of avoiding foreseeable risk of injury11.
Foreseeability is however an evolving measure of action. What may not have been foreseeable when the cable was first laid may become foreseeable
The nature and frequency of incidents will also constitute an important consideration. While it may not have been foreseeable when the cable was first laid that there would be incidents involving vesselâ€™s anchors or fishing gear, if after several incidents over a period of time, a cable operator must take cognizance of these incidents and take supplemental measures to avoid that they reoccur in the future. In short, what constitutes a reasonable precaution will depend strongly on the circumstances including the geography and particularly the geology of the seabed or riverbed, the evolving commercial activities around the cable and the history of prior incidents.
That being said, cases where either cable operators have been found either fully liable for their own loss or contributorily negligent to the loss are rare. One of the few Canadian cases where a vessel owner was exonerated for having damaged an underwater cable is Canadian Electric Co. v. Crown of Aragon 12. In that case, the vessel owner successfully argued inevitable accident. It had to drop his anchor in a no anchorage zone in the St. Lawrence near QuĂŠbec City in order to avoid colliding with other vessels at berth. In doing so, it dragged its anchor and damaged the underwa35
ter cable located in that area. The Court concluded that the Defendant ship operator justifiably breached the prohibition against dropping the anchor in order to avoid a more serious accident and thus could not be held liable for the damages that resulted therefrom13.
While it is difficult in Canada for a ship operator to avoid liability for damage to an underwater cable or even to convince a Court to attribute even a portion of liability on the cable operator, ship owners can take solace in the fact that they are most likely able to limit their liability for the damages that result from the damage to the underwater cable.
LIMITATION OF LIABILITY
Canada has adopted as part of its Marine Liability Act, the Convention on Limitation of Liability for Maritime Claims, 197614.
The 1976 Limitation Convention provides for limits of liability for any claims arising out of a single incident for all those who fall under the definition of shipowner which includes the owner of the vessel, its charterer, manager and operator as well as their respective liability insurers and the vessel itself. The limits in the 1976 Limitation Convention are all encompassing in the sense that they apply to all claims, by all parties (other than criminal fines) arising out the incident and regardless of the way the claim is framed. The Marine Liability Act adds to the 1976 Limitation Convention by setting a specific limit of liability for damage to property of CA $500,000 where the ship has less than 300 gross metric tons. Above 300 metric tons, the limits of liability under the 1976 Limitation Convention are calculated based on the gross tonnage of ship and increases very quickly. However, considering that many fishing vessels, tugs and other work
boats will fall in the 300-gross ton category, and particularly considering that the cost of repairing an underwater cable will often exceed CA $500,000, this limitation is relevant. If the incident results in business interruption losses arising from a stop in the flow of data, the CA $500,000 may only represent a small fraction of the direct and consequential losses. It is also very hard to break limitation of liability. In order, to do so, one must establish that the loss resulted from a personal act or omission of the person liable, committed with the intent to cause such loss or recklessly with the knowledge of such loss would probably result15.
In other words, one must establish that the directing mind of the ship owning company intended to break the cable or acted with such a degree of recklessness that he or she could not have ignored that the damage to the cable would likely result. This is a very high burden
to meet and would require that the behavior go beyond a normal level of negligence. The cable operator would need to demonstrate recklessness in the extreme. For example, in Peracomo the cable operator attempted to bar the fisherman from limiting liability. It was noted at trial that he failed to consult hydrographical charts, which all would show that there was a live telecommunication cable in the area he was fishing. Moreover, when he picked up that cable with his fishing gear, he cut it in two with a chain saw. The cable operator convinced the trial judge that the fisherman was not entitled to limit liability. On appeal to the Supreme Court of Canada, that finding was overturned and the fisherman was entitled to limit its liability to CA $500,000 even though the cost of repairs of the cable were close to CA $1,000,000. However, should an intentional act or this high level of recklessness be demonstrated, one must keep in mind that the liability underwriters of the shipowners would most likely deny coverage, as liability insurers will not cover an intentional act or willful misconduct. This means that a cable operator would be unable to collect from the insurers of the vessel owner, leaving only the vessel owner itself which may not have much unencumbered assets to seize to pay the judgement debt. This was the final result at the Supreme Court of the cable operator. In most circumstances, Canadian law will hold the ship owner liable for damages to an underwater cable that is accurately indicated on a hydrographic chart and noted in notices to mariners. While there are certain responsibilities on the cable operator, particularly to inform of the presence of the cable and to take reasonable precautions to protect it from likely hazards, proving even contributory negligence of the cable operators is very difficult. On the
other hand, it is likely that, depending on the gross tonnage of the vessel involved in the incident, a ship owner will benefit from the limit of liability which may be well below the cost of repairs of the cable, let alone any business interruption losses if the flow of data is stopped.
While Canadian Courts have been deciding cases arising from the breach of underwater cables by ship owners for over a century, the sheer number of surface-laid underwater cables in Canada, the developments in technology, the importance of telecommunication networks and the ever-increasing flow of marine traffic means that these issues will remain at the forefront of Canadian maritime law for years to come.
Société TELUS Communications v Peracomo Inc., 2011 CarswellNat 1226 (F.C.), 2012 FCA 1999, 2014 SCC 29 (« Peracomo ») 2 Peracomo, trial decision, Para 49 3  1 FC 6 (“Pembina”) 4 Pembina, paras 11 & 12 5 Pembina, para 14 6 Peracomo, para 28 7 (1974) 52 DLR, 3d 702 (“Mar-Tirenno”) 8 Mar-Tirenno at p. 713 9 Peracomo, trial decision at para. 23 10 Peracomo, trial decision at para. 19 11 Pembina, paras. 12 & 31 12 (1910), 13 Ex C.R. 399 (« Crown of Aragon”) 13 Crown of Aragon, paras. 33 & 34 14 Marine Liability Act, S.C. 2001, c. 6, Schedule I (“1976 Limitation Convention”) 15 1976 Convention, Article 4 1
Jean-Marie Fontaine is a partner in our Montreal office who specializes in the field of Maritime law as well as non-marine insurance regulation and compliance. Jean-Marie acts for high-profile clients in both contentious and non-contentious transportation matters. Jean-Marie’s practice encompasses cargo claims, collisions, spills, disputes relating to shipbuilding and charterparty contracts and the arrest of ships and cargos. He also has expertise in the drafting of logistics and warehousing agreements, charterparty contracts, the purchase, sale and financing of ships, marine insurance policies and the importation and registration of vessels. He advises insurers, brokers and other intermediaries in the insurance market on regulatory and compliance issues and frequently represents clients before the Autorité des marchés financiers. Jean-Marie also acts as counsel representing clients in aviation and land transportation matters, and advises in matters involving a variety of compliance, regulatory and litigious issues, ranging from the transportation of dangerous goods to the carriage of passengers. He has appeared before the Superior Court of Québec, the Federal Court, the Federal Court of Appeal, the Québec Court of Appeal, as well as before the Supreme Court of Canada. He has also pleaded before the Canadian Transportation Agency. 37
ISO 9001:2015 certified designer and imp for commercial, governmen
plementer of submarine fiber cable systems ntal and oil & gas companies
T THE WORLD.
NORTH KOREAN ATMOSPHERIC NUCLEAR TESTING COULD DAMAGE SUBMARINE FIBER OPTIC TELECOMMUNICATIONS BY THOMAS S. POPIK, GEORGE H. BAKER, WILLIAM R. HARRIS, AND JORDAN T. KEARNS 40
IF NORTH KOREA CONDUCTS ATMOSPHERIC NUCLEAR TESTS, COULD SUBMARINE TELECOMMUNICATION NETWORKS SUFFER PERMANENT DAMAGE? Despite economic sanctions, the North Korean government proposes to test and stockpile nuclear weapons that cause an electromagnetic pulse hazard to critical infrastructures. Without protective measures, EMP from high altitude nuclear tests can damage both the landing station equipment and repeater amplifiers upon which submarine fiber optic cable networks rely. This paper addresses EMP threat plausibility and what can be done to protect submarine telecommunications networks. The Foundation for Resilient Societies, Inc., a non-profit in Nashua, New Hampshire which performs research on threats to critical infrastructures, released a Working Paper in late 2017 entitled: High Consequence Scenarios for North Korean Atmospheric Nuclear Tests. This article highlights key findings from that publication.
The 1962 Starfish Prime test conducted by the United States demonstrated that a nuclear weapon detonated in the upper atmosphere will produce a series of elec-tromagnetic pulses radiating downward within line-of-sight (LOS) of the nuclear burst. The technical term for this phenomenon is high-altitude burst electromagnetic pulse (EMP), sometimes also called “HEMP.” High-alti-tude nuclear tests conducted by the Soviet Union pro-duced the same EMP environments.
Short duration, high-intensity EMP pulses can disable electronic equipment on the Earth’s surface. Addition-ally, a low-frequency component of the EMP pulses can penetrate deep into the ocean, inducing large currents in the repeater power conductors of submarine cables.
North Korea has threatened to conduct an atmospher-ic nuclear test in the Pacific region. North Korea has also declared that electromagnetic pulse capability is a “stra-tegic goal” of its regime. Some atmospheric test scenar-ios, including scenarios for EMP tests, may cause failure of submarine telecommunications systems. Disruption in transPacific trade could result. However, operators of submarine telecommunications cables can use proven engineering techniques to defend their equipment from EMP effects.
NORTH KOREAN THREATS TO CONDUCT ATMOSPHERIC NUCLEAR TESTS On August 8, 2017, North Korea threatened the U.S. territory of Guam, location of landing stations for many Pacific region submarine cables, with a “ring of fire.” On September 3, 2017, North Korea conducted an underground test of a high-yield nuclear device claimed to be a hydrogen bomb. Also, on September 3, 2017, the Korean Central News Agency of the Democratic People's Republic of Korea stated that the capability to conduct a high-altitude electromagnetic pulse attack is a “strategic goal” of the regime.
On September 22, 2017, Ri Yong Ho, Foreign Minister of North Korea, spoke of a potential atmospheric nuclear test. On October 13, 2017, North Korea state media published a threat to “take counteractions for self-defense, including a salvo of missiles into waters near the US territory of Guam.” In a CNN interview aired on October 25, 2017, a senior North Korean official repeated the possibility of an atmospheric nuclear test.
In order to deter attack or regime change, North Korea has strong incentives to demonstrate its nuclear capability through atmospheric tests. With a limited number of nuclear weapons, attack by EMP is perhaps North Korea’s strongest deterrent. However, because EMP tests by the United States and Soviet Union five decades ago were inadequately instrumented due to an incomplete theoretical understanding of EMP, and because the limited test results have been withheld as classified information, many pundits downplay the severity of EMP effects. Accordingly, North Korea may seek to demonstrate the impact of an asymmetric EMP attack on modern infrastructures, including on submarine telecommunications cables and their landing stations. Were North Korea to conduct an EMP test with a missile launched from ship or submarine, the source of the nuclear device might not be immediately traceable. The circular geographic EMP effects area is extremely large—up to 4,500 kilometers in diameter. The wide-area effect of EMP could allow North Korea to detonate a nuclear device over international waters and still expose submarine telecommunications cables.
Multiple sources have speculated that a North Korean atmospheric test in the Pacific could have the purpose of demonstrating an EMP attack capability. International law on atmospheric testing of nuclear weapons may not deter North Korea. An international consensus against atmospheric testing developed in the 1950s and early 1960s, resulting in the Limited Test Ban Treaty of 1963. This treaty allows testing underground, but not in the
atmosphere, outer space, or underwater. North Korea is not a party to the Limited Test Ban Treaty, but since November 1984 it has become a state party to the Environmental Modification Convention (1978) known as the “ENMOD Convention.” The ENMOD prohibits long-lasting widespread or severe damage to other state parties through environmental modification techniques. A HEMP detonation could be a material breach of that Convention. But would fear of consequences deter North Korean testing? Additionally, North Korea is not a state party to the Treaty of Rarotonga, by which South Pacific nations and others agree to refrain from nuclear testing in that region.
the effects of EMP are less well understood by the public. To create high-altitude EMP, a nuclear weapon is detonated at an altitude between 40 kilometers to 400 kilometers. Ionizing radiation from the detonation strips electrons from air molecules. These electrons interact with the earth’s magnetic field to produce a series of electromagnetic pulses radiating downward within lineof-sight of the burst. Prompt gamma radiation from the burst generates a high amplitude, fast pulse (E1). Subsequent neutron radiation generates an intermediate time, lower amplitude pulse (E2). The weapon fireball and heated layers of the ionosphere produce a late time, low amplitude pulse (E3).
HOW ELECTROMAGNETIC PULSE DAMAGES SUBMARINE TELECOMMUNICATIONS
The E1 “early time” pulse has a high amplitude of thousands of volts per meter, with the peak lasting about 250 nanoseconds. The E1 pulse induces high voltages in conductors of approximately 0.3 meters of length or more; these conductors act like radio antennas. When electronic equipment is exposed to E1 pulse voltages, transistor junctions can change polarity or break down, causing temporary upset or permanent damage. E1
While North Korea might, theoretically, be liable for massive financial damages through willful or reckless damage to submarine cable networks, in practical terms North Korea may be nearly judgment-proof. Consider the resistance of North Korea to the broad scope of sanctions already in force, through the unanimous decision of the United Nations Security Council via Security Council Resolution 2375 in September 2017.
While non-technical readers intuitively comprehend the destructive effects of ground-level nuclear attack,
For a detonation at 40 kilometers altitude, the diameter of the line-of-sight area on the ground is approximately 1,400 kilometers. For a detonation at 400 kilometers altitude, the diameter of the line-of sight-area on the ground is approximately 4,400 kilometers.
Figure 1. Types of HEMP; Notional Waveform 8 42
Figure 2. NASA Photograph of Korean Peninsula at Night in 2014 pulses will not affect submarine cables but can damage electronic equipment within cable landing stations. The E2 “intermediate time” pulse is similar to nearby lighting strikes – equipment protected against lightning will likely survive E2.
The E3 “late-time” pulses, also termed magnetohydrodynamic (MHD) pulses, are low frequency waves lasting tens of seconds. The E3 pulse has two components that occur in sequence. The E3A pulse is caused by distortion of the earth’s magnetic field by the expanding fireball. The E3B pulse, or “heave” effect, is caused by rising plasmas in the ionosphere. Both the E3A and E3B pulses can induce dozens of volts per kilometer in long conductors.
The E3 pulses penetrate to the ocean floor. While modern submarine cables transmit their signals using non-conductive fiber optics, periodic repeaters powered by a conducting line are required to boost the optical signals. E3-induced currents in these lines may reach hundreds of amperes, compared to the hundreds of milliamperes normally flowing. If repeater circuitry is not protected, overload and burnout can occur.
ELECTROMAGNETIC PULSE IS AN ASYMMETRIC THREAT Why would EMP be a preferred means of nuclear attack by North Korea, a higher strategic priority than ground-burst attack causing shock, blast, fallout, and ground-level radiation? We propose that the North Korean incentives fall into three basic categories. First, to achieve an EMP attack capability, North Korea would have fewer technical obstacles than for ground-level attack—notably, no missile reentry capability or aim-point accuracy is required for EMP. Second, EMP attack is a wide-area threat—with one or a few nuclear warheads mounted on missiles or other vehicles for EMP attack, North Korea can credibly threaten infrastructures over vast, multi-state regions, whereas surface-bursts affect city-scale areas. Third, EMP attack will not directly cause human fatalities, although wide-area the critical infrastructure failure in the aftermath will result in economic disruption and eventual loss of life. Without immediate deaths, the international community may lack consensus that an EMP attack justifies retaliation using nuclear weapons, perhaps decreasing the risk of retaliation against North Korea.
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An EMP attack by North Korea would be asymmetric. Large, industrialized nations are dependent on critical infrastructure, especially telecommunications for data and electric power grids. Without well-functioning telecommunications, industrialized nations cannot support their dense, urbanized populations. An EMP detonation over international waters could disable submarine telecommunications and disrupt international trade. Large economic losses and political upheaval could hit industrialized trading partners such as the U.S., China, Japan, South Korea, and Australia. In contrast, North Korea is far less industrialized and therefore less vulnerable to second-order economic effects, as this 2014 NASA nighttime photograph of the Korean Peninsula graphically illustrates.
ATMOSPHERIC NUCLEAR TEST SCENARIOS AFFECTING SUBMARINE CABLES
A critical factor in EMP effects is the altitude of the nuclear detonation. A detonation at 40 kilometers altitude or greater, but less than 100 kilometers, will produce mainly E1 effectsâ€”the EMP effects that damage ground-based electronic equipment containing sensitive integrated circuits. Nuclear detonations between 100 kilometers and 400 kilometers will produce both E1
and E3 effects. The E3 pulses penetrate deeply into both soil and ocean water.
We examined a variety of potential scenarios for North Korean atmospheric tests to demonstrate EMP capability. We took into account demonstrated North Korean missile capabilities and past trajectories, statements and threats by North Korea, and potential impacts on critical infrastructure. Because EMP detonations must take place at high altitude, and because the diameter of affected area on the earthâ€™s surface is large, there are very few potential test locations in the Pacific region that would not impact submarine cables or land-based infrastructure. For some test locations, such as the U.S. territory of Guam, EMP effects on telecommunications may be deliberate.
For illustrative purposes, we have selected three EMP test scenarios. All three postulated test scenarios are likely within current North Korean technical capabilities. Our scenarios involve live tests of ballistic missiles armed with nuclear warheads. Because of risks associated with fuzing malfunction, launch failure, and guidance errors, nations have rarely tested nuclear warheads mounted on ballistic missiles. However, if North Korea were to conduct an atmospheric test in the Pacific, we believe delivery via an armed missile is most probable given the risks of interception of any vessel or aircraft used as a delivery mechanism.
We present these EMP test scenarios in rough order of risk and level of provocation. For example, a “South Pacific” test over the ocean at 400 kilometer altitude will avoid most population centers, while still demonstrating EMP effects on some land-based and underwater infrastructure. A 150 kilometer test over Johnston Island, southwest of Hawaii, would show effects on submarine cables and also edge effects on the Honolulu population center. A 150 kilometer altitude test slightly north of Guam could demonstrate both E1 and E3 impacts on critical infrastructure, including debilitation of submarine telecommunications used for international trade.
SCENARIO 1: SOUTH PACIFIC
Scenario 1, “South Pacific,” could allow North Korea to demonstrate EMP effects without exposing submarine cables, except for a single connection from Hawaii to French Polynesia. The North Korean missile’s path would take it over the Japanese islands, terminating in a vast and mostly unpopulated expanse of the South Pacific. EMP from 400 kilometers burst altitude could cause equipment failure both in submarine cables and their landing stations. This region of the Pacific Ocean is subject to the Treaty of Rarotonga, an in-force treaty banning atmospheric nuclear testing, but this is unlikely to deter North Korea. To avoid destruction of groundbased electronics in French Polynesia, North Korea might lower the detonation altitude.
SCENARIO 2: JOHNSTON ISLAND Scenario 2, “Johnston Island,” could demonstrate EMP effects on the significant network of cables transiting the Hawaiian Islands. The North Korean missile trajectory would pass over the northern tip of the Japan’s Honshu Island and terminate 150 kilometers above Johnston Island, identical to the latitude and longitude location of the 1962 Starfish Prime test conducted by the U.S.―for possible symbolic effect. A 150 kilometer altitude detonation could damage both submarine cables and their landing stations. Other electronic equipment in the Hawaiian Islands would be impacted by the edge of the EMP field. To avoid a provocative impact on Hawaii’s military and civilian infrastructure, the detonation altitude could be reduced—still, any detonation above 100 kilometers is likely to affect submarine cables transiting Hawaii.
SCENARIO 3: GUAM
Scenario 3, “Guam,” could have the purpose of demonstrating EMP effects on submarine telecommunications of the United States and its Pacific-region trading partners. A large network of cables transit Guam. The North Korean missile trajectory would pass over Japan and terminate in international waters about 35 kilometers to the north of Guam, consistent with August 10, 2017 threat by North Korea to “hit the waters 30 to 40 kilometers away from Guam.” Detonation at 150 kilometers
altitude would affect both submarine cables and their landing stations. Under this scenario, significant disruption to trans-Pacific telecommunications could result. Alternative detonation at 40 kilometers altitude would affect cable landing stations in Guam but avoid damage to underwater cable repeaters. This EMP detonation could be judged as an act of war, resulting in U.S. retaliation against North Korea.
PROACTIVE DEFENSES FOR TELECOMMUNICATIONS OPERATORS
Proactive steps for operators of submarine telecommunications include opening repeater DC power feed line circuits, redesigning power feed equipment to compensate for EMP E3 quasi-DC currents, depowering equipment and holding it in reserve, and implementing electromagnetic shielding.
Were North Korea to conduct an EMP test, it would be prudent for submarine cable operators to instrument both the electromagnetic pulses and the effects on telecommunications equipment. The E1 pulse can be measured using commonly available digital recording oscilloscopes operating in the gigahertz range coupled to electric and magnetic field sensors. If scientific instrumentation is unavailable, a simple whip antenna will
suffice to get rough measurement of EMP field levels. Because the internal circuitry of digital oscilloscopes may not survive exposure to the E1 pulse, it is recommended that scopes be enclosed in a Faraday cage and use shielded battery power. A readily available but less capable alternative is a commercially produced recording device, EMP.Alert™ from Emprimus. This shielded device measures E1 fields and digitally records only peak values on internal data storage. At landing stations of submarine telecommunications cables, the power feed equipment (PFE) output lead is a good place to measure the E3-induced current. Care should be taken that existing instrumentation does not go “off-scale,” as the induced current could reach amplitudes close to 1,000 amperes.
Equipment without power or connection to exposed conductors is far more resistant to EMP. Therefore, an excellent protective strategy is to selectively depower or disconnect. To help protect dry plant against the E1 pulse, including landing stations, redundant equipment can be depowered and held in reserve. To protect wet plant against the E3 pulse, including cable repeaters, their power leads can be disconnected, rapidly, upon detection of an E1 event. In the long-term, it would be prudent to shield dry plant against the E1 pulse. (Ocean water attenuates the
E1 pulse, naturally protecting wet plant.) E1 shielding enclosures used by militaries for their strategic systems are a well-developed technology available from multiple commercial vendors.
High-altitude nuclear detonations conducted by the United States and Soviet Union have demonstrated that EMP is a real threat to critical infrastructures. Submarine telecommunications cables and their landing stations are particularly vulnerable.
Through its actions and its words, North Korea has indicated an intent to maintain a nuclear deterrent. Because North Korea has declared EMP capability as a â€œstrategic goalâ€? of its regime, it has a significant incentive to conduct atmospheric EMP tests. There are few EMP test locations and altitudes in the Pacific region that would not cause impacts on submarine telecommunications cables. Telecom operators should proactively protect their networks against permanent damage from EMP. More resilient submarine telecom networks would have the additional benefit of protecting the global economy from potentially catastrophic disruptions.
REFERENCES 1. Atherton, Kelsey. “No one wants another H-bomb test in the Pacific.” Popular Science, September 28, 2017. https://www.popsci.com/h-bomb-test-pacific-North-Korea
2. Baker, George H. “EMP Knots Untied: Some Common Misconceptions about Nuclear EMP.” Proceedings of the Policy Studies Organization, New Series, No. 22. December 7, 2012. http://www.ipsonet.org/proceedings/wp-content/uploads/2013/08/Proceedings-22-reduced.pdf 3. Broad, William J. and Sanger, David E. “North Korea Missile Test Appears to Tiptoe Over a U.S. Tripwire.” New York Times, May 15, 2017. https://www. nytimes.com/2017/05/15/world/asia/north-korea-missiles.html
4. Conrad, Edward E.; Gurtman, Gerald A.; Kweder, Glenn; Mandell, Myron J.; and White, Willard W. “Collateral Damage to Satellites from an EMP Attack.” Report. Defense Threat Reduction Agency, August 2010. http://www.dtic.mil/docs/citations/ADA531197 5. Foster, John Jr. et. al. “Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack, Volume. 1: Executive Report.” Congressional EMP Commission, 2004. http:// www.dtic.mil/docs/citations/ADA484497
6. Foster, John Jr. et. al. “Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack: Critical National Infrastructures.” Congressional EMP Commission, April 2008. http://www.dtic.mil/docs/citations/ADA484672 7. Fowler, Tara and Winsor, Morgan. “North Korea details its missile threat to Guam, says ‘only absolute force can work’ on Trump.” ABC News, August 10, 2017. http://abcnews.go.com/International/ trumps-threat-load-nonsense-north-koreas-military/story?id=49123733
8. Gilbert, James, et. al. “The Late-Time (E3) High-Altitude Electromagnetic Pulse (HEMP) and Its Impact on the U.S. Power Grid.” Report prepared for Oak Ridge National Laboratory by Metatech Corporation, January 2010. https://www.ferc.gov/industries/ electric/indus-act/reliability/cybersecurity/ferc_ meta-r-321.pdf 9. Gearan, Anne and Rauhala, Emily. “North Korea missile launch marks a direct challenge to Trump ad-
ministration.” Washington Post, July 4, 2017. https:// www.washingtonpost.com/national/north-korea-claims-successful-intercontinental-ballistic-missile-test-defying-international-condemnation/2017 /07/04/4f804488-609c-11e7-8adc-fea80e32bf47_ story.html?utm_term=.355fae4a66d7
10. Kweder, Glenn, et. al. “United States' Growing Dependence on Commercial Satellites Tempting Nuclear Terrorism.” SatelliteToday.com, March 16, 2001.
11. National Communications System. “Electromagnetic Pulse (EMP) Survivability of Telecommunications Assets.” Report. Office of the Manager, National Communications System, Washington, D.C. 20305, February 6, 1987. http://www.dtic.mil/dtic/tr/fulltext/u2/ a183710.pdf
12. Phillips, Tom. “North Korea missile test shows it could reach New York, say experts.” The Guardian, July 28, 2017. https://www.theguardian.com/world/2017/ jul/28/north-korea-fires-missile-japan-reports-say
13. Savage, Edward, et. al. “The Early-Time (E1) High-Altitude Electromagnetic Pulse (HEMP) and Its Impact on the U.S. Power Grid.” Report prepared for Oak Ridge National Laboratory by Metatech Corporation. January 2010. https://www.ferc.gov/industries/ electric/indus-act/reliability/cybersecurity/ferc_ meta-r-320.pdf 14. TeleGeography. “Submarine Cable Map.” August 11, 2017. https://github.com/telegeography/www.submarinecablemap.com/blob/master/README.md 15. Wright, David. “All Things Nuclear.” Union of Concerned Scientists. http://allthingsnuclear.org/ dwright#.WdvrFLpFzVg
1. By Thomas S. Popik, Jordan T. Kearns, George H. Baker, Henry F. Cooper, and William R. Harris. Public Release Date: November 30, 2017.
2. Ripley, Will. “North Korea revives Guam threat ahead of US-South Korea drills.” CNN, October 15, 2017. http://edition.cnn.com/2017/10/13/asia/north-korea-guam-threat/index.html 3. Ripley, Will. “North Korean official: Take hydrogen bomb threat 'literally'” CNN, October 26, 2017. http://www.cnn.com/2017/10/25/politics/northkorea-us-hydrogen-bomb-threat/index.html
4. With additional time, however, the United States and other nations have the ability to apply forensics to analyze debris, source materials, device design, and indicia of delivery sponsorship. See Defense Science Board, “Assessment of Nuclear Monitoring and Verification Technologies,” January 2014; W. H. Dunlop and H. P. Smith, “Who Did It? Using International Forensics to Detect and Deter Nuclear Terrorism,” Arms Control Today, Sep. 13, 2006; Richard Stone, “Surprise nuclear strike? Here’s how we’ll figure out who did it,” Science, March 11, 2016; and K. J. Moody, P. M. Grant, and I. D. Hutcheon, Nuclear Forensic Analysis, 2d ed. CRC Press, 2014. 5. Shin, Hyonhee and Sieg, Linda. “A North Korea nuclear test over the Pacific? Logical, terrifying.” Reuters, September 22, 2017. https://www.reuters. com/article/us-northkorea-missiles-atmospheric-test/a-north-korea-nuclear-test-over-the-pacific-logical-terrifying-idUSKCN1BX0W5
netic Risks, but Opportunities Exist to Further Assess Risks and Strengthen Collaboration.” Report. Government Accountability Office, March 2016. p. 2. http:// www.gao.gov/assets/680/676030.pdf
11. Foster, John S., Jr. et al. “Report of the Commission to Assess the Threat to the United States from Electromagnetic Pulse (EMP) Attack: Critical National Infrastructures.” Report. EMP Commission, April 2008. pp. 27, 29, 32. http://www.dtic.mil/docs/citations/ ADA484672 12. Fowler, Tara and Winsor, Morgan. “North Korea details its missile threat to Guam, says ‘only absolute force can work’ on Trump.” ABC News, August 10, 2017. http://abcnews.go.com/International/ trumps-threat-load-nonsense-north-koreas-military/story?id=49123733
6. Akpan, Nsikan. “What a North Korea hydrogen bomb would do to the Pacific Ocean and space stations.” PBS NewsHour, September 30, 2017. http://www. pbs.org/newshour/updates/north-korea-hydrogenbomb-pacific-ocean-space-stations/
7. See Convention on the Prohibition of Military or Any Other Hostile Use of Environmental Modification Techniques, entry into force, 5 October 1978. 8. Savage, Edward, et. al. “The Early-Time (E1) High-Altitude Electromagnetic Pulse (HEMP) and Its Impact on the U.S. Power Grid.” Report prepared for Oak Ridge National Laboratory by Metatech Corporation. January 2010. p. 2-2. https://www.ferc.gov/industries/electric/indus-act/reliability/cybersecurity/ ferc_meta-r-320.pdf
9. U.S. MIL-STD-464C, “Department of Defense Interface Standard, Electromagnetic Environmental Effects Requirements for Systems,” 1 December 2010 (U), Appendix A, at page 94, explains: “The prompt gamma HEMP (E1) couples well to local antennas, equipment in buildings (through apertures) and to short and long conductive lines…The most common protection against the effects of E1 is accomplished using electromagnetic shielding, filters, and surge arresters.” See also MIL-STD-188-125-1, 17 July 1988, standards on HEMP protection for fixed-site communications centers.
10. United States Government Accountability Office. “CRITICAL INFRASTRUCTURE PROTECTION: Federal Agencies Have Taken Actions to Address Electromag-
Dr. George H. Baker is an Emeritus Professor of Applied Science at James Madison University, where he directed the JMU Institute for Infrastructure and Information Assurance. In 19871994 Dr. Baker led the Defense Nuclear Agency's Electromagnetic Pulse (EMP) R&D program, and later directed the Defense Threat Reduction Agency’s assessment arm. He served as a Senior Scientific Advisor to the Congressional EMP Commission, in 2001-2008 and in 2017. Dr. Baker holds an M.S. in Physics from University of Virginia, and a Ph.D. in Engineering Physics from the U.S. Air Force Institute of Technology. Currently, Dr. Baker is CEO of BAYCOR, LLC – a consulting company primarily devoted to preparedness for and protection against major electromagnetic threats to critical infrastructures. Dr. Baker serves on the Board and as a Principal Investigator for the Foundation for Resilient Societies. William R. Harris is an international lawyer specializing in arms control, nuclear non-proliferation, energy policy, and continuity of government. He is a Member of the Board, Secretary, and a Principal Investigator involved in reliability standard development for critical infrastructures for the Foundation for Resilient Societies. He formerly served as a space operations lawyer for reconnaissance and communication systems of the United States government. Mr. Harris served as a Senior (Legal) Advisor to the Commission on Electromagnetic Pulse (EMP) in January-December 2017. Since September 2017 he has been a Vice Chair of the EMP Special Interest Group of InfraGard, a non-profit committed to protection of critical infrastructures. Mr. Harris holds a B.A. from Harvard College and a J.D. from Harvard Law School.
Thomas S. Popik is the Chairman, President and Founder of the Foundation for Resilient Societies. See the website at www.resilientsocieties.org. In addition to his administrative duties at Resilient Societies, Thomas Popik serves as a Principal Investigator on critical infrastructures, specializing in vulnerability assessment, comparative risk analysis, and economic modeling. Mr. Popik is also a principal of Geosegment Systems Corporation, a market research firm specializing in the U.S. banking and mortgage industries. Mr. Popik holds a Master of Business Administration from Harvard Business School and a Bachelor of Science in Mechanical Engineering from MIT. In his early career, Mr. Popik served as an officer in the U.S. Air Force, with a final rank of Captain. Mr. Popik has been a co-founder of several non-profit organizations, including the Academy for Science and Design, New Hampshire's charter high school for science and math education. Jordan Kearns received S.M. degrees from MIT’s Technology & Policy Program and Nuclear Science & Engineering Department in 2017. While a student at MIT, he conducted research through the MIT Energy Initiative on carbon capture and storage systems, power system modeling, and the economics of electric power generation. Jordan previously conducted research on energy security in Estonia as a Fulbright scholar and has worked on energy policy issues with a number of think tanks. Jordan previously received a B.A. in Politics and B.S. in Physics-Engineering from Washington and Lee University.
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EVALUATING SUBMARINE CABLE SUPPLY CONTRACTS BY JENNIFER GIBBONS AND MIKE CONRADI
iven the unique considerations that come into play when building a submarine cable system, it can be difficult to evaluate the turnkey supply contract documentation and understand whether certain contract positions are ‘good’ from the perspective of a customer or investor. This article gives an overview of the key provisions that we would recommend are taken into account when evaluating the risk allocation in a submarine cable supply contract and provides our assessment of a customer-friendly position in each case. It also discusses the proprietary “dashboard” tool we at DLA Piper have developed to provide a very visual way to report on, and to compare, contracts.
SERVICE SUSPENSION AND TERMINATION RIGHTS There are a number of standard provisions that are applicable to assessing most commercial contracts in any sector, such as termination rights and liability limits. However, even relatively standard provisions may have some unique considerations when applied to the build of a submarine cable system. As an example, it is reasonably common in a commercial contract for an unpaid supplier to have the right temporarily to suspend its services until it receives payment. However, service suspension in a submarine cable build could jeopardise the entire project with potentially devastating cost and operational implications if
the vessels laying the cable are reallocated to another project pending payment. In evaluating submarine cable contracts, we would markdown contracts that contain any form of suspension right, and instead advise that alternative remedies are sought in the event of non-payment.
The same principle applies to any other contract provisions which may jeopardize build continuity. We would expect that the supplier’s termination rights are restricted to limited circumstances only with an extended notice period and opportunity for the customer to cure any breaches. It is also useful to consider any requirements for the supplier to provide performance and warranty
bonds of a meaningful percentage of the contract price to protect against any risk of the supplier’s insolvency or breach of contract.
As with any services contract, it is advisable to include a comprehensive and detailed services specification. However, notwithstanding the parties’ best intentions, it will be almost impossible for every single detail to be captured in the written specification. Therefore, an ideal position from the customer’s perspective is for the supplier to commit to perform any work necessary to complete the project at no additional cost even if it is not specifically set out in the contract.
The contract should also set out how any changes to the services specification will be dealt with. It is good practice that any changes must be agreed in writing via a defined change control procedure, and the contract should set out which party should bear the costs associated with certain categories of changes. We have discussed below responsibilities for costs associated with changes arising due to the results of the route survey and permits, but it should also be considered which party is responsible for any changes required in order to comply with applicable laws.
FORCE MAJEURE AND WEATHER On the other hand, there are a number of provisions which are comparatively unique or unusually important when contracting for submarine cable systems. Force majeure and the weather is one example. Given the location of where most of the services are provided in a submarine cable build (i.e. the open ocean), delays caused by bad weather would not be usual. Therefore, the clause detailing what would constitute a ‘force majeure event’, i.e. an event which excuses the supplier from performing its obligations, has an unusual level of importance as it will set out who bears the risk of any bad weather. From a customer perspective, we would advise that the contract should include a clear definition of ‘bad weather’ such as to exclude from force majeure any weather that is foreseeable based on past weather patterns. Contracts which, instead, include plans for a given number of days of unworkable weather, with any beyond that being force majeure are not as favourable for the customer because they put the risk of having the right number of days in the plan in the first place on the customer, when it might be more reasonable for the supplier to take responsibility for the accuracy of this number.
We would also look at whether a force majeure event would follow the normal position of entitling the Supplier to receive an extension of time but not additional payment.
ROUTE SURVEYS AND PERMIT RESPONSIBILITIES
Marine surveys can bring up a number issues which were not foreseen at the desktop study stage, and so require a number of changes to the route position list, or to the armouring requirements, or to other technical details of the cable - all of which would of course have corresponding cost implications. The contract will normally set out at the outset who will bear the cost of any changes arising as a result of the survey. From the customer perspective the concern of course is that the supplier might (at the tender stage) have provided an erroneous desktop study, or one which made some favourable assumptions in order to bring the headline price down, but on the basis that they would then be able to increase the price through change control after the survey, at which point there would no longer be any competitive pressure. One approach to this risk allocation is for the supplier to be entitled to recover its costs as a result of any changes needed due to information revealed by the survey but only up to a pre-agreed cap - on the basis that they should have at least some
degree of confidence in the accuracy of their own desktop study.
Another external factor which should be dealt with in the agreement is responsibility for obtaining any permits required to build the system. We would not expect the supplier to be fully responsible for obtaining all permits and for bearing any costs if the permit grant requires any alternation to the work (e.g. re-routing). Instead, we would consider that a customer-friendly provision would require the supplier to prepare a permit-responsibility matrix which sets out which party is responsible for obtaining each permit. Suppliers are normally responsible for obtaining the operational, installation and importation permits, and customers are usually responsible for landing licences and the permits needed to operate the system, although this may differ depending on each project. It is good practice for the agreement to also provide that the supplier is responsible for obtaining any permits which are required, but which are not listed in the permit-matrix table. As the supplier was responsible for preparing the matrix at the outset, this catch-all may help avoid
any disputes in relation to omitted permits at a later stage.
As with surveys, the agreement should also set out who bears the risk of any cost impact if a permit requires any material changes to the services specification. As this is an unforeseen risk, there is no right answer, although we have seen in certain contracts that the supplier bears the risk for the permits that they are responsible for obtaining, and the customer bears the costs
arising from the allocated ‘customer permits’.
WARRANTY, DESIGN LIFE
Submarine cable contracts will usually contain a ‘warranty period’ which guarantees that the system will be free from material defects for a certain number of years following provisional acceptance. We would then expect to see a ‘design life’ period (usually 25 years) which provides some additional protection to the customer following expiry of the warranty period if there
are any issues arising due to a problem with the way the system or its components have been designed. Often this is dealt with by a separate mechanism looking at what happens if a “pattern of failure” arises, even after expiry of the normal warranty period. It is important to assess not just the length of any warranty/design life period, but what level of support the customer is entitled to receive during each period and at what cost. For example, we would examine whether the supplier is responsible not just for the costs of replacement parts but also for the vessel costs involved in installing those parts (which may be significant).
“OPEN SYSTEMS” AND UPGRADES
One further issue which has become increasingly important in the more recent contracts we have been involved with is the extent to which the customer is “locked-in” to use only SLTE provided by the supplier (which would mean a restriction on their ability to upgrade the system some years after the RFS date) or else can instead procure an “open” system using SLTE from any manufacturer they choose, meaning they can then upgrade the SLTE at a later date without risking invalidation of the warranty on the end-to-end system. Intellectual property provisions can also be relevant to this issue since it will be important to ensure the customer has the rights needed in practice to use and maintain their own SLTE.
SUBMARINE CABLE CONTRACT EVALUATION TOOL
As demonstrated above, it can be difficult to assess how ‘good’ a submarine cable contract is given the number of different considerations that may be taken into account. To assist DLA Piper have developed a submarine cable-specific contract “dashboard evaluation” tool. This tool provides a snapshot overview of the strength of the contractual positions for certain key provisions with an overall weighted percentage score for the agreement. The scoring method enables different contracts to be compared on a like-forlike basis so that, for example, in a tender exercise it is easy to compare different bidder contract offers. The dashboard may also be useful to potential investors in order to assess the strength and any weaknesses in the contractual documentation as part of a due diligence exercise. Each of the sliders and weightings are fully customisable so that the overall percentage score can be tailored to the factors that are important for any particular client or project.
An example of an overall summary output from the contract dashboard tool is set out below (though in practice our tool also generates a few pages of commentary - not shown below - explaining the meaning of the various scores).
Mike Conradi is one of the lead partners for telecoms matters at DLA Piper, which is one of the world’s largest law firms. He is ranked as one of the leading telecoms lawyers globally by the various legal guides, with Chambers & Partners describing his “ability to grasp complex technical points quickly” and as well as his “skill in navigating through the constraints of a tough regulatory environment”. Mike has particular expertise in the submarine cable sector. He has worked, to varying degrees, on more than 40 different systems and was the only private practice lawyer to sit on the Legal working group for SubOptic, which drafted a template system supply agreement. A project he led involving the creation of a new sales channel for the ACE consortium cable won the TMT Law Firm of the Year award at the African Legal Awards recently. Other work just in 2017 and 2018 includes advising on the purchase of debt in the Hawaiki cable system, advising a consortium buying spectrum on a new cable planned between Brazil and Portugal, advising a participant in the new trans-Pacific “Jupiter” cable system on the consortium terms and on the supply contract, and advising the Asia Development Bank on the procurement terms for a new cable system connecting a number of Pacific Islands. Mike has delivered a “legal masterclass” to every SubOptic conference since 2004. Jennifer Gibbons. Jennifer is an associate based in the TMT team at DLA Piper. She has experience of advising on, negotiating and drafting largescale telecom, technology and commercial contracts. She has been involved in the review a number of submarine cable system contracts, including performing 57
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COLLABORATING TO SUPPORT MARINE LICENCE APPLICATIONS FROM THE SUBSEA CABLE SECTOR BY THE UK MARINE MANAGEMENT ORGANISATIONâ€™S
The UK Marine Management Organisation’s (MMO) Marine Licensing Team worked with the European Subsea Cables Association (ESCA) to develop a desk note to assist with marine licence applications, which was published in January 2018, the details of which are below. INTRODUCTION
his desk note provides an overview of the Subsea Cable Sector, the relevant legislation, a description of the different types of cable, the main methods of cable installation, as well as the key impacts to be considered in a subsea cable application.
WHAT ARE THE TYPES OF SUBSEA CABLE?
There are three primary types of cables which the MMO deal with on a regular basis. These are:
• Electricity Cables – This type of cable allows the transfers of electricity from one place to another. This includes interconnector cables, which exchange electricity to and from continental Europe and beyond; ensuring the UK has a secure electricity supply. At times of low power generation in one country, extra electricity can be imported from a country exporting their surplus through an interconnector cable. Some international interconnector cables are classed as Projects of Common Interest (PCIs) by the EU Commission and are subject to the TEN-E Regulation. • Telecommunication Cables – This type of cable transfers data from one place to another. Today 97% of the world’s communications are transported via fibre
optic cable, and as an island nation, submarine telecoms cables are vital to the UK economy.
• Renewable Energy Export Cables - This type of cable exports electricity generated by an offshore wind farm or wave/tidal array to a substation on land. This Desk note does not cover this type of cable, as consents for the laying and maintenance of export cables are provided under Development Consent Orders issued by the Planning Inspectorate.
WHAT LEGISLATION IS RELEVANT TO THE SUBSEA CABLE SECTOR?
Consents including Marine Licence applications for specific types of cables have to be processed differently due to other international, European or UK legislation. This is summarised below:
United Nations Convention on the Law of the Sea (UNCLOS) The United Nations Convention on the Law of the Sea (UNCLOS) is an international agreement signed in 1982, which provides levels of protection at an international level to all international submarine cables and pipelines (i.e. interconnectors and telecommunications cables). Amongst many other provisions UNCLOS provides the freedom to lay, maintain and repair cables on and off the continental shelf and places obligations on owners of new cables and pipelines to indemnify repair costs for any damage caused to existing cables. Article 79 of UNCLOS provides this freedom and states that the coastal State (e.g. MMO when exercising our licensing function) may not impede the laying or maintenance of such cables or pipelines. To
ensure compliance with this, Section 81 of the Marine and Coastal Access Act (MCAA) 2009 sets out an exemption for such projects and this is explored in further detail below. Marine and Coastal Access Act 2009 (MCAA)
Section 66 (1) of the MCAA sets out that a marine licence is required for the installation of a subsea cable. Section 66 (8) of the MCAA sets out that a marine licence is required for the removal of a subsea cable. However, case officers must be aware of caveats due to requirements under UNCLOS as stated above. Section 71(6) of the MCAA sets out that the MMO must not grant a licence that is contrary to international law. As such the MCAA also includes a number of provisions to ensure the rights conferred by UNCLOS are maintained within the marine licensing regime. Section 81 of the Marine and Coastal Access Act (MCAA) 2009
Section 81(1) of the MCAA 2009 sets out that nothing in Part 4 of the MCAA applies to any activity done in the course of laying or maintaining an offshore stretch (defined in Section 81(4) as being beyond the seaward limits of the territorial sea) of an ‘exempt cable’ (as defined in Section 81(5) below). Further, activities such as clearance dredging and side-casting of sandwaves undertaken to facilitate the laying of a cable would reasonably be considered to be undertaken in the course of laying a cable and may not require a licence beyond 12 nautical miles (nm). Under Section 81(5)1 of the MCAA 2009; a submarine cable is exempt unless it is a cable constructed or used in connection with: • the exploration of the UK sector of the continental shelf;
• the exploitation of natural resources of that sector; • the operations of artificial islands, installations and structures under UK jurisdiction; or • the prevention, reduction or control of pollution from pipelines.
Furthermore, Section 81(2a), of the MCAA states that where subsection 81(1) of the MCAA has effect in relation to part (but not the whole) of an ‘exempt cable’, the MMO must grant any marine licence application to lay any inshore stretch (within the seaward limits of the territorial sea (12 nm)) of the cable. However, the MMO has the power to attach conditions as normal to such a marine licence under Section 81(3) of the MCAA. In cases where the case team would otherwise be minded to refuse a licence if it were not for Section 81 of MCAA, this should be discussed on a case by case basis with the relevant case managers.
1 If you are exploring for, or producing, oil and gas you do not need a licence if you are: searching for and getting petroleum, constructing or maintaining an energy pipeline, establishing or maintaining an offshore energy installation, unloading, storing and recovering gas and storing carbon dioxide. These activities are regulated under the Petroleum Act 1998 and therefore administered by the Department for Business, Energy & Industrial Strategy. Activities within the UK marine area that require a permit under the Offshore Chemicals Regulations 2002 and the Offshore Petroleum Activities (Oil Pollution Prevention and Control) Regulations 2005 are exempt from requiring a marine licence.
Section 81(2)(b) also provides that any activities undertaken in the course of maintaining any inshore stretch of such an ‘exempt cable’ does not require a marine licence. The MMO’s view is that most maintenance activities on ‘exempt cables’ would be covered by Section 81(1) and Section 81(2)(b) of the MCAA 2009, such as the execution of a cable repair or replacement of a
faulty stretch of cable and activities associated with such maintenance (e.g. removal of sediment to access the cable or removal and replacement of existing cable protection to access the cable asset). No approval or notification is required by the MMO for maintenance / repair works under Section 81 of the MCAA 2009.
Laying an “exempt cable” under S.81 of MCAA both beyond and within the territorial sea (12 nm).
Laying an “exempt cable” under S.81 of MCAA both beyond the territorial sea (12 nm).
However, Section 81 of the MCAA 2009 does not apply to the deposition of any additional mattressing or rock protection and does not absolve the undertaker from seeking any other consents or approvals which may be required before embarking upon the works. Please see table and diagrams below for further detail.
Inshore Stretch: A marine licence is required, however, this must be granted by the MMO subject to any conditions considered necessary for that part of the cable. Offshore Stretch: A marine licence is not required. A marine licence is not required.
Maintaining an “exempt cable” under S.81 of MCAA both within and outwith 12 nm.
A marine licence is not required.
Laying / maintaining any cable not an “exempt cable” under S.81(5) of MCAA both within and out with 12 nm.
A marine licence is required.
Laying / maintaining any cable wholly within the seaward limits of the territorial sea (12 nm).
A marine licence is required.
Laying cable protection.
A marine licence is required.
Removing a cable.
A marine licence is required.
EXEMPT CABLES UNDER SECTION 81 OF MCAA (2009)
The Marine Licensing Exempted Activities Order 2011 (as amended) Article 34 of The Marine Licensing Exempted Activities Order 2011 provides an exemption for any ‘deposit, removal or dredging activity’ carried on for the purpose of executing emergency inspection or repair works to a cable solely inshore (within 12 nm) or for emergency works that do not fall within the criteria of Section 81 of MCAA 2009. This exemption is to be used in an emergency only. “Emergency” is defined by the MMO as imminent risk to human health, property (including the cable itself) or the environment. This exemption must not be used for general maintenance of a subsea cable.
This exemption is subject to the condition that the activity may only be carried out in accordance with an approval granted by the MMO. Therefore, for any individual or organisation to execute such an emergency repair, they must submit a notification of an exempted activity on MCMS and not undertake the activity until an approval response has been provided. If the exemption is submitted from 15:00 on a Friday to 23:59 on a Sunday, the following number must be called for the MMO to undertake a compliance test: 07770 977 825. If the works are compliant with the emergency exemption, verbal approval will be provided and a confirmation email will be sent within 24 hours. However, an exemption request must still be submitted to MCMS.
This exemption does not apply to any deposit falling under Item 10 of Section 66 MCAA (deposit or use any explosive substance or article).
The regulation on guidelines for trans-European energy infrastructure (EU 347/2013) (the TEN-E Regulations) sets out a series of guidelines for streamlining the consenting process for major transEuropean energy network infrastructure projects (e.g. submarine interconnectors) known as Projects of Common Interest (PCIs). The TEN-E Regulations set the policy direction that PCIs are necessary to take forward EU energy policy and that such projects should be given the most rapid consideration in the consenting process that is legally possible. To ensure this,
DOMESTIC / NON-EXEMPT CABLES UNDER SECTION 81 OF MCAA (2009)
the Regulations set a timetable of 3.5 years for the permitting process, with a 2 year period for the pre-application phase and coordination across consenting regimes, and 18 months for the determination process on the Application File (Marine
Licence Application and Planning Permission Application(s)).
The Secretary of State for Business, Energy and Industrial Strategy is the designated National Competent Authority for PCIs in the UK.
However, various tasks relating to certain PCI projects have been delegated to the MMO where a marine licence is the primary consent required for the PCI. In such cases the MMO will act as the National Competent Authority and must co-ordi-
nate the permitting process for both the marine licence and the planning permissions required. The MMO will also liaise with the National Competent Authorities of the other Member States involved in the project to ensure that procedures are undertaken in accordance with the timescales prescribed in the TEN-E Regulation. Detailed guidance can be found in the TEN-E Regulation Desk Note.
IMPACTS THAT COULD BE ASSESSED IN A SUBSEA CABLE APPLICATION
It should be noted that subsea cable installation is not a Schedule A1 or Schedule A2 project under the Marine Works Regulations (Environmental Impact Assessment (EIA)) 2007 (as amended) (MWR), therefore, the applicant is not required to undergo the EIA process and produce an Environmental Statement. However, the applicant under Regulation 5 of the MWRs may choose to undertake an EIA in agreement with the MMO.
The following areas may be assessed in a subsea cable marine licence application and any associated environmental report, however, this should not be viewed as a definitive list, nor should all of these areas be included in every application; this must be viewed on a case by case basis and through discussion with case managers. • Marine coastal processes; • Benthic sub-tidal and intertidal ecology; • Fish and shellfish ecology; • Marine mammals; • Ornithology; • Nature conservation • Proximity to designated sites; • Commercial fisheries; • Shipping and safety of navigation:
• Aviation, military and communications; • Marine Archaeology; • Electromagnetic field generation impacts (not usually considered to be an issue); • Unexploded ordnance (UXOs); • Infrastructure and impacts other users of the sea (and intertidal area); • Waste management / Waste Framework Directive; • Water Quality / Water Framework Directive; • Impacts on other marine licensed activities; • Relevant Policies (i.e. Marine Policy Statement or relevant MMO Marine Plan): • Cumulative and incombination effects.
WHAT ARE THE METHODS USED IN SUBSEA CABLE INSTALLATION?
Cable Burial On the continental shelf (0 -130 m water depth) power cables are typically buried beneath the seabed to provide a reasonable degree of protection from other marine users, such as vessels and fishermen (due to anchors and inadvertent fishing activity over the cables), shifting sediments and currents. Cable burial depth depends on the substrate type; in hard substrate the cable does not need to be buried deep (12 m) as the risk of cable becoming un-buried is low and fishing gear penetration depth is diminished. Telecom cables are buried up to water depths of 1,500 m due to the potential risks of deep water trawling.
Installation of a cable is undertaken from a vessel utilising a burial tool usually a plough or a Remotely Operated Vehicle (ROV) (See videos in references for visual aids). The type of burial tool used to excavate a trench will be influenced by the sediment type present:
• Jetting ROVs (high pressure water jets or swords covered with jets to fluidise sediment) – typically best for sandy sediments. • Ploughing ROVs / ploughs – typically best for mud and clay sediments. • Cutting ROVs – typically best for harder substrates (often using chain cutters or less commonly rock wheels).
Telecom cables are generally installed using a towed cable plough, as they are generally smaller (~55 mm diameter compared to ~350 mm for interconnector power cables). Ploughs offer the benefit of both laying and burying the cable in one operation. ROV burial can sometimes be carried out after the cable has been laid on the surface. Different burial tools can be utilised for different sections of the cable, typically changing as the cable spans areas of different sedimentary geology. Some ROVs have a combination of burial tools in one machine, which reduces the need for ROV recovery/ re-launch or repeated burial.
Even though the ROVs/ ploughs are large machines the component that excavates the trench is small (a few centimetres to half a metre in width), therefore, the main area of seabed impact is usually relatively small (a few metres across). The ways burial tools are used on each project should be described in licence application. Where jetting ROVs are utilised the cable is usually surface laid first and then subsequently buried in a separate operation. These use a pre lay plough to form a trench in the seabed and then days or even weeks later a cable is laid into the pre-cut trench. Cables can be manufactured and transported in lengths that ensure multiple sections of cable aren’t
required. However, when smaller lengths are deployed or when an offshore section of cable needs to be attached to the intertidal section of cable; joints can be utilised to link the cables together. The joint will usually be a few meters long and slightly larger in diameter than the cable and is laid utilising the same method as the cable. Submarine branching units can also be used for telecommunication cables where the cable needs to split to more than one destination and repeaters can also be used to extend transmissions.
Pre-Sweeping In areas where large sandwaves or surface boulders exist it may be necessary to clear these obstructions before cable laying commences. This ensures the burial tool remains stable and the cable doesnâ€™t become exposed after burial due to mobile sediments. Telecom cables are usually micro-sited to avoid the need for pre-sweeping.
Cable Protection Cables on the continental shelf are usually buried for protection; however, when burial is impossible the cable can be protected using rock armour (dumping various-sized rocks on top of the cable in a controlled manner) or mattressing (large plastic or concrete protection mats).
Cables may also require the use of mattresses when they cross an existing cable; mattresses are placed on top of the existing cable for up to tens of metres either side of the crossing point to protect the existing cable. The new cable is then laid over the mattresses across the
existing cable route and if required further mattresses are placed on top of the new cable. It can also be protected by rock placement. If the existing cable to be crossed is out of service or retired, a section can be removed and the open ends of the cable can be weighed down (this route clearance occurs in advance of the cable laying operation).
Landfall (onshore cable installation) Cable landfall (intertidal installation) can be undertaken using a variety of methods and depends on the conditions at the coast. The length of the landfall depends on the distance between the Mean High Water Springs (MHWS) and the Mean Low Water Springs (MLWS). Usual onshore cable burial depth is to at least 1 m and can be up to 5 m depending on substrate condition (The Crown Estate, 2013). Horizontal Directional Drilling (HDD) is sometimes used when the cable needs to be installed under a feature which is difficult to pass or disturbance is required to be minimal such as coastal defences or environmentally protected features. HDD creates a duct under the beach for the cable to be winched through. HDD lengths can vary depending on the project requirements, cable diameters and geology. The HDD methodologies used on each project should be provided by the marine licence applicant.
Trenching is another landfall installation method and can be used for part or all of the landfall installation. Standard terrestrial civil engineering trench construction techniques are used to bury the cable in the intertidal zone. Sometimes additional protection such as castiron split pipe can be applied (and may also extend into the wet section of the route offshore). This provides physical protection in the surf zone where the environment is most dy-
namic and subsequent terrestrial works may pose a risk to the cable.
Connection to onshore cable For power cables, a transition joint pit (TJP) is usually excavated where the submarine cable can be connected to the onshore power cable via a joint. The joint may be housed in a concrete chamber and backfilled. Submarine power cables can be connected directly to an overhead line via a wooden pole or steel lattice (The Crown Estate, 2013).
For telecom cables a Beach Manhole (BMH) is constructed near the landfall. This is a purpose built structure above MHWS, where the marine cable is jointed to a terrestrial cable. Telecom cables sometimes require a system earth where either an earthing plate is installed in the beach or sea or an ocean ground bed (OGB) anode array is constructed nearby to the BMH.
FURTHER INFORMATION ON SUBSEA CABLES • Further details on UNCLOS can be found at http://www.un.org/ depts/los/convention_agreements/texts/unclos/UNCLOS-TOC.htm, while further interpretation of each part of UNCLOS related to submarine cables can be found at https:// www.thecrownestate.co.uk/ media/5708/submarine-cables-and-offshore-renewable-energy- installations-proximity-study.pdf
uk_manual_proce dures_ten_e_ regulation.pdf).
• Further information on cable installation techniques and environmental effects can be found at: http://webarchive. nationalarchives.gov.uk/+/ http:/www.berr.gov.uk/files/ file43527.pdf
• YouTube video demonstration of a combination jetting / cutting ROV: https://www.youtube. com/watch?v=cFxlwWPm4f0 •
YouTube video demonstration of a ploughing ROV: https://www.youtube.com/ watch?v=d9tRmJLOCdg
• YouTube video demonstration of a telecoms cable plough burial: https://www.youtube.com/ watch?v=9hEDTRU_F2s • YouTube video demonstration of a simultaneous power cable ROV lay and burial: https:// www.youtube.com/watch?time_continue=66&v=UKp_0CBJm7E
• Further information on Ten-E can be found in the UK Manual of Procedures: The permitting process for Projects of Common Interest in the UK (https:// w w w. g ov. u k / g ove r n m e n t / uploads/system/uploads/attachment_data/file/311184/
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INTERVIEW WITH THE SUBOPTIC 2019 PROGRAM CHAIR DR. STUART BARNES
tuart Barnes began his career at the Research Subsidiary of STC (Standard Telecommunications Ltd) after graduating from Queen Mary College, London University with BSc (Hons) and PhD in Engineering.
After 7 years in Research, including 3 years supporting development of STC Submarine Systems first optical repeater, he became involved in turnaround activities in the Terrestrial Fibre and Cable divisions (Market Share increased from 5% to 50%). He went on to become Deputy Technical Director and subsequently Technical Director in 1995, where he was responsible for the development of STC’s second optical repeater. This repeater is still in production today.
TELL US A LITTLE ABOUT YOURSELF AND HOW YOU GOT INVOLVED IN THE INDUSTRY. WHAT MAKES YOU A GOOD FIT IN YOUR ROLE? When I started my career I was fortunate enough to be recruited by STC (then part of ITT) and joined their research facility in Harlow. It was here that fibre optic research effectively started with the seminal paper by Hockham and Nobel Prize Winner, Kao. I was in fact involved in a small way on the last long haul analogue submarine cable (ANZCAN) trying to squeeze bandwidth out of
After the acquisition of the Submarine Group by Alcatel he moved to Paris to head up Alcatel’s Optical Recherche Group. In 1999, he Founded ilotron (UK), after a short period with Atlas Venture as an ER he co-founded Azea Networks in 2001, which merged with Xtera Communications Inc. in 2007.
“Of my 40 working years (this September) I will have been directly involved in the subsea industry for 35 years, and I have enjoyed every minute,” he told us candidly. Stuart answered our questions about his role with SubOptic 2019 with refreshing energy and aplomb. We think you’ll be interested in what he has to say and the conference will benefit under his leadership.
the dielectric. Then, I was more directly involved in the very first optical submarine system (UK Belgium) working on both the first optical repeater and then on the redesign of the optical cable core.
WHY DO YOU FEEL PASSIONATE ABOUT SUBOPTIC 2019 AND WHAT MAKES IT DIFFERENT FROM OTHER CONFERENCES?
SubOptic is the only Conference “For the Industry by the Industry”. The telecoms industry is hot at the moment, but when it inevitably
cools a little other conferences will slip away, SubOptic will survive and prosper. It remains essential that we keep SubOptic alive for future generations. Fibre optics is the only medium capable of successfully transporting large amounts of data over long distances – and, as such, will remain at the heart of the subsea telecommunications industry forever. SubOptic tends to be more educational in all topic areas, whereas many other Conferences are more focused on the networking and commercial elements of the business. By “educational” I am not just talking technology. We have tackled
a range of technological issues over the years from Coherent to Plough Burial, and all points in between. Also SubOptic offers CE merits for anyone attending the Master Classes, helping to encourage interest in the field.
For 2019, we plan to take advantage of the large area offered by the New Orleans Marriot to provide space for networking outside of the conference sessions.
WHAT ARE SOME OF THE THINGS YOU’RE LOOKING FOR IN AN EXCELLENT/TOP TIER PAPERS SUBMISSION?
The Papers Co-Chairs and their excellent team of Vice Chairs will address this from a topic-by-topic perspective, but from my point of view I would look for the following: • Up-to-date and forward-looking commentary on whatever topic the presenters address. This is essential as it will continue to differentiate what we do from other conferences • Papers that will stimulate debate. We intend to look at ways of stimulating more debate in each session.
We are trying to increase the conference scope to bring in a greater level of regional interest and diversity. For 2019, we have introduced Regional Ambassadors to broaden our reach and provide hot topics from all four corners of the world.
TELL US A STORY ABOUT A PAST EVENT. WHY DO YOU ATTEND? WHY DO YOUR COLLEAGUE ATTEND THE EVENT? I attended the first Paris Conference in 1986 and most of the others since. At the outset, I was a bit in awe but this is a great and welcoming industry. Jean Devos, the driving force behind SubOptic, used the term “Coopetitive” or some such. This sums up our Industry. We do compete, but sometimes we have had to come to together and address issues that threaten us all; Shark Bite, Hydrogen, the bursting of the dot com bubble…We are good at this when under pressure! That is why it is a great industry and a great conference.
IF YOU HAD TO CHOOSE ONE TOPIC YOU’RE PARTICULARLY EXCITED ABOUT AT THE 2019 EVENT, WHICH WOULD IT BE AND WHY?
There are many more than ONE! I have been involved in transmission most of my career so I am inclined to be a bit biased. There has been some stunning work in this area over the years and 2019 will be no different. We should not forget that OUR industry continues to drive the most challenging aspects of transmission, many of which then subsequently get folded into less demanding terrestrial applications.
The presence of the Internet Content Providers has injected new vigor onto our space. There will surely be some exciting inputs here on Open Systems, disaggregation and related issues Reliability is a hot issue again with the arrival of ROADM Branching Units and new cable types. Route diversity, networking, reduced system life…
New ships - at last 3 are on the horizon! And finally, legal, commercial and regulatory. Often a fairly dry subject, but now with cyber threats and piracy, the law of the sea is threatened...dull no more!
HOW HAVE YOU SEEN THE INDUSTRY AND THE EVENT GROW? WHAT DO YOU LOOK FORWARD TO IN THE FUTURE?
To me the technology has always been moving but the pace of change in recent years has been staggering: cable stations are now data centers, many more countries are now connected than ever, China has risen as a great player, etc. etc. We need SubOptic to continue to reflect these changes and the industry will be in safe hands. SubOptic 2019 registration is now open. Visit www.suboptic2019. com to view complete schedule, read more on program topics and explore tours for the +1 Program.
BACK REFLECTION: THE “LIGHT YEARS” OF THE BUBBLE 1998-2005 BY JOSÉ CHESNOY
ne can find interesting nuggets in a book published in French in 2005: “Du Morse à l’Internet” (Reference 1), written by Gérard Fouchard, René Salvador, Yves Rolland, and Alain Leclerc. In this “back reflection” issue of the SubTel Forum magazine, we propose you a translation of a selected part of this book in which one can guess that Jean Devos also contributed. This selected part present the vision of the formation and the outburst of the Internet bubble that impacted telecommunications and especially submarine cables in early years 2000. When you read this article, please remember that it was written in 2005, about halfway between the advent of the first optical cable, and now, and you will enjoy how fresh it is 18 years later.
1-THE FLIGHT FORWARD AND THE EXCESSES As of l997, there are three main business models that are fighting for promotion of new submarine cables: The traditional large Operators that became competitors through the deregulation. From their “local” origin, they fight together to become “global”.
The « New » operators who expand to compete locally and globally with incumbents in their historical areas, thanks to deregulation. BT must compete against C & W, ATT against MCl, Sprint, GTE and WorldCom, who all need a global network.
Finally, the « Carrier’s carriers », entrepreneurs and investors, following the Global Crossing success
story, nurturing the ambition to sell capacity to all operators and end users.
Analysts predict an explosion of capacity requirements. This catches the greed of the big global financial and industrial groups, especially US based. Projects with excessive ambition are first promoted, such as Africa One or Oxygen (see the diagram on Figure 1). Oxygen is an ambitious, innovative but totally unrealistic idea: a single 300,000 km network open to all users with 300 access points! Africa One is a 15000 km fiber loop around Africa, a grandiose idea based on a false perception of reality in Africa, and in addition, impossible to finance. A second wave of American initiatives develops from l997-98 with much more intelligence, and finally succeed.
Following Global Crossing, new network creators such as Flag Telecom, Williams, Level 3, Worldwide Fiber (which became 360Networks), got the support of the financial markets to build the digital highways of the future, starting from the heart of the Internet network, that is United States (Figure 2). They proceed first to construction of North American terrestrial networks, then trans-Atlantic and trans-Pacific such as AC1, Hibernia, PC-1, Yellow, Atlantica, etc. and then propagate to the rest of the world, Europe and Asia, raising the interest of regional parties.
The evolution were opposite in the Atlantic Ocean and Indian Ocean. In the Atlantic, under financial pressure, the capacity offer explodes outside any serious economic analysis. In the Indian Ocean, the offer was prudently progressive and followed closely the capacity demand
of operators. In the other regions, either the Pacific Ocean or between North and South America, the evolution follows intermediate models as displayed in Figure 3. What happened is that the new Carriers’ carriers have no industrial experience and are more likely “colossus with clay feet” that the previous strong telecommunication multinational companies. They are fragile and stagger under the lightest fluctuation of the financial market. When an investor in submarine cables grows too rapidly, it take the risk to stumble and finally to be absorbed by a stronger player.
Building a strong submarine cable operator is a delicate cooking recipe with a clever mix of technical competence, market intelligence and financial background. If the mix is not right, the meal will not be as good as in other domains! 74
2- NEW DEAL FOR THE CABLE SUPPLIERS The newcomers, entrepreneurs and operators, pull the cable suppliers towards an unorganized flight forward. Competition is no longer based on prices, performance, and quality, but on the risk that the suppliers are ready to share with the new customers to support their business case. Delayed payments, shorter delivery times, maintenance services and even entry into the capital, sharing the risk of the new projects. One supplier invests $1 billion in 360 Networks, and then agrees to keep 50 percent ownership of the capacity over a transatlantic cable (Apollo). Another pushes logic to the end and builds its own worldwide Network (TGN), investing 2 to 3 Billion dollars. This TGN network comprises a transatlantic loop, a transpacific loop, and prolongations in Europe and Asia. All the manu-
facturers increase their production capacity at the price of heavy investment to supply these new carriers’ carriers. The number of cable ships is multiplied by four and exceeds 200 units. Stock exchange inflated following commercial successes and the increase of the financial investment since overall cable sales rise sharply from l to $8 billion per year (Figure 4). The consequence come later, the speculative bubble is formed, and the trees will grow to heaven!
3-THE MISTAKES OF ENTREPRENEURS
These entrepreneurs are too dogmatic, self-confident, guided by the prospect of miraculous profits, deaf to the advice of “wise men”, and ignoring two fundamental phenomena: The technological revolution of WDM and the basic culture of the large operators. Disregard of both products and customers are two reason to reach a fatal issue. Disconnection with the needs of the market is
another mistake illustrated by the installation of many large cable arteria along the same routes. Thanks to the WDM technology, the gap between the needs and the available capacities becomes whopping. New cables first designed for one channel per fiber evolved to 4, 8,16, and finally cable design is offered for 160 wavelength channels each passing from 2.5 Gbit/s to 10 Gbit/s, while number of fiber pairs can also increase to 8 fiber pairs. Thus, the new cables have in their submerged part a potential of several Terabit per second, 200 times more than cables designed only 10 years earlier. Just add progressively some terrestrial equipment to use as needed this latent capacity does not need other cables. That is what the promoters of the Sea-Me-We 3 system have done several times between l998, when it was put in service, and 2005, when the decision was taken to build Sea-Me-We 4.
The large operators from American, Europa as well as from Asia do not adhere to the new philosophy except marginally around 1997, when they bought capacity to cope with the fast start of Internet. The network is too strategic for operators to be left in the hands of uncontrollable sellers having the single purpose of making money. They must rely on their own network. Despite all these new private cables, they continue to build their own cables, in consortium for some of them, such as: TAT-14, or Japan-US, China-US, APCN-2, SAFE / SAT3 (Europe to Asia going around Africa, or in other forms for others: AJC (Australia-Japan), SAM and Southern Cross (South Transpacific), and the Singtel network (Telecom Singapore). They are all operator cables. Furthermore, despite the huge number of private cables available over the Atlantic, the British operator C&W puts into service a double cable loop Apollo over the same route!
4-THE PUNISHMENT BY THE CRISIS The abandonment of many projects (such as the pharaonic Oxygen project) and the implementation of oversized capacity on the main routes, especially those linking the United States, has soon evolved into a major crisis with ongoing effects. Despite a growth in traffic never seen in the past, overcapacity causes brutal collapse of prices. Carriersâ€™ carriers being deeply indebted, see their income collapse or not appear at all. GCL, FLAG, 360 Networks shelter under the famous chapter 11 protection provided by the American law in case of bankruptcy. These companies are restructured, their debts are erased, their ambitions are down as well as those of their initial promoters, and most of them are put up for sale, either retail or wholesale. The
detailed description of the crisis process may be long to describe, but the visible consequence is the cheap purchase of all these cables, more often by emerging operators (FLAG or TGN are now owned by Indian groups, Reliance and TATA which already has VSNL). The EAC system now belongs to China Netcom, Atlantica (360 Americas) to Brazil Telecom. The transpacific cable PCl, and the transatlantic cable Hibemia are sold back for a pittance to investment funds which nevertheless have then difficulties to cover their maintenance costs.
5-BACK TO THE REASON
The bubble has simply exploded. We are then gradually returning to a safe situation.
From chapter 11 to restructuring, from consolidation to sales, the infrastructure becomes now again property of their end users and become driven by real needs. The most recent cables, including SeaMe-We 4 and Falcon are now property of cable operators, responding to real capacity needs between Europe, Middle East, India and Asia, over routes that did not suffer from overbuilding during the roaring years. In fact, the speculative bubble has developed over routes connecting the United States of America. In the major industrialized countries, the regulatory authorities still play their role and ensure equal access to infrastructures and limiting the impact of the crisis. This is not the case for the countries on the coast of East Africa which has no connection to the global network (with the exception of Djibouti, Morocco and South Africa). In these
regions, the World Bank participates to the promotion of a system linking all these countries, the EASSY network, in order to influence the price of capacity and avoid the monopoly of a single operator. Existing cables are also close to saturation in Asia and in a lesser extent the Pacific where cable planning is at its best. Of course, there is still considerable overcapacity in the Atlantic, but the big operators are able to absorb it progressively, even if it will need some time. They will first benefit from the current low prices and will then plan their own cable. The industrial suppliers, who have lost money during this crazy period, have closed several factories becoming useless, reduced their profits and work on cost and price reduction. They must find margins to relaunch the research that is presently frozen. The cable fleet is also adapted to the new situation.
The prices of capacity and that of cable construction tend to stabilize before a probable future reasonable rise. History narrated in this we can resume his nominal course. Until 2004, we see that the global network ensures a double service, telephone service (fixed and mobile) at one hand, and Internet services at the other hand. The phone is based on setting up a one-to-one communication between two connected users. In the Internet, there is no communication channel between users. The network Information is fragmented in pieces “digestible” by the network while the fragments of information following their own way (like the Post Office or DHL). We are now at the start of a new day mutation of the telecommunications network with telephony on the Internet using the same protocol for the transmission of voice (VoIP) than for other services. According
to Georges Krebs (note from the translation: in the book preface), in the same way as telephone cables absorbed telegraphic traffic as a secondary traffic in their early time, the optical cables are in the process of carrying the telephone service as a by-product of Internet traffic and services. Even more, the low-speed Internet that offers e-mail, voice and music is quickly supplanted by high-speed internet which is also able to transmits animated images in real time and distribute the television on demand. The capacity needs of broadband (20 Mbit/s today), which are not comparable to the requirements of the telephone channel (64 kbit/s only), suggest a strong demand of capacity and therefore ... the laying of new submarine cables in all seas and oceans.
6-GEOPOLITICAL CHANGES During these “Light years”, Europe moved from a British to a French leadership over submarine cables. On the one hand, France Telecom (FT) and FCR develop and carry out major worldwide projects, that was until then the private domain of British Telecom and C & W, but more especially, the French supplier Alcatel, following the initial impulse of FT, get out of its European and African enclosures, and becomes a global player, first conquering Asian and Pacific markets through the successful planting of factories in Australia, then by the absorption of its historic English leading competitor STC, in addition to the absorption of the smaller player Pirelli submarine cables. At the dawn of the third millennium, the landscape underwater telecommunications industry is grouped into three poles: American. Japanese, and European sides. In
2005, the European Alcatel is becoming the number one with more than 50% market share (Figure 5). On the other hand, France Telecom, as most national operators, facing an external growth requirement and margin erosion of their fixed services core business becomes considerably indebted. In underwater cables, the French operator has cut research, development and engineering activities, then has spin off its cable ship business. Same evolution took place for United States operators and to a lesser extent in Japan.
Following this silent revolution, at the end of this decade, nothing is like before. Following the success of the submarine optical technology, the little smooth world in which the submarine cable community pleased itself for many decades, exploded. Fiber optics -terrestrial or submarine- is now in the heart of the digital revolution and the driver of the internet in particular. Within ten years, optical technology has not reached its limits, but simply its maturity. At the start of the twenty-first century, optical fiber offers transmission capacities which are expressed in Terabit/s (l 000 Gigabit/s),
more than three thousand times the capacity offered ten years before. This had never been seen during 150 years of submarine cables, more accustomed to developments where tradition is driving more than innovation: from I860 to l950, submarine cable technology had quasi-stationary performances with very slow improvements (a factor of 10). Then from l950 to 1985 the analogue transmission on coaxial cable passes from a few tens voice channels transmitted to several thousand that is a growth by a factor of several hundred over 35 years. With optical systems, from transatlantic TAT-8 to Appolo link, the capacity transmission has been multiplied by about 5000 in only 14 years, and even more than 10000 if we compare to I2I (Singapore to India) with 8.4 Terabit/s design capacity (8x105x10 Giga!). More surprisingly, the huge increase of capacity offering resulting from optical technology improvements is regularly absorbed by the growth of needs. Internet, multimedia and deregulation are words that stretch over the first pages of economic journals. These are the real drivers fueling the numerical revolution spreading in most regions of the world. The rapid introduction of high flow rates in the local loop (ADSL, cable, mobile and broadband internet) will increase the pressure on the networks long dis-
tance and special underwater cables who may become the bottleneck of the worldwide network development. No assets are definitively won! Neither on the industrial side nor in the networks operation and cable laying industry. The changing telecommunications market necessitate for each actor to always renew strategies to survive in the unknown external world. Do not wait for a universal recipe that is to be permanently reinvented! The stake is not less than survival. Time is short. The fortress is besieged. The idol has crossed the walls of Troy!
18 years have passed again, but the above story counting the major event that was the bubble is still quite fresh and informative. The text written in 2005 carries the right vision, and the lessons of the year’s 2000 bubble still deserve to be meditated. One should also remember that the technology of submarine cables was almost frozen between 2001 and 2007!
Huge progresses happened since that time in the last 10 years. The reference book (Reference 4) provides a detailed picture of the present submarine cable technology. One knows that the landscape today is reshaped after some major evolution that were not foreseen in 2005 when the above chapter was written. Just to cite the main ones: the market revolution by the GAFAs becoming the main investors in new cables, the upgradability of old cables that offer ten times more capacity than when they were designed (Reference 2 in SubTel Forum), Coherent technology, or the reach of the Shannon’s limit implying that the capacity of new submarine cables will increase more slowly in the future than in the last 25 years (Reference 3 in SubTel Forum).
1. Du Morse à l’Internet, R. Salvador, G. Fouchard, Y. Rolland, A.P. Leclerc, Edition Association des Amis des Câbles Sous Marins, 2006 (book)
2. SubTel Forum Magazine November 2017, p.76, José Chesnoy, Back reflection: Retrospective of submarine upgrades, http://SubTelForum.com/ STF-91/#?page=76 3. SubTel Forum Magazine May 2016, p. 88, Back Reflection: The capacity Epic of the Optical Era, http://SubTelForum.com/STF-88/#?page=88
4. Undersea Fiber Communication Systems, Ed.2, José Chesnoy ed., Elsevier/Academic Press ISBN: 978-0-12-804269-4 (book)
José Chesnoy, PhD, is an independent expert in the field of submarine cable technology. After Ecole Polytechnique and a first 10 years academic career in the French CNRS, he joined Alcatel’s research organization in 1989, leading the advent of amplified submarine cables in the company. After several positions in R&D and sales, he became CTO of Alcatel-Lucent Submarine Networks until the end of 2014. He was member of several Suboptic Program Committees, then chaired the program committee for SubOptic 2004, and was nominated Bell Labs Fellow in 2010. José Chesnoy is the editor of the reference book “Undersea Fiber Communication Systems” (Elsevier/ Academic Press) having a new revised edition published end 2015.
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FROM THE PROGRAMME COMMITTEE SUBOPTIC 2019; PAPERS COMMITTEE UPDATE FROM THE PAPERS COMMITTEE CO-CHAIRS. BY MARC-RICHARD FORTIN AND STEVE DAWE
ollowing the announcement and introduction of the SubOptic2019 Papers Committee Co-Chairmen, we are pleased to follow up in this update with the introduction of the industry professionals who have volunteered their expertise to serve as the Papers Committee Vice-Chairs:
TOPIC AREA 2 WET TECHNOLOGY.
TOPIC AREA 4 MARINE ADVANCEMENTS.
Welcoming Olivier Gautheron, CTO, ASN.
We welcome Ana Chamon, TE SubCom.
We welcome Tim Stuch, Global Optical Architect, Facebook
TOPIC AREA 3 DRY TECHNOLOGY.
TOPIC AREA 1 NETWORKS OF THE FUTURE.
This topic area is aimed to cover a wide array of areas ranging from integrating networks and data centers beyond the beach, the impact of OTT infrastructure and the future of manufacturing, and avoiding bottlenecks in capacity or routes.
This topic will explore the current specifications of fibers, cables, repeaters and branching units, PFEâ€™s of the future, and what future designs must improve upon to meet system needs.
We are pleased to welcome Yoshihisa Inada, NEC.
This topic area will aim to provide a comprehensive look at cutting edge software, techniques & practices used to more efficiently manage networks, and increased efficiency of landing equipment and terrestrial security at the landing site.
This topic will explore installation techniques and best practices, cable damage prevention, global pinch points, and cable ship fleets. Additional areas include: Route survey, Desktop study, Permits and environmental planning.
TOPIC AREA 5 REGULATORY, LEGAL & SECURITY. We are very pleased to welcome Kent Bressie, Harris, Wilshire & Graniss recently appointed International Cable Law Advisor to ICPC This topic area will look at regulatory and legal issues, examine global permitting processes, as well as, security for networks and the landing stations.
TOPIC AREA 6 COMMERCIAL AND FUNDING. We are pleased to welcome Bernard Logan, MainOne Cable
In this topic the we will examine best practices in system project development, the geopolitical impact on the cable industry, roles of consultants and different funding types
TOPIC AREA 7 GLOBAL CITIZEN.
We are pleased to introduce and welcome Nicole Starosielski, New York University.
This topic will address environmental concerns and considerations to be aware of and integrate into processes, and conservation efforts that impact installation and maintenance. The topic will also explore how to fill the skilled labor gap and how to improve the gender balance within the subsea industry.
TOPIC AREA 8 OIL, GAS & SPECIAL MARKETS. We welcome Denise Toombs, ERM
In this topic we will look at system developments in the oil & gas industry, on recovering and scrapping out of service cable, shore end reuse, low latency network needs, challenges of network topology, capacity, operations and maintenance. The Papers committee has commenced its work, the abstract and paper submission portal is at the end of its construction to be followed by testing and ready for the Call for Papers.
Our Vice Chairs are in position and assisting finalizing the scope of each topic and assisting the Co-chairs to develop the Call for Papers planned for release this April. On behalf of the committee we encourage all readers to consider the broad themes set out in the proposed program and consider the abstracts for papers you may wish to submit. After all this is your industry and your industry’s premier event. Marc and Steve Papers Committee Co-chairmen
About SubOptic 2019: SubOptic 2019 (www.suboptic2019.com) will be held in New Orleans, Louisiana, USA on 8-11 April 2019 and is the longest running and most comprehensive conference series in the world for the submarine fiber industry. SubOptic (www.suboptic.org) is a non-profit international organization active in the undersea communications industry and best known for the conference it organizes widely considered to be the global summit of the submarine cable community.
Marc-Richard Fortin began his career at Nortel in 1993 with a Master’s degree in Telecommunications from Laval University. He first started working on the GlobeNet Network in 1999 overseeing many aspects of the subsea network from terminal vendor selection, subsea cable deployment, marine maintenance and repair along with providing support to business development. He currently works at TE SubCom as Network Operation Center Director. Stephen Dawe is the Engineering & New Business Manager for Vodafone Submarine Systems Engineering (VSSE), which is part of Vodafone Group Services, and is based in London. He has over 35 years’ experience in the submarine systems industry with an extensive background in engineering. Stephen is an experienced leader in international project implementation and his expertise includes international connectivity and carrier commercial arrangements for submarine cables. Stephen is Vice Chairman of the European Subsea Cables Association (ESCA), an active member of the SubOptic Executive Committee; and Executive Committee Member of the ITU/WMO/UNESCO-IOC Joint Task Force on SMART Cables for Observing the Ocean, and Co-Chairman of its Business Model Committee.
FROM THE CONFERENCE DIRECTOR BY CHRIS NOYES 84
t was great to attend PTC’18 and see members of SubOptic and others in the industry back in January.
eople were telling how excited they are about attending SubOptic 2019 in New Orleans. Registration opened on March 1st and we saw large numbers of people visiting the SubOptic2019.com and buying tickets. There is a great opportunity to save $100 on the conference registration fee by reserving your hotel at the same time as you register. We look forward to seeing you in New Orleans, in just over a year. The SubOptic Conference wouldn’t be a world class gathering of the industry without the continued support of the companies that sponsor the event every three years. Sponsoring or exhibiting at a conference can do several things for a company, but sometimes management walk away wondering if all the expense and effort met their expectations. First, the organization must determine the goals of exhibiting or sponsoring at the event. Every company is unique in measuring their exhibiting and sponsorship ROI. The idea from the beginning is to determine how the company will measure their individual ROI for sponsorship. Here are a few of the ways different companies measure their ROI of an exhibit or sponsorship, examples: »» Number of Tweets »» Number of Leads »» Number of People that stopped by the booth
The other factor when evaluating if your company should support an event is that every event creates experience for the attendee, which creates a memory which should be a meaningful or memorable experience. When attendees have a good experience with an event they look at who and what organizations supported the event and in return support those organizations with their business. With every opportunity to support there are a few basic for choosing the correct event for your organization and brand, and then the key is to maximize your participation as a supporter. 1. MAKE SURE THE EVENT REPRESENTS YOUR ORGANIZATION’S CULTURE AND YOU WANT TO BE ASSOCIATED WITH YOUR BRAND.
SubOptic is the premier conference for the submarine cable industry, with the leading professionals delivering industry specific sessions. The conference is the place to be if you are part of the submarine cable industry to meet and learn what is trending, as well as a chance to interact with other industry professionals. The conference’s tradition of providing the industry with a technical education conference by the industry and for the industry is again the goal of the conference. If your organization values the opportunity of professionals gaining more professional knowledge and the opportunity to network with other industry professionals with value of putting the industry first, this is your chance to align with such a conference.
2. ENSURE THE EVENT IS ORGANIZED AND MANAGED TO YOUR LIKING.
This is key, if you believe the event is managed the way you like or believe it will not be an event to your standards, then the attendees will extend their disappointment to your organization.
3. ROI: MAKE SURE YOU KNOW WHAT YOU WILL RECEIVE (TANGIBLE AND INTANGIBLE)
Every event offers different types and levels of sponsorships. Know what will work for your organization and brand and know what you
want. If you know of something you want, event organizers are willing to work with a sponsor to make a package work for their needs. Just ask and you could be surprised.
4. DOES YOUR ORGANIZATION ADD SOMETHING MEANINGFUL TO THE EVENT?
As the sponsor ensure your organization can be an integral part of the event. You may ask how you can make this happen. As an example, a pen sponsorship is reasonably priced sponsorship and is an exclusive for the conference. This gives your organization an opportunity to be make an impact for the conference. 5. HOW DOES MY SPONSORSHIP IMPACT THE COMMUNITY/INDUSTRY?
In the case of sponsoring SubOptic you are impacting your business industry and community. Other events that you may consider sponsoring could affect a community where your organization is located. By sponsoring SubOptic 2019 your organization is enabling the industry to have a gathering of peers and learn the latest trends and what is happening in the sub sea cables industry (help here as well) 6. DON’T JUST CUT A CHECK; MAKE SURE YOU CAN AND PLAN TO ENGAGE
This could many different things to the different organizations. Some organizations could use events they sponsor to engage attendees more by creating a highly interactive exhibit booth; some could plan offsite social functions for prospects and clients. A sponsor could invite clients that haven’t been before. Think how you your company engages attendees at other conferences or ways that other companies have
engaged attendees to create something custom for your company to maximize your sponsorship. Having discussed the “how” you should plan to measure your sponsorship or exhibition at SubOptic, these are the “whys” in determining your participating in either sponsoring or exhibiting. 1. PUBLICITY FOR YOU COMPANY
As the old-adage of “the only bad PR is no PR at all” we know that isn’t necessarily the truth, but the purpose of publicity as a sponsor of the conference is to drive more attention and awareness of your company. Having a marketing and communication plan to promote to the overall event, which includes listing the major sponsors and for certain marking pieces includes the exhibitors. This increases your company’s visibility and builds the reputation by being associated with the conference.
2. TARGETED MARKETING
The focus of the conference marketing plan is to attract more professionals to the conference and to your booth, etc., which increases a sponsor’s exposure to their target market. This creates additional value and increases your sponsorship opportunity to create interest in the products and services offered by your company. As a sponsor ask for the conference marketing plan and see if there are opportunities to tag along with some of your own marketing to compliment the conference’s marketing to increase your exposure to in the target market.
3. LEAD GENERATION
Lead generation Is one of the key factors as to why companies want to be at the event, and on the exhibit floor. This is your chance to convert a lead to business. Have a planned system to capture visitors to your
booth, and part of the plan should be to have some type of interaction for visitors, albeit giveaways, or a mixture of both, such as an activity to “win” the giveaway.
4. BRAND AWARENESS
Sponsoring or exhibiting at a conference is fantastic way to increase your brand awareness within the targeted market of the conference. The company’s logo and name will be listed on the event or conference website, which will receive more views than the company’s site would alone. With the sustained marketing efforts over the next year leading up to the conference the website will see more and more visitors, and this will increase a company’s exposure to these individuals and increase your brands awareness.
So far and just over a year away from SubOptic 2019, the conference is doing well with the exhibit floor just over 30% sold. If you plan on purchasing a booth make sure you contact, Rebecca Khoury, our Sponsorship & Exhibitor Sales Coordinator at firstname.lastname@example.org.
We also suggest you look at the conference website (www.SubOptic2019.com) and check out the latest updates. We have made some significant updates for attendees attending the conference. We have a completely automated registration system that allows you to register and reserve your room at the conference hotel in one go, and if you reserve your room when registering you will save $100 off the conference registration price.
We have implemented an interactive exhibit floor map for you to see what companies are already attending and where their booth is located on the exhibit floor. This will allow you to plan your time on the exhibit floor, and this will be in-
tegrated with the conference App when released.
With the comments we heard at PTC we have added several pre and post conference NOLA tours for those that plan on arriving early or staying after the conference. Remember to register for the conference and to book your room now. We look forward to seeing you in New Orleans next year.
Christopher Noyes began his career in 1996 as the Meeting and Incentive Director for Spectrum Industries, providing company sales and incentives meetings. His experience includes producing meetings, trade shows and events in USA, Mexico, Bahamas, Canada, and Holland, and has produced meetings and events for the Urban Land Institute, Coca-Cola, Medtronic, Bank of America JER Partners, Legg Mason Wood Walker, and Avery Communications. He possesses the international designation of Certified Meeting Professional form the Convention Industry Council, and joined Submarine Telecoms Forum in 2016 as Conference Director to help develop and lead the company’s venture, STF Events. 87
ADVERTISER’S CORNER BY KRISTIAN NIELSEN Dear Readers,
I love writing this piece, though daunting it may be at times.
I started writing the Advertisers’ Corner a handful of years ago with two goals in mind: the first is to show you what goes on behind the scenes here at SubTel, and the second is to address advertising decision makers directly. Often, I sit down to write this piece with a salient idea in mind, a grain of sand to form a pearl around, so to speak. Over the last 8 months we’ve undergone some significant changes, most of which we’ve discussed at length. We’ve brought on new talent in every single department – from editorial content, to
analytical pieces, and even design work. SubTel Forum has undergone a polar shift in design, tone and content. With all these changes, I’ve hoped to steer our publications with the same tenants and core strategies in mind, maintaining our “voice of the industry” credentials. It’s a moniker that we take quite seriously. I can happily report that, now nearly a full year in to our redesign, we have genuine, quantifiable results that our approach is working. Some quick figures – As compared to one year ago: • Magazine downloads are up 18.1% • Web hits are up 41.7%
• Unique visitors to SubTel Forum are up 41.5%
The SubTel Forum site now sees on average 112,000 unique visits every month, an average of 12-14 times a month. We now see well over 11 Million hits a year. We executed our rebranding strategy to provide a better product to our readers, and in turn our advertisers. With these results in mind, I feel we’ve accomplished that.
There’s not time to rest on these laurels, mind you. We are still off to bigger and better things! Next up we will begin work on our newest publication: The Submarine Cable Industry Directory. A new annual publication, we will provide a document
useful for individuals looking to stay in touch with the who’s-who of the submarine telecoms cable industry.
Such publications are not possible without the financial and editorial support of our sponsors. We have had many sponsors over the years, some come and go, others have been with us since the beginning. If you haven’t been featured in SubTel Forum, or it’s been a while, I bid you look at our 2018 Media Kit, our reach in this industry is without equal.
As always, advertising in multiples gets you access to special discounts, and in 2018 will also give you the bonus of direct marketing to the SubTel readership including a company specific survey and e-mailer.
Choose SubTel Forum to represent your company, you will not be disappointed with the results.
Kristian Nielsen Vice President
Kristian Nielsen literally grew up in the business since his first ‘romp’ on a BTM cableship in Southampton at age 5. He has been with Submarine Telecoms Forum for a little over 6 years; he is the originator of many products, such as the Submarine Cable Map, STF Today Live Video Stream, and the STF Cable Database. In 2013, Kristian was appointed Vice President and is now responsible for the vision, sales, and over-all direction and sales of SubTel Forum.
Published on Mar 22, 2018
Submarine Telecoms Forum Magazine is a free, bimonthly trade journal focused on the submarine cable industry. The magazine has seen continuo...