CAPACITY
CONNECTION SUBSEA
DYNAMICS OF THE SUBMARINE CABLE BANDWIDTH MARKET: FACTORS INFLUENCING DEMAND AND PRICE BY JOHN MAGUIRE
INTRODUCTION
Welcome to Submarine Telecom Forum’s new department, Capacity Connections. In this section of the magazine over the coming months we’re going to look at commercial aspects of the submarine cable industry: The capacity market. This is where all the technical wizardry involved in dense wave division multiplexing (DWDM), reconfigurable optical add/drop multiplexers (ROADMs), wavelength selective switching (WSS) and the ‘open cable’ meets, usually, the telco that integrates and provides the services that connect our homes and offices—indeed, our mobile devices—delivering us the benefit of all of this wizardry. In an era where global connectivity is so fundamental to our lives, submarine cables play a critical role, enabling transfer of vast amounts of data across oceans, connecting continents and—as we shall later in this series see—communities on much smaller landmasses. These undersea fiber-optic systems form the backbone of international communication connectivity and provide for a seamless flow of information. The bandwidth market associated with submarine cables is a complex and dynamic environment, influenced by a variety of factors on both the supply and demand sides that affect pricing. This initial article surveys the state of the bandwidth market in submarine cables, identifying key factors
24 SUBMARINE TELECOMS FORUM MAGAZINE
that drive demand, prompt new cable builds to address supply issues and, consequently, shape pricing strategies. We identify factors here and describe them at a high level. In forthcoming articles, we’ll look in at some of the factors in greater detail, remaining focussed on the non-technical dimensions that are perhaps not elsewhere widely considered in Subtel Forum.
THE SUBMARINE CABLE ENVIRONMENT
Since the mid-19th century, when the first telegraph cables were laid across the Atlantic Ocean, continuous generational technological advancements have transformed these cables from copper telegraph lines to today’s high-capacity fiber-optic
networks. Where we used to measure cable capacity in ‘simultaneous telephone calls’ we now, generally—and only if compelled—speak of how many HD movies a cable could deliver in a second. As we’ve evolved from a population of people talking on the telephone to one watching HD movies on our mobile devices, global demand for data has surged exponentially. It continues to do so, driven by the proliferation of digital services, cloud computing, artificial intelligence, mobility and the internet of things (IoT). As a result, of these shifts in use cases coupled with advancements in submarine cable technology, the submarine cable industry has wit-