The collapse of capacity prices and the scarcity of investment capital have together led to unprecedented pressure on the cost optimisation and robustness of business plans for new networks. This article will approach the problem from both sides - how to minimise the cost of a new network, and how to raise the funds to build it. We first review the key cost elements and their minimisation in the light of clearly defined availability and performance objectives. Then we address the process of raising capital, how investors analyse proposals, the key elements of a good business plan and some examples of what is currently going on in the market. Much of the following content on cost minimisation will be familiar to those who have been in the industry for a while, but the evidence is mixed on whether more recent market entrants have all adhered to the principles described. We suggest that it would do no harm to review these ideas which seem obvious when written down, but which also seem to be at the root of some of the recent difficulties affecting our industry. The process by which systems are initially conceived is largely a mystery to those of us who have not done it. It may be a single brilliant flash of inspiration or a natural succession from a previous series of cables – or mysterious mutterings in dark smoke-filled rooms. Whatever the method, the outcome is a rough idea of landings, routes and the identity of parties requiring capacity. This initial vision will need to be filled out with details. The order in which the details are tied down
Alchemy Restored
By Basil Demeroutis, Ian Fletcher and Steve Wells 32
will vary from case to case; however there will need to be recent, well founded and specific demand studies which will generate a matrix of traffic between the connected nodes as a function of time. Taking the geographical locations of the traffic origins and destinations into account will allow the generation of a first cut at the physical routes. Seabed specialists will give good general advice on areas to avoid due to factors such as anchorages, hydrocarbon activity or geological instability. The predicted growth of traffic will allow a forecast of the required upgrade potential, and for many cases this will be substantially below the maximum offered by the industry. Although 10G per wavelength is currently the standard, reduced fibre count will reduce the unit cost of cable and repeaters, and reduced wavelength upgrade count will allow repeater spans to increase for further cost savings. New build is not the only option – careful investigation may uncover supplier inventory stock that is heavily discounted, and there may even be entire systems that can be recovered, re-configured and re-laid in a new location at even heavier discounts. The relatively slow movement of transmission technology in increasing cable capacities means that such options can now be realistically considered for stock or segments up to three years old. In addition to the wet plant, the terminal equipment initial and upgrade capacity pricing has improved in recent years as competition and equipment integration have developed. Of course there will be many options for interconnecting the required landings, and this is the