Asia-Pacific Submarine Cable Market Moves Into New Phase
Asia-Pacific submarine cable market moves into new phase
In January last year, BuddeComm’s Paul Budde presented a view of the Asia Pacific submarine cable market as he saw it coming into 2007. He wrote then: ‘After the collapse of the previous submarine cable boom, I predicted a new boom starting in 2008 with a ramping up period of 12 to 18 months. All the signs point to the Asia Pacific submarine cable market now moving into this new phase.’ Twelve months later, he takes another look at the market and notes that
By Peter A. Evans we have in fact moved into this new phase. In this article, Peter Evans, BuddeComm’s Senior Analyst, Asia, reviews the considerable level of fresh activity in the sector. Introduction New boom or new bubble? The last submarine cable boom (1998-2001) and crash (2002) is, I would suggest, still fresh in our collective memory. Following the collapse of that boom, BuddeComm predicted a new boom
starting in 2008 with a ramping up period of 12 to 18 months. All the evidence says that the Asia Pacific submarine cable market has now moved into this new phase. For some time now, the unknown had been the amount of unlit fibre ‘sitting doing nothing.’ Whilst there is certainly still fibre lying idle, market activity indicates a much more complex situation. Demand across the region is not even; some cable routes are coming under considerably more pressure than others. At the same time, in the wake of the chaos in Asia’s submarine networks caused by the December 2006 Taiwan earthquake, there is increased demand for workable network diversity. And, of course, there is the continually rising demand for bandwidth within and into Asia, largely driven by China and India. Whilst other rapidly growing Asian markets are definitely part of the equation, it is the big two that the operators are trying to satisfy by building bigger and faster pipes for the surging volumes of Internet and telephone traffic produced by multinational corporations doing business with these countries. At the same time, we should not overlook the significance of the traffic generated by regional and local customers. A survey by Telegeography in Sept 2007 noted that international backbone capacity was growing faster than Internet traffic volumes. The research company reported that average peak international Internet backbone traffic grew 60% between 2006 and 2007, while bandwidth grew 68%. As a result, it noted that peak utilisation declined from 47% in 2006 to 44% in 2007. In other words, despite predictions that video, user-generated content and P2P traffic would overwhelm network backbones, 2006/2007 had seen the available bandwidth outpace traffic 17