The Sub-Sea Industry: Expanding in a Changing Mar ket by Fiona Beck I often get asked about the cyclical state of the subsea capacity market. Are there now too many new cable builds? Are we heading for another bust? It’s happened before but will it happen again to an industry that’s in a much different space to that of 2001–2003? There are fewer ships, manufacturing capability is smaller and there’s a waiting list on a number of fronts. We all have a reasonable idea of the big trends that underlie our industry but it’s always difficult to pick the timing, size and impact of the important changes. The subsea market, particularly the Asia-Pacific region, is currently experiencing strong growth and I believe that many of the cable systems that are being built will prove commercially sound where they have the backing of strong carriers who take a long term view of the telecommunications environment and who have an understanding of the fundamental demand outlook for low cost and reliable international capacity.
11
A number of the current cable builds target new markets while others augment existing routes, sometimes served by many cables. At the same time many upgrades will take place
as required. These will be at comparatively very low cost but will provide huge increases in capacity. The potential upgradability of many existing 10G systems has just been raised by 300% with the availability of 40G equipment and it will most likely be raised by 900% within a couple of years. Who knows after that? Looking forward there are three fundamental questions: • What do our customers want? • Where will customers demand come from? • How will we meet that demand? Our customers continue to need more and more capacity, they want reliability and they want their investment and operational costs to be low. They want the choice of quality suppliers and the choice of IRU products and leases. They want their networks on diverse paths and they are looking for new products. They will continue to favor quality suppliers so their networks are more robust and to ensure operational seamlessness
and responsiveness. They must do this because they compete in a world that is now dependent on the global web where any loss of service is not tolerated. We all know that submarine systems are inherently prone to single cable failures that can take weeks to repair so customers must have fully diverse paths for each traffic route. Submarine systems must deliver seamless and flexible service on a day today basis and new circuits must be commissioned at short notice. But most of all subsea providers must be commercially strong enough to last the long haul of 10 -20 years. At Southern Cross we have embraced customer needs as the driving force for long term success. We built a fully diverse dual cable network to provide our customers with