FORUM ISSUE 123 | MARCH 2022
FINANCE & LEGAL
EXORIDUM FROM THE PUBLISHER WELCOME TO ISSUE 123, OUR FINANCE & LEGAL EDITION
aving grown up during the Cold War and being old enough to remember air raid drills in elementary school, like most I never dreamed our world would see the last month or so. After all I work in an industry, which is all about increasing communication between disparate peoples. We have put in cables to just about everywhere; people a generation ago who could only dream of electricity are today enjoying the benefits of broadband connectivity to the world over. Today we are learning new rules, or maybe just relearning old ones. But we are all seeing things never before in real time because of the technologies we created, and as a result a community of resistance to autocracy, both internal and afar, has been formed. And this resistance has taken many forms – from direct military and humanitarian aid to daily prayers from the world’s faith communities. Singer Songwriter John Ondrasik of Five For Fighting recently wrote:
Today we are learning new rules, or maybe just relearning old ones.
“Who is this comedian / His audience more mice than men / This Superman Ukrainian / I don’t know. Great grandson of the Holocaust / An Eastern heart the West has lost / Nail or carry up his cross / I don’t know. But he’s got everyone thinking / Yeah, he’s got all of us thinking… / Can one man save the world? / In a thousand years will they say your name? / Or
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A Publication of Submarine Telecoms Forum, Inc. www.subtelforum.com ISSN No. 1948-3031 PRESIDENT & PUBLISHER: Wayne Nielsen | email@example.com | [+1] (703) 444-2527 VICE PRESIDENT: Kristian Nielsen | firstname.lastname@example.org | [+1] (703) 444-0845 SALES: Teri Jones | email@example.com | [+1] (703) 471-4902
is this all in vain? / Can one man save the world? Will you take my hand? / Will you help me stand? / Still in the end… / Can one man save the world?” I suspect the world will need to readdress the international rules of law when this is finally behind us. How the world will look on that day is still to be written. Thank you to the excellent Authors who have contributed to this edition! Thanks also for their support to this issue’s advertisers: APTProcure, Ellalink and Southern Cross. Of course, our ever popular “where in the world are all those pesky cableships” is included as well. Thank you as always to our readers and supporters for honoring us with your interest. Lastly, and borrowing from a LinkedIn connection much more eloquent than me - In a world full of Putins, be a Zelenskyy. #Ukraine STF Stay well,
Wayne Nielsen, Publisher
PROJECT MANAGER: Rebecca Spence | firstname.lastname@example.org | [+1] (703) 268-9285 EDITOR: Stephen Nielsen | email@example.com DESIGN & PRODUCTION: Weswen Design | firstname.lastname@example.org DEPARTMENT WRITERS: Fernando Margarit, George Ramírez, Philip Pilgrim, Nicole Starosielski, Rebecca Spence, Terri Jones, and Wayne Nielsen FEATURE WRITERS: Andrés Contreras, Andrew D. Lipman, Chris Bergman, Eric Handa, Javier Izaguirre, Jean-François Bilodeau, Jonathan Boes, Kristian Nielsen, Leetal Weiss, Maria Mato, Natalia López, Nicholas Kazaz, Patrick Parsons, Sammy Thomas, and Ulises R. Pin NEXT ISSUE: MAY 2022 – Global Capacity AUTHOR & ARTICLE INDEX: www.subtelforum.com/onlineindex Submarine Telecoms Forum, Inc. www.subtelforum.com/corporate-information BOARD OF DIRECTORS: Margaret Nielsen, Wayne Nielsen and Kristian Nielsen SubTel Forum Continuing Education, Division of Submarine Telecoms Forum, Inc. www.subtelforum.com/education CONTINUING EDUCATION DIRECTOR: Kristian Nielsen | email@example.com | [+1] (703) 444-0845
Contributions are welcomed and should be forwarded to: firstname.lastname@example.org. Submarine Telecoms Forum magazine is published bimonthly by Submarine Telecoms Forum, Inc., and is an independent commercial publication, serving as a freely accessible forum for professionals in industries connected with submarine optical fiber technologies and techniques. Submarine Telecoms Forum may not be reproduced or transmitted in any form, in whole or in part, without the permission of the publishers. Liability: While every care is taken in preparation of this publication, the publishers cannot be held
responsible for the accuracy of the information herein, or any errors which may occur in advertising or editorial content, or any consequence arising from any errors or omissions, and the editor reserves the right to edit any advertising or editorial material submitted for publication. New Subscriptions, Enquiries and Changes of Address: 21495 Ridgetop Circle, Suite 201, Sterling, Virginia 20166, USA, or call [+1] (703) 444-0845, fax [+1] (703) 349-5562, or visit www.subtelforum.com. Copyright © 2022 Submarine Telecoms Forum, Inc.
IN THIS FORUM ISSUE
ISSUE 123 | MARCH 2022
7 QUESTIONS WITH FERNANDO MARGARIT
THE BUSINESS AND FINANCE MODEL FOR NEW SUBMARINE CABLE NETWORKS By Sammy J. Thomas
By Sean Bergin
By Maria Mato and Javier Izaguirre
PROTECTING SUBMARINE CABLE DATA By Andrew D. Lipman, Ulises R. Pin and Leetal Weiss
4 SUBMARINE TELECOMS MAGAZINE
OBTAINING PURCHASER PERMITS WORLD-WIDE
ISO 27001:2022 IS COMING By Jonathan Boes
SUSTAINABLE BY DESIGN
ARE LAWS REGULATING SUBSEA CABLES OUTDATED? By Nicholas Kazaz
STATUS REPORT ON THE SUCCESSES IN USING FOREIGN SHIPS TO LAY SUBMARINE CABLES IN CANADA
PERSPECTIVES ON THE FINANCING OF SUBMARINE CABLE PROJECTS By Chris van Zinnicq Bergmann
By Jean-François Bilodeau
By Natalia López and Andrés Contreras
By Kristian Nielsen
IDENTIFYING AND ENABLING SUBMARINE CABLES
REGARDING THE BUILDING BLOCKS OF SYSTEM DEVELOPMENT
departments EXORDIUM................................................................................................................................................................ 2 SUBTELFORUM.COM.................................................................................................................................................. 6 STF ANALYTICS.......................................................................................................................................................... 8 CABLE MAP UPDATE.................................................................................................................................................10 WHERE IN THE WORLD.............................................................................................................................................12 SUSTAINABLE SUBSEA..............................................................................................................................................14 BACK REFLECTION................................................................................................................................................... 68 ON THE MOVE.......................................................................................................................................................... 72 SUBMARINE CABLE NEWS NOW............................................................................................................................... 73 ADVERTISER CORNER.............................................................................................................................................. 74
VisitSubTelForum.com SubTelForum.com to to find find links resources Visit linkstotothe thefollowing following resources
FREERESOURCES RESOURCESFOR FORALL ALLOUR OUR SUBTELFORUM.COM SUBTELFORUM.COM READERS FREE READERS The most popular articles, Q&As of 2021. TOP OFyou 2019 FindSTORIES out what missed! The most popular articles, Q&As of 2019. Find out what you NEWSmissed! NOW RSS FEED Keep on top of our world of coverage with our free News NEWSdaily NOW industry RSS FEEDupdate. News Now is a daily RSS feed Now Keep on top of our world of coverage with our freehighNews of news applicable to the submarine cable industry, Now daily industry update. News Now is a daily RSS&feed lighting Cable Faults & Maintenance, Conferences As-of news applicable to the submarine industry, highlighting sociations, Current Systems, Datacable Centers, Future Systems, Cable Faults & Maintenance, Associations, Offshore Energy, State of the Conferences Industry and&Technology & Current Systems, Data Centers, Future Systems, Offshore Upgrades. Energy, State of the Industry and Technology & Upgrades.
PUBLICATIONS PUBLICATIONS Submarine Cable Almanac is a free quarterly publica-
Submarine Cablethrough Almanacdiligent is a freedata quarterly publication made available gathering and tion madeefforts available through diligent data gathering and mapping by the analysts at SubTel Forum Analytics,
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a division of Submarine Telecoms Forum. This reference mapping analysts at SubTel Forum Analytics, tool givesefforts detailsby onthe cable systems including a system map, a division of Submarine Telecoms Forum. This reference landing points, system capacity, length, RFS year and other tool givesdata. details on cable systems including a system map, valuable landing points,Telecoms system capacity, and free other Submarine Industrylength, ReportRFS is anyear annual valuable data. publication with analysis of data collected by the analysts of Submarine Report is an annualanalyfree SubTel ForumTelecoms Analytics,Industry including system capacity publication of data collected by the of analysts of sis, as well aswith the analysis actual productivity and outlook current SubTel Forum Analytics, including system capacity and planned systems and the companies that serviceanalythem. sis, as well as the actual productivity and outlook of current and planned CABLE MAP systems and the companies that service them. The online SubTel Cable Map is built with the industry CABLE MAP standard Esri ArcGIS platform and linked to the SubTel The online SubTel Cable Map is built withthe theprogress industryof Forum Submarine Cable Database. It tracks standard Esri ArcGIS platform and linked to the SubTel some 450+ current and planned cable systems, more than Forumlanding Submarine Cable It centers, tracks the of 1,200 points, overDatabase. 1,700 data 37 progress cable ships
as well as mobile subscriptions and internet accessibility data for 254 countries. Systems are also linked to SubTel Forum's News Now Feed, allowing viewing of current and archived news details. The printed Cable Map is an annual publication showcasing the world's submarine fiber systems beautifully drawn on a large format map and mailed to SubTel Forum Readership and/or distributed during Pacific Telecommunications Conference in January each year.
SubTel Forum designs educational courses and master classes that can then appear at industry conferences around the world. Classes are presented on a variety of topics dealing with key industry technical, business, or commercial issues. See what classes SubTel Forum is accrediting in support of the next generation of leaders in our industry.
The Authors Index is a reference source to help readers locate magazine articles and authors on various subjects.
SUBTEL FORUM BESPOKE REPORTS SubTel Forum provides industry analyses focused on a variety of topics. Our individualized reporting can provide industry insight for a perspective sale, business expansion or simply to assist in making solid business decisions and industry projections. We strive to make reporting easy to understand and keep the industry jargon to a minimum as we know not everyone who will see them are experts in submarine telecoms. In the past we have provided analyses pertaining to a number of topics and are not limited to those listed below. Reach out to email@example.com to learn more about our bespoke reports. DATA CENTER & OTT PROVIDERS: Details the increasingly shrinking divide between the cable landing station and the backhaul to interconnection services in order to maximize network efficiency throughout, bringing once disparate infrastructure into a single facility. If you are interested in the world of Data Centers and its impact on Submarine Cables, this reporting is for you. GLOBAL CAPACITY PRICING: Details historic and current capacity pricing for regional routes (Transatlantic, Transpacific, Americas, Intra-Asia and EMEA), delivering a comprehensive look at the global capacity pricing status of the submarine fiber industry. Capacity pricing trends and forecasting simplified.
GLOBAL OUTLOOK: Dive into the health and wellness of the global submarine telecoms market, with regional analysis and forecasting. This reporting gives an overview of planned systems, CIF and project completion rates, state of supplier activity and potential disruptive factors facing the market. OFFSHORE ENERGY: Provides a detailed overview of the offshore oil & gas sector of the submarine fiber industry and covers system owners, system suppliers and various market trends. This reporting details how the industry is focusing on trends and new technologies to increase efficiency and automation as a key strategy to reduce cost and maintain margins, and its impact on the demand for new offshore fiber systems. REGIONAL SYSTEMS: Drill down into the Regional Systems market, including focused analysis on the Transatlantic, Transpacific, EMEA, AustralAsia, Indian Ocean Pan-East Asian and Arctic regions. This reporting details the impact of increasing capacity demands on regional routes and contrasts potential overbuild concerns with the rapid pace of system development and the factors driving development demand. SUBMARINE CABLE DATASET: Details more than 450 fiber optic cable systems, including physical aspects, cost, owners, suppliers, landings, financiers, component manufacturers, marine contractors, etc. STF
MARCH 2022 | ISSUE 123
BY REBECCA SPENCE
elcome to the annual Finance and Legal edition of SubTel Forum Magazine. This month we take the time to review ownership and financing of the various planned systems around the globe. The data for this article is acquired by SubTel Forum Analysts from the public domain and entered in to the regularly updated Submarine Cable Database. This database also feeds our other products, like the Annual Report, Submarine Cable Almanac, SubTel Forum Online Map and bespoke reports. A key indicator of whether a cable system will successfully reach completion, is whether a project has a Contract in Force (CIF). Figure 1 shows that as of early March the CIF rate for planned systems through 2025 is 31 percent. This is down from 49 percent from March 2019. 68 percent have either not announced their contracts publicly at this time or have not yet reached that stage. Due to the lingering effects of schedule delays caused by the global pandemic, several systems have been delayed or changed over the last two years. As cable vessels complete projects with schedules that have been constantly shifting, some catch up will likely be seen resulting in less systems having their RFS dates pushed farther back, but at this time covid delays are still seen on a regular basis. Over $51 billion has been invested in submarine fiber optic telecommunication cables since 1992 – consisting of 1.3 million kilometers – annually averaging $1.7 billion worth of investment. Currently there are 79 planned systems
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Figure 1 CIF Rate of Planned Systems, 2022-2025
Figure 2: Financing of Systems 2017-2021
Figure 3: Financing of Systems 2022-2025
Figure 4: Financing of Systems, 2022-2024
being tracked in the SubTel Forum Cable Database, totaling $14 billion in industry investment by 2025. Breaking down submarine cable investment farther, you see in Figure 2 that over the past 5 years 61 percent of cables were self-financed and 14 percent of financing came from Multilateral Development Banks (MDB). The number of systems financed by MDBs has increased from 9 percent in 2019, a year prior to the start of the pandemic. Figure 3 details system financing over the next four years
SubTel_Ad_Mar2022.pdf 1 7/03/2022 5:11:07 PM
which currently shows continued increase in investment by MDBs and multiple owner consortiums. Though system investment is beginning to shift, the number of systems with a single owner continues to rise over multiple owner systems according to publicly revealed systems. With the continued capacity demand on OTT providers like Google and Meta, this trend will likely continue to increase with time. We hope this report will prove useful to you and until next year, keep those
press releases churning! Our industry can be very secretive at times, and the more information that is out there, the better we are able to prepare for what comes next. STF REBECCA SPENCE is the Project Manager from Submarine Telecoms Forum. Rebecca possessed more than 10 years’ experience as an analyst and database manager, including for the small business division of prominent government contractor, General Dynamics IT. She is a regular contributor to SubTel Forum Magazine and is based out of Hillsborough, North Carolina USA.
NEED HYPER-SCALE AT HYPER-SPEED? We’ve got you covered! Southern Cross NEXT will be the lowest latency route between Sydney and Los Angeles* and will add to Southern Cross’ existing lowest latency options between Sydney-Auckland and Auckland-Los Angeles. So how fast do you need your data to be? Southern Cross NEXT Coming: Q2 2022
*based on our competitors published data
MARCH 2022 | ISSUE 123
SUBTEL CABLE MAP UPDATES
he SubTel Cable Map is built with the industry standard Esri ArcGIS platform and linked to the SubTel Forum Submarine Cable Database. It tracks the progress of over 500 current and planned cable systems, 45+ cable ships and over 1,400 landing points. Systems are also linked to SubTel Forum’s News Now Feed, allowing viewing of current and archived new details. This interactive map is a continual work in progress and is updated on a weekly basis. With pertinent data captured by analysts at SubTel Forum and feedback from our users. Our goal is to make easily available not only data from the Submarine Cable Almanac, but also more and more new layers of system information. If you are the point of contact for a system, please reach out and let us know if there are any changes or updates in your system! We strive to keep the map as up to date as possible for our users. We hope you continue to make use of the SubTel Cable Map to learn more about the industry yourself and educate others on the importance of submarine cable systems. Please feel free to reach out to our Project Manager,
Rebecca Spence, should you have any questions, comments, or updates at firstname.lastname@example.org
SKKL Rabo-Baja – In-service Converge ICT Domestic – In Service BaSICS PEACE GO-1
ADDED TO MAP
ACC-1 MEDUSA SeaLink Sea-Me-We-6 STF REBECCA SPENCE is the Project Manager from Submarine Telecoms Forum. Rebecca possessed more than 10 years’ experience as an analyst and database manager, including for the small business division of prominent government contractor, General Dynamics IT. She is a regular contributor to SubTel Forum Magazine and is based out of Hillsborough, North Carolina USA.
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Latency combined with Diversity Low latency - Diverse - High Availability
25 Tbps capacity direct from Europe to Latin America per Fibre Pair
Best project of the year subsea networks Global Carrier Awards 2019 & 2020
Landing in Sines, Portugal
Open scientific project leading the SMART cables innovation revolution
Presence in 6 data centers and 4 cable landing stations
To cross the Atlantic connecting Portugal and Brazil
10G/100G low latency Capacity & scalable Spectrum services
<60 ms RTD
Seamless Pop to Pop Connectivity
Between Marseille and São Paulo
Totally diverse transatlantic route, beach landings, and terrestrial routes
MARCH 2022 | ISSUE 123
WHERE IN THE WORLD ARE THOSE PESKY CABLESHIPS? BY REBECCA SPENCE
he global cableship fleet certainly hit the ground running this year! With Southern Cross Next, PEACE Cable, and Share all seeing continued progress in landing and completion of final splices. As these projects reach completion of their wet plants, the vessels will immediately move on to their next assignments with little to no break between. According to the SubTel Forum Submarine Cable Database, 44 systems will be ready for service in 2022. This is a lofty goal considering 2021 had 33 and 2020 had 38 reach completion. For this issue of Where in the World are Those Pesky Cableships I pulled the AIS tracking data to cover January and February data. At that time, 66 percent of the tracked vessels had reached their current destinations. Of that 66 percent, six vessels were on hiatus for repairs, maintenance or crew changes and spent several weeks in
Figure 1: Vessel Time Remaining to Destination
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Figure 2: Ile de Re landing SCNext in Savusavu, Fiji
the same location. These include the Ile de Batz which has been moored at Daman Ship Repair in Dunkirk since late December, and the Subaru which spent all of January and February at the Yokohama Dockyard in Japan. Figure 1 breaks down the 34 percent of vessels that had not yet reached their destinations. Seven were set to arrive within a
week, two were a week out, two would arrive within two weeks and one was over 4 weeks to its next destination. The fleet and their crews face a busy year ahead, but the last several years have shown that they are capable of consistent progress. In Figure 2 you see the breakdown of Regions of Activity for the first two months of the year. The EMEA region is currently seeing the most vessel activity with 46 percent of AIS data coming from the region from both Equiano and Peace cable wet plant. AustralAsia is the second busiest region as OAC, Southern Cross NEXT and others go into the water. The landing of Southern Cross NEXT can be seen in Figure 2 landing in Savusavu, Fiji curtesy of João Soares in early February and Figure 3 shows the Ile De Sein landing at Coogee Beach courtesy Southern Cross NEXT Cable. Figure 4 shows the EMEA will continue to be a top region of activity as systems like 2Africa and others begin their wet plants. Thank you to everyone posting these magnificent cableship photos. My favorite this month comes from SBSS with the Bold Maverick in Rognan, Norway. Please tag @subtelforum to highlight your vessel in the next issue of SubTel Forum Magazine. Until next time, smooth sailing. STF
Figure 3: Ile de Sein at Coogee Beach
REBECCA SPENCE is the Project Manager from Submarine Telecoms Forum. Rebecca possessed more than 10 years’ experience as an analyst and database manager, including for the small business division of prominent government contractor, General Dynamics IT. She is a regular contributor to SubTel Forum Magazine and is based out of Hillsborough, North Carolina USA.
MARCH 2022 | ISSUE 123
sustainable SUBSEA ENERGY + TELECOMMUNICATIONS: BRINGING TOGETHER TWO WORLDS AT THE CABLE LANDING STATION BY NICOLE STAROSIELSKI & GEORGE N. RAMÍREZ
nvironmental sustainability is an increasingly significant part of technology sector conversations. Companies broadcast their latest environmental updates, debate carbon reduction plans, and let their investors know that transformation is good not only for the environment, but also for the bottom line. And yet, amidst all of the discussion of why sustainability, there is little information on how. What is the path to becoming sustainable? Renewable energy? Building efficiencies? And what if your facilities are old and inefficient: should you upgrade, or build anew? One strategy has been to “green” the cable landing station (CLS). BT, for example, has made changes at their CLSs, including efficiency improvements (i.e. increasing the standard temperature), as well as a shift from refrigerant cooling to free-air cooling. Even for zero-carbon operators, such as the cable landing station campus NJFX, efficiency remains key. “Energy efficiency is always at the forefront when considering design in power intensive critical infrastructure,” NJFX CEO Gil Santaliz reports. Echoing this, Stine Holthe of Bulk Infrastructure (whose Norwegian cable station and data centers are indeed powered by hydropower) observes: “Even when a station is powered by renewable energy it is still critical to think about efficiency.” And yet, this path to a green CLS is not always simple, nor straightforward. Possible solutions are often constrained
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by technological, physical space, and environmental limitations. The Sustainable Subsea column, brought to you by the SubOptic Foundation’s Sustainable Subsea Networks research project, not only relays best practices, but also describes challenges that companies encounter on the path to a sustainable future. Every roadblock arises within a particular cultural and geographic situation. Sometimes solutions can be drawn from other industries, like the data center sector, and re-purposed for the subsea industry. And sometimes the most sustainable solution is not in the form of energy efficient products but rather in services and knowledge. This has created new market opportunities for sustainability consulting at
the cable landing station, including for the company we profile this month: R&G Telecomm. It has also produced new opportunities for companies to partner locally to have positive environmental effects, as the case of HMB IX below shows. These examples reveal that there is no universal solution to sustainability. It is one of the central beliefs of our project that sharing these stories—and profiling how companies address such obstacles—can help us all to meet the climate challenges to come.
IN THE MIDDLE: R&G TELECOMM NEGOTIATES A SHIFTING LANDSCAPE
The approach to greening the CLS differs dramatically depending on when a station was initially built and for what use case it was designed. For CLSs es-
tablished before the 2010s, construction was typically guided by principles of operational performance and security. There was not yet a global movement to green telecommunications, nor widespread expertise in sustainable telecommunications design. More recent stations have the advantage of decades of improvements in technology. Consider for example, HMB IX (f/k/a RTI Infrastructure), in Hermosa Beach, California, constructed in 2015. Chris Brungardt, Sr. VP of HMB IX, reflects on the fact that they benefit from newer high-efficiency HVAC units and backup generators than in many other stations. Similarly, for Bulk Infrastructure’s purpose-built CLSs, efficient energy management was part of the stations’ conceptual design as well as their maintenance set-up. On the other hand, in Latin America, where R&G Telecomm operates, there are a unique set of challenges at the CLS. Providing their customers with effective facility management requires that R&G Telecomm navigate a mix of European, North American, and South American standards, often with no straightforward solutions. Latin American cable landing stations also present another challenge: many buildings were not built with sustainability in mind. Gustavo Regnicoli, who oversees Business Development at R&G, recounts how stations often did not have hot/cool aisles, but merely perimetral air-conditioners and standard ductwork, all set to equalize the white rooms to one uniform cool temperature. When these stations were constructed, the concept of efficiently managing air-flows was absent. Energy was seen as an unlimited resource. They were designed for telecom equipment, typically 48VDC optical transmission equipment, and
certainly not for current densely-populated servers. They were equipment rooms, not data halls. However, as Erick Contag, a SubOptic Foundation trustee, notes: with the “advancement of optical technology, and significantly higher fiber pair count subsea systems, engineers are also rethinking the CLS; moving away from large scale infrastructures to modular designs, allowing to adapt space and power to incoming technology while being more efficient.” R&G did not begin specifically as an environmental company—in 2006, when they were founded, there were very few companies that provided efficiency consulting. They were, however, founded at a critical moment in the history of the subsea cable industry. The CLS was in transition, with a shift from terminal equipment provided solely by the submarine cable suppliers to equipment developed for terrestrial networks but adapted to perform in submarine links. This technical transition required a lot of work. R&G was established to meet this need, installing new equipment and altering facilities accordingly. However, increasing environmental awareness has led to new opportunities. R&G was able to turn these difficulties into a business: as they were managing facilities, they started to offer advice as well. Soon they moved formally into consulting. In the late 2010s, as part of R&G’s growth in this area, they were able to dedicate a full-time position to sustainability, which remains an anomaly in the industry. They hired Andrea Reschini, who had been working at Ciena where, while dealing with optical
Figure 1. A 3-D model of a cable landing station upgrade. Image courtesy of R&G Telecomm.
links, she also focused on sustainability, energy, and efficiency. She was brought in to manage R&G’s new unit of Sustainability and Energy Efficiency Programs. From the outset, Reschini worked to implement a broad philosophy in sustainability, one where it is dealt with as part of a holistic system tied to both economics and infrastructure. Greening the CLS, she tells us, requires a new approach: bringing together energy and telecommunications. This holistic approach is not only integral to R&G’s business, but offers a key lesson for all green CLSs. The major foci of R&G’s work—cooling, upgrading equipment, and repurposing hardware—are important considerations for all facilities. One of the highest potential energy savings at cable landing stations can be achieved by upgrading telecom equipment. In terms of facilities, most energy is dedicated to cooling, and this is especially true for older equipment that is not as efficient as newer infrastructure. At the same time, when companies do update systems, they don’t know what to do with their old equipment. Reschini finds both environmental and economic promise in a circular economy that maximizes the value of existing equipment, compoMARCH 2022 | ISSUE 123
sustainable SUBSEA nents, and materials at all times while minimizing waste. She has crafted proposals for six different CLSs and found that cooling rooms function more efficiently after upgrades, even in facilities that are more than twenty years old. She identified a set of key contextual factors to consider in landing stations built during specific periods, which allows consultation to begin even before a site visit is completed. And personally, she also cares deeply about the environment. She tells us: “Telecom can have an active role, not to return the planet to what it was before industrial times, but to get better and get healthier for all living things. Communication and intelligence should help us build a better world to live in.” The circular economy, an integral concept to greening the CLS, is a process in which materials are kept at the highest utility and value possible across their lifecycle, through careful design, management, and technological innovation, as well as minimizing waste (Ellen MacArthur Foundation 2022). The overall objective is to “enable effective flows of materials, energy, labour and information so that natural and social capital can be rebuilt’’ (Ellen MacArthur Foundation 2013, p. 26). Driven by the specific contexts of a product, solutions proposed in this process always look different even if they are guided by the same philosophy. For landing stations, this means leveraging the geographic, environmental, and economic resources already present in a facility. It also means looking toward a future, such as the one that Bulk Infrastructure is anticipating, in which key suppliers of landing station materials will be required to have Environmental Product Declarations, and
SUBMARINE TELECOMS MAGAZINE
construction will source materials such as carbon-reduced concrete. As a result, sustainability drives innovation, not the other way around. Changes are instilled within the structure of the industry as a whole, rather than solely at one location. As opposed Figure 2. Drop ceilings, to the linear economy, image courtesy of Tate Inc. which always produces more waste, the circular economy could further they initially contemplated putting both sustainability and efficiency for solar panels on the rooftop of their the subsea industry. facility—a process that would have delivered both financially and environmentally. However, they ran into a CHALLENGES AS PARAMETERS limit: their landlord wouldn’t permit RATHER THAN LIMITATIONS the installation of rooftop panels. Greening the CLS also forces Instead of abandoning their project, companies to rethink challenges as they looked elsewhere, and founded a parameters rather than limitations. partnership with the city of HermoFor example, when developing prosa Beach to support the installation posals for facility management, R&G of rooftop panels on a nearby City observes that technology, space, and building. They now not only benefit environment are three factors that from the input of green energy into offer parameters for possible soluthe local grid, but they have helped to tions. Where there are resources and establish positive relations with their materials that can improve the carbon local community. And as Gil Santaliz intensity of energy consumption, the makes plans to establish solar panels best solution isn’t necessarily to purthis year at NJFX, he too will have to chase the most widespread technolwork creatively to address the chalogy. Wind generators or solar panels lenges to renewable development. can be helpful, but these renewables The physical space of a facility is also often require more space, more mona key factor to consider in maintainey, and in some cases more mainteing sustainable cable landing stations. nance. The most effective technology Often, there may be a desire for more to implement is always dependent on space or a technology that compensates individual geographic, economic, and for the lack of efficiency in a room, but regulatory constraints. Moreover, the as Reschini suggests, spaces can also ideal technology for many of these be restructured to optimize already conditions does not yet exist, so many existing or more affordable technolotimes, creativity is needed to maxigies. From a room perspective, R&G mize the use of existing technologies. might analyze which resources can be When HMB IX began to develused to make airflows more efficient, op their green strategy, for example,
such as containment or directionality. They might also consider providing intelligence to HVACs, reviewing duct architecture or under-floor air circulation, and making general improvements to the station. Take for example a recent project that R&G completed at a cable landing station in the Caribbean. This station was built in the earliest 2000s, and at the time was state-of-the-art, a robust infrastructure that met the highest standards of effective operation and service availability. Like many stations of this period, however, it was not constructed with energy optimization as a guiding principle. Partnering with the station’s operator, R&G did not propose a renewable energy source or a single product, but rather a series of modifications that would collectively enhance energy savings. They installed a drop ceiling, hot air return plenums, dampers, high performance raised floor panels, and containment, among other enhancements. They assessed and improved the separation of cold and hot air flows, transitioning the station from the room-cooling to the equipment-cooling concept. They also complemented these shifts in the facility with HVAC settings adjustments and a careful tracking of energy usage. Now, Reschini observes, “The main white room of this station has more efficient lighting and cooling, and also a smarter look and feel.” This is a case where energy upgrades were achieved through synergies between telecom, infrastructure, and cooling equipment. Gustavo Regnicoli observes that optimizing power consumption is the first step for a transition to a more sustainable energy matrix: “it must be part of the master plan. If we think
we can just replace energy sources or wait for a technology that solves our problems, we are missing the point.” Power consumption is the first focus for R&G when they begin consulting for energy. They analyze how telecom equipment is deployed in the station in terms of hot air exhaust, adjacency and interactions between rows of equipment, standards followed (ETSI and/or ANSI), cold/hot aisle architecture, tray location, and HVAC and air circulation. In Latin America, he says that after an initial survey, “there are normally significant enhancement opportunities.” Establishing robust partnerships— with customers and communities—is critical given the expectation in subsea telecom for perfect customer service and quality assurance. Regnicoli notes that it is difficult to talk with many companies about making changes simply for the sake of energy usage reduction. For example, he tells us, “if telecom equipment fans are exhausting hot air to a wrong direction for optimization, our customers don’t want to hear about changing equipment and affecting their customers, and they are correct. So, the option is to investigate how those fans can be reversed without affecting service, or if there are air flow baffles available, or if a different kind of rack door would help.” Gil Santaliz echoes this sentiment: because “never down” is the standard, “best practices that are proven without impact to site resilience is easy. New technologies are challenging to incorporate when there is any potential of impact to the twenty-five year design life.”
COLLABORATING ACROSS TELECOM
We share these stories to highlight the work already being done in the
industry, the ways that sustainability now offers a viable business opportunity, and a few lessons for those who are seeking to upgrade their own stations. There are many challenges that arise within specific cultural and geographic contexts, but these challenges are also useful in pinpointing the parameters for implementing an effective and affordable solution. For HMB IX, NJFX, and R&G Telecomm, innovation comes from a desire to be more sustainable, a practice that in turn challenges the subsea industry to be creative with energy always in mind. STF NICOLE STAROSIELSKI is Associate Professor of Media, Culture, and Communication at NYU. Dr. Starosielski’s research focuses on the history of the cable industry and the social aspects of submarine cable construction and maintenance. She is author of The Undersea Network (2015), which examines the cultural and environmental dimensions of transoceanic cable systems, beginning with the telegraph cables that formed the first global communications network and extending to the fiber-optic infrastructure. Starosielski has published over forty essays and is author or editor of five books on media, communications technology, and the environment. She is co-convener of SubOptic’s Global Citizen Working Group and a principal investigator on the SubOptic Foundation’s Sustainable Subsea Networks research initiative. GEORGE N. RAMÍREZ is a PhD candidate in the Department of Media, Culture, and Communication at New York University, where his work focuses on sensation and performance in Latinx popular culture. REFERENCES 1. Ellen MacArthur Foundation. 2013. “Towards the Circular Economy, Opportunities for the Consumer Goods Sector.’’ https://ellenmacarthurfoundation. org/towards-the-circular-economy-vol-2-opportunities-for-the-consumer-goods 2. Ellen MacArthur Foundation. 2022. “The Circular Economy in Detail,” https://archive.ellenmacarthurfoundation.org/explore/the-circular-economy-in-detail.
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7 QUESTIONS WITH FERNANDO MARGARIT Talking Technology Trends With Hunton Andrews Kurth’s Partner
WHAT IS HUNTON ANDREWS KURTH’S MISSION?
Hunton Andrews Kurth LLP—with more than 900 lawyers in the US, Asia, Europe, and the Middle East, and serving clients across a broad range of complex transactional, litigation, and regulatory matters—has a simple, but important, mission: To provide the high-quality legal services, together with practical business counsel, that allow our clients to accurately assess risks and rewards and then act accordingly. On this mission, we also commit to amplifying and championing diversity and inclusion; providing predictability, cost efficiency, and matter transparency; and giving back to our communities in the form of pro bono projects and other indispensable services.
HOW DOES HUNTON ANDREWS KURTH PARTICIPATE IN THE SUBMARINE CABLE MARKET?
Our attorneys have been representing all types of clients in the submarine cable market for over 30 years, and many of our telecom attorneys work exclusively in this space. In the last number of years, we have been in-
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volved as counsel in the builds and development of many of the most significant and recognizable subsea system builds around the world. Our clients in these systems range from one of the most active technology companies in the industry to telcos and non-traditional telecom investors seeking to participate in the industry. We advise our clients on all aspects of the system build, development and implementation, including as to the system supply contract, consortium joint build agreements, marine and any terrestrial maintenance agreements and the myriad of other project documents; fiber purchase (IRU and non-IRU) arrangements; all types of landing party arrangements; access and security agreements, permitting issues and regulatory issues. We also often represent clients in respect of their money raises and project financing associated with the system build as well in connection with ancillary matters, such as to commercialization of the system, related real estate issues, tax structuring and analysis, and issues associated with the United Nations Convention on the Law of the Sea.
IS HUNTON ANDREWS KURTH CURRENTLY INVOLVED WITH MANY NEW SUBMARINE CABLE PROJECTS?
Yes. We have been involved as counsel to some of the most active subsea cable system developers in the industry throughout the last number of years, and are currently involved in many of the most significant subsea cable system projects currently being developed. These projects connect landing locations throughout the world. The spike in system builds is being driven by, among other things, a demand for bandwidth that has grown exponentially with the increasing dependence of individuals, businesses, and governments on global connectivity. Never has the need for fast and reliable bandwidth been more evident than it is now, especially with the changing landscape of the world resulting from the Covid-19 pandemic; even the most traditional of industries have moved their services online and directed employees to work remotely. The proliferation of virtual events, meetings, and celebrations, and basic human desire to feel connected while being apart, has made this work more essential than ever.
WHAT MAKES HUNTON ANDREWS KURTH UNIQUE IN THE SUBMARINE SYSTEM MARKET?
We are unique because of our depth of experience—both a cause and result of our strong position in the market—in this cutting edge subject matter and number of lawyers active in the industry. Our team of practitioners dedicated to this space and related matters has now grown to over 20. I have been advising clients in this field for almost 30 years, and have been involved in systems from their build and development to decommissioning. In that time, my team and I have had hands-on experience with the large variety of issues – good and bad – that can impact a system build. We have also developed good relationships with the key players in the industry, including the principal system suppliers.
WHAT ARE THE ELEMENTS OF HUNTON ANDREWS KURTH’S SUCCESS?
We are successful for many of the same reasons we are unique: our experience, expertise, solid teamwork, and geographic reach enable us to obtain the best result for each client in each matter. We have assembled a close-knit team that is completely devoted to working on the most state-of-the art, groundbreaking systems. This team is well rounded; we understand not just the development phase of these projects, but also the commercial side of the business, and we provide corresponding financial, investment, and M&A services. Clients benefit from the strength of the firm as a whole and the practices that tan-
gentially relate to, yet complement, our core work, including real estate (which is becoming critical here with respect to, e.g., data centers), tax, renewable energy, intellectual property, privacy and cybersecurity, litigation, and more.
AS SUSTAINABILITY HAS BECOME A HOT BUTTON ISSUE IN OUR INDUSTRY, WHAT ARE HUNTON ANDREWS KURTH’S PLANS FOR SUSTAINABLE OPERATION FOR THE NEXT 5 YEARS?
Sustainability is being flexible as technology and culture changes, and shadowing our clients as they navigate those changes. The growth in our industry mirrors the way in which society is evolving, interacting, and working— leaning into the future (e.g., with virtual networks and networking, the rise of Zoom and other online meeting platforms, the unending demand for smart electronics, and the growth of the Internet in general). The work that we do makes all of that possible. Hunton excels at adaptability. We are currently building strong practices for the energy transition, renewables, and product stewardship, all of which encompass legal issues that are becoming increasingly important by the day.
WHAT IS NEXT FOR HUNTON ANDREWS KURTH?
Hunton will maintain growing as the space grows. Subsea cable systems are the backbone of digital communications, enabling the Internet to connect across continents and transporting the vast majority of the world’s data traffic. But telecommunication systems reach farther than submarine cables (into satellites, smart cities, the cloud, 6G technology, and beyond). We will continue to develop our lawyers to anticipate the requirements of companies existing in and entering the industry. We will be flexible in addressing the needs of our clients in their efforts to bridge the communications gap through the worldwide construction of terrestrial and subsea cable systems. We are excited to see what is next and happy to be part of the subsea ecosystem. STF FERNANDO MARGARIT is Partner at Hunton Andrews Kurth and represents clients on domestic and cross-border financing transactions, mergers and acquisitions, infrastructure projects and other corporate transactions. Fernando routinely represents project sponsors, developers, equity investors and financial institutions on a wide range of infrastructure projects, including some of the world’s most significant subsea fiber optic cable systems. He also regularly represents clients in complex mergers and acquisitions, joint ventures, strategic alliances, financings and other corporate transactions, often on a cross border basis. Fernando has particular experience and familiarity with the legal systems, culture and business practices of Latin America. Fernando’s clients range from start-up corporations to some of the world’s largest multinational telecommunications carriers, financial institutions and private and public companies.
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INTRODUCING APTPROCURE: Establishing the New Digital Infrastructure-Focused Investment Venture BY SEAN BERGIN
PTelecom recently announced the establishment of a new digital infrastructure-focused investment arm, called APT Procure. This entity is the genesis of APTelecom, which has been operating in US & Asia for over 15 years. Among the company’s core offerings are due diligence, fiber sales, data center and strategic consulting services. In 2016, APTelecom founded Stratanet Group LLC focusing on subsea capacity arbitrage. Subsequent investements were made into Thai-based LXT Networks in 2018 and Singapore-based VergeDI in 2020. The team at APTProcure seeks to parlay these existing investments assets into a ventures arm to identify and provide seed capital for “under the radar” opportunities hyper-focused on subsea cable and adjacent services, such as edge data centres. APTProcure is focusing on companies that are pre-revenue, early revenue or Series A. APTProcure’s investment strategy is to place our investment alongside that of a consortium of co-investors we are currently developing. The APTProcure team and associated APTelecom companies have decades of experience in the digital infrastructure space. That expertise will be applied to the portfolio company in the form of sales support, operational support, and business planning to support and accelerate portfolio company’s growth. APTelecom is anchoring the team’s initial investment placements. “As one of the world’s most recognized consultants in the sector in which we operate, it makes perfect sense for us to take this next step. Clients typically engage us at a very early stage of any infrastructure project, so the opportunity to get in on the ground floor of projects we believe in, is an opportunity we should take advantage of ” said Eric Handa, Chief Executive Officer, APTelecom. “We are in a unique position to leverage our global knowledge, relationships, trust, and the expertise of our leadership team to source and invest in best-in-class upand-coming companies driving the digital future.” APTProcure believe they are on the front-end of a
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once-in-a-generation market opportunity that will provide attractive returns for investors. Harnessing APTelecom’s deep commitment to the digital infrastructure segment, significant in-house expertise, and capabilities, along with extensive access to early-stage companies places the team in a unique position. “We are approached on a regular basis by organizations looking to formulate and develop infrastructure projects, usually at the inception stage of the idea. We have what one might say, a unique ‘looking glass’ into what is planned to come into fruition, years ahead of actual deployment” said Handa. APTProcure sits at the intersection of the two investing megatrends of our times – the massive opportunity and innovation required to address the digital infrastructure market such as edge data centre development and associated connectivity, coupled with the ever-increasing demand from both individual and institutional investors to look beyond public markets where the opportunity to invest in seed round placements exist.
Telecom and digital infrastructure is at the center of convergence for all Sectors. Technology companies continue to dominate and actively continue to invest in their expansion to enable digital transformation with Consumers, Small and Large Enterprise. Telcom class assets have direct connection with existing customer bases and have an opportunity to ride this wave. APTProcure’s recent investment in Verge Digital Infrastructure (Verge DI) is a great example of addressing key investment metrics in the context of emerging market opportunities in Southeast Asia, coupled with the growing trend to establish an edge presence and foothold in underserved tier two cities within the region. Coupled with this, Verge DI also has a strategy to construct submarine cable landing stations, further enhancing the value proposition, and maximizing revenues. With the continual trend towards convergence, APTProcure’s strategy is to position itself to capitalize on the growing interdependence between technology and infrastructure. APTProcure’s initial move into this segment began with our investment in LXT Networks, a licensed Thai based infrastructure company, with the aim of providing a ‘digital bridge’ between the west and east coasts of the southern peninsular. This project, code named ‘Saphan’ was established to support the growing need for diversity away from Singapore regarding submarine cable landings and to also take advantage of Thailand’s strategic geography which borders Malaysia, Myanmar, Laos and Cambodia. This investment has become the springboard for a much larger play within the region and underpinned the establishment of Verge DI, which is now set to roll out in excess of 10 open access edge data centres and cable landing stations across Thailand, Indonesia, & Vietnam. With the Development Round funding it has been able to complete the final surveys, permits and other activities prior the scheduled start of construction in Q2 2022. APTProcure is all about capitalizing and kickstarting underserved markets, rather than a ‘me too’ strategy. Verge DI’s strategy for example, is focussed on identifying
strategically positioned, second tier locations traditionally underserved by the global data centre players with the aim of offering a standardised solution across the region. These locations are characterised by proximity to dense populations outside the major cities with an ability to become hyper-connected with access to multiple international connectivity options including submarine cables; coupled with geographic separation for it to be a logical secondary market in a country for customers needing a high level of diversity and resilience in their network. The locations where Verge is deploying its assets will benefit from computing and connectivity resources extending from the current connectivity hubs and moving closer to the edge supporting the growth of education, medical, research and banking ecosystems in these geographies. Unsurprisingly, with a network of open access, enterprise grade, edge facilities being deployed in regional cities across South-East Asia the cloud and content providers are also embracing this first step toward the edge in new markets, supporting their goal to get closer to the eyeballs of their consumers in a replicable way. This ticks all the boxes in terms of APTProcure’s investment strategy APTProcure is currently assessing other markets to identify and deploy capital to replicate the success currently being experienced through its investment in Southeast Asia. Current market opportunities for the deployment of seed capital is being sought in LATAM and Africa. STF SEAN BERGIN is Co-Founder and President of APTelecom. Sean has been instrumental in building APTelecom into a globally recognized leader in telecom and due diligence consulting, elevating from a start-up business to an award-winning global organization which has generated over US $400 million in sales for clients. Sean has significant management experience at both national and international levels at Telstra & BT. Bergin has also served as Director of Sales for Australia Japan Cable, an international wholesale submarine cable system linking Australia and Japan. Sean is also the President & Chair of the Board of Governors for Pacific Telecommunications Council (PTC) and is a frequent speaker and panelist within the ICT sector. Sean has worked and resided in SE Asia for more than 20 years.
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PROTECTING SUBMARINE CABLE DATA:
Team Telecom Expanding its Toolkit to Include New Mitigation Measures BY ANDREW D. LIPMAN, ULISES R. PIN AND LEETAL WEISS
Data is shaping into the currency of the 21st century. As global demand for data continues to grow at an extraordinary rate, a changing geopolitical climate and increased focus on cybersecurity and national security concerns, including ownership of critical infrastructure, will continue to impact submarine cable transactions and developments in the coming years. With over four billion current Internet users, significant amounts of data are being sent and received. Given their capacity, speed and security, submarine cables carry over 99% of all international communications and remain the preferred medium for transporting Internet traffic. The United States government is deeply concerned by the risk to United States persons’ data (including individuals, companies, and government entities) and is focusing time and resources on national security reviews of foreign investments to ensure data transmitted from submarine cables is not susceptible to foreign adversaries. As part of
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this process, the Committee for the Assessment of Foreign Participation in the United States Telecommunications Services Sector (more commonly and affectionately known as “Team Telecom”) is entering into mitigation agreements with submarine cable operators to minimize the risks posed when data transits through a submarine cable and, more recently, when data exits the submarine cable and requiring companies to pursue diversification of interconnection points.
OVERVIEW OF THE UNITED STATES NATIONAL SECURITY REVIEW PROCESS FOR SUBMARINE CABLE SYSTEMS
The Federal Communications Commission (“FCC” or “Commission”) regulates submarine cable landings in the United States. Operators of submarine cables must obtain an FCC license pursuant to the Submarine Cable Landing License Act of 1921 and Section 1.767 of the FCC’s Rules. Although in theory Team Telecom only reviews applica-
tions for new submarine cable landing licenses (including applications to assign, transfer, or modify said licenses), if (1) the submarine cable system will connect the United States to a foreign point, or (2) the submarine cable system will have an aggregate direct or indirect foreign ownership of 10% or more; in practice, however, Team Telecom has recently scrutinized even 100% American projects. Team Telecom was created through Executive Order 13913 issued in April 2020 (the “Executive Order”) and is formed by the Secretary of Defense, Secretary of Homeland Security, and Attorney General (Department of Justice) who serves as chair and aggressively uses Team Telecom to advance national security objectives. In addition, the President may also designate the head of any executive agency or department, or any Assistant to the President as a member of Team Telecom. Advisors to Team Telecom include the Secretaries of State, Treasury, and Commerce, the Directors of National Intelligence and the Office of Management and
Budget, the United States Trade Representative, the General Services Administrator, the Assistants to the President for National Security Affairs and Economic Policy, the Director of the Office of Science and Technology Policy, and the Chair of the Council of Economic Advisers. The Team Telecom process is well established and must be completed in accordance with the Executive Order. Once a submarine cable application is filed with the Commission, FCC staff routinely sends submarine cable applications to Team Telecom. Team Telecom generally notifies the FCC during the public notice period that it plans to review the application for national security issues. In that case, the application is taken out of FCC processing and FCC staff will suspend further Commission action until it hears back from Team Telecom that all potential national security issues related to the submarine cable have been resolved. As an initial step in the Team Telecom review process, MARCH 2022 | ISSUE 123
FEATURE the Committee generally requests that applicants answer certain threshold questions (referred to as “triage questions”). Team Telecom has made publicly available standardized triage questions covering five general categories: (1) corporate structure and shareholder information of the applicant(s); (2) relationships with foreign entities; (3) financial conditions and circumstances; (4) compliance with applicable laws and regulations; and (5) business and operational information, including services to be provided and network infrastructure. As part of these questions, Team Telecom seeks detailed information about the submarine cable’s existing equipment type, storage and security of network data, encryption key usage, and persons and entities with access to the applicant’s network and data. In conducting its analysis of national security risks, Team Telecom considers two broad areas: (a) the nature of the proposed network, including the security of the data running through it, and (b) the identity of the applicant(s), including the degree of foreign government control over such persons. This is a highly fact-based evaluation process, where Team Telecom conducts a background check on the shareholders and managers of the applicant company(ies) and evaluates any vulnerabilities or concerns with the operations of the network and the data running through it. Under the Executive Order, Team Telecom’s national security review must be completed within 120 days after the initial questions are deemed complete by Team Telecom (i.e., a “start the clock” order). However, we note that in practice, it takes several weeks (if not months) for Team Telecom to start the clock, as Team Telecom generally asks multiple rounds of questions before it starts the review clock. In its initial determination, Team Telecom may find that: (1) granting the license or transfer of license poses no risk to United States national security or law enforcement interests; (2) that any such risks raised could be effectively addressed through standard mitigation measures recommended by Team Telecom; or (3) a secondary assessment is needed, which cannot take longer than 210 days, because the risks cannot be allayed by standard mitigation measures. Team Telecom’s review often results in the second option – required standard mitigation measures which can take the form of letters of assurances or network securi-
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ty agreements as a condition for FCC approval. These mitigation agreements are viewed as critical to protect data traversing the submarine cable, facilitating surveillance programs conducted by United States national security and law enforcement agencies, as well as for preventing foreign governments and foreign adversaries from gaining visibility into the United States’ telecommunications systems.
TEAM TELECOM MITIGATION AGREEMENTS REQUIREMENTS FOR SUBMARINE CABLE SYSTEM OPERATORS
Generally, Team Telecom does not micromanage how submarine cable system operators secure network data. Instead, Team Telecom focuses on encouraging submarine cable system operators to implement the highest levels of industry standards. Upon a review of eleven publicly available mitigation agreements that Team Telecom entered into with submarine cable operators between January 2020 to December 2021, all eleven mitigation agreements required, among other things, that the applicants: (1) take measures to prevent unauthorized logical access to the submarine cable system; (2) submit for Team Telecom’s review and approval a policy setting forth logical security measures; (3) physically secure the submarine cable system; (4) submit for Team Telecom’s review and approval a policy setting forth the submarine cable’s physical security measures; (5) implement and submit for Team Telecom’s review and approval a policy for screening personnel; and (6) protect the resiliency of the submarine cable system. In addition, seven of the eleven mitigation agreements also included a mitigation term that required the applicants to promptly be able to disable or interrupt traffic on the submarine cable system. The mitigation agreements also included various other security-related measures, including obligations to report breaches, provisions for both Team Telecom’s compliance monitoring and third-party auditing, requirements for changes in control and foreign influence, responsibilities to hire security officers and security directors, and reviews/ approvals of principal equipment by Team Telecom. The mitigation requirements are obligations companies are legally required to undertake or should undertake in order to secure submarine cable systems. While companies can establish the details of their policies for themselves,
policies for logical and physical security must be submitted for Team Telecom’s approval, and Team Telecom could choose to reject a policy that it deems inadequate. Similarly, if a company fails to take steps Team Telecom views as necessary to meet what the mitigation agreements anticipate, Team Telecom can go back to the mitigation negotiating table and request more detailed measures. Finally, we note that Team Telecom is deeply concerned with how data traversing through submarine cable systems will put United States data at risk overseas, specifically in Asia. Team Telecom is even concerned if a submarine cable is not directly connecting the United States to a jurisdiction of concern, such as China or Hong Kong. For example, in a recent national security agreement for a cable connecting the United States to points different than Hong Kong or Mainland China, Team Telecom required the licensees to pursue diversification of interconnection points other than Hong Kong and has suggested that applicants seek interconnection points in Asia, that include but are not limited to Indonesia, Philippines, Thailand, Singapore, and Vietnam, in order to minimize the amount of data transferring over the submarine cable to areas of national security concerns. These restrictions ultimately allow Team Telecom to minimize data that is routed indirectly to China. STF ANDREW D. LIPMAN is Partner at Morgan Lewis. Andrew 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. Andy’s practice includes strategic analysis of companies’ telecom user agreements, renegotiating existing agreements, and negotiating new, more favorable telecom user agreements. For nearly a decade, Andy served as senior vice president, legal and regulatory aﬀairs, for MFS Communications, the nation’s largest competitive local services provider. One of the founders of MFS, Andy helped guide the company from startup to its eventual sale for $14.4 billion to WorldCom. Frequently writing and speaking on telecommunications, Andy’s work encompasses more than 170 articles and ﬁve books, including two Dow Jones books on telecommunications. He occasionally appears on National Public Radio, C-SPAN, Bloomberg News Network, and ABC News, and he served on the editorial advisory boards of Phillips Publishing Company, Internet Law and Regulation, Telecommunications Alert, Telecommunications Reports, Telecommunications Regulatory Monitor, and The Satellite Compendium. Andy served as general counsel to the International Teleconferencing Asso-
ciation and as legislative/regulatory counsel to the International Satellite Users Association. He sits on the board of directors of ﬁve public companies trading on the NYSE, NASDAQ, and Toronto Stock Exchange. Additionally, he co-founded the Association of Local Telecommunication Services (ALTS)—the national trade association for competitive telecommunications carriers—and served as its ﬁrst chairman. Prior to joining Morgan Lewis, Andy was a partner in the corporate practice of another international law ﬁrm, where he was also a member of the executive board and leader of the telecommunications, media and technology practice. Before entering private practice, he participated in the legal honors program at the US Department of Transportation and served in the Oﬃce of the Secretary of Transportation. He also served as an extern law clerk to Judge Raymond Sullivan of the California Supreme Court. ULISES R. PIN is Partner at Morgan Lewis. Ulises 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 experience in cross-border transactions with particular emphasis on foreign investment and national security issues, including securing approvals by the Committee on Foreign Investment in the United States (CFIUS). Ulises’s practice covers all sectors of the TMT market, including wireline, wireless and international communications, infrastructure projects (land and submarine networks), satellite services, internet 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 technology, energy, retail, and real estate. Additionally, Ulises drafts and negotiates telecommunications and technology contracts on behalf of hyperscalers, telecommunications operators, equipment manufacturers, and large telecommunications users. Ulises frequently counsels clients on foreign investment, national security, export controls, international trade, and embargo issues before CFIUS, the Oﬃce of Foreign Assets Control (OFAC) of the Department of Treasury, and the Departments of Commerce, State, Defense, Homeland Security, and Justice. In this area, he has substantial experience negotiating complex mitigation agreements. He has also represented institutional, high-yield, and distressed debt investors in complex workout and insolvency matters in domestic and cross-border ﬁnancial restructurings. Ulises is a member of the Morgan Lewis CFIUS working group. He is a native Spanish speaker. LEETAL WEISS is associate at Morgan Lewis. Leetal advises telecommunications and technology clients on regulatory, compliance, corporate, and litigation matters before the Federal Communications Commission and State Public Utility Commissions. Prior to joining Morgan Lewis, Leetal participated in Georgetown Law’s Communications and Technology Clinic, where she actively advised clients on various matters. While at Georgetown University Law Center, Leetal interned at Verizon, the Electronic Privacy Information Center, and the Federal Aviation Administration. She served as the senior online content editor of the Georgetown Journal of International Law and case comments editor of the Georgetown Law Technology Review. Leetal graduated magna cum laude from California State University – Channel Islands with a Bachelor’s degree in Communications. She was a member of the Omega Alpha Communications Honor Society and Gamma Beta Phi Honor Society.
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THE BUSINESS AND FINANCE MODEL FOR NEW SUBMARINE CABLE NETWORKS
BY SAMMY J. THOMAS
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emand for new Submarine Cable capacity is being driven by seemingly unending double-digit annual growth in data traffic. Operations and ownership of new networks has shifted from consortium to private cables, with the latter able to support ‘Open System’ competitive services better and delivering more security to the OTTs and large Enterprises who need direct control of the underlying network assets. Their dependence on more reliable and protected network elements is critical to these large capacity users that also need to have more control and assurance of the quality of the network. Their needs have become more acute than traditional telco carrier demands, resulting in private operators becoming the lead submarine cable developers and their investors. Development and deployment of new submarine cable capacity increasingly utilizes a Condominium business model; a developer sells capacity ownership to individual operators within the same cable and retains responsibility for the maintenance of the cable. The Condominium business model can deliver very attractive economies of scale to the capacity buyers if the supporting Financial framework is calibrated correctly. A Financial plan needs to deliver three critical features to the buyers of capacity: • Capital efficiency, with lowest possible cost of capital and cost of acquisition; • Cost effective risk management and mitigation; • Monetization valuation of the system assets over its operating lifespan.
ness model where the elements of cable capacity are owned, controlled and operated by independent operators. Applying a condominium business model, well known in real estate development, can bring new submarine cable systems online with superior capital efficiency compared to past system developments and with a clear path to monetization of value over the life of a system. The old Utility business model relied on the legacy regulatory framework of the incumbent telco operators who typically joined in consortium partnerships to build and operate submarine cables. Financing arose from the telcos Capital expenditure program of each incumbent, financial returns were based on regulated rates for usage and interconnection, and financial risk was spread across the entire rate base of the incumbent. The submarine cable assets accruing to any particular member of a consortium cable were not material compared to the total asset base of each of the consortium members. Capacity allocation of a cable was managed by committee. In the era of low bandwidth services and low network utilization, the regulated business model worked because financing and risk mitigation were addressed, demand was stable, and monetization was not an issue. The system relied on the collective credit rating of the (incumbent) telcos in the consortium. Bandwidth demand growth especially over the past decade has changed the submarine cable industry, and the underlying financial model is beginning to evolve with these changes. There was an interim period where non-telco developers began to build submarine cable systems using a modified version of the regulatory model. Investors would raise equity, construction financing would be arranged, the system would be built, and capacity would be sold. The investors were bringing the role of the consortium members to these projects without the large balance sheets of the consortium members. Credit risk (and cost of capital) was higher than before. Without the umbrella of a large rate base to absorb financial and business shocks as the consortium enjoyed, financial risk was concentrated on the investors of a single system with little opportunity to
Bandwidth demand growth especially over the past decade has changed the submarine cable industry, and the underlying financial model is beginning to evolve with these changes.
The submarine cable industry is a vital component of worldwide communications, carrying volumes of data traffic which are increasing annually at enormous rates. Over the past decade or so, the business model of the industry has changed from a utility-based consortium model, which managed capacity allocation on a cable among members of the consortium and relied on the credit ratings of the members to support necessary financing and confidence. Newer systems are relying on independent promoters to build and operate new cable capacity based on a condominium busi-
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FEATURE mitigate the risk. Several of the non-telco submarine cable systems during this period entered bankruptcy, and their assets were monetized for a fraction of their cost. Clearly, another approach and business model was needed. In the post-telco era of network operation, the OTT and Enterprise service providers are operating their networks for their own requirements, not to resell networks. Nor do they rely on telco network services. These new private networks are evolving the operating requirements of submarine cable infrastructure; utilizing network capacity as close to 100% as possible, configuring highly resilient transmission paths, and seeking low latency to boost the quality of their offerings. Service definitions reside in network nodes/data centers, requiring high performance network connectivity to support dynamic delivery of service with content to any end-user. These service definitions and content delivery requirements change during the day and across the year; directly managing the network to assure performance quality is a top priority of how these new networks are configured. New capacity delivered by utilizing the Condominium business model offers several attractions allowing each User to be more involved in the network operations, while having the assurance the ‘Condominium’ or cable system is properly managed. The Users can gain significant economies of scale and lower acquisition cost compared to developing cable systems either on their own or within a consortium. None or very little coordination with other members in the Condominium is required. The portion of capacity (typically a Fiber Pair) owned by the User is exclusively managed by that operator. Taking the experience of the Real Estate industry, successful system development and operation with a condominium model utilizes a different type of Financial plan to deliver the critical features of Capital Efficiency, Risk Mitigation, and Value Monetization compared to business models of long ago submarine cable develop-
ment. Lower cost of capital is achieved by utilizing each customer’s credit, rather than on the developer’s credit. “BYOB” (Bring Your Own Balance Sheet) contributes significantly to increased Capital Efficiency. The large OTT and Enterprise network operators seeking network capacity have strong credit ratings and relatively low cost of capital compared to what a submarine network developer could provide. Risk mitigation is built around the stream of scheduled customer payments which are calibrated with the supply contracts to build and install the submarine system. These customer payments are guaranteed by third parties (e.g., bank letter of credit or insurance company trade credit). Conversely, supply delivery is also guaranteed by third parties (e.g., bank guarantees or sureties). These cross guarantees mitigate the risk of not completing a system, assure the financing from customer payments is in place, and replicate the risk mitigation and low financial cost of the old rate base model. No Consortium committee or developer balance sheet is needed. Applying guaranteed customer payments over the construction period supplants bank financing and lowers financing cost. Once the system construction is completed and regular operations begin (Ready for Service), risk mitigation focuses on assuring resources are available for continued maintenance and occasional repair to be managed by the system developer. Submarine cable interruptions due to external aggression (e.g., ship anchors) or technical failure (e.g., shunt fault) can be modeled with well understood predictive analysis techniques to determine expected frequency of cable interruption and severity of repair. Financial resources can then be built, using various insurance products, to assure rapid recovery from interruptions. The traditional approach is to accumulate reserves on the cable company’s balance sheet. Reserves cannot be declared an operating expense until they are used, while a premium paid for an insurance product to provide funds in response to a future event are
These new private networks are evolving the operating requirements of submarine cable infrastructure; utilizing network capacity as close to 100% as possible, configuring highly resilient transmission paths, and seeking low latency to boost the quality of their offerings.
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classified as operating expenses. Clearly, the insurance model has better capital efficiency than the old reserve model. Moreover, the insurance coverage has a better risk profile for the company because the risk is typically shared among many insurance carriers. If the risk modeling has been completed well to determine the controllable impact of interruptions and repairs, the remaining financial risks to the Condominium system arise from potential unrecovered cost inflation and/or changes in regulatory and government policies. Valuation of a system for its remaining life provides a gauge to how well these remaining financial risks are addressed. Business consolidation with other businesses or assets presents a strategy to mitigate the remaining risks. The periodic cash flows of submarine systems are very predictable after implementation of risk mitigation. This predictability has value to certain entities which have predictable future liabilities. Matching the submarine cash flows with the future liabilities reduces the overall risk of both. Monetization of network assets is the feature of calculating the value of those assets at every point in time over the life of the assets. That value is a measure of the financial efficiency of those assets and how well they are being utilized. Of course, the value can be used to monetize the assets in a variety of ways, such as sale, back leverage, or shares. The monetization feature of the Condominium financial model does not have an equivalent in the old rate base framework, since submarine cable assets were part of a larger asset base and at end-of-life assets would be retired in place. Monetization presents an attractive element to early-stage investors of new submarine cable system, providing an attractive exit opportunity with little need for conventional financing to build a system. Financial innovation in the telecom industry has provided important leverage to accelerate the adoption of new technologies and respond to growing demand efficiently. An important example used to this day was the intro-
duction of the “Indefeasible Right of Use” (IRU) which facilitated the allocation of transmission capacity of a physical cable among several unrelated operators. The IRU improved capital efficiency by lowering deployment costs through the economy of scale of multiple users who could utilize the plant independently of each other. The IRU is now an element of most telecom plant development, using market forces to allocate capacity or fiber pairs of a common cable system among many operators. Data traffic volume is projected to grow by double digits at least through the coming decade. The applications of data services will also evolve from caching content near users to delivering service applications to points on the edge of the network. Such applications will not only require greater capacity of transport, but a higher level of quality emphasizing lower latency and higher resiliency then required by today’s customers. The new Condominium Business is very well suited to develop submarine cable systems which meet the requirements of network operators. If it is buttressed by an appropriate Financial model, the result is lower acquisition and financing cost, strong risk mitigation, and opportunity for monetization over the life of the plant. It avoids the need to allocate system capacity among users and frees each user to operate his capacity as their business requires. The Condominium business model, if well managed, delivers all of the benefits of older business models more efficiently and quicker. STF
Data traffic volume is projected to grow by double digits at least through the coming decade. The applications of data services will also evolve from caching content near users to delivering service applications to points on the edge of the network.
Formerly an Executive Director of Telcordia Technologies responsible for strategy analysis and business development for the company’s software and management consulting business. Prior to Telcordia, SAMMY J. THOMAS held various senior management and director positions at NYNEX Telecommunications Company (now Verizon) and New York Telephone, including Chief Economist, Vice President – Financial Planning, and CFO of Greater New York Metro business unit. Over twenty-five years of telecommunications, software, and high-tech experience in diversified areas of strategic and financial planning, worldwide business development, financial management, marketing, operations, profitability management, forecasting, and business evaluation.
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OBTAINING PURCHASER PERMITS WORLD-WIDE BY MARIA MATO AND JAVIER IZAGUIRRE
he submarine telecoms industry has come a long way since the first transoceanic cables were laid in the 1950s. The real breakthrough in long distance digital communications came with the development of fibre optic cables in the 1990s, replacing the original coaxial cables. As in any nascent industry, initially questions were asked, and rightly so, about the environmental impacts these cables might have on the locations through which they pass. WSP has been at the forefront in answering those concerns since the industry’s earliest days. Our
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involvement in permitting the first fibre optic cables to circumnavigate Latin America and the Caribbean secured WSP’s position as the sector go-to for subsea cabling permitting services and has provided the platform from which to expand our subsea telecoms capability globally. WSP’s expertise in this area dates back to 2000 when Alcatel was laying Latin America’s first submarine telecom cable, South American Crossing (SAC), an 18,000km long system connecting Venezuela, Colombia, Brazil, Chile, Peru, Argentina, and an exclusive economic zone (EEZ) in
Maria Mato stakeholder consultation with the Indigenous Indians in Kuna Yala.
Uruguay. Thanks to the pan-region footprint of WSP’s legacy subsidiary, Ecology & Environment, and its established reputation offering environmental services, we were selected by Alcatel to advise and secure permitting for the system. Back then, fibre optic cables were a new development in submarine cabling, and the regulatory bodies across the region were unfamiliar with how they differed from other cables including EMF emitting subsea power cables. The team’s expert guidance was instrumental notably in reassuring the Brazilian Institute of the Environment and Renewable Natural Resources (IBAMA) of the negligible environmental impacts posed by fibre optic cables at the Fortaleza landing point. It was to be a watershed moment both for the industry and regional regulatory bodies - while also saving the client millions of dollars in fees - and it cemented WSP’s advisory reputation across Latin America. Since our involvement in that first pioneering cable back in 2000, WSP has helped inform and steer the regulatory frameworks for landing cables in all jurisdictions across the region. And we have permitted almost every cable laid in Latin American waters since.
LAYING CABLES IS THE EASY PART…
Physically laying the cable is only half of the challenge; securing the necessary permits beforehand requires expertise of a different - and no less specialist - kind. The former can take just days, the latter a year (or more)! Although there are international conventions that give telecommunications the ‘right of innocent passage’ to traverse EEZs, e.g., UNCLOS, there are numerous federal, state and municipal regulatory and permitting approvals required for each landing site. At WSP, we are intimately familiar with the legislative intricacies and approval authorities of each country we have permitted. Furthermore, we have inspected in person the local environment of every single subsea cable landing location around the entire continent! In Fortaleza alone, where it all started two decades ago, we’ve landed at least half a dozen cables.
But even before our clients have established the cable routes, we can identify and advise on any elements that could be of concern to regulatory authorities, for example marine protected areas, military zones, fishery entities, oil & gas concessions, port infrastructure etc. And of course, the legislations themselves are subject to being updated or changed when new public administrations are voted in. We can advise on and factor into our Plan of Work (PoW ) any political risks that could impact the timing of submittals. This familiarity is what our clients depend SPCS/Mistral Cable upon, not least given how time sensitive cable laying vessel schedules are. When a single day’s delay in the schedule can cost our clients US$175,000 in standby fees, they need to be confident that all necessary permits and permissions are in place and on time. We haven’t yet missed a permit to install! The need to secure the necessary approvals and legislative requirements is all the more crucial given that some cables are emerging out of the sea onto remote and pristine lands, some of which are home to communities who have little interest in, or even knowledge of, gigabit-capable broadband. With over two decades in the field, our multi-lingual team is experienced in negotiating with all local stakeholders in culturally and environmentally sensitive areas. This was demonstrated when we had to get special permission from the General Congress of the Chibchan-speaking Kuna people to land the ARCOS-1 cable MARCH 2022 | ISSUE 123
on the autonomous San Blas Islands in Panama. Having carried out two environmental studies - one for the Panama government and one for the government of the Kuna people – and before divers could enter the water, we were privileged to attend a traditional ceremony performed at the cable landing location on the beach. The Kuna believe that entering the ocean is like entering somebody’s home, and failure to acknowledge this brings bad luck. In fact, once the cable landing had been completed, the Kuna chief personally thanked WSP Global Telecoms Practice Lead, Maria Mato, for providing a role model to the community’s girls, and for “having shown our daughters what they can be.” It’s humbling to be able to have these types of experiences.
LATIN AMERICA: COMING FULL CIRCLE
With the expertise that we hold, and the experience that we have gained, it’s not surprising that WSP has become a preferred provider for the industry’s leading cable supply contractors. We have worked globally for Alcatel, SubCom, Huawei and NEC, and ultimately for some of telecommunication’s biggest names such as Google, Facebook, Microsoft, América Móvil/Claro, Telefonica/Telxius. Having permitted that first cable around Latin America back in 2000, it was hugely rewarding 20 years later to be commissioned by SubCom to permit the 7,300km South Pacific Submarine Cable (SPSC) – also known as Mistral. The cable connects Puerto San José (Guatemala) to Valparaíso (Chile), with additional landing points in Salinas
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(Ecuador), Lurín (Peru) and Arica (Chile), which means we are revisiting some of the original countries and permitting new ones for this system. Furthermore, we’re thrilled to have been entrusted by SubCom once again to undertake the permitting for Google’s epic high-speed Firmina subsea cable, connecting North to South America on the eastern side. With the installation scheduled for 2023, WSP is undertaking all environmental permitting along the cable’s 13,000km route, running from the east coast of the US down to Las Toninas in Argentina, with additional landings in Praia Grande, Brazil, and Punta del Este, Uruguay. Bringing greater speed and reliability for users of Google products across the region, Firmina will also be the longest cable in the world capable of running entirely from a single power source.
TO LATIN AMERICA AND BEYOND
That unparalleled WSP service circumnavigating the Latin American continent and the Caribbean has provided the platform from which to expand our subsea telecoms capability on a global scale. The team has now worked on dozens of systems all over the world. We have specialists located across Latin America, US, Canada, Indo-Pacific region and Asia. And with WSP’s global footprint spanning 40 countries worldwide, we have access to the over 14,000 environmental professionals, enabling us to provide permitting services for any cable anywhere in the world with local resources.
To date, we have been involved in the permitting of over 30 subsea telecoms cables, spanning over thousands of miles including Ellalink (Brazil to Portugal 5,900 Km.), Firmina (Argentina to the US 13,000 Km.) and Mistral (Chile to Guatemala 8,000 Km.). And beyond the Americas (with links to Europe and Africa) Blue Cable Tel-Aviv, in the Indo-Pacific region, we have permitted the Fiji-Tonga Cable, Interchange Cable from Fiji-Vanuatu and Interchange Cable-2 from Vanuatu-Solomon Islands-PNG.
climate resilience and technical disruptors, and of course environmental permitting! With the global shift in working patterns triggered by the Covid-19 pandemic against the backdrop of mass digitalization and the advent of the Internet of Things, submarine telecoms industry is facing both intense demand - and intense pressure - that can only continue to rise. WSP has the expertise, the global scale, the multidisciplinary capability and the forward-looking thinking to partner it for the generations, both societal and technical, to come. STF
ADVISING THE INDUSTRY FOR ‘GENERATIONS’ TO COME
MARIA MATO is Vice President of WSP. With over 30 years of professional experience, including extensive experience in subsea fiber optic cable telecom projects throughout the Americas, Maria leads the global telecom practice at WSP (formerly Ecology & Environment, Inc.). She provides a global platform to support her clients in Permits in Principle (PiPs) with strategic leadership and tri-lingual language skills in English, Spanish and Portuguese. She leads her teams in successful on-time and on-budget project execution, engaging staff as well as regulators in multiple time zones, languages, and cultures.
What really sets WSP apart is our end-to-end capability in fibre optic cabling. As a global multidisciplinary design and engineering firm, we can advise on every aspect of this rapidly expanding market, from marine considerations 200 miles out to sea, to terrestrial installation in the heart of the community (however remote). And just like every other industry, the submarine telecoms industry is challenged with reducing its environmental footprint and adopting more sustainable approaches. With WSP’s Future Ready® program we see the future more clearly and advise to this future as well as today. Our global innovation program identifies and analyses future macro trends through four lenses - climate, society, technology and resources – all of which are intrinsically linked with this industry. We advise on everything, from carbon reductions and energy efficiency to
JAVIER IZAGUIRRE is International Project Director of WSP. Mr. Izaguirre has 38 years of experience providing both environmental and engineering expertise for the telecommunication and energy industries in the U.S., Venezuela, Brazil, Argentina, Uruguay, Colombia, Mexico, Chile, Peru, Ecuador Costa Rica, Guatemala, the Dominican Republic, Angola, Uganda, and Italy. He has had a key role in managing the completion of numerous EIAs needed to obtain environmental permits for exploration, production, refining, and telecommunication facilities. He is fluent in English, Spanish and Portuguese, and conversant in Italian and French. He is based in Houston, Texas.
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ISO 27001:2022 IS COMING WHAT DO THE CHANGES MEAN FOR YOU? BY JONATHAN BOES
his year, the ISO 27002 standard has undergone its first major revision since 2013. Businesses certified to ISO 27001 will see these changes reflected in the security controls of Annex A. But what do these changes mean for your business and your security?
WHAT IS ISO 27001?
ISO/IEC 27001 (usually shortened to “ISO 27001”) is an Information Security Management System standard written jointly by the International Organization for Standardization and the International Electrotechnical Commission. This standard lays out universal best practices for creating and maintaining an information security management system (ISMS). This standard helps organizations protect the confidentiality, integrity, and availability of their information. These three elements form the basis good information security. ISO 27001 helps protect information in any form, but cybersecurity—which protects digital information—plays a major role.
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WHY DOES IT MATTER?
Information security matters more than ever. Even small businesses can’t afford to leave data unprotected. According to a CNBC report from 2019, 43% of cyberattacks target small businesses. Many businesses never recover from these attacks. Almost every day, you hear about another company losing valuable information in a breach. Other circumstances compound the problem. Since the Covid-19 pandemic, more and more businesses have taken their operations online. Telework has become the norm in many companies. All these factors serve to increase cybersecurity risk. Often, cyberattacks compromise customer information. For their own protection, today’s customers want to work with businesses who make security a priority. Because of this, many businesses face ISO 27001 as a customer requirement. ISO 27001 certification proves that you follow internationally-recognized security practices,
building trust with customers and partners. ISO 27001 certification also helps businesses earn points toward many government contracting vehicles. In short, every business needs information security. ISO 27001 certification proves to the world that your company follows information security best practices.
ISO 27001 AND ISO 27002
Like other ISO management system standards, the requirements of ISO 27001 are built to shape around your business processes. But due to the technical nature of information security, this standard includes specific security controls for organizations to follow. ISO 27001 lists these in Annex A. However, Annex A does not provide detail on these controls. For that, you need to consult the ISO/IEC 27002 Security Techniques and Code of Practice for Information Security Controls. This standard contains the full security controls outlined in ISO 27001’s Annex A. You can think of Annex A as a “table of contents” for ISO 27002:2022 ISO 27001 and ISO 27002 are both ISO/IEC standards, but companies only certify to ISO 27001. ISO 27002 simply serves as a guidance document, explaining the security controls referenced by the ISO 27001 certification standard. The 2022 updates apply to the security controls of ISO 27002. Annex A of ISO 27001 will also be updated to reflect those changes
than ever, even for small businesses.
WHAT HAS CHANGED?
While the actual clauses of ISO 27001 haven’t changed, the ISO 27002 guidance standard has undergone a major overhaul. You will soon see these changes reflected in Annex A of the ISO 27001 standard. The security controls of Annex A make up a good amount of the technical work behind ISO 27001 implementation. So even though only Annex A has changed, the update will impact your entire management system. The previous version of Annex A (found in ISO 27001:2013) contained 114 controls across 14 families. The new version contains 93 controls in 4 families.
WHY HAS THE STANDARD BEEN UPDATED?
All ISO standards undergo a review process at least every five years. But that review doesn’t always bring about major changes. However, in the case of ISO 27002, the recent review has resulted in some significant updates. There’s a good reason for this. Nearly a decade has passed since the last major revision. The previous version saw publication in 2013, but it was written even earlier than that. Much has changed during that single decade. The cyber threat landscape has evolved and grown more complex. New technologies have come into play. More and more businesses have gone online and adopted telework, operating virtually with cloud applications. Information security in 2022 simply isn’t the same as information security in 2013. It requires more vigilance and more diligence than ever before. These ISO 27002/Annex A changes may require some extra effort. But ISO 27001 is the international standard for information security, and these are the best practices for protecting your data. In 2022, these practices matter more
Technically, the new version contains fewer controls. But much of that decrease comes from redundant controls which have been removed or merged. In fact, ISO 27002:2022 actually adds 11 new controls to Annex A: 1. Threat intelligence 2. Information security for the use of cloud services 3. ICT readiness for business continuity 4. Physical security monitoring 5. Configuration management 6. Information deletion 7. Data masking 8. Data leakage prevention 9. Monitoring activities 10. Web filtering 11. Secure coding These additional controls add new layers of information security to the standard. MARCH 2022 | ISSUE 123
FEATURE Another change: the updated version of the standard now requires documented operating procedures. The previous version only required policies. Policies provide high-level goals and parameters for your information security management system. Procedures lay out the operational steps you’ll take to pursue those goals. These newly-required procedures will make the documentation side of certification a more in-depth, detailed process. At this point, it might seem like the changes have only made Annex A more complicated, but these important updates also provide clearer guidance and more comprehensive explanations than previous versions of the standard. The updated ISO 27002 is a much heftier document, but it provides greater clarity on the specifics of each control. The updated version also provides a new organizational scheme for the controls. The security controls are now sorted by five attributes: • Control type • Cybersecurity concept • Information security properties • Operational capabilities • Security domains These new attributes help businesses prioritize the correct controls for their context. For example, if your primary concern is confidentiality, you can use these attributes to sort the controls by that one information security property. In summary: the 2022 updates add extra responsibilities to ISO 27001 certification, but they also provide clearer guidance and organization.
WHAT DOES THIS MEAN FOR YOU?
Every ISO 27001-certified business will face some level of extra work to comply with the updates. If you’re currently certified to ISO 27001:2013, you will need to make the transition to ISO 27001:2022 before your first surveillance or recertification audit of 2023. Depending on the date of your next audit, you might need to have the changes in place as early as January. Don’t wait to get started. Depending on the scope of your ISMS, you could be required to implement up to 11 new controls. Before your audit, those controls need to be put in place, enforced with policies and procedures, and tested. Since the ISO 27002 security controls have been merged and renumbered, even the controls that haven’t technically changed will require some organizational updates. You will need to relabel your existing documents and create an updated statement of applicability to reflect the changes.
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In short, don’t underestimate the time and resourced needed to prepare. The best course of action is to start now. You can begin by buying a copy of the updated standard. Look through the new requirements and perform a fresh risk assessment for your information security management system. In all likelihood, you’re already doing more than you think. After all, these are universal best practices. If you’re already committed to good security, you’re likely already compliant with some of the new controls—maybe even with all of them. But again, don’t assume this will be the case. You can’t know how much work you’ll face until you dive in, learn the new controls, and assess your current security posture. Your deadline is the 2023 audit.
When it comes to evaluating your security posture and learning the new controls, you have a few options. First, you can try to tackle the transition alone. With the right internal resources, a business can make this happen. But many businesses—especially smaller businesses—don’t have security experts on staff. The new controls cover some advanced technical ground. Without the right in-house expertise, a business can easily misinterpret or misapply the new controls, leading to costly rework and additional audits. Second, you can work with a Managed Service Provider (MSP). Many businesses already outsource their IT responsibilities to an MSP. But keep in mind that many MSPs don’t specialize in cybersecurity or ISO certification. Third, you can work with cybersecurity experts to provide consulting and technical solutions specific to ISO 27001. These services usually provide training or consulting for ISO 27001 compliance and certification. Some of these services also offer managed software solutions to help meet the technical security controls. With the right help, any business can apply ISO 27001 to keep their information protected and build trust with customers. That covers the ISO 27001 changes in a nutshell. Much has changed, but the core principles remain the same. Every business, regardless of size, has information to protect. By following proven best practices, you can protect your information, secure your business, and build customer trust. STF JONATHAN BOES is a Digital Communications Specialist at Core Business Solutions, Inc. in Lewisburg, Pennsylvania. He writes article and video content to teach businesses about ISO 27001, ISO 9001, NIST/CMMC, and other certification standards.
play for offshore wind. Climate Change
While the telecom industry has been operating for quite some time and has made significant advances in our knowledge of benthic marine environments, climate change is one issue that we will have to face in conjunction with all offshore maritime industries and the wider world. The push for projects concerning environmental monitoring and communications is spreading throughout the industry, with a current focus on issues relating to marine megafauna and fisheries targets. Initiatives such as SMART cables and similar monitoring systems in offshore wind will go a long way towards narrowing existing knowledge gaps and ensuring that we have lengthy and reliable data records as our seas undergo this period of immense change. As mentioned previously, interdisciplinary initiatives such as ROSA will be integral in encouraging data sharing and data tracking as some common fisheries and conservation target species exhibit spatial and temporal distribution shifts. By working together, industry and local stakeholders can broaden our collective knowledge of how the oceans around us will be impacted by climate change related phenomena. As such, we can hope to mitigate issues to the best of our abilities and focus on nurturing sustainable growth of both telecom and offshore wind industries, keeping the world connected and providing reliable sources of clean, renewable wind energy. Similarly, collective knowledge on natural system faults, both for subsea cables and offshore wind infrastructure, will contribute to our understanding of how best to shift future engineering and operation innovations to cope with an increase in strength and frequency of inclement weather events and other climatic factors. Summary
those of public perceptions, will help to pave the way for community buy-in and long term success of these installations. In the past century and a half, humans have come to understand a significant amount about our oceans and how they function. Through the course of hundreds of subsea cable installations, the telecom industry has been at the forefront of uncovering benthic knowledge. Our understanding of seafloor hydrology, shifting sediments, ecological interactions, and even earthquakes and tsunamis has greatly increased. By taking what we have learned and applying it to the burgeoning offshore wind industry, we can best position ourselves to reap the rewards of an extensive renewables network while mitigating social, environmental, and ecological impacts. We have extensive local fisheries and communities networks, professional guard vessels and crews, broad knowledge of the marine environmental and applicable requirements and legislation, and, above all, we have a vision for long-term, sustainable success in harnessing our renewable natural resources for clean energy. To our partners in the offshore wind industry— we are ready and willing to help you reach your goals. Emma Martin is the Marine Systems Associate at Seagard. She has her BA in Biology from Boston University, USA and her MSc in Marine Systems and Policies from the University of Edinburgh, Scotland. She has performed marine field work around the world and looks forward to continuing to support maritime infrastructure developments.
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Throughout both industries, a common theme is the importance of early and continued stakeholder engagement. “We stand by the idea that stakeholder engagement and outreach with other maritime users and operators is incredibly important,” Ryan Wopschall, ICPC GM states, “Raising awareness of subsea cables within the offshore renewable energy sector and encouraging developers and stakeholders to contact us in regard to new and ongoing projects will further facilitate safe and efficient use of marine resources and long-term protection of seabed infrastructure.” All marine users must be considered throughout project development, and these considerations, alongside
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SUSTAINABLE BY DESIGN reprinted with permission from www.patrickparsons.co.uk/wp-content/uploads/Sustainable-by-Design-Report-Web.pdf
Patrick Parsons, the engineering consultancy, conducted research with one hundred senior executives of UK construction firms which have collectively been involved in over £26.6 billion worth of construction projects over the past year. The survey reveals that 85% of respondents think enough is being done to reach net zero on time and a similar number believe COP26 Summit was instrumental in raising environmental, social and governance issues on the construction agenda. Encouragingly, the survey also reveals that respondents see realistic commercial incentives for improving sustainability in future building projects. And the survey reflects the sense of urgency to make the construction industry more environmentally friendly, with 58% of respondents
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saying sustainable design to become even more important over the next three years. Yet for all the positivity, there are barriers to achieving net zero targets. A lack of sustainability in the building material supply chain and outdated planning regulations continue to hamper efforts to go green.
Eighty-six percent said COP26 will accelerate positive advances in sustainability in the sector during 2022. • Eighty-five percent believing the industry is doing enough to reach net zero by 2050. • Eighty-three percent say projects designed with green credentials have given them a competitive advantage. • Sixty-six percent say sustainable design is adding value to current developments. • Sixty-eight percent expect the value of developments with
• • • •
sustainable design to increase by between 10% and 20% over the next three years. Sixty-eight percent say improvements to building material supply chains to reduce carbon are critical to achieving net zero. Sixty-three percent say existing planning regulations need to change to support the sector. Sixty-two percent say a lack of alternative materials with a lower carbon footprint are a barrier to sustainability. Fifty-three percent say sustainable design will become even more important over the next 12 months.
Managing carbon emissions from the built environment is critical if the UK is to meet its net zero target by 2050. At present the building and construction sector contributes 40%1 of the UK’s total CO2 emissions and must, according to a 2021 report from the National Engineering Policy Centre and Royal Academy of Engineering, “decarbonise more urgently” and adopt “holistic and efficient building designs, combined with measures such as reusing building materials wherever possible and using non-fossil fuel powered machinery”2. Looking globally, the building and construction industry is crucial in meeting the UN Sustainable Development Goals (SDGs)3 which aim to protect the planet and promote prosperity. These include UN SDG 6 - ensure availability and sustainable management of water and sanitation for all; SDG 9 - build resilient infrastructure, promote inclusive and sustainable industrialisation and foster innovation; SDG 11 - make cities and human settlements inclusive, safe, resilient, and sustainable; and SDG 13 - take urgent action to combat climate change and its impacts. Our research - based on a survey with one hundred senior executives of UK construction firms involved in over £26.6 billion worth of projects over the past year - shows significant awareness of the need to drive sustainability through the sector with 86% of respondents attributing advances to last November’s COP26 summit. The survey also demonstrates that leaders in the construction industry already appreciate the commercial, social and environmental benefits of engineering and constructing cleaner, greener buildings. However, the survey also highlights several obstacles that must be overcome. Importantly, building material supply chains must improve and planning regulations need to change if the industry is to demonstrate authentic green credentials and achieve carbon neutrality by the deadline.
Survey respondents identified significant commercial benefits from using sustainable design and engineering to build developments with lower carbon footprint and water use, reduce waste and materials used. Eighty-three percent say projects designed with green credentials have given them a competitive advantage while two thirds (66%) claim sustainable design is adding value to current developments. More than two thirds (68%) of respondents expect the added value from enhanced sustainability in construction design to increase by between 10% and 20% over the next three years. A further 18% say values will increase by between 20% and 50% over the same period. It is no surprise then that more than three quarters (77%) think that sustainability planning in the early-stage design is important. Returning to the ability of construction companies to meet the UN Sustainable Development Goals, almost half (48%) of respondents say the most important aspect of sustainable projects is to improve the quality of life for the people living in/using the buildings, creating healthier environments that promote well-being, and prevent negative social issues arising. Meanwhile, 44% say the most important element is to maximise the use of sustainable resources to lower environmental impact and increase energy efficiency. Appreciating the importance of flexibility in sustainable developments, 70% of respondents say projects must be built with the flexibility to accommodate future changes, taking into consideration the lifetime of a building from draft to demolition, not just the initial construction. Conor Murphy, Senior Partner, Structural Engineering at Patrick Parsons says: “Reducing the impact of our built environment is no longer an option but an imperative, and sustainable design and engineering has a crucial role in protecting the environment and our communities.”
SUSTAINABLE DESIGN PRIORITIES
The importance of meeting the UN Sustainable Development goals was again reflected in respondents’ views on the priorities for sustainable building projects. Just over half (51%) say energy-efficient systems and design utilising natural light, smart windows, and heating, ventilation, and air conditioning (HVAC) was very important. This was followed by 47% who believe reducing water and sewerage waste is a priority, and 35% who say MARCH 2022 | ISSUE 123
FEATURE that sourcing materials with lower embodies carbon such as timber, clay and stone was very important. Looking ahead, the focus on minimising the impact of developments in terms of carbon footprint, waste and resources used continues. More than half (53%) say the importance of energy efficient design will increase significantly over the next three years. Just under a third (32%) believe waste reduction and lean design (26%,) which minimises the use of materials, will also increase significantly. Water neutrality - where the total demand for water within a planning area after development has taken place is the same, or less, than before it was built - was also a major consideration. More than one-third say between 5% and 15% of their organisations’ developments are water neutral. More than two-fifths (43%) say between 15% and 20% are water neutral, and a further 17% reveal that a fifth to a half of current developments are water neutral. In future, water neutrality gains even more importance. Forty-four percent expect between 20% and 50% to be water neutral by 2025. When asked about the role of sustainable drainage systems when it comes to flood prevention, promoting biodiversity or natural habitats and preventing pollution, 46% said that they expect them to become even more important over the next three years. Only 12% expect them to decrease in importance. Andy Johnson, Associate, Patrick Parsons: “Water neutrality is rising up the sustainability agenda as the construction industry focuses on using scarce natural resources more responsibly and placing even greater importance on protecting natural habitats, and pollution and flood prevention.”
OVERCOMING OBSTACLES TO SUSTAINABILITY
While commercial imperative and increased awareness of the importance of sustainability are two critical steps towards helping the construction industry ‘go green’, respondents identified notable challenges they must yet overcome. Over two-thirds (68%) of respondents say building material supply chains to reduce carbon must improve if they are to achieve net zero. Sixty-two percent of respondents cite the lack of alternative materials which have a lower carbon footprint as a significant barrier to overcome, followed by decarbonising existing buildings (59%) and the ability to collect data to measure carbon in buildings (48%). A further 63% of respondents say existing planning regulations need to change to support the sector if it is to
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hit this target. However, given the positive response to the progress made at COP26, it may yet be that policy makers are able to make requisite change in this area. Conor Murphy, Senior Partner, Structural Engineering at Patrick Parsons: “The UK construction industry’s ambition to achieve net zero is not without its challenges. There must be a development in the materials used and planning rules must change if we are to decarbonise legacy buildings and improve their performance.”
The industry must collaborate to overcome the obstacles to improving sustainability in construction, and the Government needs to lead the industry on the issue, with planning regulations which encourage carbon neutrality. Spaces need to be created that are flexible to allow for the ever-changing requirements of buildings and the people that occupy them, so that they really are fit for the future. There should also be a greater focus on the repurposing of existing buildings. There are many approaching their end of life which can be transformed into attractive, modern building and can be completed faster, more economically and far more sustainably than by demolishing and re-building. Starting from scratch is not always the best answer. It is vital that the focus on sustainability begins well before the first foundation is laid to ensure it is in the DNA of each and every development. For example, there should be embodied carbon reporting from the earliest stages of a project to assess environmental impact and provide opportunities to make reductions before the project has gone too far gone in the life cycle. Similarly, greater use of modern methods of construction such as modular, dramatically reduces the amount of waste that ends up in landfill and has an inherent focus on eco – friendly materials. There should also be a greater focus on using local and natural materials to improve the carbon footprint of the supply chain. Finally, as an industry, there needs to be a fundamental shift in mindset and aspirations, with a greater focus on building better for our future generations, not just for profit. STF NOTES 1
2 https://www.raeng.org.uk/news/news-releases/2021/september/constructionsector-must-move-further- and-faster-t 3 https://sdgs.un.org/goals
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MAP LEGEND LANDINGS (1044) OIL & GAS SYSTEMS IN SERVICE (19) PLANNED (6)
OFFSHORE FACILITIES (18) CABLE SYSTEMS AGE 16+ YEARS (130) 0–15 YEARS (231) PLANNED (62)
DATA CENTER CLUSTERS Number of Data Centers UP TO 5
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SUBMARINE CABLES OF THE WORLD 2022 MEDITERRANEAN
BY THE NUMBERS SUBMARINE CABLE SYSTEM I N V E S T M E N T, 2 0 2 2 –2 0 2 4
SUBMARINE CABLE SYSTEM I N V E S T M E N T, 2 0 1 2 –2 0 2 1 2012 2013
2014 2015 2016
2017 2018 2019
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REGIONAL DISTRIBUTION O F N E W C A B L E , 2 0 1 2 –2 0 2 1
TRANSPACIFIC TRANSPACIFIC 36K KMS98K KMS 85K KMS
EMEA 132K KMS
80K KMS 52K KMS
R ERG NA E IGOI O NLA LD IDSITSRTIRBIU B TUITOI N ON OO F FN N EW 0 201 2 5 E WC A CBALBEL,E2, 021022–2 2 –2 TRANSPACIFIC
POLAR POLAR 67K KMS 150K KMS
INDIAN OCEAN INDIAN OCEAN EMEA EMEA AUSTRALASIA
26K KMS 62K132K KMSKMS
2K KMS AMERICAS
T O P D ATA C E N T E R P R O V I D E R F A C I L I T Y C O U N T
T O P D ATA C E N T E R P R O V I D E R F A C I L I T Y C O U N T
CF OA NC T EI N L ITTPYR O CVOI D UENRT FACILIT Y COUNT
CHINA TELECOM CENTURYLINK
Number of Data Centers
Number of Data Centers
DIGITAL REALTY TELEHOUSE
CHINA UNICOM TELEHOUSE
CHINA MOBILE 0
NUMBER OF DATA CENTERS 20 40 60
NUMBER OF DATA CENTERS
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STATUS REPORT ON THE SUCCESSES IN USING FOREIGN SHIPS TO LAY SUBMARINE CABLES IN CANADA BY JEAN-FRANÇOIS BILODEAU
ast year, I wrote an article in this publication on the installation of undersea fibre-optic cables and the difficulty in using a foreign ship to install or repair of undersea cables in Canada. In particular, I referred to the Alcatel Submarine Networks coasting trade application and the Decision of the Canadian Transportation Agency issued on April 16, 2021. Contrary to the message that might have been conveyed in the article, many foreign vessels are regularly used in Canada to perform specialized transportation such as the live transportation of juvenile and grower salmon, using
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a mobile offshore drilling unit registered in Panama, to undertake drilling services for the exploration and development of petroleum resources off the east/southeast coast of Newfoundland, the use of a dive support ship registered in Isle of Man, to complete the 2022 Subsea Project in the Terra Nova oil field, the use the “IT INTREPID”, a cable ship registered in Barbados, to install, lay and bury a new undersea fibre communication cable between Sept-Îles and Sainte-Anne-des-Monts, Quebec, the use of a seismic support ship registered in Bahamas, to support the operations of one seismic research ship by facilitating crew changes
of a suitable ship to perform the activity described in the application. Those key were reviewied in the recent Orange Marine decision issued on July 7, 20211.
Under the cited Coastal Trade Act, the Minister of Public Safety and Emergency Preparedness may issue coasting trade licence authorizing foreign ships or a non-duty paid ships to conduct a commercial activity in Canadian waters for a maximum period of 12 months once the Canadian Transportation Agency (CTA) determines there are no suitable Canadian ship to perform the activity described in the application. Orange Marine applied to the Minister for a licence to use the “RENE DESCARTES”, a cable-laying ship registered in France and intended to partner with IT International Telecom Inc. (IT Telecom), a Canadian company that will provide assistance with the proposed activity. Horizon Maritime Services Ltd. (Horizon Maritime) filed a contestation to the application and offered three Canadian-registered ships to perform the activity described in the application, in collaboration with ITB Subsea Ltd. (ITBS) of Burnaby, B.C. The CTA determined, pursuant to subsection 8(1) of the Act, the availability and suitability of the vessels presented by Horizon Maritime.
and resupplying fuel, supplies, and equipment, off the east coast of Newfoundland and Labrador. In two instances mentioned above, IT International Telecom Barbados Canada Inc. applied to obtain a licence to use the “IT Intrepid” Barbados registered ship to lay and bury and repair/replace underwater cables without any contestation being made to the application to use foreign vessels. The criteria to contest the use of a foreign vessel under the Coastal Trade Act is to demonstrate the availability 1
It was intended for the “RENE DESCARTES” to lay off two sets of fibre-optic telecommunication cables in the Alberni Inlet located in British Columbia as part of the Topaz submarine fibre-optic cable project linking Canada and Asia. The ship would have arrived in Victoria, British Columbia, from Kita Kyushu, Japan, and then travel to Port Alberni, British Columbia, carrying 5,100 tons of fibre-optic cable, fibre-optic repeaters, a plough, and a remote operating vehicle (ROV). Orange Marine intended to use the “RENE DESCARTES” to perform the entire work related to the Topaz project, both within and outside Canadian waters. The applicant admitted it did not contact any Canadian shipowners, given the small cable-laying ship market and the fact the available Canadian ships are widely known to industry. The portion of the laying operation within Canadian waters subject to the Act was approximately 150 km in length. Horizon Maritime opposed the use of the “RENE DESCARTES”, and offered the use of any of its three ships to perform the activity described in the application within Canadian waters, in collaboration with ITBS.
Canadian Transportation Agency Decision No. 67-W-2021
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FEATURE In its view, Orange Marine took the position that the selected ship was to be capable of laying cable with plough burial, operate a ROV for post-burial operations, and install branching units, capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan, as required under the Topaz project. Apparently, the ability to carry 5,200 tons of cable is not a known capability of the existing Canadian ships.
THE POSITION OF THE PARTIES AVAILABILITY
Orange Marine did not contest the availability of any of the Horizon Ships, but implied the apparent lack of availability, as all of these ships were working abroad: the “HORIZON STAR” was then flagged in Barbados and was working in the United Kingdom; the “HORIZON ENABLER” was flagged in Vanuatu and worked in the Gulf of Mexico, while the “HORIZON ARCTIC” flagged in Canada was working in the United Kingdom. Further, Orange Marine challenged the availability of necessary equipment for the Horizon Ships to perform the proposed activity namely the power-feeding equipment (PFE) and a full universal jointing (UJ) spread which would require a six- to eight-month lead time for acquisition. Horizon Maritime responded that all it ships would become available for the intended project and the two ships registered abroad would be reflagged to the Canadian registry which would not constitute a barrier to the contestation as outlined in previous CTA decisions.
Orange Maritime made a series of arguments in support of the Horizon Maritime vessel unsuitability and in particular referred to: 1. The conversion of the Horizon Maritime multipurpose ships for the cable-laying activity and in particular with the requirement to carry 5,200 tons of cable for continuous laying from Canada to Japan. 2. The necessity to install PFE because the cable in an active system with repeaters and active branching heads; 3. The cable had to be buried by plough on the Canadian continental shelf and which required complex systems: vehicle, towing winch, an umbilical winch, a command and control van, and a careful integration to conduct simultaneous cable laying operations. 4. The ship had to be equipped with a full UJ spread with jointers able to make joints during the installation if a repair is required without needing the mobilization of another ship;
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5. 6. 7.
Expertise to operate such complex systems; Timing to make the vessels available and operational; and Cost; converting multipurpose vessels in cable ships is costly and complex which would render not economically viable the short Canadian scope of the project.
The onus is on the applicant or in this case on Orange Maritime to complete the coasting trade application to provide information in sufficient detail to permit the Canadian industry to assess and respond to the application. The Coastal Trade Act, recognizes the interests of Canadian ship operators by permitting foreign ships to temporarily engage in coasting trade activities in Canadian waters, only if no suitable Canadian ship or non-duty paid ship is available to perform the activity.
Horizon Maritime provided substantive rebuttal to this concern and the CTA accepted that Horizon Maritime could have the ships reinstated in the Canadian register in a matter of days and that their current work abroad would be concluded by July 2021.
Pursuant to the CTA’s Guidelines, the offered Canadian‑registered ship does not have to be “identical” to the proposed foreign vessel. Moreover, the suitability of the Canadian-registered ship should not be determined in comparison with the foreign ship but assessed in relation to the technical and operational requirements of the activity: is proposed ship is capable of performing the activity. The suitability criteria may include: • commercial and economic suitability – the commercial (e.g., financial) and economic implications of using the foreign ship versus the offered Canadian‑registered ship; and • technical and operational suitability – technical characteristics of the ship and equipment required to operationally perform the proposed marine service or activity. Such items have been raised by Orange Maritime.
COMMERCIAL AND ECONOMIC SUITABILITY
The CTA recognizes, as a matter of principle consistent with the overall intent of the Act, that the operation of Canadian‑registered ships implies costs and operating conditions that usually higher than for, foreign ships. Evidence that go solely to the higher cost of operating a
Canadian ship is generally insufficient to establish that an offered Canadian-registered ship is not commercially and/ or economically suitable. In raising commercial and/or economic suitability the applicant must produce evidence that clearly demonstrates: • the necessity of using the foreign ship for the commercial viability of the proposed activity; and • that the higher costs of using an offered Canadian ship for the activity would render the activity commercially/ economically unviable. If the applicant produces such evidence, the offeror needs to challenge the applicant’s position by producing counter-evidence in its reply to demonstrate that the use of a Canadian-registered ship would not render the proposed activity commercially and/or economically unviable. In the present instance, Horizon Maritime did not rebut Orange Marine’s arguments related to cost in its reply submission. The CTA recognizes that additional costs resulting from the use of a second ship to perform the work in Canadian waters by using one of the Horizon Ships when the “RENE DESCARTES” would perform the entirety of the work will cause increased costs. However, it was for Orange Marine to demonstrate that such cost was unreasonable and would have rendered the proposed activity using one of the Horizon Ships economically unfeasible. Orange Marine failed to make any submissions, aside from a general statement about an “unrealistic cost.”
TECHNICAL AND OPERATIONAL SUITABILITY
Orange Marine raised a number of questions on the technical and operational shortcomings of the Horizon Maritime vessels: Issue 1 – Conversion for cable-laying activity The CTA accepted that the assistance of a third-party (ITBS) by Horizon Maritime to provide the equipment necessary to convert the Horizon Ships would render the vessel able o perform cable-laying activities. The CTA consistently held that a Canadian offered ship does not need to be identical to the proposed ship and that the requirement is only that the offered ship can perform the work. Further, Orange Marine did not establish that any one particular slack management software system can only be used for this operation, nor that the installation of such software on the Horizon Ships is infeasible. In this regard, the CTA found that ITBS’ experience and success in performing cable-laying activities, combined with the fact that the Horizon Ships are outfitted with dynamic positioning software, are indicative of the capability of the Horizon Ships’ ability to provide the requisite navigation capabilities necessary to carry out the work. Finally, the issue of whether the Horizon Ships are capable of carrying 5,200 tons of cable for continuous laying from Canada to Japan was not addressed by Horizon Maritime, nor was the requirement of such capability rebutted. The CTA indicated that it was important to note that if this were a key issue, Orange Marine, for its part, did not make pleadings in this respect when it had the opportunity to do so in its response to Horizon Maritime’s objection. In light of the evidence made in the pleadings and MARCH 2022 | ISSUE 123
FEATURE supporting affidavits, the CTA found that that the Horizon Maritime ships could be outfitted for cable laying.
ing the activity at issue. The Agency concluded that Orange Marine has not met its evidentiary burden in this respect.
Issue 2 – Need for PFE Horizon Maritime contested the requirement for PFE, stating that it was not a listed requirement in Orange Marine’s application but could nevertheless perform the requisite function with its equipment. Given the Orange Marine initial application, the CTA accepted the representations made by Horizon Maritime.
Issue 6 – Timing Orange Marine did not provide any concrete evidence to substantiate or contradict Horizon Maritime’s submissions regarding timing and whether the Horizon Ships would be onsite and ready to carry out the work in time for July 2021.
Issue 3 – Plough systems Orange Marine made general statements regarding the complexity of plough systems and the need for a towing winch, umbilical winch, and a command and control van. However the applicant did not submit any information in the pleadings to indicate that the provision of such equipment by another party would be infeasible or unsuitable. The CTA therefore found that Orange Marine has not met its evidentiary burden of demonstrating that the Horizon Ships would be unsuitable to perform that task. Issue 4 – UJ Spread The CTA consistently holds that an offered ship need not be identical to the proposed foreign ship, provided that it can perform the task at hand. Orange Marine’s application makes no mention of the requirement for a UJ spread, let alone substantiate the need for one. While not ignoring the desirability nor the necessity of the functionality a UJ spread could provide, Horizon Maritime presented evidence to demonstrate that a similar outcome can and has been achieved in other projects using Horizon Maritime’s and ITBS’ equipment. On that basis the CTA found that Orange Marine has not met its evidentiary burden in demonstrating the necessity of a UJ spread. Issue 5 – Expertise and Horizon Maritime Cable-laying operations that rely on equipment and expertise provided by a third party is not uncommon, and notably, Orange Marine itself proposed to do so with IT Telecom. While claiming that IT Telecom is the only Canadian company capable of implementing a telecom cable installation of the magnitude set forth in the application, Orange Marine did not provide any information to substantiate this claim, nor to justify the preclusion of the use of any other contractor. The CTA, in a previous decision2 reiterated that the question is the suitability of the offered ship, and not experience perform2 Decision No. 27-W-2021
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In light of the above, the CTA determined that there were Canadian ships available and suitable to perform the envisioned activity contemplated by Orange Maritime despite the fact these vessels were located in the Atlantic Ocean and would have to travel to the Canadian West Coast.
This decision of the CTA is interesting because if refines the analysis of the requirements to licence foreign vessels to operate in Canada. Firstly, the initial application to use a foreign vessel should be as complete as possible and ought to include all the technical and operational requirements of the project. The CTA found that for several items, the initial application was lacking in technical substantiation that was added to respond to the contestation made by Horizom Maritime. Further the applicant must indicate and support with strong evidence the “must have” technical equipment and compulsory time line. In the Orange Application, the CTA did not retain vague sentences on the use of specific equipment or the time line requirement. The need to use foreign vessels to lay or install undersea cable should be considered and planned in the earlier design stage of a project before tenders are issued to support specific technical needs or financial constraints. In this instance, one can imagine the additional costs the project will incur in paying for the mobilization costs relating to the travelling expenses for the Canadian vessels to sail from the East to the West Coast of Canada. STF JEAN-FRANÇOIS BILODEAU is Counsel at Borden Ladner Gervais LLP and focuses his practice on maritime law-related disputes. As a former member of the Royal Canadian Navy Reserve, his experience in navigation and ship management enables him to provide relevant legal services, supported by technical knowledge of the marine industry. He represents different interests active in the marine industry before Québec and federal courts and the Supreme Court of Canada.
IDENTIFYING AND ENABLING SUBMARINE CABLES BY NATALIA LÓPEZ AND ANDRÉS CONTRERAS
nvestment in infrastructure is necessary for a country development to satisfy its continuous needs and challenges, and it also is a powerful tool for recovering after Covid-19 pandemic hardly stressed our economies. However, infrastructure funding is not an easy task when projects have risks, involve big challenges or during uncertain economic scenarios. Submarine cables projects can be particularly exposed to this. Thus, infrastructure funds can play an important role for encouraging and promoting new projects and let industries growing especially when funding environment is limited. Current demand in
connectivity and economic recovery can be both a great advantage and opportunity. This is the case of Chile’s telecommunication industry that is currently supported by Desarrollo País, a Chilean infrastructure fund who is leading a disruptive and long-awaited submarine cable project.
CHILE’S DIGITAL PLAN
Telecommunications infrastructure is a key enabler for digital business. Therefore, three years ago, the Chilean government decided to move forward to make Chile a digital hub, bringing the country to a better place in the digital MARCH 2022 | ISSUE 123
FEATURE economy. This plan has been focused on three pillars: 1. Development of a nation-wide strategy to strengthen fiber optic networks; 2. Rollout of 5G Networks and development of the 5G ecosystem; and 3. Opening a new international connectivity route. For the first pillar, Chile has been deploying more than 15,000 kms of optical fiber, both terrestrial and submarine for high-capacity domestic networks. This deployment will allow all localities to have access to a fiber optic connection, doubling the current backbone capacity of data transmission for those areas. Alongside that, in the second pillar Chile worked hard to lead the development of 5G networks in our region, by being the first country to make spectrum available for 5G networks (1,800 MHz), which was allocated mostly to multinational telecom companies that show the position that Chile has in the telecommunications industry. Finally, Chile focused its efforts on having a quantum leap in international connectivity by increasing the number of international interconnections points with neighboring countries, developing terrestrial fiber optic in new border crossings and international submarine cables. If the delivery of these initiatives continues to go as planned, as of 2025 Chile’s international bandwidth capacity will undergo a 40-fold increment. In a context marked by the pandemic, with economic slowdown and drop in investments throughout the region, the Chilean telecommunications sector is expected to support the national economic recovery effort. Telecoms will bring more than USD 3 billion in investments (new projects), the creation of more than 60 thousand new jobs, and developments in new industries, which will play an important role for the country’s economic recovery in the coming years. We strongly believe in Chile’s technological neutrality, institutional and regulatory strength and advocacy for free competition. Keeping our market open for innovative initiatives will be key to attract investors over the years. Funding and enabling infrastructure are key for supporting country growth and recovery.
FUNDING NEW ROUTES
In 2018, Chile created ‘Desarrollo País’, a state-owned infrastructure fund that seeks to promote infrastructure projects that improve the wellbeing of Chileans by taking care of the country´s long-term needs, through projects that are both economically and socially profitable. Desarrollo País is playing a key role in Chile’s digital plan by promoting infrastructure development through submarine cables projects as part of its portfolio that include different industries. A key project is the first fiber optic route to link South America with Asia, the Humboldt System. This new route is critical not just for Chile but for South America as its traffic increases year to year at steady rates. Our region demands capacity and diversity to satisfy its increasing requirements. Under that perspective, the Humboldt cable will provide the first direct route from South America to Asia Pacific providing important benefits such as strong improvement in latency and increased capacity. Currently, South America does not feature any direct route to Asia Pacific, traffic from this continent goes entirely through the U.S. That impacts directly in latency and quality of service which is critical for new technology requirements. Humboldt is an inspiring project but full of challenges. Submarine cable industry for years have called this route the ‘missing link’ as it is recognized as a necessary link but difficult to deploy because of its commercial and technical risks associated to a new route and its required investment. Here is when an infrastructure fund acts as an enabler for a challenging submarine cable project. Therefore, Desarrollo País took the leadership of Humboldt and decided to develop it strategically according to its unique characteristics. From the regional perspective, Humboldt must ensure that is capable to aggregate demand from South America to Australia and Asia. In order to achieve that, the Government of Chile and Desarrollo País as promoters of the Humboldt cable, have been encouraging agreements with its neighbor countries to offer them be part of the project. This is a win-win relationship as it stimulates both parties to direct their traffic to the first route to Asia Pacific, and it also strengthen South American terrestrial networks to facilitate traffic exchange.
A key project is the first fiber optic route to link South America with Asia, the Humboldt System. This new route is critical not just for Chile but for South America as its traffic increases year to year at steady rates. Our region demands capacity and diversity to satisfy its increasing requirements.
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On the other hand, funding was a critical issue so Desarrollo País assumed a main part of equity not just by itself but also jointly with other interested parties like development banks, South American public companies and other private financial entities that saw in Humboldt a strategic project supported by a state-owned infrastructure fund. Public private partnerships are a powerful tool for enabling complex projects. Besides, the operator company was another piece missing in the equation as its role is essential for running the business. Therefore, Desarrollo País conducted a strategic partner selection process to find an operator capable to execute the project. After an exhaustive process, H2 Cable LP -part of Hawaiki group- found an attractive project supported by key South American governments and companies, mostly funded and aligned with its commercial plans and was finally selected as Humboldt’s strategic partner. Humboldt has a long way ahead but a $3M feasibility study and the strategic partner selection process have been successfully concluded, which forecasts that the milestones to reach CIF will go smoothly as well. Regarding new opportunities, Chile is also promoting the first submarine cable to Antarctica Peninsula. The potential of this new route is huge because of its scientific impact. In Antarctica there are numerous research activities that aim to study several global phenomena, such as climate change, evolutionary and ecological processes, astronomy, pollution, fishing activity, among others. Current efforts are heavily constrained because of its lack of connectivity. Bringing a high-capacity submarine cable to Antarctica will dramatically improve their daily communications and research activities. A submarine cable to Antarctica is an exciting and required project but -again- difficult to execute. Chile is the closest country to Antarctica, and it just makes a bit easier an extremely demanding project that involves challenging engineering, strong coordination among countries based in Antarctica and building alliances with the scientific community. Based on Humboldt’s experience, Desarrollo País will act again as the enabler to make this happen filling those gaps by funding and promoting public private partnerships. A request for information process was recently concluded and it showed a high interest of different players of the industry.
INFRASTRUCTURE FUNDS ARE KEY DRIVERS
Convenient incentives can enable complex projects. Infrastructure funds can play a strategic role for converging interests from different stakeholders. Desarrollo País
as a state-owned infrastructure fund has become a key player for both executing Chile’s digital plan and promoting submarine cable projects. Its experience can motivate other funds to lead both submarine cable and countries’ growth efforts. On one hand, leading the first digital direct link to Asia, along with other initiatives such as the deployment of a national optical fiber, the 5G development, hosting new data centers, and the deployment of the first submarine cable to connect the Antarctica territory national, will strengthen Chile’s position on the new world economic map, in addition to positioning ourselves as a digital hub. On the other hand, after pandemics the need of connectivity is stronger than ever and submarines cables play an important role to satisfy that. Infrastructure funds like Desarrollo País are strong enablers to encourage cable deployments by reducing investments, arranging agreements, capturing operators’ attention and fill gaps to facilitate the development of complex projects. Humboldt is an extraordinary example about how proper incentives can lead to an executable project and making present a ‘missing link’. Antarctica project is supposed to be even more difficult, but we are confident that attempting towards strong signals in funding and collaboration will enable a new link. STF NATALIA LÓPEZ is Digital Projects Manager for Desarrollo País (Chilean Infrastructure Fund). With over 10 years of experience in telecommunication sector, she possesses a Management Control and Information Systems Engineering from the University of Chile, Master in Consulting Strategic Business and Institutional Communication from the University Rey Juan Carlos in Spain, and International Master in Business Administration from ESERP Madrid School of Business and Social Sciences. Her previous experience in the telecommunications sector includes a role in Management Control Corporative for Telefonica and later a position as the Leader of Network Commercial Planning Department in Business Segment in Entel. Getting back to Chilean public sector, she was in charge of the Telecommunications Development Fund where her role was to drive initiatives to close Chile’s digital divide, leading projects such as Southern Optic Fiber, National Optic Fiber, WiFi-free national network, Internet access to national public schools. Currently, she is the Digital Projects Manager of the Chilean Infrastructure Fund, where her main purpose is propelling, leading, and developing public digital infrastructure as Humboldt project, to enhance the Chilean position in the digital economy. ANDRÉS CONTRERAS is Senior Digital Infrastructure Engineer at Desarrollo País where he supports technical, commercial, and corporative progress of Humboldt and Antarctica project. He worked for 10 years at the Undersecretariat of Telecommunications of Chile (SUBTEL) planning and designing projects based on fiber optic terrestrial and submarine systems, mobile networks and satellite systems. He also worked as researcher at the University of Chile about bandwidth pricing and allocation mechanisms. Andres holds a BS and MS in electrical engineer both from University of Chile.
MARCH 2022 | ISSUE 123
ARE LAWS REGULATING SUBSEA CABLES OUTDATED? BY NICHOLAS KAZAZ
ubsea cables enable our modern way of life, but the laws regulating them have not changed much for over a century. Today’s globalised world thrives on the transmission of data. From financial transactions to social media posts, the vast majority of international communications is transmitted by subsea telecommunication cables.1 Subsea cables, like all physical objects, are prone to damage. Accidents involving damage to subsea cables have the potential to cause disruption or – at worst – even disconnect parts of the global population, as the January 2022 volcanic eruption near the island of Tonga so vividly illustrated.
The first international telegraph cable was laid in 1850 between England and France. Whilst the installation of
the first transatlantic subsea cable laid between Ireland and Newfoundland in 1858 failed, the second attempt in 1866 was permanently successful.2 In recent years, the number of cables has increased significantly: there are now over 400 cables,3 with the exact number changing as new cables are built and old cables decommissioned. The commercial landscape is changing, too. Whereas most cables are owned by telecommunications companies, businesses such as Google, Microsoft, and Meta have also started to invest in this industry.4
After five weeks of disruptions, Tonga was finally able to restore its connectivity when the 827-km long fibre optic cable connecting the island to the rest of the world was repaired at the end of February 2022.5 There are several
1 Douglas Main, ‘Undersea Cables Transport 99 Percent of International Data’ (Newsweek, April 2015) <https://www.newsweek.com/undersea-cables-transport-99-percent-internationalcommunications-319072> accessed 28 February 2022 2 Encyclopaedia Britannica (2022) ‘Undersea Cables’ 3 Dan Swinhoe, ‘What is a submarine cable? Subsea fiber explained’, (Data Center Dynamics, 26 August 2021) <https://www.datacenterdynamics.com/en/analysis/what-is-a-submarinecable-subsea-fiber-explained/> accessed 28 February 2022 4 Maritime Awareness Project, ‘Submarine Cables’, (The National Bureau of Asian Research) <https://www.nbr.org/publication/submarine-cables/> accessed 27 February 2022 5 Tom Bateman, ‘Tonga is finally back online. Here’s why it took 5 weeks to fix its volcano-damaged Internet cable’ (Euronews, 23 February 2022) <https://www.euronews.com/ next/2022/02/23/tonga-is-finally-back-online-here-s-why-it-took-5-weeks-to-fix-its-volcano-damaged-interne> accessed 28 February 2022
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reasons why it took so long to make the cable functional. Aside from the technical complexities, vessels with cable repairing capacities are scarce. When the Hunga-Tonga-Hunga-Ha’apai volcano erupted, the closest cable repair vessel, “RELIANCE”, was stationed in Papua New Guinea – about 2,900 miles (4,700km) away.6 It took her 10 days just to arrive at the repair site.7 This illustrates a long-standing issue that the subsea cable industry faces. Historically, more developed nations have been able to build up a relatively robust network of subsea cables compared to less developed nations. The UK, for example, is currently linked to the rest of the world by almost 60 subsea cables.8 There might be some light disruption if one of these cables is damaged, but it is difficult to imagine a scenario in which the whole of UK would be entirely cut off. Less developed regions may also rely on private investors to lay subsea cables, which affects the availability and cost of telephony and Internet access to their populations.9 The reliance on subsea cables may also make them vulnerable to global and national security threats. In an incident which took place during the Egyptian Crisis in 2013, three divers allegedly attempted to cut the SEAME-WE 4 cable off the port of Alexandria, disrupting the speed of Internet in Egypt as well as other countries.10 More recently, Admiral Sir Tony Radakin – the head of the UK’s armed forces – warned of increased
Russian underwater activity. According to Sir Tony, any attempt by Russia to damage the subsea cables could be considered an “act of war”.11
CAUSES OF DAMAGE
Cable damage caused by natural disasters such as the volcanic eruption near Tonga is rare, but its effects can be significant. In December 2006, a devastating earthquake near Hengchun, Taiwan severed eight subsea cables.12 Connectivity in Asia was severely disrupted in the aftermath. Apart from earthquakes and tsunamis, other natural causes of subsea cable damage include undersea landslides, ocean currents and shark attacks.13
Nevertheless, human activity accounts for about 70% of cable damage incidents. Apart from the intentional damage mentioned above, disruptions are most often caused by fishing trawlers and ship anchors.
Nevertheless, human activity accounts for about 70% of cable damage incidents.14 Apart from the intentional damage mentioned above, disruptions are most often caused by fishing trawlers and ship anchors. In 2008, 75 million people were left with limited internet connectivity after a vessel trying to moor off Alexandria,
6 Jane Wakefield, ‘How will Tonga’s broken internet cable be mended?’ (BBC, 24 January 2022) <https://www.bbc.co.uk/news/technology-60069066> accessed 27 February 2022 7 Bateman, ‘Tonga is finally back online. Here’s why it took 5 weeks to fix its volcano-damaged Internet cable’ (n 5) 8 Harry de Quetteville, ‘Why hi-tech undersea cables are the real threat to national security’ (The Telegraph, 22 January 2022) <https://www.telegraph.co.uk/news/2022/01/22/ undersea-water-cables-real-threat-national-security> accessed 28 February 2022 9 Ewan Sunderland, ‘Undersea cables and landing stations around Africa: Policy and regulatory issues’ (2014) 25th European Regional Conference of the International Telecommunications Society (ITS) <https://www.econstor.eu/handle/10419/101381> accessed 21 February 2022 10 BBC, ‘Egypt arrests as undersea internet cable cut off Alexandria’ (BBC, 27 March 2013) <https://www.bbc.co.uk/news/world-middle-east-21963100> accessed 28 February 2022 11 L Brown and C. Philp, ‘Admiral Sir Tony Radakin warns of Russian threat at sea’ (The Times, 7 January 2022) <https://www.thetimes.co.uk/article/admiral-sir-tony-radakin-warns-ofrussian-threat-at-sea-kx7vf5sxv> accessed 27 February 2022 12 Winston Qiu, ‘Submarine Cables Cut after Taiwan Earthquake in Dec 2006’ (Submarine Cable Networks, 19 March 2011) <https://www.submarinenetworks.com/news/cables-cut-aftertaiwan-earthquake-2006> accessed 28 February 2022 13 Z S Bischof, R Fontugne and F E Bustamante, ‘Untangling the world-wide mesh of undersea cables’ (2018) HotNets ‘18: Proceedings of the 17th ACM Workshop on Hot Topics in Networks < https://dl.acm.org/doi/10.1145/3286062.3286074> accessed 21 February 2022 14 ibid
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FEATURE Egypt reportedly damaged the FLAG Europe Asia (FEA) and SEA-ME-WE 4 cables.15 More recently, in August 2021, a containership reportedly damaged the Australia Singapore Cable (ASC) near the West Australian Coast. The vessel had been anchored close to the protection zone in the vicinity of the ASC. As a result of high winds, she dragged her anchor through the area and caused damage of approximately $1.5 million.16 Damage likely caused by a vessel’s anchor was also reported in February 2022 after the TW1 cable was cut off Karachi, Pakistan.17 Unknown human activity has also been established as the cause of damage to a subsea cable connecting Svalbard with mainland Norway in January 2022.18 Damage to subsea cables caused by human actions – whether intentional or innocent – is far from uncommon. This is the case even though all subsea cables are marked on nautical charts and mariners are therefore able to avoid anchoring on or near them. The claims resulting from such damage are often high value and it is in this setting that international regulations come into play.
obstruct telegraphic communication”. Such punishment is without prejudice to any civil action for damages. The party states are obliged by Article XII to establish enforcement of the Convention in their national legislations. Importantly, under Article VIII of the Convention, only the flag state (i.e., the country in which a vessel is flagged) can take action against an infringing vessel and her crew. Article IV states that cable owners who damage another cable in the course of laying or repairing their own cable must bear the cost of repairs; and under Article VII shipowners of vessels that sacrificed an anchor or other equipment to avoid damaging a subsea cable are eligible for compensation from the owner of that cable. The Convention was adopted in a world that was different compared to the reality today. The number of cables connecting the international community in 2022 is much greater compared to the number of cables laid in 1884. Globalisation and modernisation of maritime transport have also led to a greater number of vessels sailing, which increases the risk of subsea cable damage occurring. The 1982 United Nations Convention on the Law of the Sea (UNCLOS) addresses the laying and protection of subsea cables. For example, Article 79 gives all party states the right “to lay submarine cables … on the continental shelf ”. In doing so, party states should have “due regard to cables … already in position.” The impact of UNCLOS on claims is, however, also potentially limited. Article 113 requires party states to enact laws that criminalise the breaking of subsea cables by vessels flying their flag. In reality, however, this obligation has not been fulfilled by many of the states and the most common penalty internationally is a fine.19
The Convention regulates – for those states which are a party to it – the protection of submarine cables, and applies to all legally established submarine cables landed on the territories, colonies or possessions of a party state.
The Convention for the Protection of Submarine Telegraph Cables (the Convention) was adopted by the UK through the Submarine Telegraph Act 1885, and it currently has 36 party states, with Algeria being the latest country to ratify the Convention in 1976. The Convention regulates – for those states which are a party to it – the protection of submarine cables, and applies to all legally established submarine cables landed on the territories, colonies or possessions of a party state. Article II of the Convention makes it a “punishable offence” to “break or injure a submarine cable, wilfully or by culpable negligence, in such manner as might interrupt or
15 Bobbie Johnson, ‘How one clumsy ship cut off the web for 75 million people’ (Guardian, 1 February 2008) <https://www.theguardian.com/business/2008/feb/01/international personalfinancebusiness.internet> accessed 27 February 2022 16 Australian Federal Police, ‘Ship captain charged over underwater cable damage off Perth’ (AFP, 21 August 2021) <https://www.afp.gov.au/news-media/media-releases/shipcaptain-charged-over-underwater-cable-damage-perth> accessed 27 February 2022 17 The Newspaper’s Staff Reporter, ‘Damage to undersea cable slows down internet speed’ (Dawn, 23 February 2022) <https://www.dawn.com/news/1676607> accessed 28 February 2022 18 Atle Staalesen, ‘’Human activity’ behind Svalbard cable disruption’ (The Barents Observer, 11 February 2022) <https://thebarentsobserver.com/en/security/2022/02/unknownhuman-activity-behind-svalbard-cable-disruption> accessed 28 February 2022 19 Tara Davenport, ‘Submarine Cables, Cybersecurity and International Law: An Intersectional Analysis’ (2015) 21(1) Catholic University Journal of Law and Technology <https://scholarship. law.edu/jlt/vol24/iss1/4/> accessed 21 February 2022
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CABLE DAMAGE CLAIMS
Cable operators who wish to bring a claim against shipowners for cable damage must navigate the obstacles brought by multiple and diverse national legal systems. As the first step, the cable operator wishing to bring a claim must establish which country has jurisdiction to hear the dispute. This will be determined by the rules of private international law. If the prospective defendant is domiciled in an EU member state or a state that acceded to the Lugano Convention, the general rule is that the action should be brought against it in the country where it is domiciled. In the UK, matters are further complicated by the implications of Brexit. As the UK is no longer a member of the EU, the Brussels Regulation (Recast) which provides a framework for determining jurisdiction no longer applies20. In addition, in 2021 the European Commission formally blocked the UK’s application to accede to the Lugano Convention.21 In these circumstances, it seems that the English Admiralty court will only have jurisdiction if the damage to the subsea cable occurs in UK territorial waters, or if the claim is brought on an in rem basis, or some Act of Parliament or other regulations explicitly gives jurisdiction to the English court. It is also open to the parties to agree to English jurisdiction. This jurisdictional uncertainty brings about a number of difficulties. First, a cable operator who wishes to bring a claim must consider from the outset how to present that claim in the most advantageous way to it. Depending on which court or courts have jurisdiction to hear the dispute, the cable operator will need to develop an appropriate case strategy. Second, the jurisdictional uncertainty may make it difficult for cable operators to ascertain the likelihood of potential recovery against a shipowner. Finally, the applicable jurisdiction in which the shipowner is located may impact upon the success of any enforcement efforts. In defending a claim, a shipowner may rely on tonnage limitation to limit its liability based on the gross tonnage of the vessel. Where a vessel causes damage to a subsea cable,
the maximum liability of a shipowner will be calculated in accordance with Article 9 of the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol. Cable operators are likely to find it very difficult to avoid the consequences of tonnage limitation, particularly because it is extremely difficult to break limits. Both cable operators and shipowners should consider carefully with their legal advisors the optimum approach to pursuing or defending (as the case may be) a cable damage claim, which will require a multi-jurisdictional and nuanced approach, always on a caseby-case basis.
In defending a claim, a shipowner may rely on tonnage limitation to limit its liability based on the gross tonnage of the vessel. Where a vessel causes damage to a subsea cable, the maximum liability of a shipowner will be calculated in accordance with Article 9 of the Convention on Limitation of Liability for Maritime Claims 1976, as amended by the 1996 Protocol.
The laws governing subsea cables are limited in their application, given that the Convention has only been acceded to by 36 party states, and otherwise sovereign states regulate the protection of subsea cables by the enactment of their own national laws. From a UK perspective, one of the recommendations in a 2017 report by UK MP Rishi Sunak was to “strengthen international law protecting cables”.22 Certainly, the international community of cable owners and operators would benefit from increased international regulation, bearing in mind the vital importance of telecommunication cables to modern economies and states. Indeed, it may be time for the international community to agree on regulations that would protect subsea cables and give more certainty to those who operate them. Until such time as there is increased regulation, claims involving subsea cable damage will continue to be complex and multi-jurisdictional in their scope. STF NICHOLAS KAZAZ is an experienced international commercial dispute resolution lawyer at international law firm, HFW, with experience of resolving disputes of subsea cable damage. Among others, he acts for and advises cable owners and operators, shipowners, energy companies, contractors, and insurers/P&I Clubs. Nicholas is qualified in England & Wales. Any views or opinions expressed in this article are personal and belong solely to the author.
20 Except for proceedings commenced on or before 31 December 2020 21 Assessment on the application of the United Kingdom of Great Britain and Northern Ireland to accede to the 2007 Lugano Convention, Communication from the Commission to the European Parliament and the Council, COM(2021) 222 final, 4.5.2021 22 Rishi Sunak, ‘Undersea Cables: Indispensable, insecure’ (2017) Policy Exchange <https://policyexchange.org.uk/wp-content/uploads/2017/11/Undersea-Cables.pdf> accessed 28 February 2022
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PERSPECTIVES ON THE FINANCING OF SUBMARINE CABLE PROJECTS BY CHRIS VAN ZINNICQ BERGMANN
his article will provide some perspectives on the financing of submarine cable projects. The first part will cover the broader picture, followed by some specific insights into the consortium and project financing. As this is a very broad subject with many different tangents, the following paragraphs can of course only scratch the surface here and there. As is commonly known, the global generation and consumption of data and the resulting demand for evermore bandwidth is continuing with unabated force, driven by the ever increasing demand for online video content (at this point roughly two thirds of all traffic) and the growing share of cloud computing. As the primary mode of intercontinental connectivity, submarine cable systems carry an estimated 95-99% (depending on whom you ask…) of all data traffic between the continents. In 2021, there were 428 active subsea cable systems connecting to 1,245 landing stations around the globe (source: TeleGeography). The continuous construction of new systems will be crucial to support this trend in the coming decades. Over the past
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years, a significant number of investments in new submarine cable systems has taken place in connecting the continents of Africa, Europe and Asia, but many projects are also underway or planned in the Atlantic and Pacific Oceans. Investments are driven by the fact that broadband connections are becoming more affordable in an increasing number of developing markets, which in turn drives the demand for international and intercontinental connectivity. For the period up to 2024, more than $8bn has been earmarked for subsea cable investment. Also, the situation that a lot of systems which were built around the turn of the century are reaching the end of their economic and design lives is a contributing factor. In many respects, the development of a submarine cable system can be compared to the development of any large scale infrastructure project. However, as an intercontinental system will cover thousands of kilometers and can touch multiple jurisdictions, the implementation process has a number of distinguishing characteristics which have significant commercial and legal consequences. This is certainly applicable to financing the development and construction
of such systems and as such there is not really a blueprint for how to successfully accomplish this. Each individual project will have its own characteristics, driven on the one hand by the geographical landing points which the system will touch and on the other hand by the markets in which the financing is to be raised. From a perspective of return on investment and tax minimization, debt financing (at a sustainable level) can play an important role. The ability to access commercial bank loans or the corporate bond market will be determined to large extent by the creditworthiness of the borrower. Also, the ownership structure of the ownership of the system will of course have a major impact on the way it is being financed. The variety of structures range from the traditional consortium approach to the joint build model (with individual fiber pair ownership enabled by the open cable model) and single private ownership. One conclusion that can be drawn in general is that over the past two decades the financing of submarine cable systems has become significantly more disciplined as a consequence of the “dotcom” crash in the early 2000s, when a lot of speculative projects that had been launched prior to the bursting of the bubble were forced through restructuring and bankruptcy proceedings. Following the crash and prior to the big content providers/hyperscalers coming to the scene around 2010, the commercial banking sector had become much more risk averse, and the traditional equity and debt capital markets were more or less closed for the financing of new systems. In the past decade, this picture has changed substantially for the better. Quantitative easing by central banks and their low interest policies have created a lot of liquidity in search of returns and digital infrastructure in the broadest sense has been a focal point for investment, particularly also by the private equity sector. As mentioned above, the dynamics in the subsea cable industry have also been changed profoundly by the appearance of the large content providers. According to TeleGeography, the content provider share in the traffic profile has surged from 10% prior to 2012 to 66% in 2020. As they overtook the traditional operators as the largest consumers of international bandwidth, these players have become direct investors in new submarine cable systems, either through the con-
sortium approach but increasingly also through single or limited multi-party ownership. Google, Facebook, Microsoft and Amazon are usually listed as the main actors, whereby it should be noted that Google and Facebook have been more active than the latter two (for example Google at this point has invested in at least 15 systems globally). Multilateral institutions (such as for example the World Bank and its affiliates, the Asia Development Bank and the European Investment Bank (EIB)) also play a role in financing new projects, particularly in situations where the business case for a new system may be challenging but it will provide connectivity to remote and not densely populated regions (see for example various projects connecting island territories in the Pacific). However, to get access to financing by these institutions can be very time consuming and as such cause considerable delays in the launch of a project. A recent development triggered by the Covid-19 pandemic has been the launch of large governmental economic stimulation funds, such as the European Union’s €720bn Recovery and Resilience Facility (RRF) or the recent infrastructure bill in the U.S. which will put $550bn in new funds into transportation, broadband and utilities. The U.S. funds will probably remain mostly out of reach for new submarine cable projects (the focus appears to be on expanding terrestrial broadband connectivity in underserved regions). The EU fund will be distributed through individual governments, which may make domestic subsea cable projects eligible for subsidies (provided that they meet the criteria as set by the national governments and the European Commission). Even a system connecting two or more countries in the EU might qualify but would require tight co-ordination of the application processes in the relevant countries. The coming months and years should show whether this manner of funding can play any role in the development of new projects. Of course, it will have to be seen how the current political and economic developments impact the subsea cable sector. Increasingly (and worryingly as demonstrated by the current conflict between Ukraine and Russia and the tensions between the United States and China), geopolitical developments can now be an important factor in the risk assessment of new projects. However, it is probably not a controversial
The dynamics in the subsea cable industry have also been changed profoundly by the appearance of the large content providers. According to TeleGeography, the content provider share in the traffic profile has surged from 10% prior to 2012 to 66% in 2020.
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FEATURE bet to conclude that the macro trends described earlier will remain on their projected growth paths for the longer term.
SOME ASPECTS OF THE CONSORTIUM MODEL…
For a long period, the dominant approach to successfully launching an intercontinental submarine system has been the consortium model (and this model was in fact the only option before deregulation and liberalization started in the telecommunications industry) as the sharing of the risks and costs among a number of participants made it attractive to telecommunications operators. Each participant invests in the project as a co-owner and receives an allocation of capacity on the system in proportion to its equity interest. In some consortia, each member provides its own financing, whether from its own balance sheet, an equity raise or from corporate debt. In other cases, the financing is at the level of the joint venture company, the SPV. Debt financing for a consortium project could be provided to the SPV with recourse to the members of the consortium. In such an approach, differences in creditworthiness of the members become important because lenders to a project will be concerned how to hold each member liable (either jointly or severally for the full amount or just severally liable for a specific member’s proportional share of the debt).
…AND SOME ON PROJECT FINANCING
When it comes to a system being funded through project financing, one particular characteristic of a submarine cable project is the fact that it usually shows a cashflow pattern in which a large part of the total cashflow is generated immediately or soon after the RFS date of the system. Typically, the capacity on the system is sold as an IRU and the fees are paid as a lump sum when the capacity becomes available (a portion may even be paid as a down payment upon contract execution between the customer and the system owner). For the duration of the IRU term (usually 10, 15 or 20 years), the customer will then pay the system owner an annual amount for “Operations & Maintenance”, but this fee is typically equal to 2.5-4% of the IRU fee. Using project financing with a long term tenor, such a cashflow structure creates interesting issues for system owners and lenders to consider, as the majority of the (cash) revenue is generated at the outset of the project’s operational period. Naturally, the system owner(s) would like to see such revenue to be distributed (to the extent it is not required for short term debt service or operating expenses), but on the other hand – as the debt is to be repaid over a longer period of time – lenders will consider the system’s ability to generate future revenues to repay the debt, also in the light of projected price
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erosion in the particular market in which the system operates. Standard project finance ratios such as DSCR (Debt Service Coverage Ratio) and LLCR (Loan Life Coverage Ratio) are difficult to apply to front loaded revenue models. Senior debt prepayments linked to shareholder distributions and locked cash reserves being included in financial ratios can be a way to mitigate the project financing risks in this particular context. Of course, refinancing the debt o nce the system is operational can be another option to improve the financing structure in line with changes in the risk profile of a project. This can enable the system owner to replace a more restrictive and costly initial debt instrument which may have been critical to get the project launched but may no longer be necessary once the system has become operational (as the ability to generate revenue has become more certain). Project finance lenders will often require that the planned system has at least one anchor tenant signed up, preferably with a strong credit rating. This will give the lenders some comfort that a certain amount of the system capacity (nowadays often at fiber pair or spectrum level) will have been pre-sold at the time of the initial debt and/or equity funding. On the other hand, a system owner may have an interest in more limited pre-sales of capacity as capacity sold after the RFS date usually avoids the discounts required for anchor tenants to sign up in the early stages of a project. The right balance of course also depends very much on the competitiveness of the market in which the system will operate. Project risk on any specific new submarine cable system is still not insignificant in view of the increasingly stringent environmental, permitting and other regulatory requirements. Also, constraints on the supplier side – such as the availability of cable-laying ships – can be a challenge with the current cycle of high investment in new projects.
Submarine cable systems come in many flavors in terms of ownership and financing structures. The good news is that in the coming years the outlook for the subsea cable industry as a whole seems to remain positive. However, each individual project will have its own set of challenges when it comes to successfully funding it. But as the saying goes: “if it was easy, everyone would do it.” STF CHRIS VAN ZINNICQ BERGMANN is Investment Development Manager for WFN Strategies and has been in the submarine cable sector for over twenty years, working in Europe, the U.S., and Asia for Global Crossing, Pacnet and Global Cloud Xchange. Since 2020, he is an independent consultant in Amsterdam, The Netherlands, and is involved in the financial and commercial development of new subsea cable projects.
REGARDING THE BUILDING BLOCKS OF SYSTEM DEVELOPMENT BY KRISTIAN NIELSEN
ver the last year I’ve touched on elements of system development when having an expert on your side of the negotiating table is absolutely critical. In this exciting edition, I’d like to outline to steps and procedures typical in the review and acceptance of the most core elements of system development – the system design, desktop study and associated site visits. These three elements are where the proverbial rubber meets the road, where years of planning come to bear fruits. Having a qualified consultant on your side of the table is absolutely critical in managing the volume and technical nature of the documents required.
REVIEWING THE SYSTEM DESIGN
Your consultant will assist you in developing and monitoring the Design Review and Technology Demonstrations of the Submarine System, resulting in a System Design Review Report. Within an agreed period of the Contract in Force date, the supplier will need to conduct a Design Review covering the technology and design principles of major components of the System. You will only have influence over those aspects of the design that relate to the Company connections (or to where design is not in line with agreed premise or demonstrates clear deficiencies). The supplier will also provide updates on the status of any outstanding qualifications in the Monthly Reports.
Your consultant should attend Design Review meetings and Technology Demonstration to assess the compliance of the marine plant against the system Technical Specification. Your consultant should utilize its experience and expertise in similar systems and, where appropriate, obtain feedback from Supplier. In addition, your consultant should apply the following quality procedures to review and assess the design developed by the supplier: • ICPC Recommendation 2, Issue 10, Cable Routing and Reporting Criteria • ICPC Recommendation 3, Issue 9A Telecommunications Cable and Oil Pipeline/Power Cables Crossing Criteria • ICPC Recommendation 9, Issue 4, Minimum Technical Requirements for a Desktop Study The System Design Review Report review will include assessment of qualification results for raw material suppliers, wet plant design qualification including the cable design, cable repairs, jointing boxes, couplings, and universal joint. All the qualification reports should be reviewed and commented upon by a qualified QA Consultant. Your consultant will accomplish a Methods of Procedure (MOP) for the Design Review effort, delineating the specific who, what, when and where before the effort begins. In its System Design Review Report, your consultant will provide assurance of the submarine system design, specifically around your connection to the system with a view to ensure: MARCH 2022 | ISSUE 123
FEATURE • System design and construction is to standard industry practices, e.g., ICPC, ITU • System is within your system philosophy • System meets your end-to-end requirements • System costs within normal industry parameters • System is robust and reliable • System is expandable and upgradeable • System will work at the outset and for its design life of 25 years. Your consultant will then accomplish for you a detailed and expansive System Design Review Report. This effort is usually accomplished by your consultant’s in-office QA personnel.
REVIEWING THE DESKTOP STUDY & CABLE ROUTE ENGINEERING REPORT
The purpose of the Cable Route Engineering Review Report is to assess the suitability of the proposed submarine cable route, installation methodology and type of cable deemed to be most suitable for the installation environment. This effort is critical to the development of the overall system - without such a review and confirmation of the CRE, there is a risk of manufacturing the incorrect amount of cable required for the system. In the best case scenario, this will unnecessarily add to the overall cost of the system. In the worst case scenario, you run out of cable or won’t have enough spares available for eventual repairs.
REVIEWING THE SITE SURVEYS AND CONDUCTING IN-FIELD VISITS
The purpose of the Site Survey Review Report is to assess the suitability of the proposed landing sites and confirm the ability to construct terrestrial infrastructure that reaches the landing sites. Your consultant will accomplish, with other applicable contractors, site visits to your various proposed shore-ends. Your consultant will travel to and perform site visit survey representation for the duration of the site visit operations. Any concerns with the nature of the landings, terrain, environment, local issues, etc., will be noted and discussed. Your consultant will accomplish a Site Survey Report regarding data collected during the site visit. The Site Survey Report serves as a reference for the Route Development Study and permitting activity. Your consultant will accomplish a MOP for the Site Survey effort, delineating the specific who, what, when and where before the effort begins. This effort is typically accomplished by Your consultant’s in-field you Representative personnel.
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ACCOMPLISHING THE IN-FIELD SITE SURVEYS
Your consultant will accomplish site visits in accordance with ICPC Recommendation No. 9 Minimum Technical Requirements for a Cable Route Study. The objectives of the site visits to potential landing sites and locations are to determine their suitability and gather data necessary to include the following, non-exclusive, factors for the subsequent reporting. Specifically, Your consultant will: • Determine existing infrastructure for landing and terminating a submarine cable • Identify suitable locations to land the submarine cable and construct or refurbish suitable landing facilities (for example landing stations, beach manholes, system earthing facilities and ducts) if no existing infrastructure exists (include latitude/longitude positions and photographs of the area in the site and DTS report) • Identify and map existing utilities that may conflict with proposed routing and/or support a new landing • Determine shore end protection measures required (i.e., cable armoring, burial, articulated pipe, directional drilling, etc.) • Establish marine and terrestrial constraints that may determine whether the cable landing is to be direct from the main lay cableship or a separate shore end installation • Identify issues that may constrain operations at the proposed landing including the climate and weather and its potential impact on the construction, durability, and impact of the cable into any proposed landing area, site, and beach descriptions (of all alternate landings investigated) • Establish potential for beach erosion during severe storms, effects of ice, seismic events, marine traffic, and fishing activity • Understand beach utilization by the public (and implications of applying access restrictions during laying operations) • Highlight local communications mechanisms (radio permits required, cell phone/mobile signal strengths) • Determine site accessibility (roadway width, surface, etc.) • Conduct working space and conditions assessment • Document local facilities (civils contractor availability, shore end support, divers, hotels, etc.) and general facilities (airport, taxis, local ports, truck hire, etc.) • Assessment of availability of locally chartered survey vessels and diving contractors • Identify potential local shipping agents. Your consultant will establish the landing requirements, terrestrial cable routing, location of the Shore Station,
local infrastructure and support, etc. Your consultant’s Site Survey Team will comprise of personnel with significant surveying, hydrographic and shoreend submarine cable experience - your consultant will conduct a Site Survey to fully understand the requirements for landing the cable. However, the requirement for a survey may be revised after review of available drawings, photographs, plans and reports. To accomplish the desired sites to be visited in an efficient and orderly fashion, your consultant will develop a Site Visit schedule, which may be modified, should events dictate. The site visit team may include one or more Representatives. All pre-defined beach manhole locations and landing points will be visited. The following tasks will be accomplished: • Determination of WGS 84 coordinates of landfall or manhole using time averaged positions obtained from a hand-held GPS receiver. • A north oriented, approximately scaled sketch (or sketches) of the immediate landing area showing the landfall or manhole (and giving their WGS 84 coordinates). • Captioned panoramic photo coverage, preferably viewed from the landfall or manhole, and ideally taken at low tide will be made with cardinal directions (N, S, E, W ) indicated. • An approximate beach profile extending from the shoreline through the manhole will be accomplished. • Environmental or cultural features that might be disturbed by cable installation, such as live coral, mangrove stands, beach vegetation, archaeological sites, historical buildings, etc. • Environmental protection areas and the agencies that regulate them will be identified, and regulations concerning them will be determined.
PREPARING THE DAILY SITE SURVEY REPORT
Your consultant will provide a Daily Log of Site Visit activities, highlighting current activities, planned activities, and areas of concern, issues, and proposed solutions, namely the Daily Progress Report. This report will be provided as available on a daily basis during the Site Visits.
PREPARING THE FINAL SITE SURVEY REPORT
Your consultant will provide a detailed Site Survey Report for each site visited, detailing as necessary and available. A written report will be completed, describing all the site visit activities and discussing any characteristics, physical or cultural, that would affect subsequent project activities including, but not limited to: landing, small boat, and diver swim surveys, cable installation, long term cable safety, property ownership, proximity to the local communications infrastructure, beach access, the surficial beach geology (emphasis on cable burial), the probable geological substrate (useful for estimating the local water table for the electrical grounding of repeated systems), the shallow water seabed morphology and geology, the exposure of the site to seasonal winds and seas, surf, turbidity, fishing activity (type, scale), future development.
Outlined above, some of the most basic building blocks of cable system development can seem very simple but are in reality quite complicated and require a great deal of commercial and technical experience. By employing a consultant, you are employing decades of experience without the overhead of multiple full time positions. A consultant will sit on your side of the negotiating table and find the best possible solutions for your system. STF KRISTIAN NIELSEN is Quality & Fulfilment Director at WFN Strategies and a Project Management Professional (PMP™) and ISO 9001:2015 quality, 14001:2015 environmental management and 27001:2013 information security specialist and possesses more than 14 years’ experience and knowledge in submarine cable systems, including Arctic and offshore Oil & Gas submarine fiber systems. As Quality & Fulfilment Director, he supports the Projects and Technical Directors, and reviews subcontracts and monitors the prime contractor, supplier, and is astute with Change Order process and management. He is responsible for contract administration, as well as supports financial monitoring. He possesses Client Representative experience in submarine cable load-out, installation and landing stations, extensive project logistics and engineering support, extensive background in administrative and commercial support and is an expert in due diligence.
MARCH 2022 | ISSUE 123
WFN Strategies is an accredited, industryleading consultancy specializing in the planning, procurement, and implementation of submarine cable systems.
We support commercial, governmental, and offshore energy companies throughout the world. We analyze and advocate renewable energy alternatives for clients’ submarine cables.
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LEGAL ITEMS OF INTEREST FROM THE PAST BY PHILIP PILGRIM
eing a techie at heart, I have not paid a great deal of attention to many of the legal, regulatory, or financial historical items that I have come across. However, a few notable ones have stuck in my mind so this Back Reflections will be a hodgepodge that will hopefully entertain you and remain on the topic of this March issue.
TAT-9 BRANCH BREAK BY FISHING VESSEL
As a historical item, this first subject is not so old, but it was my first observation of high-speed subsea legal proceedings. In the early 1990’s I worked at the Teleglobe Canada Cable Landing Station and Satellite Earth Station at Pennant Point, Nova Scotia. It was on a stormy night and I had just started the night shift. Not long into the shift, the station alarms sounded, and I had to service a High Voltage Alarm on our branch’s Power Feed Equipment (PFE). The voltage increased and held but the PFE did not shut down. Traffic was not affected, and the voltage slowly returned to nominal. The AT&T SSI PFE (made by Spellman of N.J.) performed well and the voltage swing was captured
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Pennant Point Cable/Earth Station (TAT-9, CANTAT-3, CANUS, Intelsat, INMARSAT, Intersputnik 1992)
on the Kent chart recorder (ink and paper). After many calls to our NOC and other CLS on the EOW, it turned into a quiet night. The shift ended at 8am when the full compliment of staff arrived for the day. Fortunately, and unfortunately, the cable fault re-appeared on that day shift and the cable parted. My colleagues dutifully located the fault location within the hour (as per our training) and they restored the traffic (multiple DS-3 45Mb/s circuits) using our two 18m satellite antenna.
During those days, Teleglobe had a superb Marine Department and even owned two vessels, but all of this was sold just before the dotcom boom. The remnants became the foundation of IT Telecom out of Montreal. One of the many cable protection duties of Teleglobe Marine back then included managing an aircraft service that would fly the cable route every Friday and proactively radio any vessels that were deemed as potential cable hazards. Within hours of the TAT-9 break, the plane was dispatched, and
they actually found the ship at the predicted fault location. They had even more luck, as they were able to fly close and take photos of the vessel with our cable pulled on board and tangled in their gear! I was a green technician at the time in a remote back-woods location but would occasionally work with engineers in our Head Office / Skating Rink in Montreal. We sometimes discussed the court case resulting from the mishap. This continued up until I left Teleglobe in 2000; so, it was in the courts for at least 7 years. I never found out if it was resolved.
CABLES, WAR, AND PROTESTS
Another interesting story from my TAT-9 days. Time for a Philip Technical Digression: I chuckle when I hear people get excited about “Placing a ROADM in a Branching Unit.” Actually, my past colleague at Ciena, and good friend, Mark Hinds and I laugh out loud over this. Way back in 1991, a great company called MPB out of Montreal put active multiplexors and demultiplexers in the branching units of TAT-9 “and threw these Undersea Branching Multiplexors (UBM) off the back of the ship”. They consumed much more power than today’s ROADMs, radiated more heat, yet they worked wonderfully. Mark worked at MPB back then and was involved in commissioning this equipment, so our paths crossed in the close-knit subsea niche sector. MPB are now an industrial laser supplier and provide most of the kit for subsea Raman applications used by many wet plant providers and subsea terminal providers. Ok back to the
story. One of Mark’s colleagues was providing training to us at Pennant Point in 1991 and he mentioned a story from his training at the Conil TAT-9 landing station. He said that some separatists appeared at the CLS one evening when only one technician was on duty. They told him their intentions to bomb the station, but they did not want to hurt him. The technician said his wife was coming shortly to bring his supper, so they waited patiently for her to arrive then they tied the two of them up outside and bombed the station. It would be a great planet if all acts of violent protest were considerate of precious life like this example. Here is a similar headline from 1922 during the War of Irish Independence. International traffic was disrupted when cable stations were seized. The example for the Irish was made
clear by the British and French less than decade earlier when they sezied German cables at the start of World War I. They did not return these to the Germans. In the very early days of transMARCH 2022 | ISSUE 123
atlantic submarine cables, the Government of Newfoundland granted Frederic Newton Gisborne exclusivity to land submarine cables in Newfoundland for 20 years. He also obtained this privilege in Prince Edward Island. In addition, he obtained land grants and mineral rights for finds while building the 500km terrestrial link across Newfoundland. In 1854, Gisborne sold his company to Cyrus Field. Here are some interesting stories associated with these government favours:
EXCLUSIVITY: (sic) as John Watkins Brett writes in his book “The story of My Life” is the monopoly that guaranteed Cyrus Field’s success. Brett and his brother Jacob initially partnered and planned with Gisborne, and then with Field, for cabling across the Atlantic, had exclusive cable landing rights in England after laying the 1850 English Channel Cable. Brett says in his memoirs that Field obtained a 50-year exclusivity deal with Newfoundland and similar with Prince
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Visit Historic France Without Leaving North America!
Massachusetts but was denied. Even with out Mass. he effectively cornered the CLS market on this side of the Atlantic before a transatlantic cable was even laid. He also had no worries as cable technology would not be able reach as far as Transatlantic Cables Circa 1875 Boston or NYC anytime soon, The land grant of 100 sq. miles in NewEdward Island (50), New Brunswick foundland soon became a thorny issue when Field’s company started to claim (50), Nova Scotia (25), and Maine small plots of land cleared by squat(25). He even tried to obtain this in
Experiment, December Marconi Transatlantic John’s Newfoundland St. Hill nal 1901, Sig
Telegraphers John George Goodwin Matthews & Frederick George Matthews
“Torbay Mix-Up” Injunction
MARCH 2022 | ISSUE 123
BACK REFLECTION ters. Letters to the papers highlight the plight of these poor people who cleared gardens and homesteads from the rocky and forested Newfoundland Crown Land.
New York, Newfoundland, & London Telegraph Company CLS Deed 1855
ST. PIERRE, THE ACHILLES HEEL OF FIELD.
Perhaps it was sheer ignorance, or lack of knowledge, but there is a part of France on each side of the Atlantic Ocean. Two small islands, St. Pierre et Miquelon reside just off the coast of Newfoundland. Cyrus Field had no exclusivity deal with France, so it was heavily exploited. Field’s monopoly enabled him to lay the transatlantic cables of 1858, 1865 and 1866 but in 1869 a France-Saint Pierre- Massachusetts system was built to bypass Field’s “patch”.
By 1875 the first transatlantic cables began to land in Nova Scotia. The landing site was Torbay but there was a similarly named Torbay in Newfoundland. When the press published this name, Field’s company launched an injunction thinking it was landing in Newfoundland.
THE FIRST BATTLE FOR SPECTRUM
Marconi came to Newfoundland to build a transatlantic wireless network. His initial experiment worked in 1901 but the Anglo-American Telegraph Company,
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Torbay Cable Landing Station in 1877 (foreground). Staff Dwelling
and Stores (background)
Torbay Cable Station “Ruins” Overcome by the Forest
successor to Field’s company, still had 3 years remaining on its 50-year cable landing exclusivity and somehow managed to oust Marconi from Newfoundland. Marconi completed his station in nearby Sydney, Nova Scotia then returned to Newfoundland in 1904, when the 50-year exclusivity agreement ended. Philip Digression: My greatgreat uncle John George Goodwin Matthews was a telegraph line constructor and operator in western Newfoundland in the late 1800’s. Letters from his friend state that John worked for Marconi in 1901. His son “Fred” was also a telegrapher and operated the 1905 Gulf Cable from Port aux Basques to Canso. He also fought in both WWI and WWII.
der McDonald of Aspy Bay, Nova Scotia. The price was five-pound sterling.
Janet and I explored the (Nova Scotia) Torbay Cable Station. Here are some photos and historical notes. STF
AN EARLY CLS INDEED
Here is the land-use agreement for the first cable landing station in Nova Scotia. It was signed on Sept 5, 1855, three years before the first transatlantic cable was constructed. Field could pick any spot he wanted in Newfoundland with his 100 sq. mile land grant, but he did not have this privilege in Nova Scotia. The agreement is for the sale of a 25’ X 25’ block of land and right-ofway in the field of Alexan-
PHILIP PILGRIM is the Subsea Business Development Leader for Nokia's North American Region. 2021 marks his is 30th year working in the subsea sector. His hobbies include "Subsea Archaeology" and locating the long lost subsea cable and telegraph routes (and infrastructure). Philip is based in Nova Scotia, Canada.
Local Residents (The two lynxes
were too fast for my camera).
MARCH 2022 | ISSUE 123
ON THE MOVE At the beginning of February, ROMÀ ANDREU became the Chief Commercial Officer at Barcelona Landing Station. He stated he is “so happy to be part of an exciting project that (at last!) put Barcelona in the Subsea Cable maps.” Prysmian Group recently announced the hire of ANNA TOWNSEND WRIGHT as Vice President of Marketing and External Communications. In her new role, Wright will work with North American executives and lead her team to develop, execute and refine Prysmian’s marketing and branding strategies, as well as external communications, public relations and employer branding. “As we continue to expand and grow within the North American region, it is essential that we have talented, forward-thinking executives leading our company. We are very excited to welcome Anna to our team because she brings these types of strong skills with a unique background in journalism and public relations that is critical for our company moving into the future,” said Andrea Pirondini, Prysmian Group CEO, North America. ANDY BAX has joined the team at EdgeUno effective March 7 as Chief Operating Officer. “I am delighted to join the team at EdgeUno and look forward to helping the company continue to surpass its dreams and remain the best at delivering Infrastructure as a Service with a dedication to quality and a focus on solving customer’s challenges,” comments Andy “I am very much looking forward to working alongside some of the most exciting and talented people I have seen in our industry for a long time and can’t wait to see where we take EdgeUno’s fantastic story next.”
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TORKILD FOLLAUG joined the board of Green Mountain AS - Data Centres as their Sustainability Project Manager. “To work in a company where sustainability is at the core of the value proposition gives speed and force, and valuable contributions to solve some of the biggest problems of our time. For me, it is exciting and fun to be a part of this forward-looking team.” Said Follaug. HyperOne also saw a new addition with the announcement of LUKE MCGREGOR as their new Chief Operating Officer at the end of January. Luke has over a decade of experience in the industry with his time at Vocus and Telstra.
HAVE A NEW HIRE YOU WANT TO HIGHLIGHT IN THE NEXT ISSUE OF SUBTEL FORUM MAGAZINE? Feel free to send a direct message to Rebecca Spence on Linkedin or send the announcement to email@example.com.
SUBMARINE CABLE NEWS
CABLE FAULTS & MAINTENANCE
Repair of Tonga’s Domestic Cable Could Take a Year
Dr. Peng Group Selling PLDC Shares in PLCN Cable
IA and APG Cable System Repairs Complete
NO-UK System Achieves 800Gb/s Line Rate With Ciena
Tonga Cable Successfully Repaired
MainOne Expands Global Cloud Connect Services
80km Stretch of Tonga Cable In Pieces From Eruption Additional Breaks To Tonga Cable Push Repair Date Back Falcon Submarine Cable To Be Fully Repaired By Feb 9 Internet In Yemen Returns After Four Day Outage Falcon Cable Fault Believed To Be From Air Strike Digicel Using CS Reliance To Evaluate Tonga Cable Fault Volcanic Eruption Takes Out Both Tonga Cables
DATA CENTERS Subsea Cloud Proposes Data Centers In Deep Ocean Water Huawei to Construct 88MW DC in Batam, Indonesia Datagrid Nabs Land For NZ’s First Hyperscale Data Centre New Ashburn DC Project Poised to Expand to 4Mill SF
Fault Reported on Sea-MeWe-4
Orange & Engie Converting DC to Solar Power
Svalbard Suffers Power Fault On Subsea Fiber Cable
Telstra Nearly Triples Network Footprint In Ashburn DC
STATE OF THE INDUSTRY
AFR-IX & Telecom Egypt Sign Medusa Landing Party Agreement
APTelecom Continues its Pivot Toward Digital Infrastructure Consulting
PEACE Cable to Extend to Singapore
R&G Partners With SubOptic Foundation’s Sustainable Subsea Networks Initiative
Matrix NAP Info & CCSI To Construct Varuna Cable SubCom & SEA-ME-WE 6 Consortium Announce CIF ASN Signs Agreement With AFR-IX To Construct MEDUSA Cinia and ARTERIA Sign MOU For Far North Fiber Savills Korea And KT Sign MOU For APAC SubSea Cable Orange Joins Sea-Me-We-6 Consortium Telecom Egypt and GRID Telecom Sign A Strategic MoU
Grid Telecom Places Crete On International Broadband Maps Africell Uganda Acquisition Expands SEACOM Footprint WFN Strategies, LLC Announces SubOptic Foundation Partnership SBSS Expands Fleet With New Cable Ship CS Fu Tai Baltimore Firm Wins $39M Contract For Undersea Cables
Inligo Partners With Indosat Ooredoo Hutchison for ACC-1
TECHNOLOGY & UPGRADES
Paratus Ready For Equiano At Namibia CLS
Infinera’s 1.6T ICE6, Gets a Turbo Charge
SEALink Fiber Project Receives Environmental Approvals Japan Plan New Cable And Data Centers Around Island Medusa Cable To Bring 480 More Tbps to Sines
EXA Unveils Backbone European Fibre Upgrades Vi Revamps National Backbone Networks with Ciena
HMN Tech Completes Marine Installation Of SHARE Cable Australian Subsea Start-up To Build Transpacific Cable
MARCH 2022 | ISSUE 123
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1. GLOBAL OVERVIEW 1.1 1.2 1.3 1.4 1.5 1.6
Industry Sentiment Submarine Telecoms: Our Technology Roots Capacity System Growth Out of Service Systems Evolution..Sys. Ownership/Cust. Base
2. OWNERSHIP FINANCING ANALYSIS 2.1 2.2 2.3
Historic Financing Perspective Regional Distribution of Financing Current Financing
3. SUPPLIER ANALYSIS 3.1 3.2 3.3 3.4
System Suppliers Installers Surveyors Recent Mergers, Acquisitions, and Industry Activities
4. SYSTEM MAINTENANCE 4.1 4.2 4.3
Publicity Reporting Trends and Repair Times Club Versus Private Agreements
5. CABLE SHIPS 5.1 5.2
Current Cable Ships Shore-End Activity
6. MARKET DRIVERS AND INFLUENCERS 6.1 6.2
Hyperscalers Data Centers
7. SPECIAL MARKETS 7.1 7.2
Offshore Energy Unrepeatered Systems
8. REGIONAL MARKET ANALYSIS AND CAPACITY OUTLOOK 8.1 8.2 8.3 8.4 8.5 8.6 8.7
Transatlantic Regional Market Transpacific Regional Market Americas Regional Market AustralAsia Regional Market EMEA Regional Market Indian Ocean Region Polar Regional Marke
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GULF INDIAN OCEAN
SUBMARINE CABLE SYSTEM I N V E S T M E N T, 2 0 1 2 –2 0 2 1
SUBMARINE CABLE SYSTEM I N V E S T M E N T, 2 0 2 2 –2 0 2 4
2014 2015 2016
2017 2018 2019 2020
LANDINGS (1044) OIL & GAS SYSTEMS IN SERVICE (19) PLANNED (6)
DATA CENTER CLUSTERS Number of Data Centers UP TO 5
TRANSPACIFIC TRANSPACIFIC 36K KMS98K 85K KMS KMS
EMEA 132K KMS
80K KMS 52K KMS
16+ YEARS (130) 0–15 YEARS (231) PLANNED (62)
R ERG E IGOI O NA NLA LD IDSITSRTIRBIU B TUITOI N ON OO F FN N EW E WC A CBALBEL,E2, 021022–2 2 –2 0 201 2 5 TRANSPACIFIC
OFFSHORE FACILITIES (18) CABLE SYSTEMS AGE
REGIONAL DISTRIBUTION O F N E W C A B L E , 2 0 1 2 –2 0 2 1
67K KMS 150K KMS
INDIAN OCEAN INDIAN OCEAN
EMEA EMEA AUSTRALASIA
2K KMS AMERICAS
26-50 T O P D ATA C E N T E R P R O V I D E R F A C I L I TY COUNT T O P D ATA C E N T E R P R
OVIDER FACILIT Y COUNT
CF OA NC T EI N L ITTPYR O CVOI D UENRT FACILIT Y COUNT
CHINA TELECOM CENTURYLINK
Number of Data Centers
Number of Data Centers
DIGITAL REALTY TELEHOUSE
CHINA UNICOM TELEHOUSE
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NUMBER OF DATA CENTERS 20 40 60
NUMBER OF DATA CENTERS
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