The sub-marine cable business is about building diversity

March 6th, 2017, Published in Articles: EE Publishers, Articles: EngineerIT

 

From just one coaxial undersea cable, SAT 1, taken into service on 18 February 1969 and providing 360 channels to Lisbon, South Africa and indeed the continent, is now served by a multitude of sub-marine cables providing thousands of circuits with plenty additional circuits in store when more bandwidth is lit up. Could this amount to a glut of connectivity?

Byron Clatterbuck, CEO of Seacom

Recently I had the opportunity to have a conversation with Byron Clatterbuck, CEO of Seacom about the trials and tribulations of the undersea cable business. “No, I would not say that there is a glut”’ he said. “After a long time of inactivity we now see a lot of newly built routes across the Atlantic and in the Pacific where one would not have expected build activity. If one looks at it from a global perspective we see the development of huge data routes driven by big data and the internet of things.”

He said that Europe and the USA are a huge market with something like 15 direct links, all at terabyte level and with more construction being considered. “With the new technology each fibre can carry as much as 20 to 30 terabytes. While new communication technology is developing at an incredible rate, the physical construction of submarine cables has not changed much over the years. “

Coming back to my question as to whether there is a glut he said that anyone trying to make money by just selling commodity bandwidth is in a bad market. The companies that are involved in laying these new cables are the over the top players (OTP):  meaning Google, Facebook, Microsoft, Amazon; and maybe to a lesser extent, Apple and Netflix. “I believe that what is happening in the telco space is more focus on the software business and less on the network. Of course the network is still important to ensure that there is connectivity. I am convinced that those companies that are building new cables have one or more OTP players involved unless it is by one of the countries where there are no other players involved, because they  have no competition and are a monopoly, much like what happened in the SAT 1-3 era in this country.”

SEACOM was the first private undersea cable to land in Africa. In service since July 2009, the capacity increased the availability of international bandwidth ten-fold, and more so in many of Africa’s most under-served nations. “For the first few years we sold capacity in big blocs at high prices, but comparing it at the time with the other available capacity we were only 10% of the cost of SAT 3.”

Seacom’s landing at Mtunzini on the KwaZulu-Natal North coast did not happen without drama. The then Minister of Communications, the late Dr. Ivy Matsepe-Casaburi, was initially opposed to private cables coming on shore in South Africa and wanted regulations to be passed, which did not happen. Local farmers and fishermen were also opposed to the project and staged demonstrations as they believed it would negatively impact on their livelihood.

Clatterbuck said one of the initial problems was connecting to Europe as it was impossible to lay a cable over Egyptian territory. Today Egypt is still a problem for everyone in the telecoms industry. “The quality, reliability and the cost of networks in Egypt are, even today, a real challenge for telcos. We had to link via Mumbai and across the Red Sea which caused an unnecessary latency problem. To link across the Red Sea is problematic as the cables lie in shallow waters and are often damaged due to anchor drags and other shipping issues.

“We now operate across Egypt with our own fibre ring, but not without its problems. Besides the cost of constructing the links across Egypt, the government charges a huge levy for just crossing the country. There is also a lot of construction going on which often causes a cable to be dug up. That is the main reason why we have a ring across Egypt. It is unlikely that both cables are damaged at the same time.

“Cable companies have been talking about crossing Africa or Jordan and Israel to link into Europe but because of conflicts and the high cost it has up to now not been an option.”

The main question that customers ask their providers is what they are doing to protect against disruption in service. Byron believes that five routes are required to ensure an always-available service. “That is the ideal state. If you look at companies running services across the Atlantic they will buy circuits on as many cables as possible, connect them to one central hub and route the traffic as required with failover systems that will reroute the traffic in case of disruption. One of the problems is what if the hub fails, or the building burns down? To provide security for such an event, however unlikely, large companies operate from two different hubs with fail-over between them.”

In the African context are there enough cables? Byron says, “For now, yes! Companies are continually upgrading and expanding capacity by adding more equipment to the shore stations.  Literally with a software upgrade and flick of a switch they add another large chunk of bandwidth capacity. The problem remain diversity. To build a new cable system has become more expensive. The challenge is one of economics. It is near impossible to sell capacity on a new cable at a higher price than the cost on existing cables.  The burning questions is if there ia any financial return in building that cable?  Unlikely! Taking Africa’s current status into consideration I would not consider building a new route.”