Submarine Telecoms Industry Report Issue 12 by Submarine Telelecoms Forum

2023 | 2024

INDUSTRY

ISSUE 12

REPORT SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

A Publication of Submarine Telecoms Forum, Inc. www.subtelforum.com ISSN No. 2640-4311 PRESIDENT & PUBLISHER: Wayne Nielsen | wnielsen@subtelforum.com | [+1] (703) 444-2527 VICE PRESIDENT: Kristian Nielsen | knielsen@subtelforum.com | [+1] (703) 444-0845 ANALYTICS: Kieran Clark | kclark@subtelforum.com | [+1] (540) 533-6965 SALES: Kristian Nielsen | knielsen@subtelforum.com | [+1] (703) 444-0845 GRAPHIC DESIGN & PRODUCTION: Weswen Design | wendy@weswendesign.com CONTRIBUTING AUTHORS: Andrés Fígoli, Anjali Sugadev, Bill Wall, Glenn Hovermale, Greg Otto, Ian Mclean, Kieran Clark, Kristian Nielsen, John Tibbles, Nicole Starosielski, Philip Pilgrim, and Syeda Humera AUTHOR AND 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

Contributions are welcomed and should be forwarded to: pressroom@subtelforum.com. Submarine Telecoms Forum Industry Report is published annually 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 © 2023 Submarine Telecoms Forum, Inc.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

VOICE OF T HE I NDUSTRY

TABLE OF CONTENTS Impressum.......................................................................... 2 Exordium............................................................................ 8 Foreword: Thoughts From Doreen BogdanMartin, Itu Secretary-General........................................10 Methodology.................................................................... 12 Executive Summary......................................................... 14

GLOBAL OVERVIEW................................................................16 1.1 Industry Sentiment................................................ 18

1.2 Phillip Pilgrim’s Look At Subsea Telecom Industry’s 150th Anniversary................................ 24 1.3 Geopolitics – Perspectives of John Tibbles........ 32 1.4 System Growth..................................................... 35 1.5 Out of Service Systems Analysis – Perspectives of Kristian Nielsen.......................... 38

CAPACITY............................................................................... 42 2.1 Global Capacity................................................... 44 2.2 Capacity Pricing: Perspectives of Ian Mclean..... 54 3.

OWNERSHIP FINANCING ANALYSIS...................................56 3.1 Historic Financing Perspective........................... 58 3.2 Regional Distribution of Financing.................... 60 3.3 Current Financing................................................ 63 4.

SUPPLIER ANALYSIS............................................................66 4.1 System Suppliers.................................................. 68 4.2 Installers.................................................................. 71 4.3 Surveyors............................................................... 73 4.4 Consultants and Client Representation Services: Navigating The Digital Abyss – Perspectives of Glenn Hovermale...................... 75

SYSTEM MAINTENANCE......................................................80 5.1 Publicity................................................................. 82 5.2 Reporting Trends and Repair Times................... 84 5.3 Club Versus Private agreements........................ 86 5.

CABLE SHIPS.........................................................................90 6.1 Current Cable Ships............................................ 92 6.2 Shore-End Activity............................................... 99 7. HYPERSCALERS AND THE EVOLUTION OF SUBMARINE CABLE OWNERSHIP: A TRANSFORMATIVE SHIFT IN INDUSTRY DYNAMICS.........................................................102 7.1 Hyperscalers......................................................... 104 7.2 Data Centers........................................................ 107 6.

SPECIAL MARKETS...............................................................112

8.1 Offshore Energy: Excerpts From Greg Otto and Bill Wall........................................................... 114 8.2 Unrepeatered Systems........................................118 8.3 Impact of Ai.......................................................... 121 8.4 Subsea Sustainability Year In Review – Excerpts From Nicole Starosielski Et Al........... 124

REGULATORY OUTLOOK......................................................128

9.1 Legal & Regulatory Matters Year In Review: Perspectives of Andrés Fígoli............................ 130 9.2 Permitting Year In Review: Perspectives of Anjali Sugadev................................................ 134 9.3 Recent Mergers, Acquisitions, and Industry Activities............................................................... 136

10. REGIONAL ANALYSIS AND CAPACITY OUTLOOK..............140 10.1 Transatlantic Region............................................ 142 10.2 Transpacific Region............................................. 146 10.3 Americas Region................................................. 150 10.4 Australasia Region............................................... 156 10.5 Emea Region........................................................ 162 10.6 Indian Ocean Region.......................................... 170 10.7 Polar Region......................................................... 174 Afterword........................................................................ 178 Biographies of Supporting Authors.............................180 Works Cited.................................................................... 182

SUBMARINE TELECOMS INDUSTRY REPORT

LIST OF VIDEOS Video 1: Wayne Nielsen, Publisher - Submarine

Video 8: Syeda Humera, Analysis Intern - Submarine

Telecoms Forum................................................................................ 8

Telecoms Forum.............................................................................. 93

Video 2: Doreen Bogdan-Martin, Secretary-General –

Video 9: Bill Wall, Project Director - LS Cable Systems

International Telecommunication Union.......................................10

America............................................................................................114

Video 3: Kieran Clark, Senior Analyst - Submarine

Video 10: Greg Otto, Technical Director – WFN Strategies....115

Telecoms Forum............................................................................... 12 Video 4: Phillip Pilgrim, Subsea Business Development Leader North America - Nokia .................................................... 24 Video 5: John Tibbles, Principal - JTIC....................................... 32 Video 5: Kristian Nielsen, Quality & Client Fulfillment Director - WFN Strategies............................................................ 38 Video 6: Ian McLean, Sr. Manager, South East Asia &

Video 11: Nicole Starosielski, Professor & Principle Investigator – NYU & Sustainable Subsea Initiative.................. 124 Video 12: Andrés Fígoli, Lawyer – Figoli Consulting................130 Video 13: Anjali Sugadev, Regulatory & Permitting Manager – WFN Strategies............................................................................. 134 Video 14: Kristian Nielsen, Vice President Submarine Telecoms Forum......................................................... 178

Oceania - APTelecom.................................................................... 54 Video 7: Glenn Hovermale, Marine Coordinator WFN Strategies ............................................................................. 75

LIST OF TABLES Table 1: Current Transatlantic Cable Systems............................ 144

Table 8: Planned AustralAsia Cable Systems............................. 161

Table 2: Planned Transatlantic Cable Systems........................... 145

Table 9: Current EMEA Cable Systems..................................... 164

Table 3: Current Transpacific Cable Systems.............................148

Table 10: Planned EMEA Cable Systems...................................169

Table 4: Planned Transpacific Cable Systems............................149

Table 11: Current Indian Ocean Cable Systems......................... 172

Table 5: Current Americas Cable Systems................................. 152

Table 12: Planned Indian Ocean Cable Systems........................ 173

Table 6: Planned Americas Cable Systems................................. 155

Table 13: Current Polar Cable Systems....................................... 176

Table 7: Current AustralAsia Cable Systems..............................158

Table 14: Planned Polar Cable Systems...................................... 177

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

LIST OF FIGURES Figure 1: Overall State of the Industry, 2023................................19

Figure 24: 53.6% CAGR Transatlantic Traffic (2000 to 2022)...... 31

Figure 2: Market Activity, 2023......................................................19

Figure 25: New System Count by Region, 2019-2023................ 35

Figure 3: Project Status, 2023........................................................ 20

Figure 26: KMS Added by Region, 2019-2023........................... 36

Figure 4: Work Status, 2023........................................................... 20

Figure 27: Planned Systems by Region, 2023-2027.................... 36

Figure 5: Industry Investment, 2023............................................... 21

Figure 28: Contract in Force Rate, 2023-2027............................ 37

Figure 6: Regional Activity, 2023................................................... 21

Figure 29: Decommissioned Systems, 2013-2023....................... 39

Figure 7: What is Your Job Function?, 2023................................ 22

Figure 30: Global Capacity Growth on Major Routes,

Figure 8: What is Your Purchasing Power in Your

2019-2023......................................................................................... 44

Organization?, 2023....................................................................... 22

Figure 31: Planned Capacity on Major Routes, 2024-2026....... 45

Figure 9: How Many Years Have You Been in the

Figure 32: Transatlantic Capacity Growth (Tbps, 2016-2020).... 45

Industry?, 2023................................................................................. 23

Figure 33: Transatlantic Lit Capacity Growth, Future................ 46

Figure 10: Where do you Reside?, 2023....................................... 23

Figure 34: Transatlantic Total Capacity Growth, Future............ 46

Figure 11: First Commercial Submarine Cable

Figure 35: Transpacific Capacity Growth, 2016-2020................ 47

(Samuel Colt 1845)......................................................................... 25

Figure 36: Transpacific Lit Capacity Growth, Future................. 47

Figure 12: Landing the 1866 Atlantic Cable

Figure 37: Transpacific Total Capacity Growth, Future.............. 48

(Newfoundland End)...................................................................... 25 Figure 13: Marconi 1901 Transatlantic Transmitter (Newfoundland End)...................................................................... 26 Figure 14: 1902 Pacific Cable Station Fiji (Courtesy Bill Burns Atlantic-Cable.com)................................... 26 Figure 15: Location of 1963 COMPAC Cable Landing Station’s Concrete Floor (Port Alberni, Canada)....................... 27 Figure 16: 1988 TAT-8 Cable System........................................... 27 Figure 17: 2004 Svalbard Undersea Cable System Landing Area................................................................................... 28 Figure 18: 1999 SEA-ME-WE 3 Cable System (Courtesy SubmarineNetworks.com)........................................... 28 Figure 19: Seven Core Fiber (Courtesy OFS) & Seven Conductor Telegraph Core (Circa 1856)......................... 29 Figure 20: Transatlantic Cables Operating in 1950.................... 29 Figure 21: 5.4% CAGR Transatlantic Telegraph Traffic (1866 to 1955).................................................................................. 30 Figure 22: 14.4% CAGR Transatlantic Traffic (1866 to 1956).... 30 Figure 23: 28.2% CAGR Transatlantic Traffic (1956 to 2000).... 31

Figure 38: Americas Capacity Growth, 2016-2020.................... 48 Figure 39: Americas Lit Capacity Growth, Future..................... 49 Figure 40: Americas Total Capacity Growth, Future................. 49 Figure 41: Intra-Asia Capacity Growth, 2016-2020.................... 50 Figure 42: Intra-Asia Lit Capacity Growth, Future..................... 50 Figure 43: Intra-Asia Total Capacity Growth, Future.................. 51 Figure 44: Financing Type of Systems, 2013-2023...................... 58 Figure 45: Investment Distribution of Systems, 2013-2023........ 59 Figure 46: Distribution of MDB Investment, 2013-2023............ 60 Figure 47: Distribution of Debt/Equity Financed Investment, 2013-2023.....................................................................61 Figure 48: Distribution of Self-Financed Investment, 2013-2023....61 Figure 49: System Investment, 2013-2023................................... 63 Figure 50: System Deployment by Year, 2013-2023................... 64 Figure 51: Regional Investment in Submarine Cable Systems, 2019-2023......................................................................................... 64 Figure 52: Number of Systems by Supplier, 2019-2023............. 68 Figure 53: KMS of Cable Produced by Supplier, 2019-2023..... 69

SUBMARINE TELECOMS INDUSTRY REPORT

LIST OF FIGURES

(continued)

Figure 54: Planned Systems by Supplier, 2024-2027.................. 70

Figure 77: Unrepeatered Systems by Year.................................. 118

Figure 55: Systems Installed by Company, 2019-2023................ 71

Figure 78: Unrepeatered Systems by Region............................. 119

Figure 56: KMS Installed by Region, 2019-2023......................... 72

Figure 79: Unrepeatered KMS by Year....................................... 119

Figure 57: Systems Surveyed by Company, 2019-2023.............. 73

Figure 80: Unrepeatered Investment by Region.......................120

Figure 58: Survey Status of Planned Systems by Region.......... 74

Figure 81: Unrepeatered Planned Systems by Region..............120

Figure 59: Consultant & Client Representation Market,

Figure 82: Cable Systems by Year – Transatlantic, 2016-2028.... 144

2020-2023........................................................................................ 76

Figure 83: KMS Added by Year – Transatlantic, 2016-2028..... 145

Figure 60: Consultant Market Share, 2023.................................. 76

Figure 84: CIF Rate – Transatlantic Planned.............................. 145

Figure 61: Client Representation Market Share, 2023................ 77

Figure 85: Cable Systems by Year – Transpacific, 2016-2028... 146

Figure 62: Cable Fault Stories per Region, 2014-2023............... 82

Figure 86: KMS Added by Year – Transpacific, 2016-2028......149

Figure 63: Total Cable Fault Stories, 2014-2023.......................... 83

Figure 87: CIF Rate – Transpacific Planned...............................149

Figure 64: Average Repair Time in Days, 2014-2023................. 84

Figure 88: Cable Systems by Year – Americas, 2016-2028......150

Figure 65: Traditional Club Agreements Map............................ 86

Figure 89: KMS Added by Year – Americas, 2016-2028.......... 154

Figure 66: Private Maintenance Agreements Map.................... 87

Figure 90: CIF Rate – Americas Planned................................... 154

Figure 67: Cable Ship Fleet Distribution by Company.............. 92

Figure 91: Cable Systems by Year – AustralAsia, 2016-2028...156

Figure 68: Average Speed by Month, 2023................................. 94

Figure 92: KMS Added by Year – AustralAsia, 2016-2028....... 161

Figure 69: Average Speed (knots) vs Average Draught, 2023... 96

Figure 93: CIF Rate – AustralAsia Planned................................ 161

Figure 70: Landing Distribution by Region, 2019-2023............. 99

Figure 94: Cable Systems by Year – EMEA, 2016-2028.......... 162

Figure 71: Landing Distribution by Region, 2024-2027............ 100

Figure 95: KMS Added by Year – EMEA, 2016-2028.............. 164

Figure 72: Systems Driven by Hyperscalers, 2019-2023............105

Figure 96: CIF Rate – EMEA Planned.......................................169

Figure 73: Systems Impacted by Hyperscalers by Year,

Figure 97: Cable Systems by Year – Indian Ocean, 2016-2028...170

2019-2023........................................................................................105

Figure 98: KMS Added by Year – Indian Ocean, 2016-2028....... 173

Figure 74: Systems Driven by Hyperscalers, 2024-2028.......... 106

Figure 99: CIF Rate – Indian Ocean Planned............................ 173

Figure 75: System Investment Driven by Hyperscalers,

Figure 100: Cable Systems by Year – Polar, 2016-2028............ 176

2024-2028...................................................................................... 106 Figure 76: Data Center Clusters..................................................107

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 101: KMS Added by Year – Polar, 2016-2028................. 176 Figure 102: CIF Rate – Polar Planned......................................... 177

LIST OF ACRONYMS ACRONYMS DESCRIPTION

ACRONYMS DESCRIPTION

2OCMA

2 Oceans Cable Maintenance Agreement

MECMA

ACMA

Atlantic Cable Maintenance Agreement

Mediterranean Cable Maintenance Agreement

ANACOM

Autoridade Nacional de Comunicações

MPLS

Multiprotocol Label Switching

Megawatt

NAZ

North American Zone Cable Maintenance Agreement

OOS

Out of Service

APMA The Atlantic Private Maintenance Agreement APMMSA Asia Pacific Marine Maintenance Service Agreement ASN

Alcatel Submarine Networks

CAGR

Compound Annual Growth Rate

OPEC Organization of the Petroleum Exporting Countries

CIF

Contract in Force

OTEC

Ocean thermal energy conversion

CWDM

Coarse Wavelength Division Multiplexed

OTT

Over-the-top

DFC United States Indernational Development Finnacne Corporatoin

RFS

Ready for Service

SCIG

Submarine Cable Improvement Group

DWDM

Dense Wavelength-Division Multiplexing

SDM

Spatial Division Multiplexing

EMEA

Europe, the Middle East, & Africa

SEAICMA

EOS

End of Service

Southeast Asia / Indian Ocean Cable Maintenance Agreement

FCC

Federal Communications Commission

SMART

Fibre Pairs

Scientific Monitoring and Reliable Telecommunications

GDP

Gross Domestic Product

SPMA

South Pacific Maintenance Agreement

HMN

Huawei Marine Services

SSN

Sustainable Subsea Networks

Hyperscaler

SWAC

Seawater Air Conditioning

ICPC

International Cable Protection Council

United Nations

ICT

Information and Communications Technology

UNCTAD

United Nations Conference on Trade and Development

IFC

International Finance Corporation

UNESCO

IOT

Internet of Things

Intergovernmental Oceanographic Commission

IRU

Indefeasible rights of use

USD

United States Dollar

ITU

International Telecoms Union

USV

Uncrewed Surface Vessel

KMS

Kilometers

VSAT

Very-small-aperture terminal

LTE

Long-Term Evolution

WDM

Wavelength-Division Multiplexing

MDB

Multilateral Development Banks

WIOCC

West Indian Ocean Cable Company

WMO

World Meteorological Organization

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

EXORDIUM W

elcome to the 12th edition of SubTel Forum’s annual “Submarine Telecoms Industry Report,” a collaborative effort led by our expert analysts. The year 2023 has been a watershed moment for the submarine cable industry. Despite hurdles such as geopolitical tensions, economic volatility, and the ongoing global pandemic, the industry has exhibited remarkable resilience and adaptability. As we look to the future, it’s evident that we are well-positioned to meet the escalating global demand for data. This makes it an exhilaratVideo 1: Wayne Nielsen, Publisher - Submarine Telecoms Forum, Inc. ing time to be part of this transformative sector, and as an industry, drivers, and future geopolitical we have much to celebrate. and economic impacts. Our annual Industry Report This report provides This year, we’ve refreshed the aims to be a cornerstone anapresentation style of the Industry lytical resource, complementing comprehensive analysis Report, taking cues from the sucour other SubTel Forum ofand forecasts, serving as an cessful format of our Submarine ferings: the Submarine Cable Telecoms Forum Magazine. The Map published every January, invaluable guide for those the Submarine Cable Almalooking to understand the health report also features personal video commentaries from multiple innac released quarterly, and the and trends of the submarine dustry representatives worldwide. online Submarine Cables of the World Interactive Map. This cable industry. It delves into both Designed for both online reading and offline perusal, we aim to offer report provides comprehensive global and regional markets, you, our readers, a holistic view of analysis and forecasts, serving addressing key issues such as new the submarine fiber industry. as an invaluable guide for those Last year’s edition was downlooking to understand the health systems, upgrades, ownership loaded over 500,000 times and cited and trends of the submarine castructures, financing, market extensively in business journals and ble industry. It delves into both periodicals. We are both optimistic global and regional markets, addrivers, and future geopolitical and confident that this year’s report dressing key issues such as new and economic impacts. will withstand similar scrutiny, and systems, upgrades, ownership we hope you’ll agree. structures, financing, market

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

IN THIS REPORT, WE’VE IDENTIFIED MORE THAN $17.6 BILLION IN NEW PROJECTS ACTIVELY BEING PURSUED. OF THESE, CONTRACTS WORTH $8.5 BILLION ARE ALREADY IN PLACE, WITH $3.7 BILLION OF THOSE SLATED FOR COMPLETION IN 2023 ALONE. We are honored to have Doreen Bogdan-Martin, the newly appointed Secretary-General of the International Telecommunication Union, contribute this year’s foreword and accompanying video commentary, discussing the state of the ITU and its initiatives related to submarine cables. In this report, we’ve identified more than $17.6 billion in new projects actively being pursued. Of these, contracts worth $8.5 billion are already in place, with $3.7 billion of those slated for completion in 2023 alone. We’ve drawn insights from a variety of articles in recent issues of Submarine Telecoms Forum Magazine and our proprietary Market Sector Reports to enrich our discussion on various industry topics. Special thanks go to this year’s contributing industry specialists, namely: • Andrés Fígoli • Anjali Sugadev • Bill Wall • Greg Otto • Glenn Hovermale • Ian Mclean • Kieran Clark • Kristian Nielsen • John Tibbles • Nicole Starosielski • Philip Pilgrim • Syeda Humera I’d like to give special recognition to Syeda Humera, who has been an intern with us since this summer. She holds a master’s degree in computer science from Central Michigan University in Mount Pleasant, Michigan—also my alma mater. Her statistical insights have greatly enriched this report, as well as other SubTel Forum products. I extend my sincere gratitude to her for her exceptional and tireless contributions. Fire up, Chippewas! We also extend our heartfelt thanks to this year’s sponsors, who have played a crucial role in making the annual Industry Report possible:

• • • • • • •

APT Procure Figoli Consulting Mertech Marine Ocean Networks OMS Group Southern Cross Cable Networks WFN Strategies

While the future may be uncertain, one fact remains clear: our industry, with its rich 170-year history, continues to be a thriving, essential, and ever-evolving enterprise. In the coming months, we are committed to providing as much new data as possible in a timely and useful manner. As the saying goes, an informed industry is a productive industry. Thank you for your continued interest and trust in SubTel Forum’s 12th annual “Submarine Telecoms Industry Report.” Good reading and Slava Ukraini

STF

Wayne Nielsen, Publisher WAYNE NIELSEN is Publisher & President of Submarine

Telecoms Forum, Inc. and possesses more than 35 years’ experience in submarine cable systems, including polar and offshore Oil & Gas submarine fiber systems, and has developed and managed international telecoms projects in Antarctica, the Americas, Arctic, Europe, Far East/Pac Rim and Middle East. In 2001, he founded Submarine Telecoms Forum magazine, the industry’s considerable voice on the topic. He is also Managing Director of WFN Strategies, which provides design, development, and implementation support, as well as commercial and technical due diligence of submarine cable systems for commercial, governmental, and Oil & Gas clients. He received a postgraduate master’s degree in International Relations, and bachelor’s degrees in Economics and Political Science, and is a former employee of British Telecom, Cable & Wireless and SAIC.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

FOREWORD

THOUGHTS FROM DOREEN BOGDAN-MARTIN, ITU SECRETARY-GENERAL

n a world where 95% of international traffic runs over submarine telecoms cables, this vital infrastructure is the bridge between people and cultures, allowing trade and information to flow across the globe. The submarine telecoms industry is the backbone of our interconnected world, and ITU is proud to have supported it through our international standards from its very beginnings. Today, ITU is addressing the potential of Space Division Multiplexing (SDM), with a new ITU technical report Video 2: Doreen Bogdan-Martin, Secretary-General – International Telecommunication Union outlining SDM applications and technical and commercial provide accurate early warnings of aspects, providing a roadmap The submarine telecoms tsunamis and a wealth of valuable towards a future cost-effective data for climate science alongside SDM network and ecosystem industry is the backbone of telecoms connectivity. utilizing ITU standards. our interconnected world, and This makes SMART cables We have two new ITU ITU is proud to have supported an important tool for monitorstandards under development ing environmental changes, and to provide for both SMART it through our international puts the submarine telecoms in(scientific monitoring and standards from its very dustry at the forefront of climate reliable telecommunications) action and sustainable digital cables and cables dedicated to beginnings. transformation. scientific sensing. ITU’s standardization work The climate and hazardsupports globally harmonized monitoring sensors included in development, implementation, SMART cables are designed to and operation of these systems, coexist with telecom compocreating the conditions necessary to make nents and match the lifespan of commercial use of the valuable data generated by the encables. They have the potential to form a visaged ocean-observation network. It builds realtime ocean observation network able to

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

WORKING TOGETHER ON INTERNATIONAL STANDARDS IS A KEY AVENUE TO REINFORCE GLOBAL ACTION TO ACHIEVE UNIVERSAL CONNECTIVITY AND SUSTAINABLE DIGITAL TRANSFORMATION — ITU’S TWO STRATEGIC PRIORITIES. on the work of the ITU/WMO/UNESCO/IOC Joint Task Force on SMART Cable Systems. This task force has helped develop the technical and financial feasibility of SMART cables, and now works closely with United Nations organizations, governments, and businesses intent on deploying SMART cables at scale. EllaLink, the BrazilPortugal transAtlantic cable system connecting the European and South American continents, was the first to dedicate a fibre of a commercial telecoms cable to environmental sensing between Madeira Island and the trunk cable. Portugal has pledged to build SMART into the new ContinentAzoresMadeira (CAM) ring cable linking the mainland to islands a thousand kilometres out in the Atlantic Ocean. SMART capability will form around 10% of the total cost to deploy the new governmentsponsored CAM cable. Expected to enter service in 2025, the cable sets valuable precedents for similar systems around the world. Other SMART projects are in various stages of planning and development in Indonesia, the Vanuatu–New Caledonia island area, and even Antarctica. This year’s Submarine Telecoms Industry Report features a wide variety of influential voices, offering a global view of the latest developments in the industry and prospects for innovation. The strong backing that this report enjoys from industry creates a publication that speaks to the prior-

ities of the community it serves, and ITU is pleased to support it. It comes at a time when we need to reach consensus on international technical standards for new technologies in fields such as artificial intelligence (AI) and ensure that these technologies prove a force for good across industry sectors. Working together on international standards is a key avenue to reinforce global action to achieve universal connectivity and sustainable digital transformation — ITU’s two strategic priorities. Our standardization process ensures that all participants’ voices are heard. As our platform continues to grow in stakeholders and value, I encourage you to join our global community, make make your voice known, and help shape our digital future. STF DOREEN BOGDAN-MARTINtook office as Secretary-General

of the International Telecommunication Union (ITU) on 1 January 2023. With over three decades of leadership experience in global telecommunications policy, Ms. Bogdan-Martin has emphasized the need for digital transformation to achieve economic prosperity, job creation, skills development, gender equality, and socio-economic inclusion, as well as to build circular economies, reduce climate impact, and save lives. Her historic election by ITU Member States in September 2022 made her the first woman ever to head the nearly 160-year-old organization. Known for mobilizing innovative partnerships, she aims to promote meaningful connectivity, intensify cooperation to connect the unconnected, and strengthen the alignment of digital technologies with inclusive sustainable development.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

METHODOLOGY T

his edition of the Submarine Telecoms Cable Industry Report was meticulously crafted by the analysts at Submarine Telecoms Forum, Inc., who also provide in-depth analysis for SubTel Forum’s Submarine Cable Almanac, online and print Cable Maps, and Industry Newsfeed. For this report, we employed a multi-faceted approach that combines interviews with industry leaders and data from our proprietary Submarine Cable Database, which has been continuously updated since its inception in 2013. Video 3: Kieran Clark, Senior Analyst - Submarine Telecoms Forum The database now tracks over 500 dict future data points based current and planned domestic on historical trends. The ETS and international cable systems. The submarine telecoms algorithm accounts for seasonalQueries can be made by various ity, trends, and noise in the data, parameters including client, year, industry is the backbone of providing a more accurate and project, region, system length, our interconnected world, and reliable forecast. This allows us capacity, landing points, data centers, owners, installers, system ITU is proud to have supported to offer a well-grounded projection of future market conditions, cost, upgrade status, and more. it through our international enhancing the report’s value for The Submarine Cable Datastandards from its very strategic decision-making. base is maintained by a dedicated In terms of data gatherteam and powered by MySQL. beginnings. ing, SubTel Forum engages in Maps are produced with ArcGIS continuous efforts throughout Pro, in the same visual style as the year, sourcing information from public, commercial, the Submarine Cables of the World print map. All data visualizations such as charts are now created in Power BI and scientific sources. Data assimilation is conducted in parallel with these efforts to provide the most accurate which is connected in real-time to our Submarine Cable market projections. Database, ensuring that the most current data is always For capacity growth, we employ two different methreflected in our visual representations. ods for determining the Compound Annual Growth Line graph projections in the report are performed Rate (CAGR). The first calculates a CAGR for a specific using the Power BI forecast function. This function period, while the second uses a rolling two-year CAGR employs advanced statistical algorithms, specifically to minimize extreme variances and provide a useful the Exponential Smoothing (ETS) algorithm, to pre12

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

year-to-year comparison. Due to adjusted FCC reporting requirements since 2019, modeling has been used to approximate capacity growth, applying average growth rates from 2015-2018 for projections into 2019 and beyond. For unrepeatered systems, we apply a maximum cable length of 250km, with exceptions made for systems that have been publicly announced as unrepeated. Trending is accomplished using known data, with linear growth estimates for subsequent years, and line graph projections are now performed using the Power BI forecast model. This model uses established time-series algorithms to predict future values based on historical data, providing a reliable basis for our projections. Regarding system cost, when publicly announced information is not available, we apply a standardized formula of $25,000 USD per kilometer of cable, offering a rough estimate based on industry averages.

While every care is taken in the preparation of this report, these are our best estimates based on the information provided and discussed in this industry. STF KIERAN CLARK is the Lead Analyst for SubTel Forum.

He originally joined SubTel Forum in 2013 as a Broadcast Technician to provide support for live event video streaming. He has 6+ years of live production experience and has worked alongside some of the premier organizations in video web streaming. In 2014, Kieran was promoted to Analyst and is currently responsible for the research and maintenance that supports the Submarine Cable Database. In 2016, he was promoted to Lead Analyst and his analysis is featured in almost the entire array of Subtel Forum Publications.

SYEDA HUMERA, a graduate from JNTUH and Central

Michigan University, holds a Bachelor’s degree in Electronics and Communication Science and a Master’s degree in Computer Science. She has practical experience as a Software Developer at ALM Software Solutions, India, where she honed her skills in MLflow, JavaScript, GCP, Docker, DevOps, and more. Her expertise includes Data Visualization, Scikit-Learn, Databases, Ansible, Data Analytics, AI, and Programming. Having completed her Master’s degree, Humera is now poised to apply her comprehensive skills and knowledge in the field of computer science.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

EXECUTIVE SUMMARY

he submarine fiber optic telecommunications industry is experiencing increased data demand, largely driven by the adoption of cloud services, mobile devices, and new technologies like 5G. This demand is both quantitative and qualitative, as the types of data being transmitted are also changing. While these cables have traditionally carried telecommunication data, there is now a growing share of content and cloudbased data. This change aligns with broader shifts in global data consumption, where streaming services, cloud computing, and data centers are becoming more central. Data from 2018 to 2023 shows a Compound Annual Growth Rate (CAGR) of 13.3% in submarine fiber capacity on major routes, such as the Transatlantic sector. These figures, while indicating growth, also represent a decrease from previous periods. Future projections estimate a 75.4% increase in global capacity by 2025, contingent on the successful development of new systems, many of which are still in early stages. Financially, the industry has attracted $21 billion in investments from 2012 to 2023. The investment pattern is cyclical, with fluctuations occurring approximately every eight to nine years. In 2023, investments peaked at $5.2 billion, contrasting with a low of $0.5 billion in 2015. Despite the current downturn, the anticipated global bandwidth demand suggests a likely increase in financial activity between 2024 and 2025. Operationally, the industry has installed approximately 670,000 kilometers of cable over the last decade. Australasia has been a significant contributor, responsible for 27% of total investments from 2019 to 2023. In terms of technology, the industry is rapidly adopting 400G wavelengths and high fiber pair count systems, essential for meeting the burgeoning data demands and maintaining global competitiveness. Developed markets are generally early adopters of these technologies. Additionally, the integration of Artificial Intelligence (AI) is revolutionizing advanced monitoring and predictive 14

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

maintenance. AI algorithms analyze data from sensors and undersea cable systems to identify potential issues before they escalate, allowing for proactive maintenance and optimized system performance. These technological advancements are not only meeting growing data demands but also significantly improving the energy efficiency and decision-making speed in new system deployments. The role of Hyperscalers such as Google, Amazon, and Facebook is becoming increasingly pivotal in shaping the submarine fiber optic telecommunications industry. These tech giants are not merely investing in the industry; they are becoming key players by owning a significant share of private networks. Their investments are particularly concentrated in high-traffic routes like the Transpacific and Transatlantic sectors. This shift towards private ownership is a game-changer, fundamentally altering the industry’s traditional business models. It’s not just a matter of who owns the cables; it’s about who controls the data and, by extension, the global digital infrastructure. The impact of this shift is most evident in regions undergoing rapid digital transformation, where Hyperscalers are becoming the main contributors to new capacity. Notably, these Hyperscalers are not passive investors but active influencers. They have specific requirements for high-capacity, low-latency connections to serve their sprawling data center networks. These needs are pushing the industry towards rapid technological advancements, including the adoption of 400G wavelengths and high fiber pair count systems. Their financial resources and strategic imperatives often position them as early adopters, setting the pace for the rest of the industry. This trend is particularly pronounced in the Americas, Transatlantic, and Transpacific regions, where Hyperscaler investments are driving the demand for new systems and influencing the types of technologies that are being adopted. On the financial front, the industry’s investment cycles often align with these technological shifts and market

strategies. This synchronicity suggests an industry that is not just reactive but strategically poised to leverage emerging market opportunities. Investments in the industry have been cyclical, peaking at intervals of approximately eight to nine years. The most recent peak in 2023 saw investments reach $5.2 billion, contrasting with a low of $0.5 billion in 2015. Despite this cyclical nature, the underlying trend points to a likely increase in financial activity, especially between 2024 and 2025, driven by the anticipated global bandwidth demand. Regionally, the Americas stand out as a hub of activity, with total capacity increasing nearly fourfold from 2016 to 2020. However, this growth comes with nuances. The average yearly lit capacity in the region remains relatively low, suggesting a level of market caution. This could be attributed to various factors, including economic volatility and political uncertainties, particularly in Latin America. This region presents a complex landscape of both opportunities and challenges, with its lower lit capacity potentially indicative of either market overestimation or caution stemming from regional instabilities. In contrast, the EMEA region is experiencing a steady upward trajectory. Several factors contribute to this growth, including the need to upgrade aging infrastructure and the rising demands from data centers. The region is also becoming a focal point for future installations as data processing requirements evolve. The role of edge computing, which involves processing data closer to its source, is becoming increasingly significant. This could lead to a more complex network topology, requiring strategic planning and potentially offering new opportunities for the industry. In terms of financing, the industry is witnessing a shift towards more diversified investment sources. While consortium models have traditionally been the backbone for funding, there is a growing role for private equity and infrastructure-focused funds. This diversification is not just a financial strategy; it’s a catalyst for faster decision-making and potentially quicker deployment of new systems. The industry is also becoming more agile in leveraging market opportunities, thanks in part to this financial flexibility. Geopolitical factors are another critical dimension. National security concerns are leading to increased scrutiny over the ownership and control of submarine cable systems. This has resulted in more stringent regulatory frameworks, which are influencing the choice of routes and landing points for new cables. The industry is adapting by conducting comprehensive risk assessments and diversifying routes to minimize geopolitical risks, thereby

ensuring a more resilient global network. The growing importance of edge computing is also shaping the planning of new submarine cable systems. As data processing moves closer to the data source, the industry is considering how to integrate these new architectures into the design and deployment of submarine cables. This could lead to more distributed landing points and a more complex network topology, offering both challenges and opportunities for the industry. In the area of maintenance and repair, there is a move towards more predictive and proactive approaches. Advances in monitoring technologies are enabling real-time health checks and predictive analytics, aimed at minimizing downtime and ensuring more reliable service. This focus on reliability is not just a technical requirement but a business imperative, given the critical nature of submarine cables for global communications. Another emerging trend is the industry’s focus on environmental sustainability. As the global push for greener technologies gains momentum, suppliers are becoming increasingly conscious of the ecological impact of their activities. Environmental assessments are now a standard part of the planning and implementation process for new cable deployments. This focus on sustainability is not just a response to regulatory requirements but also a proactive measure to mitigate the environmental footprint of submarine cable systems. It’s becoming a competitive differentiator and a point of corporate social responsibility that stakeholders are paying close attention to. The role of public-private partnerships is also gaining prominence in the industry. Governments and private enterprises are collaborating more than ever to fund and deploy new systems, especially in regions that are strategically important but may not offer immediate commercial incentives. These partnerships are crucial for expanding connectivity to underserved areas and for enhancing geopolitical ties, thereby contributing to the industry’s long-term resilience and growth. In conclusion, the submarine cable industry is undergoing a transformative phase, significantly influenced by technological advancements, including the integration of Artificial Intelligence. These are coupled with shifting data consumption patterns, diversified funding sources, and geopolitical considerations. These trends are not only expanding the industry’s capabilities but also adding layers of complexity that necessitate agile strategic planning and innovation. Despite these multifaceted challenges, the industry appears well-prepared to navigate them, fortified by its ongoing commitment to technological innovation and strategic adaptation. STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

1.1

INDUSTRY SENTIMENT

his survey was conducted over several weeks and promoted through regular SubTel Forum publications as well as social media channels. We’re delighted to announce that the survey garnered over 100 responses, setting a new record for our Industry Sentiment feature. The industry’s overall outlook is overwhelmingly optimistic. Notably, the categories of “very pessimistic,” “pessimistic,” and “neutral” were not selected by any respondents. Compared to last year, the “very optimistic” category has seen an approximate 15% increase, indicating a highly positive view of the industry. In line with this optimism, most respondents have reported a more favorable perception of market activity. Over half have experienced or observed an increase in work compared to the previous year. However, the uptick in work has led to some slowdowns due to longer work queues. Respondents have noted a nearly 20% increase in project delays since last year, although the “significant delay” category has diminished.

The EMEA (Europe, Middle East, and Africa) region continues to dominate the industry, with projects like 2Africa and Sea-Me-We 6 capturing much of the sector’s focus. Other regions, such as AustralAsia and Transpacific, have also seen growth, largely due to the exploration of new routes. Despite the industry’s apparent boom, there has been a slight decrease in investment levels compared to last year’s survey. While investment remains near average, the “below average” category has seen a close to 15% increase. The survey reveals a highly optimistic outlook for the industry, with a record number of respondents and a significant increase in the “very optimistic” category. While there has been a surge in work and market activity, it has also led to some project delays. The EMEA region remains the industry’s stronghold, but other regions are also showing growth. Investment levels have slightly cooled but remain near average. Overall, the industry appears to be on a positive trajectory, albeit with some areas for improvement. STF

Compared to last year, the “very optimistic” category has seen an approximate 15% increase, indicating a highly positive view of the industry.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | INDUSTRY SENTIMENT

INDUSTRY SENTIMENT

Figure 1: Overall State of the Industry, 2023

Figure 2: Market Activity, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

INDUSTRY SENTIMENT

Figure 3: Project Status, 2023

Figure 4: Work Status, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | INDUSTRY SENTIMENT

INDUSTRY SENTIMENT

Figure 5: Industry Investment, 2023

Figure 6: Regional Activity, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GETTING TO KNOW YOU

Figure 7: What is Your Job Function?, 2023

Figure 8: What is Your Purchasing Power in Your Organization?, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | INDUSTRY SENTIMENT

GETTING TO KNOW YOU

Figure 9: How Many Years Have You Been in the Industry?, 2023

Figure 10: Where do you Reside?, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

1.2 PHILLIP PILGRIM’S LOOK AT SUBSEA TELECOMS 1.2.1 THE DAWN OF SUBMARINE CABLES (1845–1906)

The world’s first commercial submarine cable was laid across the East River in New York in October 1845 by Samuel Colt. This armored cable featured four conductors. The next significant development came in 1850 with an unarmored cable between France and England. Though it lasted only a day, it marked the beginning of international submarine telecommunications by enabling communication across ocean waters through telegraphy. Another milestone was achieved in 1866 with the compleVideo 4: Phillip Pilgrim, Subsea Business Development Leader North America - Nokia tion of the first commercially suctechnological limitations of the time, Field succeeded in cessful transatlantic cable between launching the first operational Atlantic cable in 1858, Valentia, Ireland, and Heart’s Content, Newfoundland. which remained functional for only a month. However, in From that point on, the global network of submarine 1865 and 1866, with the assistance of the world’s largcables began its incremental growth. Cyrus West Field spearheaded the first attempts to lay est steamship at the time, the SS Great Eastern, a more a transatlantic telegraph cable. His efforts commenced in reliable transatlantic cable was finally laid using advanced technology. 1854, building upon the earlier work of Frederic NewThe invention of the telephone in 1876 dramatically ton Gisborne to connect New York to London using a combination of terrestrial and telegraph systems. Despite broadened the scope of communication. By 1891, the 24

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | PHILLIP PILGRIM repeaters. However, by the mid-90s, optical amplifiers replaced these regenerators, enabling the simultaneous transmission of multiple wavelengths. This advancement has made submarine cables the backbone of international telecommunications, handling 99% of all such traffic. Antarctica remains an untapped frontier in this field, although plans are in progress to connect the continent to Chile. The Arctic made significant progress in 2004 when the Svalbard Undersea Cable System reached 77.9 degrees North. Plans for future submarine cable systems—both regional and transoceanic—are underway, and the prospect of establishing a northwest Arctic passage appears increasingly likely. Figure 11: First Commercial SubFueled by the growing needs of the marine Cable (Samuel Colt 1845) Internet, video transmission, and data centers, the demand for new, faster, and 1.2.2 THE ERA OF COAXIAL CABLES higher-capacity submarine cables continues to rise globally. (1956–1970S) This trend is expected to persist for the foreseeable future. In 1956, TAT-1 became the first transoceanic coaxial submarine cable to incorporate repeaters. Laid across the Atlantic Ocean, it commenced service the same year 1.2.4 UNPRECEDENTED GROWTH: FROM MEGABITS TO PETABITS (1990S–PRESENT) and consisted of two parallel, unidirectional cables. The first transpacific coaxial cable, known as COMPAC, was Since the 1990s, the submarine fiber market has seen inaugurated in 1963, linking Australia and New Zeaextraordinary growth, moving from Megabit-level capacland to Canada via Fiji. In 1964, TPC-1 was launched, ity in the early ‘90s to thousands of Terabits by 2023. A connecting the U.S. to Japan through Guam and Hawaii. key innovation was the introduction of Wavelength-DiSatellite communication also debuted in 1967 with the vision Multiplexing (WDM) on the SEA-ME-WE 3 launch of INTELSAT-II over the Atlantic Ocean. system in 1999. This groundbreaking technology allowed multiple optical wavelengths to be transmitted over a single fiber pair, reducing costs and boosting efficiency. 1.2.3 THE RISE OF OPTICAL SUBMARINE CABLES English Channel had become the site of the world’s first submarine cable for telephone communication. Although Marconi successfully demonstrated transatlantic radio communication in 1901, it wasn’t until 1923 that both radio and submarine cable communication became fully operational for transoceanic connections. The first transpacific telegraph cable was completed in 1902, connecting Australia, New Zealand, and Canada with stops at Norfolk Island, Fiji, and Fanning Island. In 1906, a new cable between Tokyo and Guam was inaugurated, facilitating telegraph service between Japan and the U.S. However, the high costs associated with installation and operation led to an increase in radio communication for both telegraph and telephone traffic.

(1980S–2000S)

The 1980s marked a pivotal shift in submarine cables with the introduction of optical systems. The first transoceanic fiber-optic system, TAT-8, became operational in 1988, significantly improving both the quality and capacity of telecommunications. Initially, these optical systems used signal regenerators within their submerged

Figure 12: Landing the 1866 Atlantic Cable (Newfoundland End)

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Dense Wavelength-Division Multiplexing (DWDM) came next, enabling even more wavelengths to be added to a single fiber pair. This advancement further accelerated the industry’s ability to create more powerful cable systems. By the early 2000s, wavelength capacity had soared to 10 Gbps and reached 100 Gbps by as early as 2010—a tenfold increase in less than a decade. We are now exceeding 1,000 Gbps waves, marking another tenfold increase in the past 13 years. System upgrades have emerged as a cost-effective alternative to new cable construction since the early to mid-2000s. The rise of “Open Cables” and Spectrum Sharing, where cables are agnostic to Submarine Line Terminal Equipment (SLTE), has allowed system owners to enhance capacity by simply swapping out SLTEs and transponders, saving both time and money. As the industry nears the Shannon Limit, Spatial Division Multiplexing (SDM) is emerging as a solution to this technological barrier. The technique uses parallel spatial channels for multiple independent optical signals, potentially unlocking untapped capacities in existing systems. The current fiber count in a repeated cable can go up to 24 fiber pairs, but more are anticipated. We will soon see multicore fibers in use, where a single fiber contains two or more optical paths within it.

1.2.5 A LOOK AT HISTORICAL TRANSATLANTIC GROWTH

Figure 13: Marconi 1901 Transatlantic Transmitter (Newfoundland End)

Figure 14: 1902 Pacific Cable Station Fiji (Courtesy Bill Burns Atlantic-Cable.com)

The transatlantic communication link between London and New York City effectively started in 1664 when the English took New Amsterdam (Manhattan Island) from the Dutch. For the past 359 years, NYC-LON communications have continuously grown, making this route one of the oldest, most stable, and most mature traffic paths globally. 26

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Communication on this link evolved from packet/mail ships to telegraph, telephone, and data exchange. Various means, including trains, a Pony Express, foot messengers, and satellite restoration of cables, have been employed at different times in the evolution of transatlantic communications technology.

GLOBAL OVERVIEW | PHILLIP PILGRIM

Figure 15: Location of 1963 COMPAC Cable Landing Station’s Concrete Floor (Port Alberni, Canada)

If you’re an investor or involved in submarine telecommunications, you’ll find it reassuring that the NYC-LON path has experienced exponential growth throughout its existence. While newer submarine telecommunication routes like Japan to the USA, Singapore to Europe, and North America to South America currently have higher growth rates and tariffs, they will eventually stabilize and converge to the same state as the transatlantic path. The NYC-LON route serves as a robust “worst-case” traffic path benchmark and is expected to continue in that role. To gauge the growth on the transatlantic route, we can examine historical data. With a few assumptions, we can plot growth from the first successful cables in 1866 to today. We can also review the past 20 years to observe the price erosion of transatlantic capacity.

Morse code, the average characters per message, and the messages per minute (a performance metric in 1866). Morse Code uses dots and dashes. We can assume a dot and a dash each represent a bit (Return-to-Zero

1.2.6 1866 TO 1956 TRANSATLANTIC CAPACITY GROWTH EXERCISE

Ones), and the space between them is also a bit (Return-to-Zero Zeros). If we apply this to all letters and numbers and then average, we get 6.5 bits per symbol. An internet search shows the number being 4.69 bits per symbol (American Math Society). Let’s settle in the middle: 5.6 bits per symbol. In 1866, the maximum single word size permitted for telegraph billing was 15 characters, so this would require 15 X 5.6 = 84 bits-per-word. The rate of communications on the transatlantic cable was 8 words per minute, requir-

1866 TRAFFIC CALCULATION

After the one-month operational Atlantic Cable of 1858 and the American Civil War (1861-1865), two new transatlantic cables were introduced in 1866. To begin the growth calculation, we first need to estimate the bit-per-second transmission rate of these cables. This can be calculated by taking the average bits per character in

Figure 16: 1988 TAT-8 Cable System

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 17: 2004 Svalbard Undersea Cable System Landing Area

ing 8 x 84 = 672 bits per minute, or more conventionally expressed as 11.2 bits per second. Although there were two cables in 1866, we can’t simply double the data rate to 22.4 bps. To make an apples-to-apples comparison, we must consider bidirectional communications. Therefore, the bidirectional data rate across the Atlantic in 1866 was approximately 11 bps. 1956 TRAFFIC CALCULATION

1956 is a significant year, as it was when the first transatlantic telephone cable was laid between Canada and Scotland. This was comprised of two unidirectional cables that each carried 32 Figure 18: 1999 SEA-ME-WE 3 Cable System (Courtesy SubmarineNetworks.com) channels of 4 kHz voice traffic. It is much easier to calculate the their traffic as well. Let’s count the telegraph cables from data rate of this cable as there are few assumptions. The 1873 to 1956 that were in service in the 1950’s: twenfirst digitized voice circuits sampled at twice the bandty-two. In the late 1920’s, “loaded cables” were used, and width, so the sample rate would be 2 X 4,000 = 8,000 samples-per-second. The first digitized voice circuits used data rates were in the order of 1,400 words-per-minute, but only one was in service in the Atlantic, and it only 8 bits-per-sample so a voice circuit would be 8 X 8,000 went from Canada to the Azores (not a full transatlantic). = 64,000 bits-per-second. Since the cables each had 32 channels, we get a cable data rate of 32 X 64,000 = 2.048 Pre-loaded cables were in the order of 80 words-perminute; so, for telegraph cables in the list below, we get Mbps.... an E1! a total of 21 ÷ 2 X 80 X 15 X 5.6 ÷ 60 = 0.001 Mb/s of For our first plot of transatlantic growth, we will simbidirectional traffic... not much! ply plot a curve that starts at 11b/s in 1866 and ends at It is clear the 1956 TAT-1 cable was a disruptive 2Mb/s in 1956. Easy right? technology and would cause a large discontinuity in our Not so. There were many “legacy” telegraph cables plot of traffic growth so let’s first look at a plot of transoperating across the Atlantic in 1956 so we must include 28

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | PHILLIP PILGRIM atlantic traffic telegraph growth from 1866 to 1955. The crude Compounded Annual Growth Rate (CAGR) fit gives 5.4% If we fit the curve to 1956, and include the TAT-1 discontinuous jump in capacity, we get 14.4% CAGR.

1.2.7 1956 TO 2000 TRANSATLANTIC CAPACITY GROWTH EXERCISE 1956 TRAFFIC CALCULATION

The traffic calculation for 1956 gives us approximately 2Mb/s. 2000 TRAFFIC CALCULATION

Figure 19: Seven Core Fiber (Courtesy OFS) & Seven Conductor Telegraph Core (Circa 1856)

peaters, CANTAT 2 had over 400! Back then, the quality of the signal was the top priority.

The number 113Gb/s has been ingrained in my mind for the past 22 years. I first calculated this figure while at 360Atlantic in 2001, during a period of receivership. 1.2.8 2000 TO 2023 TRANSATLANTIC CAPACITY GROWTH EXERCISE We were working with KPMG to sell the distressed asset, and I conducted traffic growth forecasts to help potential buyers grasp the opportunity. Over the years, 2000 TRAFFIC CALCULATION I’ve repeatedly used and validated this number against The traffic calculation for 2000 is already completed, industry analyses. This giving us approximately 113Gb/s was the estimat113Gb/s. ed traffic for all transatlantic cables operating 2023 TRAFFIC at speeds below 10Gb/s, CALCULATION predating the Yellow/ This data is readily Global Crossing 2 era. available from industry When I crudely fit the analysts like TeleGeograend points, the Comphy. According to one of pound Annual Growth their conference presentaRate (CAGR) for transtions, the traffic for 2023 atlantic traffic from 1956 is estimated to be approxito 2000 comes out to be mately 1.45 Pb/s. 28.2%. This number aligns Plotting a CAGR curve well with field data. My to fit the data points of father worked on several 113Gb/s in 2000 and transatlantic cables during 1.45 Pb/s in 2023 yields this period, including the a CAGR of 53.6%. It’s CANTAT 1 cable in 1961, worth noting that the real Figure 20: Transatlantic Cables Operating in 1950 the CANTAT 2 cable in data is not as smooth, 1973, and the CANTAT 3 especially considering the cable in 1994. I once asked him about the growth rate for challenging period for the subsea industry from 2002 to new circuits from 1966 to 1991, and he estimated it to be around 2010 (post dot-com burst). Advances in coherent roughly 20% year-over-year—a figure that has stuck with transmission, lower loss fibers, and high baud rates have me ever since. Cable station engineers were well aware enabled technology to accommodate the recent boom in of this as they would solder and wire-wrap intra-station transatlantic traffic. connections when putting new circuits into service. An In summary, the fitted CAGR from 1866 to 2023 interesting side note: unlike today’s cables with fewer reshows very healthy numbers, pointing to a positive SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

growth future. We observe a nearly doubling of growth rates for each period: • 14% for the early telegraph days • 28% for the middle ages of telephone, early data, and non-DWDM systems • 54% for the current data explosion era

1.2.9 RECENT PRICE EROSION

The transatlantic route, being the oldest and most mature traffic path, has already experienced its most significant price erosion. There is little room left for further erosion without destabilizing the industry. Price erosion is more pronounced on other routes, such as North America to South America, but these are expected to stabilize as they approach the traffic pricing and capacities of the Atlantic. I’ve had the privilege of working on Atlantic systems for over 30 years. Back in 1996, the cost for a transatlantic STM-1 (155Mb/s) was around $6 million per year. Fast forward to today, and that cost has plummeted to around $190 per year—if you slice it out of a transatlantic 100Gb/s at $10,000 per month. The reality of price erosion is both sobering and sad. However, I hope that the “Hockey Stick” graphs I’ve presented above offer some optimism! STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 21: 5.4% CAGR Transatlantic Telegraph Traffic (1866 to 1955)

Figure 22: 14.4% CAGR Transatlantic Traffic (1866 to 1956)

GLOBAL OVERVIEW | PHILLIP PILGRIM

Figure 23: 28.2% CAGR Transatlantic Traffic (1956 to 2000)

Figure 24: 53.6% CAGR Transatlantic Traffic (2000 to 2022)

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

1.3

GEOPOLITICS

PERSPECTIVES OF JOHN TIBBLES GLOBAL CAPACITY: QUALITY OVER QUANTITY?

September marks the start of autumn in the Northern Hemisphere and serves as the time for SNW, the largest dedicated subsea event in Singapore. Traditionally, this event has been a kickoff for the SubSea industry following the summer break. Before this year’s gathering, rumors abounded of announcements for several major new cable projects, signaling a potential step change in global capacity, the theme of this issue. However, as often happens, anticipation fell short of reality; the only major announcement concerning new systems was Google’s Transatlantic system Nuvem, linking Portugal, Bermuda, and South Carolina. Even without new projects being announced, 2023 has already brought changes to the industry in other areas, including significant personnel shifts at the OTTs. What impact will these changes have in an industry where 32

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Video 5: John Tibbles, Principal - JTIC

personal relationships are so crucial? From an external perspective, it appears that some parties are scaling back their direct involvement in system development, while others are expanding their teams and shifting their focus to different areas than in the recent past.

GLOBAL OVERVIEW | GEOPOLITICS GEOPOLITICS AND SUBSEA CABLES

priority. While the EU has made some efforts to directly support ASN, it lacks the strong political commitment that ASN’s competitors enjoy. Will the EU recognize ASN’s potential to enhance their global influence and act more assertively to support their leading supplier in the subsea network?

My recent contributions to SubTel Forum have explored the issue of politics and subsea cables, which are increasingly viewed by both governments and the public as critical infrastructure. In 2023, the focus has shifted from protection concerns to more aggressive actions aimed at almost weaponizing subsea systems. These actions seek to ensure that newly built systems align with DEMAND FORECASTING broader commercial and governmental interests. MaAnother facet of global capacity is understanding jor newspapers and business journals regularly feature how much is available and how much is in demand. In exaggerated stories about sub-sea cables, with Britain’s the past, when coaxial cables supplemented the global conservative Sunday Telegraph being a recent example, satellite network, the capacity they provided primarily publishing substantial articles on served the growing international the topic in consecutive weeks. telephone business. Major carriers Cables are just one facet of like AT&T, Deutsche Telecom, In 2023, major news outlets broader trade and political tenFrance Telecom, BT, and KDD in and industry journals report that Asia, who controlled a significant sions between the United States AI technologies are poised to and China, each backed by their share of the world’s voice busirespective allies or partners. If ness, had a clear grasp of demand significantly increase demand taken to an extreme, this could for voice minutes and thus, on existing networks. Quantum telephone circuits, which were the result in the emergence of two separate internets—an oxymoron, unit of capacity at the time. computing, another demandgiven the internet’s foundationThe introduction of fiber optic generating technology, must al principle of being a holistic, systems initially followed this also be considered. Both integrated global resource. Both pattern, but the internet quickwould claim to be the ‘trusttechnologies require substantial ly outpaced voice in terms of ed’ internet and would need to bandwidth requirements. While bandwidth, and OTTs, who are it was clear that more capacity interconnect at some point, as the fundamental nature of the integral to these technological was needed, the exact amount was internet is to link everyone tounknown. Systems were designed developments, must have an gether. Such bifurcation would be based on technological limitations accurate assessment of future sub-optimal and could exacerbate rather than demand, effectively global tensions. building the largest systems posbandwidth needs. The political landscape is fursible. The internet’s growth rate ther complicated by high barriers surpassed all expectations, and to entry in the subsea cable industry. Currently, only four until recently, available capacity has only just kept pace companies possess both the capability and the credibiliwith demand, although some argue it still lags, particuty to install major oceanic systems, each having distinct larly in geographic reach. relationships with their home countries: In 2023, major news outlets and industry journals Huawei is closely aligned with, if not part of, the Chinese report that AI technologies are poised to significantly state, benefiting from the support that relationship offers. increase demand on existing networks. Quantum comNEC is deeply integrated into ‘Japan Inc.’ and has puting, another demand-generating technology, must decades of strength in global trade. also be considered. Both technologies require substantial SubCom has ties to the U.S. government, ties that may bandwidth, and OTTs, who are integral to these technonot always be openly acknowledged but have received logical developments, must have an accurate assessment significant financial and political support this year. of future bandwidth needs. ASN, the current market leader, has complex govGiven the critical role these entities play today, either ernmental relations. Although Finnish-owned, almost in network development or as primary users, one could all its manufacturing and management occur in France, speculate that AI and Quantum computing will give tying it to the EU. However, many EU countries have these parties even more control over the network’s size, limited coastlines, making subsea cable support less of a reach, and ‘shape’ in the coming years. This could potenSUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | GEOPOLITICS significant role in subsea networks, can Singapore maintain its privileged position? The Red Sea, Djibouti, and Egypt are situated at either end of the Red Sea and face their own set of concerns. Ongoing regional conflicts have affected plans for new Indian Ocean to Mediterranean cables. Even as I write this, renewed conflict in the Middle East underscores the inherent risks in this globally important route. Very few countries can link one major sea or ocean to another with minimal terrestrial involvement. While India has the Indian Ocean on both sides of its southern tip, Cape Town in South Africa is one of the few places where two oceans meet. Cables like 2Africa Another factor that has and Equiano land there, but Cape Town serves more as an endpoint gained a high profile in 2023, than a major interconnection hub. and which impacts the theme Enhanced global connectivity of global capacity, is the could elevate the city’s status in increased awareness of network the subsea network world.

tially raise already high barriers to entry in global capacity and cable development markets. Google, rumored to be planning several more systems under their control, faces antitrust lawsuits in multiple U.S. states related to other aspects of their business. Will they soon dominate the subsea market to a degree similar to AT&T before the millennium? Could they wield excessive influence over cable manufacturing, or impact the capacity wholesale market by offloading ‘excess’ capacity at unmatchable price points? Alternatively, might the U.S. Government prioritize Google as the entity that establishes a Western ‘trusted’ internet, thereby averting an unintended monopoly?

NETWORK RESILIENCE

Another factor that has gained a high profile in 2023, and which impacts the theme of global capacity, is the increased awareness of network choke points or choke points or bottlenecks. In TO CONCLUDE bottlenecks. In regions like the regions like the North Atlantic, North Atlantic, diversified parPerhaps there wasn’t much allel systems have formed mesh quantitative news coming out of diversified parallel systems networks. However, in other Singapore, but enough has already have formed mesh networks. areas, there’s a concentration of happened this year to suggest that systems at key points, leading to However, in other areas, there’s the truly significant changes may vulnerability. Geography dictates be qualitative. I always believe in a concentration of systems that these hubs can only really posing a few serious questions at key points, leading to exist at the confluence of two when writing. Optical and manumajor bodies of water; no sea facturing technology will convulnerability. means no hub. tinue to incrementally increase There has always been some cable capacity, rather than making level of concern about these true breakthroughs. However, the bottlenecks. However, with the increasing volume of data larger issues may be geopolitical in nature, the impact transfer and a rising emphasis on network resilience, of new user applications like AI, and a growing need for might we see a shift from shortest-distance routings network routes that offer resilience, not just additional to alternative, diversified, but longer and more resilient capacity. These are major challenges that the industry paths that bypass areas of geographic or political risk? must confront, even though they are largely outside its Two examples stand out: direct control. Singapore serves as a truly global hub, but its growth So, while SNW 24 will once again take place in Sinmay be constrained by limited land and potential power gapore, the pressing question is: where will our industry shortages. With neighboring Indonesia playing a more stand at that time? STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

1.4

SYSTEM GROWTH

n the realm of submarine cable systems, the far-reaching and enduring effects of the COVID-19 pandemic continue to reveal themselves, with their full scope becoming increasingly clear. Contrary to initial expectations, the pandemic’s true impact on the submarine cable industry didn’t fully manifest in 2020 or 2021 but is anticipated to have a more significant influence in the coming years. While projects that were already in the

planning stages during the pandemic generally stayed on course, some experienced notable delays. In contrast, projects that had not yet started essential surveys, manufacturing, or installation faced significant setbacks. It’s important to note that the planning and preparation phase for a submarine cable system, from concept to operation, is typically shorter than the actual installation and commissioning phases. As a result, the number of

Figure 25: New System Count by Region, 2019-2023 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 26: KMS Added by Region, 2019-2023

Figure 27: Planned Systems by Region, 2023-2027

completed submarine cable systems in the post-pandemic years is expected to fall short of the ambitious forecasts made before the pandemic began. Since our last Industry Report, the sector has seen substantial progress. PRAT, CDSCN, NO-UK, Cross Channel Fiber, and HAVSIL have all been successfully commissioned and accepted, adding a total of 18 new submarine cable systems to the service roster by the end of 2021. This momentum has carried into 2022, with an additional eleven submarine cable systems becoming operational. Notably, Equiano and 36

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Grace Hopper are nearing service activation, poised to further enrich the industry’s connectivity landscape by year’s end. These advancements and ongoing trends highlight the resilience and adaptability of the submarine cable industry, emphasizing its vital role in sustaining global connectivity. In the current year, submarine cable systems have made significant strides in four key regions: EMEA, Indian Ocean, Americas, and Australasia. EMEA leads the pack with the most cable installations over the past

GLOBAL OVERVIEW | SYSTEM GROWTH

Figure 28: Contract in Force Rate, 2023-2027

five years, totaling 35 systems. Additionally, the Indian Ocean region is set to add five new systems this year. The Transatlantic region also marked a milestone with the Amitié system entering service this year, further enhancing connectivity. When we shift our focus to the total kilometers of cable installed, a different narrative emerges compared to the number of new systems. It’s evident that the number of new systems added in some regions did not always directly correlate with the amount of kilometers installed. For instance, the Transpacific region added only two cable systems over the past five years, but these systems collectively span 24,000 kilometers. In contrast, EMEA outpaced all other regions by adding 63,000 kilometers of cable and also recorded the highest annual increase in new cable. Globally, there are 87 planned submarine cable systems expected to be completed over the next five years. Within this group, a significant subset of precisely 31 systems is projecting a 2023 Ready for Service (RFS) date. While certain systems like Equiano and Grace Hopper are nearing completion and are poised to go live before the end of this year, it seems unlikely that all the remaining systems targeting a 2023 RFS date will successfully meet this goal. Some have already begun the installation process and may face minor delays, potentially pushing their deployment schedules into 2024, while others could encounter more substantial setbacks. Looking ahead, EMEA and Australasia are set for significant growth through 2025. EMEA, with upcoming projects like Africa1, Equiano, 2Africa,

PEACE, and SHARE, is expected to complete a multitude of systems, accounting for 29 percent of all future announced systems in this region. Similarly, Australasia is projected to host 22 percent of all planned projects, featuring key initiatives like ADC, PDSCN, and Apricot. In contrast, the Americas are looking to add 14 more systems, followed by 12 in the Indian Ocean and 10 in the Transpacific region by the close of 2025. The Transatlantic region is slated to introduce an additional four systems during this timeframe. Although making up just four percent of the total announced systems through 2025, the Polar region plans to add four systems, marking an astonishing 166 percent increase. In a groundbreaking move, Chile expressed interest in November 2021 to install a cable connecting Antarctica, aiming to advance scientific and technological development in its southern regions. If achieved, this would establish the first-ever connection to the continent. For various reasons, some submarine cable systems never advance beyond the planning stage. SubTel Forum has determined that achieving a Contract in Force (CIF) status is a strong indicator of whether a system will eventually become operational. Currently, 48 percent of planned systems have reached CIF status, while the remaining 52 percent have yet to hit this crucial milestone (Figure 18). Some of these systems are in the early stages of development, having only been recently announced, and are expected to provide further updates in the months to come. However, some may never make it to the ocean floor. STF SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

1.5

OUT OF SERVICE SYSTEMS ANALYSIS PERSPECTIVES OF KRISTIAN NIELSEN

An in-depth examination of the complexities and solutions related to the decommissioning of Outof-Service (OOS) submarine cable systems reveals critical insights into this often-overlooked aspect of the industry. Despite many cable systems exceeding their estimated End-ofService (EOS) dates, the decommissioning of these systems often goes unnoticed and rarely makes headlines. However, recent developments have brought attention to this issue. Specifically, the International Cable Protection Committee (ICPC) and companies like Video 5: Kristian Nielsen, Quality & Client Fulfillment Director - WFN Strategies Mertech Marine and Submarine Cable Salvage have confirmed the in the current year, they have been actively involved in decommissioning of two submarine cable systems this the recovery of segments from six different cable systems. year. Mertech Marine has been a pioneer in this sector for Their expertise is complemented by other specialized companies like Subsea Environmental Services and Subover 18 years. They have developed a comprehensive system for acquiring OOS cables from owners, recovering marine Cable Salvage, which offer innovative solutions salvageable sections, and recycling various materials. Just for managing, repurposing, and recycling these under38

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

GLOBAL OVERVIEW | OUT OF SERVICE SYSTEMS ANALYSIS water communication systems. These companies have completed an impressive range of projects, recovering tens of thousands of kilometers of OOS cable, with a strong focus on both recovery and environmental sustainability. Publicly available data indicates that around 113 submarine telecommunications cable systems have been taken OOS in the last decade. This figure represents a significant 18% of all Figure 29: Decommissioned Systems, 2013-2023 cables ever activated. The common practice when As these systems age, they encounter a range of chala cable system is retired is to leave it on the ocean floor. lenges, from increasing equipment failures that lead to This is primarily done to preserve the marine life that more frequent service interruptions, to the complexities of may have developed around it, but it’s also influenced by regulatory compliance. Regulatory frameworks in many the high costs associated with cable reclamation efforts. jurisdictions now mandate the removal or recycling of Regionally, the EMEA (Europe, Middle East, and these systems, and non-compliance Africa) has been the most active in can result in severe penalties. Moredecommissioning, accounting for the technological advancements a staggering 67% of all decommisTechnological advancements over, that have extended the life of some sioned systems. Since 2013, EMEA have been both a blessing and a systems can also render older systems has decommissioned 65,000 cable kilometers, which is 63% higher than curse. They have enabled many incompatible with new technologies, necessitating either upgrades or comthe Americas, the region with the cable systems to surpass their plete replacements. next highest total. Australasia and System consultants are invaluable the Americas follow with 14% and estimated EOS dates, some in this complex landscape. They 12.4%, respectively, while all other even exceeding the industryoffer a structured approach to these regions have seen three or fewer standard 25-year lifespan. This challenges, backed by accredited decommissioned systems. Technological advancements is often due to ongoing system maintenance planning systems and international quality standards. They have been both a blessing and a upgrades and equipment serve as a crucial link between the curse. They have enabled many cable replacements in landing stations client and specialized companies, systems to surpass their estimated ensuring that projects are wellEOS dates, some even exceeding and data centers. planned, risks are mitigated, and key the industry-standard 25-year lifesmilestones are achieved. pan. This is often due to ongoing In conclusion, the end-of-life system upgrades and equipment replacements in landing stations and data centers. However, management of submarine cable systems is a multifaceted challenge that requires coordinated efforts from various it’s crucial to note that 85 systems are expected to reach stakeholders. By collaborating with specialized compatheir EOS within the next five years, with an additional nies and leveraging the expertise of system consultants, 53 expected by 2032. Given that fewer than 60 systems the industry can make informed, sustainable decisions for have been decommissioned in the last two decades, this its aging infrastructure. STF growing number of aging systems is a cause for concern. SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUBMARINE TELECOMMUNICATION CABLE RECOVERY EXPERTS WHO RECYCLE TO REPURPOSE We are the global leaders in turnkey solutions for the recovery and recycling of out-of-service submarine telecommunication cables. As the only provider utilising its own fleet of vessels and processing facilities to perform end-to-end decommissioning and recycling of submarine telecommunication cables, we are pioneering the process of commercially dismantling marine cables sustainably, economically and responsibly. Submarine telecommunication cables come in various shapes and sizes and commodities such as polyethylene, lead, copper, aluminium and steel are extracted from them. We put these materials back into the circular economy, reimagining submarine cables and the possibilities they can contribute to the next generation. Mertech Marine is run by an exceptionally experienced team of marine and cable recovery experts. We are known for our reliable innovative solutions in marine projects, providing shore-end removal, along with worldwide clearance services.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUBMARINE TELECOMS INDUSTRY REPORT

We challenge businesses to look for the opportunities that lie beneath the surface of the ocean and join our circular economy to reinvent what already exists.

SEE A LITTLE CLEARER

World Leader In Submarine Cable Recovery & Recycling

GO A LITTLE FURTHER

The Circular Economy

Out-of-service submarine telecommunication cables

Submarine telecommunication cable recovery

Own fleet of recovery vessels and processing facilities

Responsible recovery to our oceans and planet

Cable recovery and recycling, depot clearance, shore-end services

World-class ISO-certified processing facilities

End-to-end decommissioning and recycling

Innovation that changes industries

THINK A LITTLE DEEPER

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30,000 square metres of specialised facilities in South Africa

Over 95,000mt of cable recovered and recycled

Displaced 245,000mt of carbon dioxide equivalent (tco2e)

2,500 subsea repeaters recovered and recycled

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUBMARINE TELECOMS INDUSTRY REPORT

41 31

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CAPACITY

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

2.1

GLOBAL CAPACITY

he unceasing global demand for data is reaching unprecedented levels, driven by several key factors such as the widespread adoption of cloud-based services, the ubiquity of mobile devices, and the rapid deployment of next-generation technologies like 5G. This burgeoning demand presents the submarine fiber industry with ample opportunities to address the world’s ever-increasing connectivity needs. From 2018 to 2023, the submarine fiber capacity on major routes grew at a Compound Annual Growth Rate (CAGR) of 13.3%. This rate accounts for both capacity upgrades and the construction of new systems, highlighting the industry’s agility in meeting rising data demands. However, it’s worth noting that this growth rate is a slight dip from the 18.2% CAGR observed in the previous year’s analysis.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 30: Global Capacity Growth on Major Routes, 2019-2023

As the global appetite for data continues to swell, the industry faces impending challenges. Balancing the soaring demand for data transmission with sustainable infrastructure growth is a significant hurdle. In some instances, data capacity demand could even outstrip supply. To mitigate this, the industry must remain committed to further capacity expansion. Cutting-edge

CAPACITY | GLOBAL CAPACITY

Figure 31: Planned Capacity on Major Routes, 2024-2026

Figure 32: Transatlantic Capacity Growth (Tbps, 2016-2020)

technologies like 400G wavelengths and high fiber pair count systems are crucial for ensuring that the submarine fiber industry keeps pace with the growing global data transmission needs. Based on current data and future capacity projections, global capacity is expected to see a substantial uptick, potentially reaching a 75.4% increase by the end of 2025 (Figure 20). This forecast emphasizes the industry’s dedication to meeting the surging global demand for data transmission. However, it’s important to point out that these projections are somewhat more conservative than those from the previous year, which

had anticipated a 100% capacity increase over the next three years. It’s also important to emphasize that not all announced systems have advanced sufficiently in their development to finalize details like fiber pair counts and design capacity. As these critical specifics are nailed down and more new systems come online, bandwidth capacities could see further increases, especially with the growing adoption of 400G wavelength technology and high fiber pair count systems. Additionally, the transformative effects of the COVID-19 pandemic, which led to a significant reevaluation of bandwidth SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 33: Transatlantic Lit Capacity Growth, Future

Figure 34: Transatlantic Total Capacity Growth, Future

needs and preparations for enhanced capacity to support remote work, add another layer of complexity to the ever-changing landscape of data transmission. Since 2015, major submarine cable routes have averaged 18 percent lit of total design capacity, maintaining a large capacity buffer in cable systems to accommodate sudden spikes in demand, such as rerouted traffic due to a cable fault. However, it’s important to note that the Federal Communications Commission (FCC) has significantly reduced reporting requirements for active circuits since 2020. This 46

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

change has led to a lack of hard data, necessitating the reliance on modeling to understand capacity and usage trends post-2020.

2.1.1 TRANSATLANTIC

Transatlantic routes are among the most competitive globally, particularly those connecting the major economic hubs of New York and London. These routes facilitate traffic between the highly developed economies and technology markets of North America and Europe.

CAPACITY | GLOBAL CAPACITY

Figure 35: Transpacific Capacity Growth, 2016-2020

Figure 36: Transpacific Lit Capacity Growth, Future

From 2016 to 2020, the Transatlantic region experienced low to moderate design capacity growth, with a Compound Annual Growth Rate (CAGR) of 16 percent. This growth was driven by regular upgrades and the introduction of a new system each year from 2015 to 2018, as well as one new system in 2020. This represents a decrease from the previous year, where the CAGR for the period from 2015 to 2019 was 22.9 percent. On average, the Transatlantic route has maintained a lit capacity of 23 percent of the total design capacity over this five-year period, which is significantly higher than

the global average of 18 percent. Specifically, 2019 and 2020 have seen lit capacities of 27.3 and 36.8 percent, respectively. Moreover, the lit capacity has grown at a CAGR of 40.9 percent during this period, indicating that demand is substantially outpacing the rate of capacity build-out. Based on publicly announced information, lit capacity in the Transatlantic region is expected to grow to between 300 and 600 Tbps by 2025. (Figure 23) On the other hand, total design capacity is projected to reach between 900 Tbps and 1100 Tbps by the same year. SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 37: Transpacific Total Capacity Growth, Future

Figure 38: Americas Capacity Growth, 2016-2020

While there is still an opportunity for new systems to be developed for 2025, the window for such projects is narrowing, given that a typical submarine cable project takes 2-3 years to implement. The surge in bandwidth demand continues to be fueled by individuals and businesses increasingly adopting cloud and web-based services, a trend that has been particularly pronounced since the onset of COVID. However, the introduction of 400G technology and high fiber pair count systems, ranging from 16 to 24 or more, suggests that design capacity may keep pace 48

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

with or even exceed demand. This will likely be achieved through system upgrades and new systems announced over the next 12 to 18 months.

2.1.2 TRANSPACIFIC

In the Transpacific region, Hyperscalers are also extending their infrastructure, mirroring trends seen in the Transatlantic area. These systems serve as vital links connecting the economies of the United States and Canada with Australia and East Asia. The Transpacific region has experienced growth rates

CAPACITY | GLOBAL CAPACITY

Figure 39: Americas Lit Capacity Growth, Future

Figure 40: Americas Total Capacity Growth, Future

closely aligned with those of the Transatlantic, recording a Compound Annual Growth Rate (CAGR) of 16.6 percent for the period between 2016 and 2020. This is nearly identical to the previous year’s CAGR of 15.7 percent for the 2015-2019 period. During this time, the region has maintained an average lit capacity of 29.4 percent, which is significantly higher than global averages. In 2015, the lit capacity in this region was as low as 15 percent, suggesting a short-term overbuild in capacity that has only recently started to decline. Specifically, the years 2019 and 2020 saw lit capacities of 29.3 and

47 percent, respectively. Similar to the Transatlantic region, Hyperscalers in the Transpacific area continue to be the driving force behind the majority of new system builds. Based on publicly announced system information, the Transpacific region remains one of the most competitive areas globally, featuring a diverse array of both systems and customers. (Figure 28) While lit capacity is not currently projected to surpass design capacity by 2025, available data suggests that lit capacity could reach as high as 69.7%. To meet this steep rise in demand, more SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 41: Intra-Asia Capacity Growth, 2016-2020

Figure 42: Intra-Asia Lit Capacity Growth, Future

systems will need to be developed and additional upgrades performed along Transpacific routes. In terms of future projections, total design capacity in the Transpacific region is expected to grow to between 860 Tbps and 930 Tbps by 2025. Concurrently, lit capacity is anticipated to increase to a range of 260 to 650 Tbps by the same year.

2.1.3 AMERICAS

The Americas region has experienced substantial growth in recent years, with total capacity along major routes nearly quadrupling from 233.5 Tbps in 2016 to 50

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

803.5 Tbps in 2020. (Figure 29) The growth rate for the period 2016-2020 closely aligns with the previous year’s rate for the 2015-2019 period, which was 28.5 percent. In contrast to this significant growth in total capacity, the region has maintained a relatively low average yearly lit capacity of 9.4 percent, falling well below the global average. Initially, much of this growth was anticipated to stem from emerging markets in Latin America, which were expected to develop new systems and capacity upgrades to the United States. However, this anticipated growth has yet to materialize, possibly due to current economic and political challenges in Central and South America.

CAPACITY | GLOBAL CAPACITY

Figure 43: Intra-Asia Total Capacity Growth, Future

Hyperscalers continue to be the main catalysts for new systems along this route. They added several high-capacity systems in 2017 and 2018, increasing the total capacity along this route by over 160 percent compared to 2016 levels. While Hyperscalers have traditionally partnered with conventional telecom carriers to add this capacity to the general market, they are now primarily constructing cables for their exclusive use. Notably, Google sold a fiber pair to Sparkle on the Curie submarine cable system in 2020 and another fiber pair to Lumen on the Grace Hopper system across the Atlantic earlier this year. These transactions indicate that Hyperscalers may be open to monetizing these assets. Based on publicly announced system information, the Americas region is expected to see a notable slowdown in new capacity demand, as much of the existing infrastructure remains unlit. (Figure 30) Traditionally, growth in this region has been driven by markets in Latin America, including Brazil, Argentina, and Chile, and further supported by the expansion of Hyperscalers in South America. However, due to ongoing economic and political instability in the region, and a potential overbuild in recent years, the usual demand drivers for systems have been lacking. Notably, much of the new bandwidth expected to be in place by 2025 will serve primarily the East Coast of the United States, where demand continues to rise. In terms of future projections, total design capacity in the Americas region is anticipated to grow to between 1350 Tbps and 1650 Tbps by 2025. Concurrently, lit capacity is expected to increase to a range of 125 to 175 Tbps by the same year.

2.1.4 INTRA-ASIA

Growth along the Intra-Asia route is contingent on significant infrastructure builds that connect major hubs across Asia and Southeast Asia, a development that does not occur annually. Since 2016, the Intra-Asia route has experienced minimal to moderate design capacity growth. (Figure 31) This represents a slight decrease compared to the previous year, when the growth rate for the period from 2015 to 2019 was 19.5 percent. The lit capacity on this route has remained below global trends, accounting for just 12.4 percent of the total design capacity. More than 700 Tbps of capacity is already available along the Intra-Asia routes, and up to 500 Tbps is expected to be added by 2025, marking a substantial increase. This growth in capacity is fueled by the development of several cables in the region, each with over 140 Tbps in capacity, planned through 2025. As demand escalates, particularly across the Pacific and between Asia, Australia, and the United States, there is potential for a significant rise in lit capacity, given the increasing amount of traffic being routed to and from Asia. Based on publicly anounced system information, the Intra-Asia route is set for considerable expansion. (Figure 32) Total design capacity is projected to grow to between 1110 Tbps and 1250 Tbps by 2025. Concurrently, lit capacity is expected to increase to a range of 106 to 125 Tbps by the same year. STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

2.1

GLOBAL PRICING

PERSPECTIVES OF IAN MCLEAN

n an era driven by digital connectivity and global communication, the intricate web of submarine internet cables intersecting the planet serves as the lifeblood of our modern interconnected world. However, beneath the surface of this vital infrastructure lies a dynamic landscape of pricing trends, capacity growth, and evolving market forces shaping the future of submarine cable investment. Historically, the Asia-Pacific region has witnessed a remarkable transformation in the pricing dynamics of submarine infrastructure. Prices have steadily fallen, charting Video 6: Ian Mclean, Sr. Manager, South East Asia & Oceania - APTelecom an impressive Compound Annual multifaceted. On the demand side, an insatiable thirst for Growth Rate (CAGR) averaging data and connectivity has fueled an ever-increasing need approximately -17%. As prices have declined, capacity for higher bandwidth and faster data transmission rates. increments have moved in the opposite direction, transiWith businesses, consumers, and institutions relying on tioning from 10G to 100G, and now 400G transmission data-intensive applications, the demand for more robust speeds. This historical trend has been propelled by a delisubmarine cable infrastructure has been relentless. cate balance between supply and demand. From the supply side, the submarine cable industry has seen The driving forces behind these pricing trends are

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CAPACITY | GLOBAL PRICING continuous evolution in technology. Cable operators and providers are investing in new technologies to meet growing demand, allowing them to offer greater capacity as well as improved reliability and performance, all while pushing prices lower. However, as we delve deeper into the intricacies of the Asia-Pacific submarine cable market, a unique challenge has emerged. In the trans-Pacific market, particularly the route between Singapore and Los Angeles, the historical CAGR may no longer be applicable. This anomaly can be attributed to a distinct lack of supply, driven primarily by the challenging geographic and logistical constraints of laying cables across the vast Pacific Ocean. Consequently, prices and capacity increments in this region have been influenced by a different set of market dynamics, where supply constraints have somewhat slowed the pace of change.

UPCOMING NEW TRANSPACIFIC CABLE SYSTEMS:

On the transpacific route, several upcoming cable systems are in development. The Echo Cable System, a first-of-itskind cable that will directly connect the U.S. to Singapore with direct fiber pairs over an express route, is expected to offer 12 fiber pairs. ACC-1 System by Inligo Networks will connect Southeast Asia with Australia, Timor Leste, and Guam through to LA in the United States and supply 16 fiber pairs. The Bifrost Cable System’s main trunk will link Singapore to the United States over 16,460 km via Indonesia through the Java Sea and Celebes Sea to provide 12 fiber pairs. The Hawaiki Nui Cable System, with a 2025 RFS, will provide 12 fiber pairs. Meanwhile, the JUPITER Cable System already provides landing points in the Philippines, Japan, and the United States and adds a further five fiber pairs to the market. These five major subsea systems are expected to make nearly 60 fiber pairs available to the transpacific marketplace by 2026. With the increased availability of capacity, questions arise: Are there enough buyers in the market, and what impact will supply increases have on fiber pair capacity and pricing? With nearly 60 fiber pairs on the market, this increased capacity could potentially lead to lower prices for transpacific bandwidth as competition among service providers intensifies. More bandwidth availability may also lead to a reduction in the cost per unit of data. As these new cable systems come online, existing cable operators will ultimately face increased competition, which may exert downward pressure on pricing as providers compete for market share. The question of how low prices can go before becoming financially unsustainable looms large: Will system constructors like SubCom, NEC, and ASN be able to reduce their pricing further in the future? If it costs $1 to build a system and it sells for only $0.90, there’s a problem. Operators must recoup their investments and generate profits to sustain operations and enable future project

investment. If pricing drops too far, financial sustainability for system constructors becomes precarious. The impact on transpacific pricing also depends on the demand for this bandwidth. If the demand for data connectivity across the Pacific Ocean continues to grow at a rapid pace, it may offset the downward pressure on prices, allowing providers to maintain or even increase their rates. Technologies like 5G, satellite, and AI are currently playing a significant role in driving increased demand in the Asia-Pacific region. The overwhelming growth in popularity of technologies such as 5G, AI, IoT, and automation is playing a significant part in this increased demand. Subsea fiber cables have become indispensable in the digital landscape, due to the significant growth of these applications. As demand for data grows, operators must continue to invest in upgrading and expanding their networks to stay ahead of the curve. The question arises: Are there enough new systems to accommodate the increased demand for these technologies? There’s a strong possibility that the market will remain supply-constrained and, in turn, stabilize prices rather than erode them. Certain routes are experiencing slower price erosion due to delays in capacity upgrades and new cable activations. Geopolitical issues and disruptions to global supply chains have played a role in affecting new networks and upgrades. While historically certain routes have had upgrade times of 6-12 weeks, some are now facing lead times of more than 35 weeks. As a result, fewer cable systems with inventory have led to less pressure on competitive pricing. Increasing supply chain and equipment costs are another factor operators are facing. By 2030, the transpacific subsea market is likely to experience continual growth, technical advancements, regulatory changes, and evolving market dynamics. With the increasing appetite for data-intensive applications like 5G, AI, and IoT, demand for data capacity across the transpacific route will continue to grow significantly. Geopolitical factors are also at play and could influence the development of cable systems as countries become more protective of their infrastructure and data traffic. Changes to regulatory policies, trade agreements, and security concerns may affect the way carriers manage, operate, and deploy cable systems. Buyers and sellers will need to adapt to changes and innovate to meet the growing demand for connectivity and data transfer from their onward customers. New cable systems in the transpacific will continue to play a significant role in global connectivity, linking Asia-Pacific markets with American markets to facilitate international trade, communications, and data exchange. With many countries in the transpacific featuring emerging economies, this is contributing to a surge in data consumption. New cable builds and routes will continue to be developed to further support these emerging markets in this region. STF SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

OWNERSHIP FINANCING ANALYSIS

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

3.1

HISTORIC FINANCING PERSPECTIVE

n the dynamic world of submarine cable projects, financing serves as a critical determinant in shaping these essential infrastructure developments. As we step into 2023, an examination of financing trends offers some compelling insights. Self-Finance emerges as the predominant method for funding submarine cable systems, boasting an impres-

sive total count of 412 financings to date. This approach underscores its viability and appeal as a self-sustaining funding mechanism. However, it’s crucial to recognize the variety of financing strategies at play in the industry. Debt/Equity Finance is a notable alternative, with a respectable count of 111 instances, indicating that collaborative and exter-

Figure 44: Financing Type of Systems, 2013-2023 58

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

OWNERSHIP FINANCING ANALYSIS | HISTORIC FINANCING PERSPECTIVE

Figure 45: Investment Distribution of Systems, 2013-2023

nal financial backing is still widely utilized. Additionally, Multilateral Development Banks contribute to the landscape with 48 instances of financing. Beyond raw numbers, average counts offer further valuable perspectives. Self-Finance not only leads in total counts but also maintains a strong average annual count of 37.45. Debt/Equity Finance and Multilateral Development Banks follow with average annual counts of 11.10 and 6.86, respectively. These figures highlight the enduring appeal and consistency of Self-Finance as a funding strategy. These financing dynamics play a pivotal role in shaping

the future of the submarine cable sector. They mirror the evolving needs and preferences within the telecommunications industry. As cable systems continue to grow and adapt, the choices in financing methods will remain a critical component of their success. The realm of submarine cable financing is characterized by both stability and adaptability. Self-Finance stands out as a robust and self-reliant option among a range of financing strategies. These choices are instrumental in guiding the direction of global telecommunications networks, emphasizing their importance in a world that is becoming ever more interconnected. STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

3.2

REGIONAL DISTRIBUTION OF FINANCING 3.2.1 MULTILATERAL DEVELOPMENT BANKS

Multilateral Development Banks (MDBs) are specialized financial institutions that offer both financial and technical support to developing nations. Created by coalitions of countries or regions, MDBs aim to foster economic development and alleviate poverty within their member states. They finance a wide array of development projects, spanning from infrastructure and education to healthcare and environmental sustainability. Over the last decade, MDBs have funneled a significant $2.1 billion into submarine telecommunications cables. This investment has been geographically diverse, showcasing MDBs’ dedication to boosting global connectivity and infrastructure. The EMEA (Europe, Middle East, and Africa) region has been the principal recipient, capturing 42.50% of the total MDB investment. The Americas follow with a 24% share, while the Transatlantic region accounts for 23%, largely due to key projects like the SAIL system, which directly links South America to Africa. AustralAsia has received 14% of the total investment, indicating a deceleration in growth as many of its critical connectivity requirements have been met. Conversely, the 60

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Indian Ocean region has historically seen minimal MDB investment. Notably, the Transpacific and Polar regions have yet to attract any MDB funding, likely due to a combination of logistical and economic considerations. These investment patterns are consistent with MDBs’ global commitment to infrastructure development, contributing to both global connectivity and economic growth. The substantial focus on the EMEA and Amer-

Figure 46: Distribution of MDB Investment, 2013-2023

OWNERSHIP FINANCING ANALYSIS | REGIONAL DISTRIBUTION OF FINANCING

Figure 47: Distribution of Debt/Equity Financed Investment, 2013-2023

Figure 48: Distribution of Self-Financed Investment, 2013-2023

icas regions emphasizes their importance as primary beneficiaries of MDB financing. Meanwhile, the attention given to the Transatlantic region, particularly through projects like the SAIL system, accentuates its strategic relevance. On the other hand, the reduced investment in AustralAsia reflects its more mature connectivity landscape, and the limited investment in the Indian Ocean region remains a point of interest.

3.2.2 DEBT/EQUITY FINANCING

From 2013 to 2023, the Americas led in Debt/Equity-financed systems, accounting for 26% of the total, followed by AustralAsia at 19% (Figure 24). Systems in these regions often involve collaborations between local telecom companies and governments to connect various parts of their respective areas. Due to the complexity and scale of these projects, they tend to be quite costly. Transpacific systems came in next, making up 16% SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

OWNERSHIP FINANCING ANALYSIS | REGIONAL DISTRIBUTION OF FINANCING of new system activity. Despite having fewer systems, the Transpacific region is home to some of the world’s largest transoceanic systems, which inherently come with higher costs. The EMEA and Transatlantic regions accounted for 14% and 13% respectively. While the EMEA region shares similarities with the Americas and AustralAsia, investment from local telecoms and governments has slightly declined, giving way to increased funding from Hyperscalers. This shift explains its relatively lower investment percentage. The Transatlantic region, on the other hand, has seen multiple new cable systems in recent years and continues to experience high-capacity demand, leading to a significant amount of new Debt/Equity investment, despite the already extensive cable infrastructure in the region. The Indian Ocean and Polar regions are the least active globally and generally attract lower investment interest. Investors in these regions typically look for strong commercial cases to justify capacity sales, which are often lacking due to the regions’ lower activity levels.

3.2.3 SELF-FINANCED

Between 2013 and 2023, the EMEA region led in Self-Financed system investment, contributing 23% of the total funds. This is attributed to its extensive geographical reach and the presence of point-to-point systems that don’t require large consortiums for development (Figure 25). Australasia followed closely, accounting for 22% of Self-Financed systems. This region often features government-backed systems that don’t rely solely on capacity sales for their justification. The Indian Ocean region contributed 17% to the Self-Financed investment pool, largely due to expansive inter-regional SEA-ME-WE-type systems that cross the area and involve multiple stakeholders. These systems are often viewed more as utility infrastructure than as revenue-generating assets, given the typically low activity in the region.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

The Americas and Transpacific regions secured the next highest shares of Self-Financed system investment, at 15% and 14%, respectively. Systems in the Americas often serve as revenue generators and are more likely to be financed through Debt/Equity means. Despite their higher costs, Transpacific systems see limited rapid development, which curtails further investment. In the Transatlantic region, Self-Financed systems constituted 7% of the total investment. This is primarily because only a few Hyperscaler-driven systems had the capacity to self-finance. Lastly, the Polar region continued to account for the smallest investment share, at just 2%. This reflects the developmental challenges and lower overall demand in this region compared to others. STF

3.3

CURRENT FINANCING

rom 2012 to 2023, the submarine cable industry has seen significant financial activity, totaling $21 billion in investments (Figure 26). This financial journey has been far from linear, revealing intriguing trends and shifts that illuminate the sector’s economic landscape. A pivotal shift occurred in 2023 when investments of completed systems reached a significant $5.2 billion, marking it as an important year for the industry. This is in stark contrast to 2015, which represented the industry’s financial nadir with just $0.5 billion in investments. The financial trends of the industry underscore its cyclical nature, characterized by cycles of investment peaks and valleys approximately every eight to nine years. Currently, the sector is navigating a period of reduced investment, but historical patterns suggest a likely upswing between 2024 and 2025. This anticipated rise aligns with projections

for increased global bandwidth demand, reinforcing the industry’s cyclical economic dynamics. Overall, the financial landscape of the submarine cable industry demonstrates its resilience and adaptability to evolving technological and market trends. The scale of investment is a direct reflection of the industry’s commitment to meeting the world’s burgeoning communication needs.

Figure 49: System Investment, 2013-2023 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

OWNERSHIP FINANCING ANALYSIS | CURRENT FINANCING Over the past decade, the submarine cable industry has overseen the installation of an estimated 670,000 kilometers of cable, averaging around 67,000 kilometers per year (Figure 27). This consistent trend highlights the industry’s stable operational growth. When examining the correlation between the level of financial investment and the amount of cable installed, a striking similarity is observed with the eight-to-nineFigure 50: System Deployment by Year, 2013-2023 year investment cycle previously mentioned. This correlation emphasizes the industry’s cyclical nature in both financial and operational aspects, showcasing its ability to adapt to fluctuating market conditions. From 2019 to 2023, the submarine cable industry saw a substantial global investment of $6.8 billion. Australasia led with 27% of the total investment, emphasizing its growing role in global connectivity (Figure 40). The Transpacific region followed with 18.5%, and the Americas Figure 51: Regional Investment in Submarine Cable Systems, 2019-2023 contributed 13%, highlighting their continued The Indian Ocean and Transatlantic regions captured development driven by connectivity needs between East 14% and 8% of the investment, respectively. The Polar Asia, North America, and Europe. region rounded out the list with 3.5%, indicating its The EMEA region, despite being the largest georelatively lower recent demand. Nonetheless, the future graphically, accounted for 15% of the total investment may see increased investment in the Polar region as new over the past five years. This is set to change, especially with expansive projects like Equiano and 2Africa nearing projects emerge. STF completion.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

4.1

SYSTEM SUPPLIERS 4.1.1 CURRENT SYSTEMS

From 2019 to 2023, suppliers have been most active in the Australasia, Americas, Transatlantic, and Transpacific regions. ASN emerged as the most active supplier, accounting for 25 new systems. SubCom followed with 15 systems, and NEC contributed 10. Other notable sup-

pliers include HMN Technologies Co., Ltd. (Hengtong) with 8 systems, Prysmian with 7, Nexans with 6, Hexatronic with 3, Xtera with 2, and Optic Marine, Orient Link, and Vocus each with 1 system. According to updated data, ASN led the industry by producing 139,420 kilometers of cable over the past five

Figure 52: Number of Systems by Supplier, 2019-2023 68

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS | SYSTEM SUPPLIERS

Figure 53: KMS of Cable Produced by Supplier, 2019-2023

while firms like Hexatronic will be crucial for supporting years, followed by SubCom with 107,570 kilometers shorter, unrepeatered systems. and NEC with 58,950 kilometers. Elettra and HMN Technologies Co., Ltd. (Hengtong) also made significant contributions, producing 44,300 and 40,370 kilo4.1.2 FUTURE SYSTEMS meters, respectively. Optic Marine Services produced In 2023, regional plans have shifted to reflect chang16,000 kilometers, while other manufacturers each ing demands and infrastructure priorities. While produced 8,000 kilometers or less. Australasia was once the main driver of new system While ASN and SubCom have been dominant in demand, the focus has now shifted to the EMEA (Euterms of volume, NEC, usually rope, Middle East, and Africa) among the top suppliers, likely region. This is due to the need faced production challenges due to replace aging infrastructure The Indian Ocean region is to the COVID-19 pandemic and accommodate growing data seeing moderate growth as affecting Japan in 2020 and for a center requirements. Projects like significant part of 2023. stakeholders look for alternative 2Africa and Equiano exemplify Suppliers have diversified their the rising interest in enhancing routes to bypass the volatile portfolios to include other marconnectivity within Africa and Middle East. These routes kets, such as offshore wind power, between Africa and Europe. which can be more lucrative and The Indian Ocean region is connecting Europe and Asia better align with their production seeing moderate growth as stakecontinue to be in high demand. holders look for alternative routes profiles. As a result, their participation in the submarine telecoms to bypass the volatile Middle sector has been relatively low East. These routes connecting between 2019 and 2023. Europe and Asia continue to be in high demand. Recently, there has been renewed interest in TransPreviously, the Oil & Gas industry was a significant pacific routes and direct connections from Asia and driver of submarine cable demand off the coasts of South America to Europe. These large-scale systems will Africa and Australia. However, declining oil prices and require thousands of kilometers of cable. Going forward, a global shift away from fossil fuels have lessened this it’s anticipated that only three or four major companies industry’s impact. will be equipped to handle these extensive projects, In the Americas and southern Transatlantic regions, SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS | SYSTEM SUPPLIERS

Figure 54: Planned Systems by Supplier, 2024-2027

supplier will produce within a given timeframe. Addiincreased activity in South America had been a key tionally, the data may not fully capture the contributions driver for new cable installations. However, economic of some key players like SubCom, which could be underand political instability in some countries may soon represented in publicly available information. As future impact this growth. projects are still in active development, the landscape The rise of offshore wind and other renewable energy sources is leading to the integration of fiber solutions into could shift dramatically, affecting the roles and market power cable distribution systems, not just for telecommu- shares of these suppliers. nication purposes. Hyperscale technology companies like Amazon, Facebook, Google, and Microsoft Hyperscale technology companies like Amazon, are increasingly driving new Facebook, Google, and Microsoft are increasingly system demand, especially in driving new system demand, especially in the Americas, the Americas, Transatlantic, and Transpacific regions. The demand Transatlantic, and Transpacific regions. The demand for for cloud services, exacerbated cloud services, exacerbated by the COVID-19 pandemic in by the COVID-19 pandemic in 2020, has accelerated this trend 2020, has accelerated this trend in 2023. in 2023. Based on the most recent publicly announced data, ASN is This competitive environment, dominated by industry involved in seven systems, accounting for 31.8% of new veterans like ASN, NEC, and SubCom paints a promissystems planned through 2027. NEC is also active, with five systems in the pipeline. Other suppliers typically have ing picture for the future of the cable supplier industry. Their dedication to innovation and their strong track one or two systems each. records position them as influential forces in the telecomIt’s important to note that the number of active projects doesn’t necessarily equate to the volume of cable each munications sector. STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

4.2

INSTALLERS 4.2.1 REGIONAL CAPABILITIES

In recent years, the landscape of global cable ship ownership has undergone significant changes. SubCom now leads with ownership of eight vessels, followed by Orange Marine and ASN, each with six. Global Marine and Optic Marine trail closely with five vessels apiece. Together, these top five companies make up 60% of the

global fleet. While these figures represent the portion of the fleet exclusively owned and operated by each installer, they also have the option to utilize “vessels of opportunity,” providing them with the flexibility to undertake various types of projects worldwide. This increased flexibility has expanded the geographical reach of supplier services, enabling companies to take

Figure 55: Systems Installed by Company, 2019-2023 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS | SYSTEM SUPPLIERS

Figure 56: KMS Installed by Region, 2019-2023

ters, while the Transatlantic region has added 37,000 kilometers. The Polar region trails with a minimal 1,800 kilometers. The past five years have seen a slight dip in the total kilometers of cable installed, largely due to 4.2.2 CURRENT INSTALLATIONS COVID-19-related delays. However, the EMEA region From 2019 to 2023, ASN has emerged as the industry has experienced a significant leader, responsible for 28 systems, rebound, doubling its cable installawhich equates to a significant 25% In terms of kilometers of tions in the last 18 months comof all cable systems installations. pared to the previous five years. This Orange and SubCom are next, cable installed by region, resurgence is expected to continue, each contributing 15 systems, or the EMEA region leads with positioning EMEA as the focal point 13.5% of the total installations, each. HMN Technologies and 112,000 kilometers, followed of future cable system installations. On the other hand, the AmerNEC follow with 9 systems each. closely by Australasia with icas region is expected to see a The remaining installations are 103,000 kilometers. The decline in activity, having already spread among smaller installers like Elettra, Prysmian, IT InternaIndian Ocean and Transpacific met much of its immediate connectivity needs. While there are tional Telecom, and Optic Marine regions have seen 69,000 preliminary plans for new Polar Services. These figures underscore systems, these projects are still the adaptability of companies with and 67,500 kilometers of uncertain due to the technical and multi-regional capabilities, as they installations, respectively. financial challenges involved. are often the most active in securLooking forward, the landscape ing and executing projects across of submarine cable installations is diverse geographies. set for a shake-up. The EMEA region is anticipated to see In terms of kilometers of cable installed by region, a surge in activity, driven by ambitious projects that aim the EMEA region leads with 112,000 kilometers, folto connect key African regions with Europe and India. lowed closely by Australasia with 103,000 kilometers. Meanwhile, the Transpacific, Indian Ocean, and AustralThe Indian Ocean and Transpacific regions have seen asia regions are expected to maintain steady growth, fueled 69,000 and 67,500 kilometers of installations, respecby investments from Hyperscale and private companies. STF tively. The Americas have contributed 58,000 kilomeon projects far from their “home base.” Consequently, cable owners now have greater latitude in selecting suppliers for their new systems.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

4.3

SURVEYORS 4.3.1 CURRENT SURVEYS

In the realm of surveying activities for the submarine cable industry, ASN and their unannounced Surveyor(s) continue to lead, accounting for 31% of all surveys conducted, a slight decrease from its previous 40.56% share. EGS follows closely with 28%, and Fugro comes in third with 12%. IT International Telecom holds a 9% share,

while other companies have surveyed 1-2 systems each. ASN’s role in surveying activities highlights its significant contribution to the preparatory phases of cable system installations. Given that surveying is a critical initial step for any new cable system, the presence of a reliable surveyor like ASN provides cable owners with a range of options and flexibility in planning their projects.

Figure 57: Systems Surveyed by Company, 2019-2023 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS | SURVEYORS

Figure 58: Survey Status of Planned Systems by Region

The data also emphasizes the global capabilities of these leading surveyors. Their extensive coverage is vital to the industry, as submarine cable systems span diverse geographical regions and face various environmental conditions. Regardless of the timeline or complexity of a system, having access to proficient surveyors is essential for the industry. (Figure 47)

4.3.2 FUTURE SURVEYS

extending their expected completion dates into 2024 or beyond. Interestingly, there is a negative correlation between the status of ‘Complete’ or ‘Incomplete,’ suggesting that regions with more completed surveys tend to have fewer instances of multiple surveys for a single system.

However, it’s crucial to acknowledge that the

Embarking on a survey marks transition from survey to full system completion can be one of the initial challenges a lengthy process, typically spanning around 18 months. on the path to implementing a submarine cable system. For the Consequently, several systems may face delays, extending period spanning 2023 to 2027, their expected completion dates into 2024 or beyond. only 25% of planned systems have successfully completed this essential task. In the context of Specifically, the EMEA, Americas, and Indian Ocean 2023 alone, 78% of all planned systems have underregions lead the way, each accounting for 25% of the total gone survey processes, indicating proactive progress in ‘Complete’ planned systems. This data underscores the the industry. However, it’s crucial to acknowledge that complexities and timelines involved in submarine cable the transition from survey to full system completion system installations and highlights the industry’s proaccan be a lengthy process, typically spanning around 18 months. Consequently, several systems may face delays, tive efforts, despite the challenges. (Figure 48.) STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

4.4 CONSULTANTS AND CLIENT REPRESENTATION SERVICES: NAVIGATING THE DIGITAL ABYSS PERSPECTIVES OF GLENN HOVERMALE

n the ongoing quest for global connectivity, the submarine telecom industry remains at the cutting edge of technological innovation. Within this complex network of undersea cables, consultancy and client representation services have become crucial, facilitating the smooth design, planning, implementation, and compliance of submarine cable systems. In 2023, this vibrant sector displayed notable growth, achieving a combined market size of $26,000,000, which is comparable to the 2020 valuation of $25,000,000. This report explores the nuances of these two distinct market segments, highlighting key players, market dynamics, and technological advancements that will shape the future of global connectivity.

Video 7: Glenn Hovermale, Marine Coordinator - WFN Strategies

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUPPLIER ANALYSIS | CONSULTANTS AND CLIENT REPRESENTATION SERVICES

Figure 59: Consultant & Client Representation Market, 2020-2023

4.4.1 CONSULTANCY SERVICES: CHARTING THE COURSE MARKET LANDSCAPE

In 2023, consultancy services in the submarine telecom sector experienced a thriving market, estimated at $11,000,000 in valuation. These services covered a wide range of projects, including systems expected to reach Ready for Service (RFS) status as far out as 2028. Importantly, these consulting services were mainly conducted by a select group of specialized consultancies, predominantly based in the United States and Europe. At the same time, cable developers utilized their in-house expertise, highlighting the industry’s depth of knowledge.

external partnerships serves as a foundation for success in the consultancy segment.

4.4.2 CLIENT REPRESENTATION SERVICES: SAFEGUARDING THE SUBSEA NETWORK MARKET LANDSCAPE

Client representation services in the submarine tele-

IN-HOUSE VS. EXTERNAL PROVIDERS

Interestingly, in 2023, a significant 21% of submarine cable systems were designed, planned, and implemented by the cable developers themselves. This reflects the industry’s self-sufficiency and deep understanding of the unique challenges associated with undersea cable installations. On the other hand, a substantial 48% of systems employed external providers, whether identified or undisclosed, underlining the industry’s adaptability and its reliance on specialized consultancies to navigate the complexities of cable system deployment. This delicate balance between in-house expertise and 76

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 60: Consultant Market Share, 2023

com sector showed strong growth in 2023, reaching an estimated valuation of $15,000,000. These services extended their scope to systems expected to achieve RFS status as late as 2028, emphasizing their essential role in ensuring cable handling, installation, and testing comply with supplier specifications. Notably, this segment included a consortium of well-known companies, mainly located in the United States and Europe, as well as in-house teams from cable developers. EXTERNAL ASSURANCE VS. IN-HOUSE EXPERTISE

In contrast to consultancy services, only a minimal 1% of in-field implementation, handling, installation, and testing assurance services were carried out by cable developers themselves in 2023. A significant 48% of such services were outsourced to external providers, whether they were recognized or undisclosed. This marked difference underscores the industry’s acknowledgment of the need for external expertise to maintain the integrity and reliability of subsea cable systems. STF

Figure 61: Client Representation Market Share, 2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

WHEN YOU HAVE THE

FOR SPEED

400GbE

Connectivity between Australia and New Zealand to the USA.

NEED

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SYSTEM MAINTENANCE

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

5.1

PUBLICITY

ince SubTel Forum initiated its tracking of cable fault incidents in 2014, a total of 236 publicized disruptions have been recorded. These disruptions stem from a range of natural disasters, including tsunamis, earthquakes, and volcanic eruptions. However, most cable faults

are attributed to human activities, particularly vessels that drop anchors or fish without regard for what lies beneath the water’s surface. The AustralAsia region has been a hotspot for such incidents, accounting for 40% of all publicized faults since tracking began. This year alone, the region has

Figure 62: Cable Fault Stories per Region, 2014-2023 82

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SYSTEM MAINTENANCE | PUBLICITY

Figure 63: Total Cable Fault Stories, 2014-2023

seen a notable number of incidents, including multiple faults affecting cables into Vietnam and several leading to Pacific Islands. The EMEA region is another significant contributor, responsible for 25% of all reported cable faults. One of the primary reasons for the high incidence of faults in these two regions is the limited safe sailing areas for certain vessels, which also happen to be ideal locations for laying submarine cables. These confined channels result in increased maritime traffic, thereby elevating the risk of cable faults. In contrast, regions with more expansive or less restricted shipping lanes offer greater route diversity for both cables and the vessels traversing the waters above them.

SubTel Forum has previously highlighted the media’s general lack of coverage on cable faults. More often, news of service disruptions circulates through social media rather than official announcements from cable owners or maintenance organizations. This scarcity of formal information makes it challenging to accurately assess the risks that submarine cables face in specific global regions. Interestingly, the year 2023 has seen fewer media stories about submarine cable system failures compared to both 2022 and 2021. STF

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

5.2

REPORTING TRENDS AND REPAIR TIMES

n 2023, the average repair time for announced faults was 40 days, a significant improvement compared to the previous two years and nearly half the duration of 2022. This year’s most notable incidents primarily occurred in Vietnam, a region that has consistently been a trouble spot for cable faults, as well as a large outage affecting four cables off the coast of Africa in August. These repairs were particularly challenging due to the regions they occurred in and the manner in which they were addressed. In some instances, repairs were conducted through the spot market rather than through a maintenance agreement, which tends to give such repairs a lower priority. The reduced average repair time this year is noteworthy, especially considering the complexities of the regions where the faults occurred. The challenges of repairing cables in these areas underscore the industry’s resilience and adaptability in maintaining global connectivity.

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 64: Average Repair Time in Days, 2014-2023

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

5.3

CLUB VERSUS PRIVATE AGREEMENTS

arine maintenance in the submarine cable industry operates under two primary types of agreements: private and club. In a private agreement, the contractor and cable owner negotiate terms and pricing directly. In contrast, a club agreement involves multiple cable owners who collectively agree on terms and pricing.

(2OCMA) operates in the southern Atlantic and Indian Oceans, utilizing Telkom SA’s depot facilities in Cape Town, South Africa. Orange Marine provides vessel and facility support, with base ports located in Cape Town.

5.3.1.2 ATLANTIC CABLE MAINTENANCE AGREEMENT

The Atlantic Cable Maintenance Agreement (ACMA)

5.3.1 TRADITIONAL CLUB AGREEMENTS

Within a Maintenance Zone, each cable owner designates a Maintenance Authority. This individual serves as the central liaison between the cable owner and both the marine service provider and depot operator. The Maintenance Authority oversees repair operations and maintains up-to-date records for the system.

5.3.1.1 OCEANS CABLE MAINTENANCE AGREEMENT

The 2 Oceans Cable Maintenance Agreement 86

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 65: Traditional Club Agreements Map

SYSTEM MAINTENANCE | PUBLICITY serves as the industry standard for maintenance services. Established in the North Atlantic in 1965, ACMA has set the benchmark for structure and operating procedures. It operates across the Atlantic, Southeast Pacific, and Northern Europe, utilizing facilities from Global Marine, Orange Marine, and SubCom.

5.3.1.3 MEDITERRANEAN CABLE MAINTENANCE AGREEMENT

Operating from La Seyne-sur-Mer in Southern France, the Mediterranean Cable Maintenance Agreement (MECMA) covers 71,000 km of cables in the Mediterranean, Black, and Red Seas. Orange Marine and Elettra provide vessel and facility support, with base ports in Le Seyne Sur Mer, France, and Catania, Italy.

5.3.1.4 NORTH AMERICAN ZONE CABLE MAINTENANCE AGREEMENT

The North American Zone Cable Maintenance Agreement (NAZ) spans from the Bering Sea and Alaska to the Equator, extending from the Americas to approximately 167º West Longitude. Global Marine Systems Limited provides vessel and facility support, with a base port in Victoria, Canada.

5.3.15 SOUTHEAST ASIA/INDIA OCEAN CABLE MAINTENANCE AGREEMENT

The Southeast Asia/Indian Ocean Cable Maintenance Agreement (SEAIOCMA) covers a vast area stretching from Djibouti to Guam and Taiwan to Australia. ACPL, IOCPL, and Global Marine Systems Limited provide support, with base ports in Singapore; Colombo, Sri Lanka; and Manila, Philippines.

5.3.2 PRIVATE MAINTENANCE AGREEMENTS

Private maintenance agreements offer customized services, tailored to the specific needs of individual system owners. These contracts are generally provided by ship operators.

5.3.2.1 ATLANTIC PRIVATE MAINTENANCE AGREEMENT

The Atlantic Private Maintenance Agreement (APMA) operates in the Atlantic and Mediterranean regions, supported by ASN and SubCom. Base ports are in Calais, France; Curacao; and Cape Verde.

5.3.2.2 ASIA PACIFIC MARINE MAINTENANCE SERVICE AGREEMENT

The Asia Pacific Marine Maintenance Service Agreement (APMMSA) is supported by SubCom, with a base port in Taichung, Taiwan.

5.3.2.3 E-MARINE

E-marine focuses on cable maintenance in the Arabian Gulf, Red Sea, Indian Ocean, and Arabian Sea, with base ports in Hamriya, UAE, and Salalah, Oman.

5.3.2.4 SOUTH PACIFIC MAINTENANCE AGREEMENT

The South Pacific Maintenance Agreement (SPMA) covers the southern Pacific up to the Hawaiian Islands. SubCom provides vessel and facility support, with a base port in Samoa. STF

5.3.1.6 Y OKOHAMA ZONE CABLE MAINTENANCE AGREEMENT

The Yokohama Zone focuses on Northern Asia and the Northwest Pacific region. KCS, KTS, and SBSS provide vessel and facility support, with base ports in Yokohama, Japan; Keoje, Korea; and Wujing, China. Figure 66: Private Maintenance Agreements Map SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CABLE SHIPS

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

6.1

CURRENT CABLE SHIPS 6.1.1 FLEET DISTRIBUTION

On a daily basis, SubTel Forum diligently tracks the activities and locations of 69 cable ships worldwide. These cable ships, although varying in design and capabilities, all play a crucial role in the installation and maintenance of the global communication backbone. Additionally, within the realm of submarine telecommunications, there are barges, power cable vessels, and survey vessels, although they are not typically categorized as cable ships due to their distinct purposes and lack of cable-laying or repair capabilities. For this report, our analysts focus primarily on telecommunications cable ships, as power cable ships often require different installation capabilities. In the 2017 SubTel Forum Industry Report, the entire cable ship fleet was solely owned by nine companies. However, over the past six years, this landscape has evolved, and the number of owning companies has expanded to twenty. Nevertheless, the total number of 92

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

Figure 67: Cable Ship Fleet Distribution by Company

cable ships in the fleet has remained relatively stable, as many of the newer entrants acquired existing vessels from established operators. Presently, three companies collectively own the majority, constituting 34.78% of the entire cable ship fleet. Orange leads the industry with 13.04% of the total cable ships, owning nine vessels. SubCom follows closely with

CABLE SHIPS | CURRENT CABLE SHIPS 11.59%, possessing eight cable ships. ASN and Global Marine each contribute 10.14% to the fleet, owning seven vessels apiece. Orange, which currently owns nine cable ships, has announced plans to replace the C/S Raymond Croze in early 2023 upon the completion of the Sophie Germain cable ship construction (Orange, 2020). Optic Marine and E-Marine control the next significant share, owning 8.70% and 7.25% of the fleet, respectively. The remaining ownership is distributed among fifteen companies, each owning one to four cable ships.

6.1.2 CABLE SHIP ACTIVITY

Cable ships are essential for seamless data, voice, and video transmission across continents and under the world’s oceans. Without their expertise, our international communication, financial transactions, and information exchange would face significant disruptions. During the specified period, cable ships were actively involved in laying new cables, conducting repairs, and expanding networks to remote areas. Their advanced technology, skilled crew, and specialized equipment ensure uninterrupted data flow in our digital age. The significance of cable ship activities lies in their direct contribution to global telecommunications. New cable installations expand network reach and capacity, enabling faster and more reliable communication. Maintenance and repair operations safeguard against disruptions caused by natural disasters, damage, or sabotage. Connecting remote regions provides economic opportunities, education, and improved access to services for isolated communities. With the increasing reliance on cloud computing, IoT devices, and emerging technologies, the demand for robust telecommunication networks continues to grow. The observed cable ship activity between January 1 and September 31, 2023 demonstrates the industry’s dedication to meeting this demand. These operations ensure the smooth functioning of our current digital landscape while setting the stage for future expansion and innovation. Exploring global cable ship activity during this period allows us to appreciate the immense efforts undertaken by these vessels and their crews. They navigate challenging seas and employ intricate cable-laying machinery to maintain the lifelines that connect our world. Join us as

Video 8: Syeda Humera, Analysis Intern - Submarine Telecoms Forum

we delve into their operations, understand their invaluable contributions, and gain insights into the dynamic realm of global telecommunications empowered by cable ships. NAVIGATION STATUS

The following bar graph visually represents the frequency of AIS status updates, shedding light on vessel activities and movements. AIS, short for Automatic Identification System, is an integral tracking system employed in the maritime industry for monitoring and transmitting crucial vessel information, including position, speed, course, and status updates. The x-axis of the bar graph categorizes AIS status into distinct categories such as “Underway,” “At anchor,” and “At port.” Meanwhile, the y-axis quantifies the frequency or count of status updates. The scale on the y-axis is determined by the range of frequencies observed within the dataset. KEY FINDINGS:

The highest count of AIS Entry was found in the “Moored” category, totaling 3,063. In stark contrast, the “Not under command” category recorded the lowest count of AIS Entry, with only 2 instances. PERCENTAGE INCREASE:

“Moored,” with 3,063 counts, displayed an astounding 153,050.00% increase compared to “Not under command,” which had a mere 2 counts. CONTRIBUTION OF MOORED

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CABLE SHIPS | CURRENT CABLE SHIPS

Figure 68: Average Speed by Month, 2023

“Moored” contributed significantly to the overall count of AIS Entry, accounting for 31.41% of the entire dataset. RANGE ACROSS ALL CATEGORIES

Across all seven Navigation Status categories, AIS Entry counts spanned from the lowest at 2 to the highest at 3,063. NOTABLE PATTERNS

The bar graph allows us to discern noteworthy patterns that can offer insights into maritime activities. For instance: A high frequency of “At port” status updates may indicate extended vessel stays in ports, possibly for maintenance, repairs, or cargo handling. This pattern can highlight the importance of a port as a hub for vessel operations or a center for maintenance and repair activities. Frequent “Underway” status updates suggest active vessel navigation or movement between locations. A significant number of “At anchor” updates signify vessels at a standstill, but not within a port or underway. This pattern can provide insights into vessel traffic, trade routes, and activities in different regions. CONCLUSION

The analysis of AIS Entry counts within the Navigation Status dataset unveils substantial variations across different categories. “Moored” emerges as the standout category with the highest count, emphasizing its significance within the dataset. Additionally, the examination of the Average of AIS 94

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Entry reveals significant disparities, with “Moored” leading by a substantial margin compared to “Not under command,” which has the lowest count. The distribution of AIS Entry among the various Navigation Status categories exhibits a wide-ranging spectrum, ranging from 2 to 3,063. SIGNIFICANCE

Analyzing the distribution and frequencies of AIS status updates through the bar graph offers valuable insights into vessel operations, helps identify patterns, and facilitates informed decision-making in the maritime industry. It provides a snapshot of vessel states and movements, offering valuable information for stakeholders such as port authorities, vessel operators, and researchers. AVERAGE SPEED

In our comprehensive analysis, we delve into the intricacies of monthly average speed fluctuations, illuminating the ever-changing pace of maritime activities throughout the year. The data on average speed provides invaluable insights into the dynamic nature of vessel movements over different months, offering a nuanced understanding of these variations. KEY FINDINGS

The zenith of average speed was reached in the month of July, boasting an impressive 3.03 as its average speed. This month stands as the uncontested leader in terms of maritime velocity. On the flip side, October reveals a contrasting narra-

tive, as it languished at the lowest end of the spectrum, with an average speed of just 2.06. This slower pace marked October as the month with the most leisurely maritime movements. SIGNIFICANT PERCENTAGE DIFFERENCE

July’s remarkable average speed of 3.03 exhibited a substantial 47.15% increase when compared to October’s more modest 2.06. This substantial difference underscores the dynamic nature of maritime activities and the extent to which they can vary from one month to another. A RANGE OF SPEEDS ACROSS THE CALENDAR

Across the twelve months of the year, the spectrum of average speeds paints a vivid picture. These speeds oscillated between the minimum of 2.06 in October and the maximum of 3.03 in July. This wide range emphasizes the nuanced patterns in vessel movements across the year. CONCLUSION

The findings underscore the significance of understanding the ebb and flow of average speeds over the course of the year. July stands out as the month of swiftest maritime activity, while October languishes with a more subdued pace. This data provides a glimpse into the seasonal and situational factors that influence vessel movements throughout the year. SIGNIFICANCE FOR MARITIME STAKEHOLDERS

This detailed understanding of monthly average speed variations holds profound implications for various stakeholders within the maritime industry. Shipping companies, port authorities, and navigational planners can leverage this knowledge to make informed decisions regarding scheduling, route optimization, and resource allocation. Ultimately, such insights contribute to the enhancement of efficiency and cost-effectiveness in maritime operations, ensuring smooth and well-orchestrated activities year-round. COMPARATIVE ANALYSIS OF AIS ENTRY COUNTS AND MONTHLY AVERAGE SPEED VARIATIONS

In this comparative analysis, we explore two critical aspects of maritime data: AIS entry counts and monthly average speed variations. By examining these two dimensions, we gain a comprehensive understanding of vessel activities and their movement dynamics throughout the year. AIS ENTRY COUNTS VS. MONTHLY AVERAGE SPEED

AIS entry counts offer insights into the frequency of status updates related to vessel activities.

In our analysis of AIS entry counts, we observed substantial variations among different navigation statuses. The “Moored” category emerged with the highest count, indicating significant stationary vessel activity. The “Not under command” category, in contrast, displayed the lowest count, suggesting minimal reporting during specific conditions. These counts provided a snapshot of how vessels transition between different states during their journeys. Monthly Average Speed Variations: Monthly average speed data reveals the pace at which maritime activities unfold over the course of a year. July emerged as the month with the highest average speed, reflecting the peak of maritime activity. In contrast, October recorded the lowest average speed, indicating a slower pace of maritime movements. The percentage difference between these two extremes, 47.15%, highlights the significant variability in maritime speeds over the months. This data provides a nuanced perspective on how external factors, seasons, or operational needs influence vessel speeds throughout the year. COMPARATIVE INSIGHTS

While AIS entry counts focus on status updates and transitions between different vessel states, monthly average speed variations provide an overview of the pace of maritime movements. The high AIS entry count in the “Moored” category suggests frequent reporting when vessels are stationary or docked, potentially for maintenance, loading, or unloading activities. In contrast, the lowest count in the “Not under command” category may signify reduced reporting during specific operational conditions, reflecting the minimal movement of vessels in this state. Monthly average speed variations, on the other hand, emphasize the ebb and flow of maritime activities over the year, influenced by seasonal changes, operational demands, or regional factors. The substantial percentage difference in average speed between July and October underscores the dynamic nature of maritime operations, with peak activity in the former and a more relaxed pace in the latter. CONCLUSION

This comparative analysis of AIS entry counts, and monthly average speed variations provides a multifaceted view of vessel activities. It highlights the importance of monitoring both the frequency of status updates and the speed of maritime movements to gain a comprehensive SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CABLE SHIPS | CURRENT CABLE SHIPS

Figure 69: Average Speed (knots) vs Average Draught, 2023

understanding of operational dynamics in the maritime industry. Stakeholders can leverage these insights for more informed decision-making, optimizing resources, and enhancing overall efficiency in maritime operations. AVERAGE SPEED VS AVERAGE DRAUGHT

The scatter plot represents the relationship between the Average Speed and average draught of ships. Before discussing the plot, it is essential to understand what draught is and why it matters in maritime operations. Draught refers to the vertical distance between the waterline and the deepest point of a ship’s hull. It determines how deep a ship sits in the water, affecting its buoyancy, stability, and maneuverability. Draught is a critical consideration for ship operators as it influences various factors, including cargo capacity, navigational limitations, and fuel efficiency. Axes: In the scatter plot, the x-axis represents the average draught values, while the y-axis represents the Average Speed values of the ships. The scales of the axes depend on the range of draught and speed values observed in the dataset. Data Points: Each data point in the scatter plot represents a specific ship, indicating its average draught and Average Speed. The position of the data point on the 96

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graph reflects the relationship between these two variables. Interpretation: The scatter plot allows for the examination of the correlation or relationship between Average Speed and average draught. Generally, a ship with a larger draught might be expected to have a slower speed due to increased water resistance and displacement. However, the scatter plot can reveal interesting correlations or outliers that deviate from this expectation. Correlations: If the data points in the scatter plot exhibit a noticeable trend, such as a negative slope or clustering, it suggests a correlation between draught and speed. A negative slope would indicate that ships with higher draught tend to have lower speeds, conforming to the expectation. Conversely, a positive slope would suggest an unexpected relationship, where ships with larger draughts have higher speeds. Outliers: The scatter plot also helps identify outliers, which are data points that deviate significantly from the general trend or pattern. For instance, if a ship has a large draught but exhibits a high speed, it suggests unique characteristics or operational considerations. There could be various reasons for this anomaly, such as the vessel’s design, propulsion system, cargo type, or specialized operations. These outliers can be of particular interest as they

may uncover interesting insights into ship operations, technological advancements, or industry-specific factors. They provide an opportunity for further investigation and understanding of the underlying reasons behind their unexpected performance. By analyzing the scatter plot of Average Speed versus average draught, stakeholders can gain insights into the relationship between these two variables for ships. It allows for the identification of correlations, patterns, and outliers that can provide valuable information for ship design, operational planning, and optimization of vessel performance. Overall, the scatter plot offers a visual representation of the relationship between Average Speed and average draught, shedding light on expected trends and revealing intriguing outliers that can stimulate further exploration and investigation within the maritime domain. On the scatter plot analysis our attention is drawn to a specific vessel, Polaris 3, which exhibited exceptional values for both Average Speed and Average of Draught. These standout characteristics provide insights into the unique capabilities and potential roles of Polaris 3 within the maritime domain. Average of AIS.SPEED (12.61): Polaris 3 recorded the highest average speed among all vessels in the dataset. This impressive speed indicates that Polaris 3 is a vessel capable of swift and efficient navigation. Such a high average speed can be advantageous for various maritime activities, especially those requiring time-sensitive operations, rapid transport, or the ability to cover long distances quickly. Average of AIS.DRAUGHT (9.05): Polaris 3 also exhibited the highest average draught value. A high draught value suggests that the vessel sits deeper in the water. This characteristic can be valuable for specific types of cargo transport or for navigating regions with deeper waterways. Vessels with high draught values are often suited for transporting heavy cargo or operating in areas where water depth is a critical factor. These exceptional characteristics of Polaris 3 highlight its unique capabilities and potential roles within the maritime industry. Its high speed makes it suitable for tasks requiring swift movement, while its substantial draught indicates its suitability for specific cargo transport or navigation in deeper waters. By identifying Polaris 3 as the vessel with the highest Average of SPEED and Average of DRAUGHT, this analysis provides valuable insights into the diverse capabilities and functions of different vessels within the dataset. Stakeholders in the maritime industry can use this information to understand the specific attributes and potential applications of vessels like Polaris 3, optimizing

their use for various operational requirements. Geopolitical Considerations: Geopolitical factors play a significant role in determining the popularity of destinations for submarine cables. Countries or regions with high population densities, economic significance, or strategic importance tend to attract submarine cable investments. These destinations require robust connectivity to support various sectors, including commerce, finance, research, and communication. Geopolitical relationships and collaborations between countries also influence the selection of destinations and the development of shared cable systems. Infrastructure and Connectivity: The availability of existing infrastructural frameworks and connectivity is crucial in determining popular destinations for submarine cables. Locations with well-established landing stations, data centers, and interconnection points are attractive for cable ship activities. These destinations provide opportunities for connectivity expansions, redundancy, and improved international connectivity. Favorable marine conditions, suitable landing sites, and proximity to major network hubs also influence the selection of destinations. Market Demand and Emerging Technologies: Market demand and emerging technologies influence the popularity of destinations within cable ship activities. High-growth regions, emerging markets, or areas with increasing demands for data and communication services become attractive destinations for submarine cable investments. Locations with a strong presence of data centers, cloud computing facilities, or technology-driven industries also drive the demand for improved connectivity and support cable ship activities. International Collaboration and Partnerships: Collaborations and partnerships between countries, industry stakeholders, and cable operators influence the interconnectedness of global cable ship activities. Joint ventures, consortiums, and international agreements promote the development of shared cable systems that connect multiple regions and foster international cooperation. These collaborative efforts aim to enhance cross-border communication, strengthen economic ties, and improve global connectivity. LOOKING FORWARD

In conclusion, the analysis of global cable ship activities has provided several key findings and insights into the industry. Let’s summarize these findings and explore their implications for the future: The data revealed an upward trend in the average speed over the specified period, corroborated between month’s ( January) and (September) reports. This indicates an SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CABLE SHIPS | CURRENT CABLE SHIPS overall increase in vessel speeds, potentially driven by factors such as improved technology, optimized routes, or the need for faster data transmission. This trend suggests a commitment to enhancing efficiency and meeting the growing demands for faster connectivity. Interestingly, there was a significant rise in the count of vessels categorized as “Moored.” This could indicate a variety of factors, such as increased maintenance activities, strategic positioning, or even heightened security measures at ports. Both reports did not show a clear trend in the relationship between vessel speed and draught, indicating that other factors may be influencing vessel speed. This adds a layer of complexity to our understanding of what drives vessel behavior and speed. As we look forward, it becomes evident that a persistent drive toward augmenting speed and operational efficiency is underway. This impetus is catalyzed by ongoing technological innovations, encompassing swifter cable-laying methodologies and the embrace of novel propulsion systems. These technological strides are poised to further amplify vessel speeds, ushering in a new era of celerity in maritime operations. Furthermore, the escalating demand for high-speed internet connectivity, propelled by emerging technologies such as 5G and the Internet of Things (IoT), is poised to propel the imperative for bolstering submarine cable networks. Consequently, cable ship activities are poised to experience an upswing as they play an instrumental role in the augmentation and upkeep of these vital undersea infrastructures. FINAL THOUGHTS

Crucially, the landscape of cable ship endeavors remains susceptible to the influences of impending events and developments. The deployment of fresh submarine cable systems, linking hitherto underserved regions, stands as a prime example of an opportunity that can galvanize heightened cable ship operations and maintenance endeavors. Moreover, geopolitical considerations, regulatory shifts, or alterations in market dynamics can all sway the prioritization of specific destinations for cable ship activities. In addition, the continuous evolution of cable technologies, encompassing the advent of higher-capacity fiber optic cables and the integration of sustainable energy solutions into cable systems, is poised to redefine the modus operandi of cable ship operations. These innovations hold the promise of rendering cable laying, maintenance, and repair processes both more streamlined and environmentally sustainable. 98

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6.1.3 NEW CABLE SHIPS

The year 2023 marks a pivotal moment in the submarine telecommunications industry, characterized by the launch of several significant cable ships. This development reflects a unified effort by key industry stakeholders to enhance their capabilities and meet the rising demand for robust communication infrastructure. Optic Marine took a strategic step by commissioning the Cable Vigilance in Dunkirk, France, in late 2022. With an impressive 5,448 gross tonnage, the vessel underwent an extensive conversion at the Remontowa Shipyard in Poland. Primarily serving as a maintenance ship, the Cable Vigilance has already proven its worth by successfully completing its first repair mission on the Greenland Connect Cable in early September 2022. (Optic Marine, 2022) SubCom, a leading name in the sector, discreetly added the Endeavour, a new cable-laying vessel, to its fleet. While the exact date of acquisition is not public, the Endeavour’s recent appearance in AIS data highlights SubCom’s dedication to expanding its cable-laying capabilities to meet industry needs. In a similar vein, ASN initiated a strategic vessel acquisition program in late 2021. This initiative involved the purchase of two ships, the Ile de Molene and the Ile d’Yeu, with plans to transform them into multipurpose maintenance and cable-laying assets. The Ile de Molene was successfully completed and commissioned in late July, while work on the Ile d’Yeu continues, aligning with ASN’s strategic objectives. Further diversifying the fleet, S.B.S.S. introduced the Fu Tai vessel in February 2022, replacing the quietly retired Fu An from the previous year. The ongoing conversion of the Ile d’Yeu, along with Orange’s addition of the Sophie Germain, promises to elevate operational capabilities and efficiency. These developments underscore the industry’s commitment to adapting to the ever-changing needs of the submarine telecommunications landscape in 2023. Orange Marine has launched the Sophie Germain, a cutting-edge cable ship specifically designed for maintaining submarine cables. The ship is constructed with 4,000 metric tons of steel and measures 100 meters in length and 18 meters in width. It can travel at a speed of 12 knots and is designed to be operational within 24 hours, year-round. The ship is environmentally conscious, aiming for a 25% reduction in fuel consumption compared to existing cable ships. It employs Azipod technology for optimal maneuverability and features a hybrid system of generators and batteries to power the propellers. The ship is now in service, replacing the Raymond Croze and contributing to global Internet connectivity. STF

6.2

SHORE-END ACTIVITY 6.2.1 CURRENT SHORE-END ACTIVITY

The strategic deployment of shore-end landings continues to show a strong regional correlation with the submarine cable systems implemented in specific areas. As noted in the Global Overview section, Australasia has risen as a dominant force, accounting for the highest percentage of system implementation activities over the

past five years. While some cable systems take advantage of existing infrastructure for their landings, the need for route diversity often drives them to establish new landing stations to mitigate potential disruptions. In a wider regional perspective, both the Americas and the EMEA regions have contributed to about a quarter of the newly established shore-end landings each,

Figure 70: Landing Distribution by Region, 2019-2023 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

CABLE SHIPS | SHORE-END ACTIVITY

Figure 71: Landing Distribution by Region, 2024-2027

highlighting their importance in the global submarine telecommunications ecosystem. On the other hand, the Indian Ocean and Transpacific regions have seen relatively less growth in terms of landing station expansion. (Figure 58) This regional imbalance in the development of shoreend landings emphasizes the calculated strategies that cable system operators employ to bolster network resilience and improve connectivity. The decision to either establish new landing stations or utilize existing ones is a crucial one, influenced by various factors such as the need for redundancy and the imperative to maintain uninterrupted service. As the submarine telecommunications landscape continues to evolve, these regional trends offer invaluable insights into the industry’s shifting priorities and strategic investments.

6.2.2 FUTURE SHORE-END ACTIVITY

As we look to the future, we expect to see changes in the distribution of new shore-end landings across various

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regions. While Australasia will continue to be a key player, its share of new landings is projected to decrease from its previous 44 percent to 17 percent. On the flip side, the EMEA region is set for an uptick, with its share expected to grow to 26 percent over the next four years. The Americas, although decreasing its share to 11 percent, will continue to be a significant region for new landings. Interestingly, regions like the Transpacific and Polar, which previously held smaller shares, are expected to see increases, accounting for 18 percent and 8 percent of new landings, respectively, provided that announced plans come to fruition. These evolving regional trends highlight the dynamic shifts in the submarine cable industry, influenced by changing connectivity needs, emerging markets, and strategic infrastructure investments. As cable system operators strategically adapt to meet the ever-changing demands of global telecommunications, these regional forecasts provide invaluable insights into what the future holds for shore-end landings. STF

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HYPERSCALERS AND THE EVOLUTION OF SUBMARINE CABLE OWNERSHIP A TRANSFORMATIVE SHIFT IN INDUSTRY DYNAMICS

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7.1

HYPERSCALERS

yperscalers like Amazon, Facebook, Google, and to some extent, Microsoft, have evolved from merely purchasing capacity to owning entire submarine cable systems. These tech giants are not just influencing the routes of these cables but are also spearheading innovations within the systems themselves. From advanced transmission technologies for higher-capacity wavelengths to increased fiber counts for greater overall system capacity, Hyperscalers are at the forefront of technological advancements. They are also advocating for open systems, which leads to shared system architectures, further democratizing the submarine cable landscape. The COVID-19 pandemic acted as a catalyst for cloud adoption across diverse industries. Companies had to adapt quickly to remote work environments, leading to unprecedented spending on Software as a Service (SaaS) solutions like Microsoft 365, DocuSign, and Dropbox, as well as private cloud options. This surge in demand was documented in a 2022 report by Flexera, highlighting the critical role of cloud services during the pandemic. (Flexera, 2022) Another paradigm shift introduced by Hyperscalers is the transition from city-to-city connections to data center-to-data center links. Unlike traditional cable owners, these tech giants prioritize locations that offer economic advantages and cost-saving benefits, thereby minimizing the operational expenses of their data centers. The entry 104

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of a major Hyperscaler into a region not only enhances the telecom infrastructure but also introduces a range of cloud services, further enriching the local digital ecosystem.

7.1.1 CURRENT SYSTEMS IMPACTED

The landscape of submarine cable ownership underwent a seismic shift in 2016 when Hyperscalers like Google, Amazon, Microsoft, and Facebook entered the scene. These tech behemoths have such intricate infrastructure needs that owning their own cable systems has become more advantageous than merely purchasing capacity. The surge in capacity demand has posed challenges for telecom companies, ISPs, and Hyperscalers alike. The upper echelons of many markets are now dominated by these Hyperscalers, who have become pivotal stakeholders requiring massive bandwidth between their global data centers. For the period spanning 2019 to 2023, Hyperscalers have been the driving force behind 24 systems, accounting for 23.5% of the 102 total systems that went into service. This marks a significant increase from the previous year, where they drove 18% of the systems. In 2023 alone, Hyperscaler-driven systems are expected to account for a substantial portion of all new system builds. Several factors have contributed to Hyperscalers like

HYPERSCALERS AND THE EVOLUTION OF SUBMARINE CABLE OWNERSHIP | HYPERSCALERS Google, Amazon, Microsoft, and Facebook taking on this pivotal role. One key event that served as a wake-up call was Hurricane Sandy’s impact on New Jersey, USA, in 2012—a major cable landing hub. The storm caused extensive damage, leading to a massive loss of connectivity to Europe and resulting in millions of dollars in lost business. This incident underscored the need for increased route diversity and more direct control over critical infrastructure, thereby accelerating the surge of Hyperscaler-backed submarine cable systems. The exponential growth of major Hyperscalers has led to a situation where their bandwidth requirements are outstripping the available supply. Previously, these companies would purchase bandwidth from traditional carriers, but the pace of their growth has made this approach inefficient. Now, they are opting to build their own submarine cable systems. This shift offers multiple advantages. First, it gives them greater control over their assets, allowing them to manage bandwidth according to their specific needs. Second, it eliminates the need to compete with other carriers and businesses for limited capacity circuits. Owning and operating their own infrastructure has streamlined the process of increasing capacity. In the past, purchasing additional circuits from traditional carriers could take weeks or even months. Now, thanks to their control over the infrastructure, Hyperscalers can activate additional bandwidth in just a matter of days. The financial aspect of this shift is also noteworthy. While the initial investment in transoceanic cable systems is substantial—often exceeding $100 million just for a route across the Atlantic—the long-term business potential for these Hyperscalers is in the billions. The annual operational costs for managing and maintaining these cables are relatively minor when compared to the potential revenue they can generate.

Figure 72: Systems Driven by Hyperscalers, 2019-2023

Figure 73: Systems Impacted by Hyperscalers by Year, 2019-2023

7.1.2 FUTURE SYSTEMS IMPACTED

For the upcoming period of 2024 to 2028, 14% of the 56 planned systems are expected to be driven by Hyperscalers, representing a slight decrease from the 21% observed in the previous period (Figure 65). This reduction could be attributed to various factors, including the ongoing impact of the COVID-19 pandemic and internal restructuring within major Hyperscalers like Facebook and Google. Facebook is considering cutting as much as 10% of its staff (Erb, 2022), while Google aims to improve operational efficiency by 20% (Elias, 2022). SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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HYPERSCALERS AND THE EVOLUTION OF SUBMARINE CABLE OWNERSHIP | HYPERSCALERS Additionally, the global chip shortage that began in 2020 has been a bottleneck for technological development across industries, although this is expected to resolve by the end of the year ( J.P. Morgan, 2022). However, it’s crucial to note that systems backed by major Hyperscalers have a significantly higher likelihood of reaching implementation due to their robust financial capabilities. As such, we can anticipate that the 14% figure may rise as new projects are announced and others fall by the wayside. Without the backing of these Hyperscalers, future systems will face considerable challenges in proving their business cases and securing necessary funding. In the broader Information Technology sector, a second wave of companies, particularly those offering remote work services, may soon follow in the footsteps of top-tier Hyperscalers. This could trigger another surge in Hyperscaler-driven systems, sustaining the submarine fiber market’s current activity levels even as the leading providers approach the limits of their infrastructure expansion. However, as of now, no new Hyperscalers have publicly announced plans to build submarine cable infrastructure. Regarding financial investment, $2.1 billion, or 18% of the total projected investment of $11.6 billion for 2024-2028, is earmarked for Hyperscaler-backed systems (Figure 66). While these companies may not be the sole owners of every system they invest in, their financial contributions are nonetheless substantial and vital for the industry. Lastly, while general statistics indicate that only 52% of announced cable systems eventually go into service (Clark, 2019), Hyperscaler-backed systems have largely bucked this trend. These systems usually don’t get announced until they’ve reached the CIF (Contract in Force) milestone, making it highly likely that they will be implemented. This further underscores the dominant role that Hyperscalers play in shaping the future of the submarine fiber industry. STF

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Figure 74: Systems Driven by Hyperscalers, 2024-2028

Figure 75: System Investment Driven by Hyperscalers, 2024-2028

7.2

DATA CENTERS

ata center providers have increasingly become essential components of the submarine telecommunications ecosystem in recent years. One of the most significant shifts has been the strategic placement of data center and colocation facilities near cable landing stations to optimize interconnection and network services. Constructing these facilities adjacent to, or even as an integral part of, the cable land-

ing stations minimizes network latency and simplifies infrastructure. Such configurations are particularly beneficial for cable landing stations that accommodate multiple cable systems. These setups offer access to a broader range of customers and interconnection opportunities. For example, the cable landing facilities in Marseille, France, host thirteen international submarine cables and offer access

Figure 76: Data Center Clusters SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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HYPERSCALERS AND THE EVOLUTION OF SUBMARINE CABLE OWNERSHIP | DATA CENTERS to numerous potential customers seeking both interconnection and onward backhaul connectivity.

7.2.1 DATA CENTER MARKET EXPANSION & INTEGRATION

The cost of establishing a new data center can be substantial. Depending on its size and location, the construction cost can range from $7 to $12 million per megawatt (MW ). (Zhang, 2022) Google alone has invested $9.5 billion in new data center infrastructure in the United States last year. (Pichai, 2022) Additionally, research firm Gartner has projected data center expenditures to reach $226 billion in 2022, marking an 11.4% increase from the previous year. . (Haranas, 2022) These figures clearly indicate that the growth in data center infrastructure is on an upward trajectory. Data centers operated by non-Hyperscalers like Equinix or Digital Realty Trust stand to benefit from the ongoing construction of submarine cables. Proximity to a cable landing station offers multiple interconnection opportunities, which can justify the high initial investment in a new data center. While these non-Hyperscaler data centers do gain advantages from submarine cable infrastructure, they are not the primary drivers of new builds. Instead, their interest lies solely in the interconnection opportunities provided by cable landing stations. For carrier-neutral providers like Equinix, locations served by only a single cable system are not considered attractive for expansion. The acquisition of MainOne by Equinix in April 2022 is a significant indicator of how data center providers are becoming more directly involved with submarine cables. Equinix’s $320 million investment not only marks its entry into the African market but also

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augments its long-term strategy to become a leading carrier-neutral digital infrastructure company in Africa. This move will extend Platform Equinix into West Africa, providing both local and international organizations access to global and regional markets. MainOne brings to Equinix four operational data centers and an extensive submarine network extending 7,000 kilometers from Portugal to Lagos, Accra, and along the West African coast. This acquisition is not just about expanding geographic reach; it’s also about enhancing connectivity and reducing latency, which are critical factors in the submarine cable industry. As Equinix integrates MainOne’s assets, it will likely continue to deepen its involvement in the submarine cable sector. This could include more direct investments in submarine cables and even the development of new submarine cable systems to further connect its data centers globally. Therefore, as the industry evolves, expect data center providers like Equinix to play an increasingly integral role in the submarine cable ecosystem. Bridging the gap between terrestrial and submarine traffic is crucial for international connectivity. Traditionally, submarine fiber systems would land at a cable landing station and then negotiate backhaul connectivity to a data center, which wasn’t always nearby. Subsequent negotiations for interconnection services with other carriers and providers would follow. This process added both network latency and complexity. However, these challenges are significantly reduced when data center facilities and cable landing stations are more closely integrated. As new technologies and strategies are developed in this direction, network efficiency and reliability are expected to continue improving. STF

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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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SPECIAL MARKETS

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8.1

OFFSHORE ENERGY

EXCERPTS FROM GREG OTTO AND BILL WALL 8.1.1 HISTORY OF OIL & GAS SUBMARINE CABLES

In the late 1970s, Offshore Telephone took the initial step by deploying a coaxial Oil & Gas cable system in the Gulf of Mexico. This was followed by PetroCom’s FiberWeb inter-platform fiber cable system in the mid-1990s. Unfortunately, both systems failed and were eventually abandoned (Berlocher, 2009). The first successful Oil & Gas submarine fiber cable was installed in the early 1990s in the North Sea by BP. Subsequent developments include PetroBras’s offshore platform system in the Campos Basin in 1998, BP’s Central North Sea Fiber Optic Cable in 2001, Saudi Aramco’s Offshore Fiber Optic Cable System in 2002, and BP’s GoM cable system in 2008, which became a model for future systems. (Nielsen, 2012) The industry is increasingly 114

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focusing on new technologies to enhance efficiency and automation. This is driving the demand for offshore fiber systems that offer higher bandwidth and lower latency than traditional satellite and O3b connections. These

Video 9: Bill Wall, Project Director - LS Cable Systems America

SPECIAL MARKETS | OFFSHORE ENERGY advancements are crucial for worker tracking and safety, remote monitoring, improved seismic mapping, big data analytics, and more. The push for efficiency helps to offset weaker oil prices during tough times and maximize revenue when prices are high. As these technologies become more prevalent, the need for new submarine fiber optic systems will continue to grow.

8.1.2 THE OFFSHORE WIND ENERGY BOOM

The offshore wind energy sector is experiencing a significant boom, driven by technological advancements, and increasing global focus on sustainability. Offshore wind farms are becoming increasingly crucial, requiring durable and efficient submarine cables to transfer generated energy to mainland grids. Unlike their application in oil and gas, where the primary need is for monitoring and data transfer, these cables in the renewable sector are critical for operational success as they have to meet the high demands of electrical transmission over long distances. Geopolitical issues like the Ukrainian conflict have accelerated this change by making the Oil & Gas sector more cautious in their capital allocation strategies. Investments are increasingly being redirected towards wind and solar energy projects, signaling not just a diversification but also a de-risking strategy. This move is not merely reactive but also anticipatory, as companies expect tighter regulations against fossil fuels soon. The shift towards renewables, therefore, is both a strategic and a defensive move, making room for sustainable growth while insulating against political and environmental vulnerabilities. Moreover, the offshore wind energy sector is also benefiting from the development of new types of submarine cables designed to meet the unique demands of renewable energy projects. For instance, unlike traditional cables used for Oil & Gas, the new cables designed for offshore wind farms need to withstand different types of environmental stress, including higher voltages and varying seabed conditions. These cables are also expected to have longer lifespans to match the operational life of renewable energy installations, thus reducing the frequency and cost of replacements. (Wall, 2023)

8.1.3 THE OIL & GAS SECTOR: A CHANGING LANDSCAPE

The Oil & Gas sector, once the cornerstone of offshore energy, is undergoing a transformative phase. The industry is grappling with a host of challenges, ranging from geopolitical tensions to environmental concerns. These challenges have led to a cautious approach in capital allocation, with companies increasingly looking at diversification strategies. The sector is not just focusing on oil and gas exploration but is also venturing into renewable energy projects, particularly offshore wind energy. This shift is not merely a reaction to external pressures but also an anticipatory move. Companies are preparing for a future where fossil fuels might not be the dominant source of energy. Regulatory pressures are mounting, with governments around the world tightening the noose on carbon emissions. In this context, the Oil & Gas sector is looking at renewable energy not just as an alternative but as a necessity for sustainable growth.

Video 10: Greg Otto, Technical Director – WFN Strategies

The changing landscape is also affecting the submarine cable industry, which has been a vital part of offshore Oil & Gas operations. The cables used in this sector are designed for high data transfer rates, enabling real-time monitoring and control of offshore rigs. However, as the focus shifts to renewable energy, these cables are being adapted to meet the unique demands of offshore wind farms, such as higher voltage requirements and varying seabed conditions. Moreover, the Oil & Gas sector is exploring less capital-intensive alternatives for its communication and data needs. Companies are considering the use of low SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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and medium earth orbit satellites as a viable trade-off. While these technologies may not offer the same level of reliability as submarine cables, they are being viewed as an acceptable compromise, especially for less data-intensive tasks. (Otto, 2022)

8.1.4 THE ROLE OF SUBMARINE CABLES: BRIDGING THE GAP

to play a significant role in the future, as they offer a cost-effective and flexible solution for the evolving energy landscape.

8.1.5 TECHNOLOGICAL INNOVATIONS: PAVING THE WAY FOR THE FUTURE

As the offshore energy sector evolves, so does the technology that supports it. Technological advancements are playing a pivotal role in shaping the future of both Submarine cables have long been the unsung hethe Oil & Gas and renewable energy sectors. In the roes of the offshore energy sector, providing the critical Oil & Gas industry, innovations in drilling technology, infrastructure needed for both Oil & Gas and renewable such as horizontal drilling and hydraulic fracturing, have energy projects. These cables serve multiple purposes, revolutionized the way oil and gas are extracted. These from transmitting energy to mainland grids to enabling real-time monitoring and control of offshore installations. technologies have made it economically viable to tap into In the Oil & Gas sector, submarine cables are essential previously inaccessible reserves, thereby extending the life of the industry. for high data transfer rates, which facilitate real-time Similarly, in the renewable enermonitoring and control of offshore gy sector, advancements in turbine rigs. These cables are designed to In the Oil & Gas sector, are making offshore withstand the harsh conditions submarine cables are essential technology wind farms more efficient and of the deep sea, including high for high data transfer rates, cost-effective. The development of pressure, low temperatures, and larger and more efficient turbines corrosive saltwater. However, as the which facilitate real-time has significantly reduced the cost industry shifts its focus towards monitoring and control of per megawatt-hour (MWh) of renewable energy, the requirements electricity generated, making for these cables are evolving. offshore rigs. These cables For offshore wind energy are designed to withstand the offshore wind energy increasingly competitive with traditional fossil projects, submarine cables need to harsh conditions of the deep fuels. Innovations in energy storage meet different criteria. They must be capable of transmitting high sea, including high pressure, solutions, such as advanced batteries and pumped hydro storage, are voltages over long distances with low temperatures, and also contributing to the viability of minimal energy loss. Additionally, corrosive saltwater. renewable energy projects. these cables must be designed to These technological advancewithstand varying seabed condiments are not just limited to tions and environmental stressors, such as strong currents and abrasive sandbanks. The in- energy production; they are also transforming the subcreasing complexity and scale of offshore wind projects marine cable industry. The development of high-voltage direct current (HVDC) technology has made it posare pushing the boundaries of existing cable technolosible to transmit electricity over longer distances with gy, necessitating innovation and adaptation. The growing demand for renewable energy is also driv- minimal energy loss. This is particularly important for offshore wind farms, which are often located far from ing the development of new types of submarine cables. mainland grids. HVDC technology is also being used in Companies are investing in research and development multi-purpose cables that can serve both the Oil & Gas to create cables that are not only more efficient but also and renewable energy sectors, offering a more flexible and more environmentally friendly. For instance, some comefficient solution. panies are exploring the use of bio-based materials for Furthermore, the industry is exploring the use of artificable insulation to reduce the environmental impact. cial intelligence (AI) and machine learning algorithms to Moreover, the diversification of energy sources is optimize energy production and distribution. These techleading to the development of multi-purpose submarine nologies can analyze vast amounts of data in real-time, cables. These cables are designed to serve both traditionenabling more efficient use of resources and reducing al Oil & Gas projects and emerging renewable energy operational costs. AI and machine learning are also being installations. Such multi-purpose cables are expected 116

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used to predict equipment failures and schedule maintenance, thereby increasing the reliability and lifespan of offshore installations.

mental impact assessments before laying new cables, and existing cables are subject to regular inspections to ensure they are not causing environmental harm.

8.1.6 REGULATORY CHANGES AND ENVIRONMENTAL CONCERNS: A DOUBLE-EDGED SWORD

8.1.7 THE FUTURE OF OFFSHORE ENERGY IN THE SUBMARINE TELECOMS INDUSTRY

The offshore energy sector is increasingly coming unThe offshore energy sector is at a pivotal juncture, inder the scrutiny of regulatory bodies and environmental fluenced by a myriad of factors ranging from technologiorganizations. While the Oil & Gas industry has long cal advancements to regulatory changes. As we have seen, been subject to regulations aimed at minimizing envithe industry is undergoing a significant transformation, ronmental impact, the focus is now expanding to include moving away from a singular focus on Oil & Gas to a renewable energy projects as well. more diversified approach that includes renewable energy In the Oil & Gas sector, companies are facing strictsources like offshore wind. er regulations on emissions and waste disposal. These This shift is not just a response to the changing regulations are driving the industry to adopt cleaner economic landscape or geopolitical tensions but is also technologies and more sustainable practices. For instance, a proactive move towards sustainability. The industry is companies are now required to increasingly adopting cleaner techcapture and reuse or safely dispose nologies and practices, driven by These environmental of methane gas, a potent greenboth regulatory requirements and concerns are leading to house gas, instead of venting it into a growing awareness of environthe development of new the atmosphere. This has led to the mental concerns. development of methane capture Submarine cables, once the technologies aimed at technologies, which are becoming lifeline of the Oil & Gas sector, are mitigating the impact. For an integral part of offshore Oil & now finding new applications in Gas operations. renewable energy projects. These example, companies are On the flip side, the renewable exploring the use of floating cables are being redesigned to meet energy sector, particularly offshore the unique demands of these projwind turbines that can be wind, is also facing its own set of ects, such as high-voltage electrical challenges. While wind energy is positioned in deeper waters, transmission over long distances. considered a clean and sustainable The role of submarine cables is away from sensitive marine source of power, the constructhus evolving, making them a ecosystems. tion and maintenance of offshore central element in the broader shift wind farms have environmental towards a more sustainable and implications. Issues such as noise diversified energy landscape. pollution affecting marine life and the use of rare earth Technological innovations are also playing a crucial materials in turbine construction are drawing attention role in this transformation. From advancements in drillfrom environmental groups. ing technologies in the Oil & Gas sector to the developThese environmental concerns are leading to the dement of more efficient turbines in the renewable energy velopment of new technologies aimed at mitigating the sector, technology is acting as a catalyst for change. impact. For example, companies are exploring the use of However, the journey is far from over. The industry floating wind turbines that can be positioned in deeper faces challenges, including regulatory hurdles and enviwaters, away from sensitive marine ecosystems. Addition- ronmental concerns, that it must overcome to continue ally, research is underway to develop turbines that do not this path of diversification and sustainability. But given require rare earth materials, thereby reducing the envithe current trends and the pace of innovation, the future ronmental footprint of these projects. of offshore energy in the submarine telecoms industry Regulatory changes are also affecting the submarine looks promising, marked by greater efficiency, sustainabilcable industry. New standards are being developed for the ity, and diversification. STF construction and maintenance of these cables to ensure they are environmentally friendly and sustainable. For example, companies are now required to conduct environSUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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UNREPEATERED SYSTEMS

n unrepeated cable system is one that doesn’t incorporate any repeaters between cable landing stations. The signal travels directly from one landing station to another, limiting its reach. Typically, these systems are less than 250 kilometers long,

with some exceptions. Despite their distance limitations, unrepeatered cables can offer higher fiber counts and capacity limits. They can also be more cost-effective than traditional repeatered systems, depending on various factors like armoring, burial, and landing station availability.

Figure 77: Unrepeatered Systems by Year 118

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SPECIAL MARKETS | UNREPEATERED SYSTEMS From 2019 to 2023, a total of 33 unrepeatered cable systems were declared ready for service, with three being lit in 2023. These systems are often less publicized than long-haul systems, so the actual market size may be larger. Of the publicly disclosed systems, EMEA led with 19 systems, followed by AustralAsia with seven, the Americas with six, and the Indian Ocean with one. In terms of kilometers added, 2021 was an outlier with the addition of the 6,200-kilometer Prat system. Most unrepeatered systems are up to 250 kilometers long, but Prat serves as an exception. It’s a Festoon system that utilizes multiple sections of unrepeatered cable and multiple landings to extend its reach. The year 2022 added 1,500 kilometers, bringing the total closer to the figures from 2018, 2019, and 2020. In terms of financial investment from 2019 to 2023,

Figure 78: Unrepeatered Systems by Region

the EMEA region led the pack with a substantial $928 million, making up 84% of the total investment in unrepeatered systems. Following EMEA, the Americas, where the Prat system is located, accounted for $112 million or 9.5% of the total investment. AustralAsia came in next

Figure 79: Unrepeatered KMS by Year SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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SPECIAL MARKETS | UNREPEATERED SYSTEMS with $70 million, making up 6% of the overall financial pie. The Indian Ocean region saw the least investment, with only $10 million, which equates to a mere 0.85% of the total. (Figure 55) Looking ahead to the period from 2024 to 2027, the distribution of planned unrepeatered systems suggests a diverse landscape. The Americas and EMEA are each expected to account for 33% of the new systems. AustralAsia and the Indian Ocean are not far behind, each planning to contribute one new system, making up 17% of the total each. This indicates a more balanced development of unrepeatered systems across regions. (Figure 56). STF

Figure 80: Unrepeatered Investment by Region

Figure 81: Unrepeatered Planned Systems by Region

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8.3

IMPACT OF AI 8.3.1 ADVANCED MONITORING AND PREDICTIVE MAINTENANCE

can optimize the planning and deployment of undersea cables. These algorithms consider various environmenThe submarine telecom industry is undergoing a trans- tal factors, such as marine habitats and sensitive areas. By analyzing oceanographic data, AI can determine the formative phase, driven by the increasing demands of most efficient and environmentally data-intensive applications, global friendly cable routes, minimizconnectivity, and the pursuit of ing potential impacts on marine higher bandwidth. One of the AI algorithms analyze vast ecosystems. most significant contributions of amounts of data collected from Moreover, advancements in AI in this context is its role in adfiber-optic cable technology have vanced monitoring and predictive sensors and undersea cable led to the development of ulmaintenance. systems to identify potential tra-high-capacity cables capable AI algorithms analyze vast issues before they escalate of transmitting colossal volumes amounts of data collected from of data over vast distances. These sensors and undersea cable sysinto major faults. This early cables are equipped to meet the tems to identify potential issues detection allows for proactive insatiable demand for bandwidth before they escalate into major faults. This early detection almaintenance, reducing the risk in today’s digital era, redefining possibilities of global data lows for proactive maintenance, of cable breaks or disruptions the transmission. reducing the risk of cable breaks and ensuring uninterrupted The integration of generative or disruptions and ensuring uninAI and robotic technologies furterrupted global connectivity. The global connectivity. ther revolutionizes undersea cable integration of AI and data anamaintenance. Autonomous underlytics has become the hallmark of water vehicles (AUVs) equipped modern submarine cable systems, with AI algorithms can inspect cables for damage and empowering operators to predict and proactively address perform minor repairs without human intervention. potential issues, thereby optimizing system performance. These advanced systems reduce the need for costly and In addition to monitoring, AI-powered algorithms SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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SPECIAL MARKETS | IMPACT OF AI terns, and seabed conditions. This data-driven approach time-consuming manual interventions, thereby enhancallows for the identification of the most efficient and least ing the efficiency of cable maintenance operations. disruptive routes for submarine cables. By minimizing The use of AI in submarine cable operations also the cables’ impact on marine ecosystems, AI contributes extends to security measures. AI-powered surveillance to the broader goals of environmental sustainability. systems can monitor cable routes and detect suspicious Moreover, AI’s predictive capabilities can forecast activities, such as illegal cable tapping or sabotage. These potential challenges that might arise during the cable’s systems can alert authorities in real-time, enabling quick lifespan, such as natural disasters or human activities like action to prevent potential damage or data breaches. fishing and shipping. By predicting these challenges, AI Furthermore, AI’s predictive capabilities can forecast enables proactive planning, allowing for adjustments in environmental changes that might affect the cables, cable routes or the implementation of protective measuch as ocean currents, temperature fluctuations, and sures in advance. even seismic activities. This predictive analysis allows The use of AI in cable route for timely adjustments in cable optimization also has economic routes or the implementation of benefits. By identifying the most additional protective measures, efficient routes, AI reduces the ensuring the long-term sustainBy identifying the most length of cables needed, thereby ability and reliability of these cutting down on material costs. critical infrastructures. efficient routes, AI reduces Additionally, optimized routes AI also plays a role in the the length of cables needed, often require less maintenance, economic aspects of submarine thereby cutting down on translating to lower operational cable operations. By optimizing costs over the cable’s lifespan. routes and maintenance schedules, material costs. Additionally, Another noteworthy applicaAI helps in reducing operational optimized routes often require tion of AI in this context is its costs. This economic efficiency is integration with Geographic Inparticularly beneficial for counless maintenance, translating tries and companies that rely to lower operational costs over formation Systems (GIS). AI algorithms can process GIS data to heavily on submarine cables for the cable’s lifespan. provide real-time updates on cable their communication and data routes, offering dynamic rerouting transfer needs. options based on current oceanic AI’s role in advanced monitorconditions. This level of real-time ing and predictive maintenance is adaptability is unprecedented and multifaceted. It not only ensures marks a significant advancement in the field. the operational efficiency of submarine cables but also In summary, AI’s role in cable route optimization is contributes to their planning and deployment, considermultifaceted, offering environmental, economic, and ing both technical and environmental considerations. As operational benefits. Its ability to analyze complex data technology continues to advance, the role of AI in this sets, predict future challenges, and adapt in real-time field is expected to expand, offering even more sophistimakes it an invaluable tool in the planning and deploycated solutions for monitoring and maintenance. ment of submarine cables. As technology continues to advance, the role of AI in this field is expected to 8.3.2 CABLE ROUTE OPTIMIZATION expand, offering even more sophisticated solutions for The planning and deployment of submarine cables are cable route optimization. complex tasks that involve a multitude of considerations, The application of AI in cable route optimization is not ranging from technical specifications to environmental just a technological advancement but a paradigm shift in impact. Traditionally, these processes have been manual how we approach the design and deployment of submaand time-consuming, often requiring extensive surveys rine cables. The integration of machine learning and data and environmental assessments. However, the advent of Artificial Intelligence (AI) is transforming this landscape, analytics allows for a more nuanced understanding of the marine environment, leading to more informed decioffering smarter, quicker, and more environmentally sion-making. This is particularly important in regions with friendly solutions for cable route optimization. sensitive ecosystems or protected marine reserves, where AI-powered algorithms can analyze vast amounts of the impact of cable installation could be detrimental. oceanographic data, including currents, marine life pat122

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AI-driven innovations extend to the materials used in Furthermore, AI’s role in cable route optimization submarine cables. Smart materials, integrated with AI extends to regulatory compliance. By providing detailed algorithms, can self-repair minor damages, reducing the environmental assessments and predictive models, AI need for frequent manual interventions. These materials can help companies navigate the complex landscape of can also adapt to environmental changes, such as teminternational laws and regulations concerning submarine perature and pressure fluctuations, ensuring the cable’s cables. This ensures that projects are not only efficient but also compliant with environmental standards, further longevity and performance. Moreover, AI’s capabilities in data analytics enable a enhancing their sustainability. more in-depth understanding of cable performance. By AI’s capabilities in this area are continually evolving, continuously monitoring various metrics, such as signal driven by ongoing research and development. Future strength, latency, and data advancements may include throughput, AI algorithms the use of AI in the real-time can provide real-time inmonitoring of cable health AI’s role in disaster recovery is sights into the cable’s operaduring extreme weather noteworthy. In the event of natural tional status. This data-driven events, or the integration calamities such as earthquakes or approach allows for timely of AI with other emerging interventions, minimizing technologies like blockchain tsunamis, AI algorithms can quickly downtime and maximizing for enhanced security and assess the damage to submarine cables efficiency. transparency. AI also plays a significant The growing adoption of and prioritize repair tasks. This rapid role in energy efficiency. By AI in cable route optimizaresponse capability can significantly optimizing data transmission tion signifies its increasing reduce downtime and ensure that routes, AI algorithms can reimportance in shaping the duce the energy consumption future of global connectivity. critical communication links are of submarine cables, contributAs we continue to rely more restored as quickly as possible. ing to global sustainability efon submarine cables for data forts. This optimization is parand energy transmission, the ticularly crucial as the world role of AI in ensuring their transitions to renewable energy sources, where efficient data efficient and sustainable deployment will only become transmission can significantly impact energy grids. more critical. In addition, AI technologies are being integrated into the quality assurance processes of submarine cable 8.3.3 TECHNOLOGICAL ADVANCEMENTS manufacturing. Machine learning algorithms can anThe submarine telecom industry is in a constant state alyze the quality of materials used, ensuring that only of evolution, driven by escalating demands for data-inthe highest-grade components are utilized. This level of tensive applications, global connectivity, and the purquality control is unprecedented and adds another layer suit of higher bandwidth. Innovations in cable design, of reliability to submarine cable systems. materials, and installation techniques are reshaping the Furthermore, AI’s role in disaster recovery is noteworindustry’s capabilities. Advancements in fiber-optic cable technology have led to the development of ultra-high-ca- thy. In the event of natural calamities such as earthquakes or tsunamis, AI algorithms can quickly assess the damage pacity cables capable of transmitting colossal volumes of to submarine cables and prioritize repair tasks. This rapid data over vast distances. These cables redefine the possiresponse capability can significantly reduce downtime bilities of global data transmission. and ensure that critical communication links are restored The integration of artificial intelligence (AI) and data as quickly as possible. analytics has become the hallmark of modern submarine In conclusion, the integration of AI in the technologcable systems. These technologies empower operators to ical advancements of submarine cables is revolutionizing predict and proactively address potential issues, optithe industry. From material innovations to data analytics mizing system performance and ensuring uninterrupted and energy efficiency, AI is at the forefront of modernizconnectivity, even in the face of unforeseen challenges. ing submarine cable systems. As the industry continues AI’s role in technological advancements is multifaceted, to evolve, AI’s role is set to expand further, offering even offering solutions that are not only innovative but also more advanced and holistic solutions. STF practical and efficient. SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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8.4

SUBSEA SUSTAINABILITY YEAR IN REVIEW EXCERPTS FROM NICOLE STAROSIELSKI ET AL

8.4.1 THE COMPLEX LANDSCAPE OF CARBON OFFSETTING AND REMOVALS

The topic of carbon offsetting and removals is a complex and multifaceted issue in the submarine cable industry’s sustainability efforts. While the industry has made strides in reducing its carbon footprint, the challenge of achieving net-zero emissions remains. Carbon offsetting and removals have emerged as viable strategies to bridge the gap between current emissions and sustainability goals. Carbon offsetting involves Video 11: Nicole Starosielski, Professor of Film & Media - University of California, Berkeley investing in projects that reduce or remove greenhouse gas emissions, effectively balancing out the emisOn the other hand, carbon removal technologies like sions produced by the industry. These projects can range carbon capture and storage (CCS) offer a more direct apfrom reforestation efforts to renewable energy initiatives. However, the effectiveness of these projects is a subject of proach to reducing emissions. These technologies capture carbon dioxide at the source and store it underground, ongoing debate. Critics argue that offsetting can sometimes serve as a ‘get out of jail free card,’ allowing compa- preventing it from entering the atmosphere. While promnies to continue their polluting activities without making ising, CCS technologies are still in the developmental stage and come with their own set of challenges, includsignificant changes to their operations. 124

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SPECIAL MARKETS | SUBSEA SUSTAINABILITY YEAR IN REVIEW ing high costs and potential environmental risks. The industry is also exploring innovative solutions like using algae-based systems to capture carbon dioxide. Algae are highly efficient at absorbing carbon dioxide and can be harvested for biofuel production, creating a closedloop system. Research is ongoing to assess the scalability and effectiveness of such systems in a real-world setting. Moreover, the submarine cable industry is increasingly focusing on lifecycle assessments to understand the longterm impact of their operations. Lifecycle assessments consider the environmental impact of a product or service from cradle to grave, providing a more comprehensive view of its sustainability. This approach helps companies identify areas where they can reduce their carbon footprint, from manufacturing to disposal. The complex landscape of carbon offsetting and removals presents both challenges and opportunities for the submarine cable industry. While offsetting projects and carbon removal technologies offer potential solutions, their effectiveness and long-term impact are still under scrutiny. The industry’s focus on innovative solutions and comprehensive lifecycle assessments reflects its commitment to achieving sustainability.

8.4.2 INDUSTRY COLLABORATION FOR SUSTAINABLE SOLUTIONS

Collaboration within the submarine cable industry is not a new phenomenon, but its focus on sustainability is a relatively recent development. Companies, both large and small, are increasingly coming together to address the pressing challenges of environmental sustainability. This collaborative approach extends beyond the boundaries of the industry, involving governmental bodies, non-profit organizations, and academic institutions. Several industry consortiums have been formed with the specific aim of tackling sustainability challenges. These consortiums serve as platforms for pooling resources and expertise to develop innovative solutions with broader impacts. For example, there is a growing focus on creating energy-efficient technologies for submarine cables. By collaborating, companies can accelerate the development and adoption of these technologies, thereby reducing the industry’s overall carbon footprint. The collaboration is not limited to technology development; it also extends to the sharing of data and research findings. Open-source platforms and industry journals are becoming increasingly popular avenues for disseminating information. This open approach fosters a culture of transparency and accountability, which is crucial for achieving long-term sustainability goals. Companies are sharing best practices, case studies, and even failure analyses to ensure that the entire industry learns and grows together.

Furthermore, this collaborative spirit is facilitating the development of global standards and certifications for sustainability. These standards are more than just a set of guidelines; they provide a robust framework for companies to assess and improve their sustainability efforts continually. They also serve as a benchmark for consumers and stakeholders to evaluate the sustainability credentials of different companies in the industry. The adoption of these standards is becoming a differentiator in the market, providing a competitive edge to companies that are ahead in their sustainability journey. Another dimension of this collaboration is the involvement of external stakeholders. Companies are engaging with local communities, environmental organizations, and even policymakers to create more comprehensive sustainability strategies. This multi-stakeholder approach ensures that the solutions developed are not only technologically sound but also socially and environmentally responsible. In summary, industry collaboration is proving to be a powerful tool for driving sustainable change in the submarine cable industry. It allows for the pooling of resources and expertise, accelerates the development of new technologies, and fosters a culture of transparency and accountability. This collaborative approach is setting new standards for sustainability, making it an integral part of the industry’s future.

8.4.3 THE RISE OF RENEWABLE ENERGY IN SUBMARINE CABLES

The submarine cable industry is undergoing a significant transformation, with renewable energy taking center stage in its sustainability agenda. The shift towards renewable energy sources like wind and solar is not just a response to increasing environmental concerns but also a strategic move to ensure long-term viability. The industry is investing heavily in renewable energy projects, both for powering data centers and for the cables themselves. This is a marked departure from the traditional reliance on fossil fuels, which have not only environmental but also geopolitical risks. One of the most promising developments in this area is the integration of offshore wind farms with submarine cables. These wind farms are strategically located in highwind areas, often far from the mainland, making submarine cables essential for transmitting the generated electricity back to the grid. The synergy between offshore wind farms and submarine cables is creating new opportunities for the industry. Companies are developing specialized cables capable of handling the high voltages and challenging environmental conditions typical of offshore wind farms. The industry is also exploring the use of solar energy for powering submarine cable systems. While still in the experimental stage, solar-powered submarine cables could SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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SPECIAL MARKETS | SUBSEA SUSTAINABILITY YEAR IN REVIEW significantly reduce the industry’s carbon footprint. Companies are conducting pilot projects to assess the feasibility and efficiency of using solar panels installed on buoys or platforms floating on the ocean surface. These solar panels would generate electricity that could be transmitted through the submarine cables, thereby making the entire system more sustainable. Another avenue being explored is the use of tidal energy. Tidal energy harnesses the power of ocean tides to generate electricity, and its integration with submarine cables is a novel concept that is gaining traction. Companies are partnering with research institutions to study the potential of tidal energy as a renewable source for powering submarine cables. Initial studies indicate that tidal energy could be a reliable and sustainable option, especially for cables running through regions with significant tidal variations. The push towards renewable energy is also influencing the design and manufacturing of submarine cables. New materials and technologies are being developed to make the cables more energy-efficient and environmentally friendly. For example, companies are researching the use of bio-based materials for cable insulation, which would reduce the need for petroleum-based products. Additionally, advances in cable architecture are enabling more efficient transmission of electricity, thereby reducing energy loss. The adoption of renewable energy sources is not without challenges. The initial investment required for setting up renewable energy projects is often high, and there are technical complexities involved in integrating these sources with existing infrastructure. However, the long-term benefits, both environmental and economic, make it a worthwhile investment. Government incentives and public awareness are further driving the industry towards adopting renewable energy solutions. The rise of renewable energy in the submarine cable industry is a significant step towards achieving sustainability. It is reshaping the industry’s energy landscape, creating new opportunities, and setting the stage for a more sustainable future. The industry’s concerted efforts in adopting and integrating renewable energy sources are a testament to its commitment to sustainability.

One of the significant shifts in this area is the move towards renewable energy sources to power data centers. Companies are investing in solar and wind energy projects to reduce their reliance on fossil fuels. This transition is not just about reducing carbon emissions but also about ensuring long-term operational sustainability. The use of renewable energy sources mitigates the risks associated with volatile fossil fuel prices and potential supply disruptions. Cooling systems are another area where data centers are becoming more sustainable. Traditional cooling methods are energy-intensive and contribute to a significant portion of a data center’s overall energy consumption. Companies are exploring innovative cooling solutions, such as liquid cooling and geothermal cooling, to reduce energy usage. These methods are not only more energy-efficient but also offer the added benefit of reducing the data center’s physical footprint. Data centers are also adopting more efficient hardware to reduce energy consumption. The use of energy-efficient processors and storage solutions is becoming standard practice in the industry. Companies are also exploring the use of artificial intelligence to optimize energy usage in real-time, adjusting cooling and power systems based on current demand. Another significant development is the industry’s focus on circular economy principles. The concept of a circular economy aims to minimize waste and make the most of available resources. Data centers are increasingly being designed with modularity in mind, allowing for easier upgrades and reducing electronic waste. Companies are also implementing recycling programs for obsolete hardware, further reducing their environmental impact. Data centers are evolving to become more sustainable, driven by innovations in renewable energy, cooling systems, and hardware efficiency. The industry’s adoption of circular economy principles further underscores its commitment to sustainability. These developments are setting new standards for data center operations, making them an integral part of the submarine cable industry’s sustainability efforts.

8.4.4 THE EVOLVING ROLE OF DATA CENTERS IN SUSTAINABILITY

The submarine cable industry is at the forefront of technological innovation, constantly seeking ways to improve efficiency, reduce costs, and minimize environmental impact. From the materials used in cable manufacturing to the systems that power and cool data centers, every aspect of the supply chain is under scrutiny for its sustainability credentials. In recent years, the industry has seen a surge in the adoption of renewable materials for cable insulation and sheathing. Bio-based plastics, derived from renewable resources like cornstarch or sugarcane, are increasingly

Data centers play a pivotal role in the submarine cable industry, serving as the nerve centers for data storage and transmission. As the demand for data continues to soar, so does the energy consumption of these data centers, making sustainability a critical concern. The industry is increasingly focusing on making data centers more energy-efficient and environmentally friendly, aligning with broader sustainability goals. 126

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8.4.5 TECHNOLOGICAL ADVANCEMENTS AND SUPPLY CHAIN MANAGEMENT

replacing traditional petroleum-based materials. These biobased materials are not only more sustainable but also offer comparable, if not superior, performance characteristics. Another significant development is the use of Artificial Intelligence (AI) and Machine Learning (ML) algorithms to optimize supply chain operations. These technologies enable real-time monitoring and predictive analytics, allowing companies to make data-driven decisions that enhance efficiency and reduce waste. For example, AI algorithms can predict when a particular component is likely to fail, enabling proactive maintenance and reducing downtime. Moreover, the industry is making strides in adopting circular economy principles. Companies are increasingly designing products for longevity, facilitating easy upgrades, and ensuring that components can be recycled or repurposed at the end of their life cycle. This approach not only minimizes waste but also reduces the need for new materials, thereby lowering the industry’s overall environmental impact. Technological advancements and a focus on sustainable supply chain management are driving significant changes in the submarine cable industry. These efforts are not only improving the industry’s environmental footprint but also offering operational and economic benefits.

8.4.6 REGULATORY MATTERS AND ENVIRONMENTAL IMPACT ASSESSMENTS

Navigating the complex landscape of regulations and environmental impact assessments is a critical aspect of sustainability in the submarine cable industry. As the industry expands its reach and diversifies its energy sources, compliance with local, national, and international laws becomes increasingly important. Regulatory frameworks often serve as the backbone for sustainability efforts, setting the standards that companies must meet to operate responsibly. Environmental Impact Assessments (EIAs) are a key tool in this regulatory landscape. These assessments evaluate the potential environmental effects of a proposed project, from its initial stages through to decommissioning. EIAs are often mandated by governments and can be a deciding factor in whether a project receives the green light. They cover a range of issues, including the impact on local ecosystems, carbon emissions, and waste management. However, the regulatory environment is not without its challenges. Laws and regulations can vary significantly from one jurisdiction to another, making compliance a complex task. Companies often have to navigate a maze of permits, approvals, and certifications, each with its own set of requirements and timelines. This complexity can slow down projects and increase costs, but it’s a necessary

hurdle for ensuring sustainable operations. Moreover, as public awareness of environmental issues grows, there is increasing pressure on governments to tighten regulations. This evolving landscape means that companies must be proactive in staying up-to-date with the latest laws and guidelines. It also provides an opportunity for the industry to engage with regulators and contribute to the development of policies that are both practical and effective for sustainability. Regulatory compliance and environmental impact assessments are integral to the submarine cable industry’s sustainability efforts. They provide the framework and tools for companies to operate responsibly, but they also present challenges that require careful navigation. As the regulatory landscape continues to evolve, staying ahead of the curve will be crucial for the industry’s long-term sustainability.

8.4.7 SUSTAINABILITY CONCLUSIONS

As the submarine cable industry continues to evolve, sustainability remains a cornerstone of its long-term strategy. The industry has made significant strides in reducing its carbon footprint, adopting renewable energy sources, and fostering collaboration for sustainable solutions. However, the journey towards sustainability is far from over; it is a continuous process that requires ongoing commitment and innovation. The industry faces a myriad of challenges, from regulatory complexities to technological limitations. Yet, these challenges also present opportunities for growth and improvement. As the industry navigates the intricate landscape of carbon offsetting, renewable energy adoption, and environmental impact assessments, a multi-faceted approach is essential. Collaboration across sectors, adoption of circular economy principles, and engagement with regulatory bodies are just a few of the strategies that will propel the industry towards a more sustainable future. Moreover, the role of data and analytics cannot be overstated. The use of advanced technologies like Artificial Intelligence and Machine Learning offers unprecedented opportunities for optimizing operations and reducing environmental impact. As these technologies mature, their application in everything from supply chain management to energy consumption will become increasingly significant. In conclusion, the submarine cable industry is at a pivotal juncture. The decisions made today will shape the industry’s sustainability landscape for years to come. With a focus on innovation, collaboration, and compliance, the industry is well-positioned to meet the sustainability challenges of the 21st century. The path ahead is complex but promising, and the industry’s concerted efforts in sustainability are a testament to its commitment to a better, greener future. STF SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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LEGAL & REGULATORY MATTERS YEAR IN REVIEW PERSPECTIVES OF ANDRÉS FÍGOLI

ubmarine cables continue to play a key role as critical global communications infrastructure. Accordingly, discussions and regulatory changes in this industry will persist at both regional and national levels around the world in 2023. The good news is that many governments have now recognized the importance of these subsea assets, especially if they are ever affected. As a result, new regulatory initiatives are underway, and more international stakeholders are entering the arena to support further protection and harmonization with other seabed user industries. Below are some potential breakthroughs and trends in the legal and regulatory landscape of telecom submarine cables: 130

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Video 12: Andrés Fígoli, Lawyer – Figoli Consulting

REGULATORY OUTLOOK | LEGAL & REGULATORY MATTERS YEAR IN REVIEW 9.1.1 BIODIVERSITY OF AREAS BEYOND NATIONAL JURISDICTION

9.1.2 IMPROVING NATIONAL REGULATORY FRAMEWORKS

To modernize its regulatory landscape, the Telecom Regulatory Authority of India (TRAI) initiated a conIndeed, the event of the year was the approval of the “High Seas Treaty,” focused on safeguarding Marine Bio- sultation process, soliciting feedback from stakeholders through written comments and counter-comments. In diversity of Areas Beyond National Jurisdiction (BBNJ). June 2023, TRAI released its recommendations on the This treaty, under discussion for nearly two decades, “Licensing Framework and Regulatory Mechanism for sets up a procedure for establishing large-scale marine protected areas in the high seas. It was finally approved at Submarine Cable Landing in India.” (Telecom Regulatory Authority of India, 2023) an intergovernmental conference in New York, USA, on While these recommendations address various asJune 19, 2023. pects—ranging from licensing requirements for cable During this period, numerous national environmental and landing station owners to authorities globally have heightownership obligations in different ened their focus on the environCurrently, the majority of segments (national/internationmental impact of submarine cable al)—barriers remain. These need installation and maintenance. ISA member states believe to be balanced between major This includes stipulations for that commercial seabed mining stakeholders, such as Over-Theenvironmentally friendly cable materials, noise levels that affect should not proceed until proper Top (OTT) service providers and national carriers, and new market marine mammals, the use of regulations are established. In entrants. This balancing act is a low-frequency sonar, and the accordance with recent meetings recurring subject in discussions adoption of best practices in installation and maintenance to held in July 2023, the ISA aims about India’s aspirations to become a hub for submarine cables. minimize disruptions to marine to continue the development of TRAI further recommended ecosystems. such regulations, targeting their that submarine cables and their Subsequent to the treaty’s landing stations be designated as approval, several bodies will be final adoption by 2025. critical information infrastrucestablished to enforce its proviture. The layout, maintenance, sions. This will prompt further and repair of these cables should interpretation and implementation in the intricate realm of submarine cable permitting. be recognized as essential services, a status that would Any future cable owner crossing the high seas will keenly entail additional security and resilience measures such as observe these developments, especially regarding whether redundancy, backup systems, and disaster recovery plans. This regulatory debate is not unique to India; simEnvironmental Impact Assessment (EIA) requirements ilar conversations are happening globally. Countries are imposed, particularly in the new marine protected are grappling with how to craft regulations that attract areas designated under the treaty. investment while not creating insurmountable barriers Similarly, the cable industry continues to liaise with for innovative new entrants in markets already dominatthe International Seabed Authority (ISA), an intergoved by OTTs or incumbent operators. Among the issues ernmental body composed of 167 member states and the under discussion are the separation of ownership of cable European Union. The ISA is responsible for authorizing stations from national and international segments, manand regulating mineral-related activities on the internadatory environmental impact assessments, and the rights tional seabed. Close monitoring is essential to prevent of non-discrimination for local backhaul providers. any interference between submarine cables and deep These public initiatives present an opportunity for seabed activities in areas beyond national jurisdiction, as this could set dangerous precedents and discourage future cable owners to seek expedited procedures for new cable landing licenses and maintenance permits. They cooperation between the two sectors. also allow for clarification on tax issues related to cable Currently, the majority of ISA member states believe depots and operational requirements for repair vessels in that commercial seabed mining should not proceed until jurisdictional waters. Recommendations from the Interproper regulations are established. In accordance with national Cable Protection Committee (ICPC) serve as recent meetings held in July 2023, the ISA aims to continue the development of such regulations, targeting their valuable references for any government official looking to update national regulations. final adoption by 2025. SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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REGULATORY OUTLOOK | LEGAL & REGULATORY MATTERS YEAR IN REVIEW Other countries, like Ireland, have established specific 9.1.4 NEW SECURITY CONCERNS government bodies such as the Maritime Area RegulatoThis year has seen a surge in initiatives focused on ry Authority (MARA), founded in July 2023. MARA is the protection of subsea energy and telecommunicatasked with granting maritime licenses for activities like tions infrastructure, including research articles, forums, new submarine cable projects. and high-level government meetings globally. Such In the United States, there is ongoing debate about attention is beneficial for the telecom industry, as it which agency should spearhead cable protection poliunderscores the critical nature of these assets to global cy. A report published by the Congressional Research communications and elevates their protection on politiService (CRS) in August 2023, titled “Protection cal agendas. of Undersea Telecommunication Cables: Issues for In February 2023, the North Atlantic Treaty OrganiCongress,” (Congressional zation (NATO) announced Research Service, 2022) has the establishment of a Critadded to this dialogue. The ical Undersea Infrastructure The European Commission’s Global Coordination Cell at its outcome could formalize the U.S. Coast Guard’s (USCG) headquarters. This cell aims Gateway program remains a major role in protecting submato safeguard submarine cables source of external funding for new rine cables in U.S. waters or and pipelines, facilitate indusdelegate this responsibility to try engagement, and unify key cable projects aimed at bolstering other agencies or entities like military and civilian stakebackbone connectivity within the Team Telecom. holders. European Union (EU) and enhancing As countries begin to draft By May 2023, the Quadnew legislation to protect subrilateral Security Dialogue its ties with third countries. marine cables or expedite their (Quad) had formed the installation, consultations are Quad Partnership on Cable in the final stages with various Connectivity and Resilience, stakeholders. The announcements of these final bill drafts acknowledging the urgent necessity to support robust will undoubtedly influence regional regulations and fuundersea cable networks in the Indo-Pacific region. ture investment in their respective countries. Some governments have opted to integrate submarine cables into existing critical infrastructure plans or even deny landing permits based on these plans. Others are 9.1.3 FUNDING FOR NEW PROJECTS The European Commission’s Global Gateway program drafting specialized legislation specifically aimed at telecommunications infrastructure. remains a major source of external funding for new cable The debate over foreign ownership restrictions on subprojects aimed at bolstering backbone connectivity within marine cable projects remains active and varies considerthe European Union (EU) and enhancing its ties with third countries. This strategy is mirrored by other regional ably from one country or region to another. It often hinges on striking a balance between national security interests investment banks and development finance institutions, and the ambition to foster economic growth and innovawhich aim to develop their members’ connectivity martion through international collaboration. As the telecom kets through new submarine cable tenders. sector and geopolitical dynamics evolve, rules concerning Public-private partnerships (PPPs) have emerged as foreign ownership of submarine cables are likely to remain a viable option for governments interested in investsubjects for ongoing debate and modification. ing in these critical infrastructures to safeguard digital Simultaneously, scholarly discussions are intensifysovereignty. Other innovative financing models, like the ing around the proper legal instruments for addressing formation of a Special Purpose Vehicle (SPV ), serve to complement traditional consortium agreements, delineat- deliberate cable damage during peacetime. Debates are underway to determine which international organization ing the rights and obligations of cable owners. should lead updates to these instruments, with potential A consistent aspect across these various funding candidates ranging from the International Telecommuavenues is the prerequisite for the proposed new cable nication Union (ITU) and the International Maritime project to maintain good regulatory standing to be eliOrganization (IMO) to other UN bodies concerned with gible for continued financial support. This is particularly global security. crucial in regions with disputed waters or in relatively unexplored routes, such as the Arctic or Antarctic. 132

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9.1.5 EUROPEAN UNION AGENCY FOR CYBERSECURITY REPORT

establish important precedents, ongoing efforts are required to develop broader solutions. To fully realize the potential of SMART cables, a supportive legal and In August 2023, the European Union Agency for regulatory framework must be created that promotes Cybersecurity (ENISA) released a report addressing key their deployment and ensures their safe and effective cybersecurity challenges in the subsea cable ecosystem. operation. (European Union Agency for Cybersecurity, 2023) The Furthermore, there is still a regulatory gap that needs report aims to assist national authorities in EU Member to be addressed to encourage the use of SMART cables. States who are tasked with overseeing public commuSpecifically, there needs to be clarity on their classificanication networks and core internet infrastructure, as tion as either a marine scientific research activity under outlined in the European Electronic Communications Code (EECC) and the Directive on Security of Network the United Nations Convention on the Law of the Sea (UNCLOS) or some other category. This is crucial to and Information Systems (NIS2 Directive). ensure there are no additional legal or permitting conOne significant conclusion of the report is that straints on these innovative projects, beyond direct agreethere’s ambiguity at the national level within the EU ments with the countries involved in laying the cables about which authority should supervise subsea cables and current industry support. and receive related incident reports. As a result, it’s This regulatory development crucial for EU Member States is especially crucial for certain to specify at the national level areas in the Pacific, where which entity holds the reThe growing dependence on identifying climate change sponsibility and mandate for the protection and security of submarine cable systems for global hotspots is vital for improving the resilience of future cable these cables. communication and data transfer installations. In addition to ENISA’s report, other EU-led initiatives has led to the development of are underway. These include 9.1.7 LOOKING AHEAD Science Monitoring And Reliable the Permanent Structured The submarine cable Telecommunications (SMART) Cooperation plan (PESCO), industry is at a crossroads, spearheaded by the European marked by significant regucables. These technologically Defence Agency (EDA). PESlatory changes, geopolitical advanced cables come with CO aims to enhance defense considerations, and technocooperation among the 26 EU logical advancements. From integrated environmental sensors Member States. Notably, one international agreements for climate monitoring, early of the PESCO projects for like the High Seas Treawarning systems, and enhanced 2023 is the Critical Seabed ty to national initiatives in Infrastructure Protection or countries like India and the cable protection. CSIP, led by Italy. United States, the regulatory landscape is rapidly evolving. Funding mechanisms are 9.1.6 SCIENCE MONITORING becoming more sophisticated, while security concerns AND RELIABLE TELECOMMUNICATIONS CABLES are taking center stage in global conversations. Emerging technologies like SMART cables hold promise but The growing dependence on submarine cable systems require a well-structured legal framework for full-scale for global communication and data transfer has led to deployment. As the world becomes increasingly interthe development of Science Monitoring And Reliable Telecommunications (SMART) cables. These technolog- connected, it’s imperative that governments, industry ically advanced cables come with integrated environmen- stakeholders, and international organizations work tal sensors for climate monitoring, early warning systems, collaboratively to navigate these complex challenges and opportunities, ensuring a resilient and secure global and enhanced cable protection. SMART cables promise communications infrastructure for the future. STF numerous advantages such as better operational efficiency, improved maintenance, and increased reliability for submarine networks. While the initial deployments of these systems will SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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PERMITTING YEAR IN REVIEW PERSPECTIVES OF ANJALI SUGADEV

9.3.1 INDIA’S RECENT RECOMMENDATIONS RELATING TO SUBMARINE CABLES

In 2017, my paper, “India’s Critical Position in the Global Submarine Cable Network: An Analysis of Indian Law and Practice on Cable Repairs,” (Sugadev, 2017) highlighted the state of the submarine cable repair permitting situation in India. The paper included suggestions that could potentially elevate India’s status as a significant cable hub in the region. Geography is key, and it favors India if leveraged Video 13: Anjali Sugadev, Regulatory & Permitting Manager – WFN Strategies efficiently! Fast-forward seven years, and the Telecom Regulatory Authority of India (TRAI) has issued substantive recommendations to address current through a supportive permitting system. challenges and enhance the submarine cable industry, and India has come a long way from its conservative stance consequently, the digital network in India. In this article, on seaborne activities, primarily due to national securiI analyze TRAI’s 2023 recommendations as a continty concerns stemming from the 2008 terrorist attack in Mumbai. That incident reshaped the country’s defense uation of the conversation on facilitating cable repairs 134

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REGULATORY OUTLOOK | PERMITTING YEAR IN REVIEW posture, leading to increased scrutiny of all ocean activities. As a result, the permitting system for laying and repairing submarine cables in India’s jurisdictional waters remains cumbersome, requiring the involvement of multiple government agencies and officials. Recently, the government has acknowledged that a restrictive approach hampers the country’s growth. SubTel Forum’s tenth report emphasizes that “the world continues to consume ever-increasing amounts of data, with international bandwidth demand projected to nearly double every two years for the foreseeable future.” (Submarine Telecoms Forum, 2021) In line with the global internet boom, India’s internet consumption has skyrocketed following the introduction of 5G technology and the expansion of data centers. (Telecom Regulatory Authority of India, 2023) In this context, the Department of Telecommunications (DoT) sought TRAI’s advice to improve the “Licensing Framework and Regulatory Mechanism for Submarine Cable Landing in India” (Licensing Recommendations). After assessing the current framework, analyzing feedback from industry stakeholders, and examining licensing frameworks in other countries, TRAI published its recommendations in June 2023, which are discussed in this article. Additionally, TRAI released another set of recommendations in May 2023, titled “Recommendations on Ease of Doing Business in Telecom and Broadcasting Sector” (Telecom Regulatory Authority of India, 2023) (Ease of Doing Business Recommendations). These support and strengthen several of the points made in the Licensing Recommendations, as discussed below.

9.3.2 DECODING 2023 TRAI’S RECOMMENDATIONS IN THE CONTEXT OF CABLE REPAIRS

My 2017 paper focused on the challenges faced in repair activities due to the lack of an Indian-flagged cable ship. Cable repair holds significant economic importance in our digitally advanced world, and quick remedies for damages enable digital functions to run smoothly. The recent TRAI recommendations and report advocate for establishing a committee of relevant government departments to discuss viable financial options for a long-term Indian vessel solution. In the interim, the report urges cable vessels operating in the region to reflag or relocate their vessels to suitable Indian ports. In addition to advocating for an Indian cable vessel, TRAI’s Licensing Recommendations identify the need for cable depots on India’s East and West coasts. These depots would store cables and essential equipment for repairs. A strategic approach for rapid response is advised, with locations near existing or upcoming cable landing

stations (CLS) given preference. Financial incentives, such as “special economic zones” treatment and GST/ customs duty exemptions, are also proposed. TRAI further elaborates its stance in another set of recommendations, “Regulatory Framework for Promoting Data Economy Through Establishment of Data Centres, Content Delivery Networks, and Interconnect Exchanges in India.” It suggests that coastal states like Gujarat, which already offer fiscal support for new cable landing stations, may consider additional incentives. (Government of Gujarat Department of Science and Technology, 2022) Gujarat’s government aims to provide one-time CAPEX support and a power tariff subsidy, further encouraging investment in this sector. The Licensing Recommendations also call for simplified clearance procedures for repair crews. An auto-renewal option for existing clearances is encouraged. Likewise, the Ease of Doing Business recommendation seconds this proposal. For environmental and coastal zone clearances, an online single-window system via the Saral Sanchar portal is suggested, covering the entire spectrum of government approvals. Data collection for cable route surveys could be streamlined by allowing officials other than those from the DoT to be on board the cable vessel. To meet the country’s growing digital needs, TRAI proposes an additional optical fiber cushion, similar to practices in countries like Singapore. A new framework for the introduction of stub cables has also been envisioned. Finally, TRAI emphasizes the need to designate submarine cables as “Critical Information Infrastructure,” managed by the National Critical Information Infrastructure Protection Centre (NCIIPC). It also proposes that these activities be accorded “Essential Services” status, requiring special provisions for customs duty and GST exemptions. These arguments are echoed in TRAI’s Ease of Doing Business recommendations, which further suggest removing the bond requirement for cable ships during repairs to avail customs duty exemptions.

9.3.3 BOTTOM LINE

The recommendations emphasize that licenses and permits for submarine cable laying and repair in India should be treated as a ‘Top Priority’ to support the ‘Digital India’ initiative. While the TRAI Licensing Recommendations may generate mixed reactions within the industry, their focus on cable repairs aims to position India for competitive advantage. If executed effectively, these recommendations have the potential to transform India into a digital superpower. STF

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RECENT MERGERS, ACQUISITIONS, AND INDUSTRY ACTIVITIES 9.3.1 ANGOLA CABLES

Angola Cables, a multinational network services and digital solutions provider, has rebranded its operations in Brazil as TelCables Brasil. The rebranding aims to strengthen the company’s local presence while maintaining global support from the parent brand. The official launch took place at Capacity Latam, a major telecom event in São Paulo. CEO Ângelo Gama stated that the new brand will focus on serving businesses across various regions in Brazil, offering scalable solutions. TelCables Brasil will have a local management structure and will seek business and partnership opportunities in the country. The move is part of Angola Cables’ strategy to become a more interconnected operator globally. (Angola Cables is now TelCables Brasil | SubTel Forum)

9.3.2 AQUA COMMS

Aqua Comms, a global provider of subsea connectivity services, has announced the acquisition of Openbyte Infrastructure Private Limited, an India-based telecom company specializing in neutral, open-access landing solutions for submarine cables. The acquisition aims to expand Aqua Comms’ global network and enhance digital 136

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infrastructure in India. Amit Vyas has been appointed as the CEO for India and Regional Chief Business Development Officer for Aqua Comms, supported by Neeraj Katiyar as CTO for India. The acquisition aligns with Aqua Comms’ strategy to invest in global subsea infrastructure and marks a significant step in its expansion plans, particularly in the Indian market. (Aqua Comms Acquires Openbyte Infrastructure | SubTel Forum)

9.3.3 LIBERTY N-ETWORKS NÉE C&W NETWORKS

C&W Networks and C&W Business in Latin America have rebranded as Liberty Networks, a unified brand under Liberty Latin America. The rebrand aims to shape the future of digital connectivity in the region by offering a range of services including connectivity, digital access, data center, and enterprise solutions. Liberty Networks plans to invest at least $250 million over the next five years to extend and upgrade its terrestrial and subsea infrastructure. The investment will also enhance its cloud and security offerings, providing a robust backbone for connectivity across nearly 40 countries in Latin America and the Caribbean.

REGULATORY OUTLOOK | RECENT MERGERS, ACQUISITIONS, AND INDUSTRY ACTIVITIES (C&W Rebrands as Liberty Networks | SubTel Forum)

9.3.4 CONVERGE ICT

Philippine-based Converge ICT Solutions Inc. has secured approval from Singapore’s Infocomm Media Development Authority to provide international connectivity services. Effective January 3, 2023, the company’s Singapore subsidiary, Converge ICT Singapore Pte. Ltd., will offer telecommunications infrastructure and connectivity services to wholesale and enterprise customers in Singapore. This expansion enhances Converge’s ability to meet growing intra-Asia and Trans-Pacific connectivity demands. (Converge ICT Goes International | SubTel Forum)

9.3.5 DIGICEL GROUP

Digicel Group, a telecom provider, is undergoing a corporate restructuring under Bermuda law to alleviate its financial woes. Bond investors have agreed to a deal that will significantly reduce founder Denis O’Brien’s stake in exchange for a $1.7 billion debt write-off. The restructuring is expected to take a few more months to complete and will leave O’Brien with a board seat and a 10 to 20% stake in the company. The deal aims to convert nearly $1.18 billion of bonds into an initial 62% stake, potentially increasing to 90% as bondholders participate in a $110 million rights issue. The move comes after Digicel faced a $7 billion debt and had to sell a Pacific unit to Australian telecom group Telstra. (Bermuda Restructuring Rescues Digicel Group | SubTel Forum)

9.3.6 FEDERAL COMMUNICATIONS COMMISSION

The Federal Communications Commission (FCC) has released an Order and Notice of Proposed Rulemaking that could have far-reaching implications for submarine cables and other international telecommunications services. The order aims to expand the FCC’s role in national security and proposes new rules that would significantly alter the existing framework for international Section 214 authorizations. Companies would face increased disclosure obligations, reporting requirements, and scrutiny by the Committee for the Assessment of Foreign Participation in the U.S. Telecommunications Services Sector, commonly known as “Team Telecom.” Specifically, the FCC proposes to collect foreign ownership information, including from entities with a 10% or greater direct or indirect foreign interest. It also proposes to mandate renewals of international Section 214 au-

thority every 10 years and establish ongoing reporting requirements. These changes could affect a wide range of entities, including those involved in submarine cables, by increasing regulatory burdens and potentially chilling foreign investment. (FCC Intl. Section 214 Order: Major Changes | SubTel Forum)

9.3.7 GLOBAL TELECOM AND TECHNOLOGY

U.S.-based GTT Communications, previously known as Global Telecom and Technology, has successfully emerged from Chapter 11 bankruptcy after over two years of financial and corporate restructuring. The company, which has operations in São Paulo, Rio de Janeiro, and Mexico City, initially filed for bankruptcy in October 2021. During the restructuring period, GTT reduced its debt by approximately $2.8 billion and attracted new investors. The company also sold its infrastructure division to I Squared Capital for $2.1 billion, reducing its debt by nearly 80%. (Telecoms Group GTT Emerges From Chapter 11 | SubTel Forum)

9.3.8 LS MARINE SOLUTION NÉE KT SUBMARINE

South Korea’s undersea cable company, KT Submarine Co., is set to rebrand as LS Marine Solution after its integration into the LS Group. The company plans to hold a shareholders’ meeting on August 17 to finalize the name change and other amendments to its articles of association. This follows LS Cable & System Co.’s acquisition of a significant stake in KT Submarine, making it the largest shareholder with 43.9% of shares. Both companies aim to achieve synergies through the vertical integration of their undersea cable construction and material production businesses. The rebranding comes as KT Submarine reports a 60% increase in sales and a return to profitability, fueled by the growing offshore wind power industry. (KT Submarine to Rebrand as LS Marine Solution | SubTel Forum)

9.3.9 OEG OFFSHORE

OEG Offshore has acquired Pelagian Ltd, a UKbased company with over two decades of experience in the subsea cable industry. The acquisition aims to bolster OEG Offshore’s capabilities in providing consultancy, engineering, and installation management services in the submarine cable and offshore renewable energy sectors. SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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REGULATORY OUTLOOK | RECENT MERGERS, ACQUISITIONS, AND INDUSTRY ACTIVITIES Pelagian’s expertise will enable OEG to better support various end markets, including telecommunications, interconnectors, and offshore wind energy. The acquisition follows OEG’s recent partnership with Oaktree Capital Management and marks a strategic move in expanding its business and global reach. Pelagian will retain its name and continue to be managed by its current Managing Director, Peter Fisk. (OEG Offshore Grows with Pelagian Acquisition | SubTel Forum)

9.3.10 PANDUIT

Panduit Corp., a global leader in electrical and network infrastructure solutions, has acquired the subsea cable and pipe protection product portfolio from South Korean marine manufacturer DongWon EN-Tec Co., Ltd. The acquisition includes URAPROTECT®, a polyurethane solution for protecting submarine cables and pipes, as well as bend stiffeners, restrictors, and J-Tube seals for wind turbine applications. This move allows Panduit to expand its offerings to Asia-Pacific customers and diversify into markets related to offshore alternative energy and global communications bandwidth. John Buck, Panduit’s vice president for electrical infrastructure, stated that the acquisition aligns with the company’s growth strategy in renewables. (Panduit Acquires Subsea Portfolio from DongWon | SubTel Forum)

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9.3.11 TELECOM ITALIA

Italy’s Treasury is set to acquire full ownership of Telecom Italia’s submarine cable unit, Sparkle, as part of a joint bid with U.S. fund KKR for the telecom group’s fixed grid, according to a draft government decree. The Italian government has approved decrees that allow the Treasury to take a 15-20% stake in NetCo, which includes both Telecom Italia’s domestic fixed-access network and Sparkle. The move is seen as a significant step in finalizing the deal and has garnered strong political support. KKR has offered approximately 23 billion euros for NetCo, leaving room for the government to join the bid. The deal is still subject to the approval of Telecom Italia’s top investor, Vivendi. STF (Italy Set to Take Over Telecom Italia’s Submarine Cable Unit | SubTel Forum)

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REGIONAL ANALYSIS AND CAPACITY OUTLOOK

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REGIONAL SNAPSHOT Current Systems:................. 19 Capacity:..................970 Tbps

TRANSATLANTIC REGION

he submarine fiber market continues its robust growth through 2023, maintaining a pace similar to that seen since 2016. While some regions have fewer systems planned beyond 2023, others are witnessing a significant uptick in their overall system count, projected to last through 2026. Overbuild concerns have largely dissipated as demand continues to skyrocket, especially as many existing cable systems approach the end of their economic and technological lifespans and will need replacing. The landscape of business models is also undergoing a transformation. Increasingly, the focus of the submarine fiber industry is shifting towards meeting Hyperscaler infrastructure needs and connecting data centers, rather than linking population centers. The majority of this Hyperscaler infrastructure and major data center clusters are located in the United States, Europe, East Asia, and South America. As a result, the Transatlantic, Transpacific, and Americas regions are most influenced by this evolving trend.

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Planned Systems:.................. 4 Planned Capacity:.... 782 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | TRANSATLANTIC REGION

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REGIONAL ANALYSIS AND CAPACITY OUTLOOK | TRANSATLANTIC REGION 10.1.1 CURRENT SYSTEMS

Growth on the Transatlantic route surged from the late 1990s through 2003. Following a 12-year hiatus, the Transatlantic region resumed its expansion, adding a new cable annually from 2015 to 2018. After a brief pause in 2019, the region regained strong momentum, adding at least one new system in 2020 and 2021. Despite a gap in 2022, the Transatlantic region is back on track in 2023, continuing to add new systems and maintain its robust growth. Two primary factors that led to the previous slowdown in development were an excess of capacity and the early 2000s financial crash, triggered by overinvestment in the submarine cable sector. However, with renewed investment and aging systems on the Transatlantic route, new cables are coming into operation. The MAREA system, deployed in 2017, capitalized on surging demand from Hyperscalers, offering a massive potential bandwidth of 200 Tbps on a modern fiber system amid a sea of outdated cables. Alongside the Dunant cable installed last year, these systems offer alternative pathways, enhancing route diversity and establishing more direct links to key data centers in Ashburn, Virginia. While the SACS and SAIL cables launched in 2018 hinted at a growing interest in direct connections to South America and Africa, this trend hasn’t maintained consistent momentum. To further enhance South America’s global connectivity, 2021 welcomed the EllaLink system, which extends across the continent before heading north to Europe. Amid escalating capacity needs on the northern Transatlantic route between New York and Europe, and a growing appetite for new links to the U.S. Mid-Atlantic and across the South Atlantic, the Transatlantic corridor has

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Figure 82: Cable Systems by Year – Transatlantic, 2016-2028

TABLE 1: CURRENT TRANSATLANTIC CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

2023

Amitié

320

6,792

2023

Grace Hopper

352

7,191

2021

Dunant

250

6,400

2021

EllaLink

9,300

2020

HAVFRUE/AEC-2

108

7,300

2018

SACS

6,209

2018

SAIL

6,000

2017

MAREA

209.6

6,600

2016

AEC-1

5,536

2015

EXA Express

4,600

2009

Greenland Connect

12.8

4,733

2003

Apollo

12,700

2001

EXA North/South

12,111

2001

FA-1

14,491

2001

TGN Atlantic

12,670

2000

AC-2

8.64

6,185

1999

AC-1

5.2

13,377

1999

Atlantis-2

0.16

13,100

1994

Columbus II

1.2

2,013

1705.6

157,308

Total

seen sustained growth. This year, two Hyperscaler systems—Grace Hopper and Amitié—became operational, adding to the route’s capacity.

10.1.2 PLANNED SYSTEMS

In the early surge of Transatlantic system development, the typical system spanned around 12,000 kilometers, primarily following similar routes between Europe and the U.S. This average length has notably decreased, now hovering around 8,000 kilometers. The shift is largely attributed to Figure 83: KMS Added by Year – Transatlantic, 2016-2028 new Hyperscaler systems, which prioritize direct routes to their data centers over connecting to major cities. While there’s been a growing demand for alternative routes that deviate from the traditional New York-London axis, the Amitié and Grace Hopper cables have added more connections along this classic route, underscoring its enduring relevance. The evolving customer needs, now focusing not just on bandwidth but also on low latency, have led developers to design routes that are, on average, 18% shorter than their early 2000s counterparts. Currently, there are three systems planned for the Transatlantic region for the next few years. One of these upcoming systems will pioneer a completely new route to South Carolina, another aims to exploit the shorter northern Atlantic route between Norway and Canada while the third seeks to connect South Africa to the United States via a direct route. These plans indicate that while traditional routes between Europe and the U.S. remain crucial, there’s also room for innovation and new pathways in the network. One of the three planned Transatlantic systems has Figure 84: CIF Rate – Transatlantic Planned successfully achieved the pivotal CIF (Contract in Force) milestone. This points to a more discerning but still strong growth pattern in this region. TABLE 2: PLANNED TRANSATLANTIC CABLE SYSTEMS Considering the significant data traffic between DESIGN Europe and North America, this robustness is CAPACITY expected to persist. It’s worth noting that two RFS CABLE SYSTEM (TBPS) LENGTH of the new planned cables are not backed by 2026 Nuvem 4,000 Hyperscalers, presenting challenges in secur2025 Leif Erikson 4,100 ing funding on the open market. This adds an 2024 Anjana 480 7,121 additional layer of complexity to the evolving 2024 SAEX West 108 14,720 landscape of Transatlantic cable systems. STF Total 588 29,941

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

145

10.2

REGIONAL SNAPSHOT Current Systems:................. 15 Capacity:.................. 742 Tbps

TRANSPACIFIC REGION

istorically, the Transpacific market mirrored the Transatlantic market, exhibiting minimal yearover-year growth. However, much like its Transatlantic counterpart, the Transpacific region has recently experienced a significant surge in activity. The primary catalysts for this growth have been Hyperscalers and the demand for route diversity.

Figure 85: Cable Systems by Year – Transpacific, 2016-2028

146

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Planned Systems:.................. 9 Planned Capacity:... 1112 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | TRANSPACIFIC REGION

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

147

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | TRANSATLANTIC REGION 10.2.1 CURRENT SYSTEMS

From 2002 to 2016, the region saw the addition of only four systems. The industry downturn in the early 2000s played a significant role in this sluggish growth. Moreover, the absence of new systems on Transpacific routes from 2010 to 2016 can be attributed to the cost-effective capacity upgrades of existing systems, which effectively deterred new competitors. Until recently, the Transpacific market was nearly saturated, offering limited opportunities for growth beyond enhancing route diversity and reducing latency. However, the landscape has changed. Since 2016, the region has welcomed at least one new cable system annually, except for brief pauses in 2019 and 2021. The driving forces behind these new Transpacific systems include demand from Hyperscalers, the need for route diversity, and the replacement of aging infrastructure. Consequently, eight new systems are in the pipeline through 2025.

10.2.2 FUTURE SYSTEMS

The Transpacific region experienced a period of stagnation with no new systems added from 2010 to 2016. However, a shift occurred from 2016 to 2023, marking a phase of steady growth. On average, one new system has been introduced each year during this period, with several more planned through 2027.

Significantly, the amount of cable in the region surged by 67.68% between 2016 and 2023, expanding from 164,000 kilometers to 275,000 kilometers. This increase is particularly noteworthy given that the average system length in the Transpacific region exceeds 15,400 kilometers, making it home to some of the world’s longest cable routes. Historically, the region remained relatively static, primarily due to the availability of cost-effective capacity upgrades and the extensive systems required to span such long distances. However, recent years have seen a marked uptick in system activity. This surge is largely attributed to the escalating bandwidth demands from Hyperscalers and the widespread adoption of cloud services. As of now, there are eight planned systems scheduled to be ready for service between 2024 and 2027 in the Transpacific market. Of these, 37.5% have reached the Contract in Force (CIF) milestone, a noticeable decline from last year’s 44%. (Figure 46) The majority of these systems aim to significantly boost capacity along their respective routes, although many are vying for the same or similar pathways. The average system length for all planned Transpacific systems is approximately 13,850 kilometers, making shorter route lengths and reduced latency key considerations for new entrants. These upcoming systems offer the added benefit of

TABLE 3: CURRENT TRANSPACIFIC CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

2022

Jupiter

14,577

2022

Southern Cross NEXT

15,840

2020

PLCN

144

12,900

2018

Hawaiki

15,000

2018

NCP

13,618

2017

SEA-US

14,500

2016

Faster

11,629

2010

Unity

4.5

9,620

2009

AAG

28.8

20,547

2008

TPE

25.6

16,163

2002

TGN Pacific

76.8

21,424

2001

AJC

25.6

12,224

2001

Japan-US

21.6

21,580

2000

PC-1

8.4

20,910

2000

Southern Cross

30,000

721.3

250,532

Total

148

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enhancing route diversity, particularly in the southern part of the region. Several systems that have not yet achieved CIF status are backed by Hyperscalers, effectively removing them from direct competition with other planned systems and mitigating some of the financial risks associated with securing outside investment. Given the renewed interest in the Transpacific region, fueled by rising bandwidth demands from cloud services, this area is expected to experience growth rates comparable to those in the Transatlantic market. STF

Figure 86: KMS Added by Year – Transpacific, 2016-2028

TABLE 4: PLANNED TRANSPACIFIC CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

2025

ACC-1

256

17,000

2025

Hawaiki Nui

240

26,000

2025

Humboldt

2025

TPU

2024

Bifrost

2024

East Micronesia Cable

2024

H2 Cable

10,500

2024

JUNO

350

10,000

2023

Echo

144

17,184

2023

TOPAZ

240

7,000

1,510

127,944

Total

LENGTH Figure 87: CIF Rate – Transpacific Planned

13,180 260

8,370 16,460 2,250

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

149

10.3

REGIONAL SNAPSHOT Current Systems:................. 83 Capacity:.................1109 Tbps

AMERICAS REGION 10.3.1 CURRENT SYSTEMS

Characterized by steady growth since the early 1990s, the Americas region has continued to see frequent additions over the last few years—going from 62 cables in 2016 to 89 cables in 2023. After 10 years of steady growth, with an average of about two systems becoming ready for service per year, the region is currently experiencing another surge in development. Four systems were implemented in 2020, another four in 2021, and none are expected to be ready for service by the end of 2022. However, five additional systems are projected to be ready for service by the end of 2023.

Figure 88: Cable Systems by Year – Americas, 2016-2028

150

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Planned Systems:................ 14 Planned Capacity:.... 552 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AMERICAS REGION

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

151

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AMERICAS REGION TABLE 5: CURRENT AMERICAS CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

2021

Curie Panama Extension

1,073

2021

Malbec

108

2,600

2021

Prat

9.6

3,550

2021

SPSC/Mistral

132

7,300

2020

FOA

2,900

2020

GCIS

2020

KetchCan1

23.04

167

2020

Tannat Extension

2,000

2019

CARCIP

2019

Crosslake Fibre

2400

2019

Curie

10,476

2019

Guantánamo Bay Cable 2

2019

Kanawa

2019

RedeIlhabela-1

2019

X-Link Submarine Cable

775

2018

BRUSA

2018

Saint Pierre and Miquelon Cable

2017

Junior

2017

Monet

10,556

2017

Seabras-1

10,750

2017

SEUL

2017

Tannat

2016

Guantánamo Bay Cable

1,500

2016

Lynn Canal Fiber

138

2016

Sea2Shore

2015

FOS Quellon-Chacabuco

350

2015

PCCS

2015

Segunda FOS Canal de Chacao

2014

AMX-1

17,800

2013

ALBA-1

5.12

1,600

2013

LCMSSCS

322

2013

Saint Thomas - Saint Croix System

183

2012

AUTA

2012

Estrecho de Magallanes

2012

TT-1

2011

East-West

2.5

1,700

2010

Antel

3.84

250

2010

SAIT

2010

SG-SCS

1.28

1,249

2009

AKORN

0.01

2,968

152

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

118

225

1,200 10

160

1,746

11,000 200 390

24 90

2,000

6,000 40

53 1.8

37 48

826

2009

CB-1

0.32

1,448

2009

C-BUS

2.5

1,609

2009

Greenland Connect

12.8

4,733

2008

CFX-1

12.8

2,439

2008

GoM

1,200

2008

Persona

2008

SEAK

0.01

626

2007

ECLink

7.2

1,240

2007

GCN

1,926

2007

Gemini Bermuda

2.5

1,500

2007

NEPTUNE Canada

2007

SCF

1.28

2,100

2006

Antilles Crossing

0.16

952

2006

BDSNi

2.4

2,736

2006

FibraLink

7.2

2,438

2006

Kodiak Kenai

0.01

971

2004

Alaska United West

0.64

2,483

2004

SMPR-1

0.0025

382

2001

Arcos-1

8.4

8,700

2001

BICS

1,000

2001

GlobeNet

9.2

22,690

2001

PAC

3.2

9,451

2001

SAC

15.37

15,983

2001

SAM-1

19.2

24,140

2000

Americas II

8,373

2000

MAC

0.92

7,461

2000

MAYA-1

0.9225

4,506

1999

Alaska United East

0.01

3,751

1999

Alonso De Ojeda

0.1

128

1999

Amerigo Vespucci

1999

Northstar

0.01

3,385

1998

AmeriCan-1

170

1998

Venezuela Festoon

1997

Bahamas-2

2.4

478

1997

CJFS

8.4

870

1997

HIFN

529

1996

Brazilian Festoon

2,552

1995

ECFS

1.1

1,875

1994

Americas I North

1.2

2,013

1994

HICS

1994

Unisur

0.00056

1,720

1992

Taino Carib

40.4

189

3,637.85

256,321

Total

800

1,200

479

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

153

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AMERICAS REGION 10.3.2 FUTURE SYSTEMS

Unlike most of the other markets, the Americas region has consistently observed medium to high levels of growth. Since 2005, new cable development in the region has consistently added an average of 5 percent more kilometers per year. However, there were notable departures from this trend: a 7 percent increase in 2009, a 10 percent increase in 2014, and an 11.7 percent increase in 2017. The region experienced steady growth until 2017, when an unprecedented 11.7 percent growth rate was observed. Since 2019, the average kilometers added has stabilized, maintaining an annual growth rate of around 5 percent, with no indications of significant changes on the horizon. There are currently 7 systems planned through to 2027, indicating a development slowdown compared to the 14 systems that were planned at last year’s report. Only 43 percent of these planned systems have achieved their CIF milestone (Figure 49). While this suggests a more cautious outlook for growth in the region, it’s important to note that economic and political instability throughout the Americas could introduce additional challenges for these planned systems as they progress through their development process. STF

Figure 89: KMS Added by Year – Americas, 2016-2028

Figure 90: CIF Rate – Americas Planned

154

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TABLE 6: PLANNED AMERICAS CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

324

3,472

2026

WALL-LI

2025

Confluence-1

2024

Boriken Submarine Cable System

2024

Deep Blue One

125 500

2,571 670

2,000

2024

Galapagos Subsea System

1,280

2024

Gold Data 1

250

2,322

2023

AU-Aleutian

860

2023

Connected Coast

3,400

2023

CSN-1

4,500

2023

Cuba to Martinique

2,410

2023

Firmina

14,517

2023

SeaLink

344

2023

SednaLink

1,904

Total

1,106

40,375

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

155

10.4

REGIONAL SNAPSHOT Current Systems:............... 105 Capacity:................. 1161 Tbps

AUSTRALASIA REGION 10.4.1 CURRENT SYSTEMS

The AustralAsia market has experienced significant growth, particularly since 2008, making it one of the most active regions globally. While the period from 2001 to 2005 saw minimal growth, and 2006 witnessed moderate activity, the region truly took off between 2008 and 2009 This surge can be largely attributed to emerging markets in Southeast Asia, including countries like Indonesia, Singapore, and Hong Kong, which have become hubs for new data center growth. The industry downturn in the early 2000s did have an impact on the timing of this regional boom. However,

Figure 91: Cable Systems by Year – AustralAsia, 2016-2028

156

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Planned Systems:................ 19 Planned Capacity:.. 1039 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AUSTRALASIA REGION

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

157

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AUSTRALASIA REGION the burgeoning markets in Southeast Asia, driven by a strong demand for international connectivity, have more than compensated for these early setbacks. The adoption of mobile and cloud services, along with the recent influx of Hyperscaler-driven systems, indicates that the region is poised for sustained growth for the foreseeable future.

10.4.2 FUTURE SYSTEMS

Following the significant growth spurt between 2008 and 2009, the AustralAsia market has maintained a consistent rate of expansion in terms of cable length added each year. Since 2012, the region has witnessed an average addition of 17,000 kilometers of cable per year, with the average system length standing at 2,830 kilometers.

TABLE 7: CURRENT AUSTRALASIA CABLE SYSTEMS RFS

CABLE SYSTEM

2023

PDSCN

2023

Tokelau Domestic Submarine Cable

20.00

250

2022

BaSICS

48.00

762

2022

G2P2

1,515

2022

KSCN

5,457

2022

OAC

39.00

9,800

2022

PEACE

192.00

25,000

2021

BALOM

2021

CDSCN

0.80

1,824

2021

H2HE

300.00

675

2021

MSC

0.10

863

2021

SKKL LABUAN BAJO-RABA

152

2020

DAMAI Cable System

575

2020

JGA North

24.00

2,700

2020

JGA South

36.00

7,000

2020

Manatua One

10.00

3,634

2020

Okinawa Cellular Cable

80.00

760

2019

Chuuk-Pohnpei Cable

2019

Coral Sea

20.00

4,700

2019

Indigo Central

36.00

4,850

2019

Indigo West

36.00

4,600

2019

PASULI

2019

Tanjun Pandan-Sungai Kakap Cable

348

2018

ASC

2018

IGG

5,300

2018

JAYABAYA

915

2018

NATITUA

2018

Palapa E

6,878

2018

Palapa M

2,100

2018

SEAX-1

250

158

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

DESIGN CAPACITY (TBPS)

LENGTH

2,500

146

1,200

60.00

10.00

4,600

2,500

2018

SSSFOIP

307.20

2018

SUSP

2018

TDCE

40.00

390

2018

Tui Samoa

17.60

1,410

2017

ATISA

7.20

280

2017

LBC

9.60

2017

MCT

30.00

1,425

2017

Palapa W

2017

SKR1M

6.00

3,500

2017

Tasman Global Access

20.00

2,300

2016

APG

54.00

10,400

2016

BALOK

2016

NWCS

12.00

4,200

2016

SEA-ME-WE 5

38.00

20,000

2015

BLAST

2015

Far East

2015

LTCS

2015

SMPCS

40.00

2,000

2014

ICN1

0.32

1,259

2014

JIBA

267

2014

Palawa-Iloilo Cable System

300

2014

PNG LNG

200

2014

SBCS

2014

TSCS

2014

Western Visayas-Palawan

300

2013

ASE

15.36

7,200

2013

BPSCS

19.20

332

2013

GOKI

0.08

4,200

2013

JBCS

2013

SJC

2013

TPKM-3

2013

TSE-1

2012

B3JS

1,031

2012

Cross Straits Cable Network

2012

Tonga-Fiji

827

2011

BDM

2.56

400

2011

MKCS

1.80

1,318

2011

SCAN

1.92

4,300

2010

Hantru-1

2010

JaKa2DeLeMa

127

1,725

250 1.60

1,844 446

40 28.00

8,986 510

6.40

270

2,908 9.60

1,800

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

159

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AUSTRALASIA REGION TABLE 7: CURRENT AUSTRALASIA CABLE SYSTEMS (CONTINUED) RFS

CABLE SYSTEM

2010

PGASCOM

2009

AAG

28.80

20,547

2009

ASH

0.00

4,680

2009

Basslink

0.64

290

2009

BSCS

1.80

2009

EAC-C2C

30.00

32,767

2009

Honotua

0.64

4,634

2009

JAKABARE

1.28

1,330

2009

MBDC

0.01

330

2009

Paniolo

2009

PPC-1

2009

SAS

2009

TGN Intra-Asia

3.84

6,485

2008

Endeavour

1.28

9,125

2008

Gondwana-1

0.64

2,152

2008

HSCS

0.64

559

2008

Matrix

2.56

1,438

2008

MIC-1

0.01

2008

SJJK

2007

BRCS

0.01

2006

Jasuka

0.32

354

2006

RJCN

0.64

1,795

2006

TIS

0.03

1,003

2005

DMCS

0.32

150

2005

SEA-ME-WE 4

12.80

18,846

2004

East-West Submarine Cable System

2003

Bass Strait 2

1.00

240

2002

APCN-2

25.60

19,000

2002

KJCN

28.80

500

2001

Nelson-Levin

2001

RNAL

1999

NDTN

1999

SEA-ME-WE 3

1997

DFON

11,100

1997

Guam-Saipan

240

1995

Bass Strait 1

Total

160

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

DESIGN CAPACITY (TBPS)

LENGTH

264

575 12.00

7,185 250

543

950

212 0.08

9,792 1,400

4.60

32,767

1.00

241

1,739.68

380,873

Given that submarine cable systems typically undergo a two-year development cycle from the time they are announced, it’s unlikely that many new systems will be announced for 2024 by the end of this year. Therefore, any further system development is expected to take place in 2025 or later. There are currently 7 planned systems set to be ready for service for the period 2024 to 2027. This marks a significant decrease from last year’s 19 planned systems, potentially indicating a cooling regional market. Unlike the typical trend in the AustralAsia region, where several smaller systems connect island nations to major hubs, the current planned systems are fewer in number. Of these planned systems, only 29% have reached the CIF milestone— a noticeable drop from last year’s 53%. (Figure 52) With less than a third of the 7 systems planned through 2027 already at the CIF stage, this suggests that the region may be experiencing a slowdown in growth. STF

Figure 92: KMS Added by Year – AustralAsia, 2016-2028

TABLE 8: PLANNED AUSTRALASIA CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

2025

ACC-1

256

17,000

LENGTH

2025

SEA-ME-WE 6

2024

Apricot

190

12,000

2024

SEA-H2X

160

5,000

2024

TLSSC

0.2

621

2024

VCS

2023

ADC

140

9,800

2023

DJSC

1,000

2023

Highclere Cable

1,025

2023

SIGMAR

2,227

2023

SJC2

Total

19,200

3,400

144

10,500

930.2

81,773

Figure 93: CIF Rate – AustralAsia Planned

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

161

10.5

REGIONAL SNAPSHOT Current Systems:............... 199 Capacity:................ 1920 Tbps

EMEA REGION 10.5.1 CURRENT SYSTEMS

Characterized by consistent growth since the early 1990s, the Europe, Middle East, and Africa (EMEA) region has seen a steady uptick in development in recent years. This region stands as one of the most stable growth areas globally, a status attributed to its expansive size and the strategic significance of the Mediterranean Sea and the Suez Canal. The system count in the EMEA region has remained stable, averaging around five new systems ready for service each year since 2002. The year 2011 marked a peak with the addition of 14 new systems. The lengths of these systems can vary significantly, but the primary drivers behind these growth spurts are the SEA-ME-WE systems and expansive coastal systems around Africa. In terms of the actual number of systems deployed, the EMEA region is unparalleled in its consistency, seemingly impervious to the industry’s cyclical boom and bust patterns over the

Figure 94: Cable Systems by Year – EMEA, 2016-2028

162

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Planned Systems:................ 23 Planned Capacity:.. 2348 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | EMEA REGION

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

163

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | EMEA REGION past 15 years. The EMEA region consistently adds smaller, regional systems each year, complementing larger, multi-regional projects like SEAME-WE, ACE, EIG, and WACS, among others. These large-scale projects span multiple global regions, as opposed to smaller, inter-country routes. They represent some of the industry’s most ambitious undertakings, with each system often exceeding 10,000 kilometers per route—sometimes even surpassing 20,000 to 25,000 kilometers. Despite the steady count of systems, these inter-regional projects result in significant surges in kilometers installed, with the period

Figure 95: KMS Added by Year – EMEA, 2016-2028

from 2010 to 2012 marking the most recent growth spurt for the region. (continued on pg. 163)

TABLE 9: CURRENT EMEA CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

2023

Equiano

144

15,000

2023

IONIAN

360

320

2023

IRIS

132

1,770

2022

Havhingsten/CC-2

300

301

2022

Havhingsten/NSC

2022

HAVTOR

1440

165

2022

PEACE

192

25,000

2022

PEACE/Arsinoe

3,750

2022

Scotland-Northern Ireland 4

2022

720

2022

ZEUS

0.6

200

2021

CrossChannel Fibre

2400

149

2021

DARE-1

4,854

2021

HAVSIL

2021

Maroc Telecom West Africa Cable

2021

NO-UK

2021

Scylla

2020

ALVAL/ORVAL

2020

BKK Digitek

2020

Dos Continentes

2020

Malta-Gozo Cable

2020

Mandji Fiber Optic Cable

2020

SkagenFiber

2020

Ultramar GE

164

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

661

170 8,300 216

713 204

800 195

460.8

1920

105

173 263

2019

COBRACable

326

2019

Eastern Light

420

2019

MainOne Expansion

2019

Rockabill

2017

AAE-1

25,000

2017

Ceiba-2

290

2017

G2A

1,500

2017

Greenland Connect North (GCN)

4.8

673

2016

Avassa

260

2016

Bodo-Rost Cable

2016

C-Lion 1

2016

NordBalt

2016

SEA-ME-WE 5

2015

Malta-Italy Interconnector

2015

NCSCS

2014

BT Highlands and Islands

2014

Didon

173

2014

FCSS

633

2014

Kerch Strait Cable

2014

MENA

2014

Skagerrak 4

137

2013

Europa

225

2013

OMRAN/EPEG Cable System

600

2013

Scotland-Orkney-Shetland

400

2012

ACE

17,000

2012

Alasia

25.6

350

2012

CeltixConnect

0.96

131

2012

Emerald Bridge Fibres

120

2012

Geo-Eirgrid

187

2012

Libreville-Port Gentil Cable

2012

Loukkos

2012

POI

2012

Silphium

1.2

426

2012

Solas

0.005

140

2012

Tamares North

2012

WACS

2011

Athena

2011

BIOS / Jonah

12.8

2,300

2011

Canalink

5.12

2,000

2011

Ceiba-1

2011

GBICS

51.2

4,719

2011

Hawk

2.72

4,334

2011

Pencan-8

5.21

1,395

1,100 221

109 144

1,172 400

20,000 95

12.8

1,100 402

46 57.6

8,800

198 1.28

187 400

345 14.5

14,350 600

287

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165

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | EMEA REGION TABLE 9: CURRENT EMEA CABLE SYSTEMS (CONTINUED) RFS

CABLE SYSTEM

2011

SAS-2

2011

TE North

2,938

2011

TGN Gulf

1.28

2,306

2011

Turcyos-2

2010

Alexandros

2010

CANDALTA 2

2010

EASSy

9,900

2010

GLO-1

2.5

8,717

2010

I-ME-WE

76.8

12,091

2010

MainOne

7,000

2010

TECS

25.6

178

2009

Hannibal

9.6

180

2009

Melita-1

0.00005

100

2008

Caucasus Cable System

12.6

1,187

2008

Channel Islands - 9 Liberty Submarine Cable

2008

Danice

2008

GO-1

2008

Shefa 2

0.57

828

2007

Atlas Offshore

0.32

1,634

2007

Keltra-2

0.02

209

2007

Minerva

0.01

2007

Polar Circle Cable

1,004

2006

GC3

2006

GlobalConnect-KPN

2006

HUGO

3.3

426

2006

Kuwait-Iran

0.0025

334

2006

TWA-1

1.28

2005

Janna

2005

Med Cable Network

0.02

1,300

2005

SEA-ME-WE 4

12.8

18,846

2004

Farice-1

0.02

1,395

2004

GWEN

2004

Qatar-UAE

0.02

208

2004

Svalbard

4.8

2,800

2004

Sweden-Latvia

0.0025

175

2004

VMSCS

0.01

250

2003

CAM Ring

2003

SAS-1

1.28

333

2002

Alpal-2

0.16

304

2002

IG-1

0.01

172

2002

SAT-3

0.8

14,350

166

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

DESIGN CAPACITY (TBPS)

LENGTH 330

213 10

3,634 115

124 5.1

2,291 290

1,237 634

647

1,120

2002

Subcan Link 1

143

2002

Subcan Link 2

136

2002

TGN Northern Europe

3.84

551

2002

TGN Western Europe

3.84

3,487

2001

Balalink

2001

BSFOCS

2001

GC2

2001

Kattegat-2

2001

MedNautilus

3.84

2001

Tampnet

2,400

2000

ADRIA-1

0.000622

430

2000

Baltic Sea Submarine Cable

1,042

2000

FEC

250

2000

Fehmarn Bält

2000

GC1

2000

Georgia-Russia

0.0025

280

2000

Italy-Libya

0.12

570

2000

Pangea

511

2000

PEC (UK-Ireland)

2000

Scandinavian Ring North

0.24

2000

Scandinavian Ring South

0.24

2000

Tangerine

0.24

121

1999

CANDALTA 1

1999

Concerto-1

0.0025

574

1999

ESAT-1

0.0025

257

1999

ESAT-2

9.6

238

1999

LEV

0.0025

2,600

1999

LFON

1999

Norsea Com-1

0.16

800

1999

PEC (UK-Belgium)

0.01

170

1999

SEA-ME-WE 3

4.6

32,767

1999

Sirius North

1999

Sirius South

1999

Tenerife-Gran Canaria

110

1999

TRANSCAN-3

210

1998

AFOS

1,100

1998

Corfu-Bar

0.000622

320

1998

Danica North

0.01

1998

Danica South

0.01

1998

Farland North

0.018

149

1998

FOG

0.02

1,286

1998

Italy-Albania

0.0025

236

1998

Taba-Aqaba

1998

Ulysses 1

274 0.0025

0.0025

933

5,729

20 44

495

110

1,639

0.48

13 0.0025

49 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

167

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | EMEA REGION TABLE 9: CURRENT EMEA CABLE SYSTEMS (CONTINUED) RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

1997

Aletar

0.005

733

1997

Baltica

0.005

437

1997

BCS East

1997

BCS East-West Interlink

218

1997

BCS North

793

1997

FEA

0.5

28,012

1997

KAFOS

504

1997

UK-Netherlands 14

0.001

208

1997

Ulysses 2

0.0025

199

1996

BAR-SAV

0.005

754

1996

BUGIO

1995

Cadmos

1995

CC5

1995

Italy-Greece

1995

Italy-Malta

1995

Italy-Monaco

0.000565

162

1995

Kattegat-1

0.02

180

1995

TEGOPA

222

1995

Trapani-Kelibia

209

1995

UGARIT

1994

Aden-Djibouti

1994

Aphrodite 2

0.00112

868

1994

Botnia

0.0012

1994

Celtic

1994

CIOS

1994

Denmark-Sweden 17

1994

EST-TET

0.0037

112

1994

Guernsey-Jersey 4

0.000155

1994

LV-SE 1

304

1994

PENBAL-5

309

1994

UK-Channel Islands 8

1993

Swansea-Brean

1992

UAE-Iran

170

1991

Denmark-Poland 2

0.0025

110

1991

Denmark-Sweden 16

0.005

1989

Denmark-Sweden 15

0.005

1989

Rønne-Rødvig

1989

Scotland-Northern Ireland 1

0.00336

1989

UK-Channel Islands 7

0.0025

124

8,518.96

375,085

Total

168 SUBMARINE TELECOMS INDUSTRY REPORT

72 0.000622

262 229

0.00169

161 238

0.000622

240 269

275 0.000622

262 11

0.000155

237

153

10.5.2 FUTURE SYSTEMS

As previously noted, the EMEA region stands out for its consistent activity, punctuated by the introduction of ambitious, region-spanning systems at regular intervals. The rate of kilometers added annually has averaged a 4.1 percent increase since 2012. Notable spikes of eight percent, nine percent, and 12 percent were observed in 2016, 2017, and 2012, respectively. However, a significant slowdown occurred between 2018 and 2020, with a modest 0.4 percent average annual increase. Despite this, the EMEA region is not anticipating a substantial decline in system activity from 2024 to 2027, suggesting that growth will remain stable for the foreseeable future. In fact, the renewed focus from Hyperscalers on technologically burgeoning countries like Nigeria and South Africa could catalyze a new wave of activity across Africa. Large systems like 2Africa from Facebook and Equiano from Google are poised to significantly boost the region’s connectivity. As these Hyperscalers establish hyperscale infrastructure, they will naturally attract additional Figure 96: CIF Rate – EMEA Planned business and increase the demand for bandwidth between key data center regions like North America and Europe. These new TABLE 10: PLANNED EMEA CABLE SYSTEMS cable systems, offering more than 140 Tbps of bandwidth, will be particularly beneficial for the west coast of Africa, which currently averages about 8 Tbps per submarine cable. There are currently twelve systems planned to be ready for service for the period 2024-2027, a significant reduction from last year’s twenty-three. Currently, 42 percent of these systems have achieved the CIF milestone, a rate that is noticeably less than last year’s 65 percent. (Figure 55) With nearly half the total system count and a lower CIF rate, the initial outlook is one of caution. The EMEA region continues to face economic uncertainty and political instability, adding an additional layer of complexity to any prospective projects. STF

RFS

CABLE SYSTEM

2025

SEA-ME-WE 6

DESIGN CAPACITY (TBPS)

LENGTH 19,200

2025

Unitirreno

2024

2Africa/EMIC-1

480

1,030

2024

Blue/BlueMed

240

1,000

2024

Celtic Norse

160

2,100

2024

IEX

200

30,000

2024

MEDUSA

480

8,760

2024

Olisipo

6144

110

2024

PISCES

2024

TEAS

300

19,000

2023

2Africa

180

32,767

2023

2Africa/Canary Islands Extension

180

2023

Africa-1

192

2023

MedLoop

1,360

2023

N0R5KE VIKING

810

2023

NORFEST

700

2,971

10,000

2023

R100 Subsea Fibre

0.000125

224

2023

Saudi Vision Cable

288

1,160

8,844

131,192

Total

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169

10.6

REGIONAL SNAPSHOT Current Systems:................. 34 Capacity:.................. 387 Tbps

INDIAN OCEAN REGION 10.6.1 CURRENT SYSTEMS

The Indian Ocean region has maintained a consistent trajectory of growth since recovering from the submarine cable industry’s downturn in the early 2000s. Despite its relatively small geographical footprint, the region serves as a critical junction between the bustling EMEA and AustralAsia corridors, contributing to its steady development since 2003. The region’s growth has been characterized by cycles of rapid expansion followed by brief lulls. These surges in development have been primarily fueled by trans-regional systems such as SEA-ME-WE 3, 4, and 5, FLAG, Falcon, and AAE-1, among others. These systems have led to three notable spikes in activity during 2006-2007,

Figure 97: Cable Systems by Year – Indian Ocean, 2016-2028

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Planned Systems:..................8 Planned Capacity:..1,441 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | INDIAN OCEAN REGION

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171

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | INDIAN OCEAN REGION 2009, and 2015-2017. (Figure 56) On a local scale, development mainly consists of smaller systems that connect India either eastward to Indonesia or westward to the Middle East, thereby enhancing connectivity for countries surrounding the Indian Ocean.

10.6.2 FUTURE SYSTEMS

With two new systems added in 2017, a hiatus in 2018, two more in 2019, one in 2020, two each in 2021 and 2022, and an exceptional five systems expected to be ready by the end of 2023, the pace of new system development in the region remains sporadic. This pattern continues to align with the region’s historical “feast-or-famine” ap-

TABLE 11: CURRENT INDIAN OCEAN CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

2022

OAC

9,800

2022

PEACE

192

25,000

2021

Macho-3

2021

METISS

3,215

2020

CANI-SMC

25.6

2,300

2019

FLY-LION3

400

2019

MARS

700

2017

AAE-1

25,000

2017

NaSCOM

3.2

1,086

2016

Avassa

260

2016

BBG

8,040

2016

SEA-ME-WE 5

20,000

2012

Dhiraagu Cable Network

2012

LION-2

1.28

3,000

2012

SEAS

0.02

1,930

2011

EIG

15,000

2011

MACHO

620

2009

FOBN2

1,900

2009

LION

1.28

1,091

2009

SEACOM

13,601

2009

TEAMS

1.28

4,500

2009

TGN Eurasia

1.28

9,240

2007

Bharat-Lanka

0.96

338

2007

DDSCN

850

2007

WARF

680

2006

Falcon

2.56

12,357

2005

SEA-ME-WE 4

12.8

18,846

2005

TGN-TIC

5.12

3,175

2002

i2i

3,100

2002

SAFE

0.44

13,669

1999

SEA-ME-WE 3

4.6

32,767

1997

FEA

0.5

28,012

1994

Aden-Djibouti

Total

172

606

1,253

269 642.92

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

LENGTH

262,605

proach to system development. Since 2019, the region has generally seen the addition of 1-2 systems per year, with the exception of 2023, which will see five new systems by the end of the year. For the period 2024-2028, 7 systems are planned, with the potential to add approximately 130,000 kilometers of cable. (Figure 95) As Australia seeks greater route diversity from its western coast and the demand for connectivity between Asia and Europe rises, this steady growth is likely to persist beyond 2028. Moreover, Hyperscalers are investigating routes from the United States to India, which could further stimulate system development in the region. Of the 7 systems planned through 2028 in this region, 43 percent have achieved the CIF milestone, showing an improvement from last year’s 36 percent. (Figure 58) The majority of these systems serve as “passthroughs,” aiming to connect East Asia to the Middle East and Europe. Despite the ongoing political and economic instability in Europe and the Middle East, these systems have a better chance of securing funding this year. While these systems aim to expand route diversity in the region, several are in direct competition, making it likely that some may not meet their target RFS date. STF

Figure 98: KMS Added by Year – Indian Ocean, 2016-2028

TABLE 12: PLANNED INDIAN OCEAN CABLE SYSTEMS DESIGN CAPACITY (TBPS)

RFS

CABLE SYSTEM

2025

Bangladesh to Myanmar

2024

2Africa/EMIC-1

2024

IEX

200

2024

KLI

0.2

2024

PEACE Singapore Extension

2024

SAEX East

108

11,749

2024

SING

9,000

2024

TEAS

300

19,000

2023

IAX

200

2023

MIST

240

8,100

2023

3,200

1,084.20

90,349

Total

LENGTH

99: CIF Rate – Indian Ocean Planned

30,000 1,900 7,400

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173

10.7

REGIONAL SNAPSHOT Current Systems:................. 34 Capacity:.................. 387 Tbps

POLAR REGION 10.7.1 CURRENT SYSTEMS

The Polar region witnessed a landmark moment in 2017 with the installation of Quintillion Subsea, the first fully Polar submarine fiber system in industry history. Spanning 1,200 kilometers across six landing points, this system broke new ground, going beyond previous endeavors like Svalbard that merely skirted the Polar region. Interest in Polar projects has surged in recent years, fueled by the prospect of dramatically shorter routes between Europe, North America, and Asia via the Polar Circle. The success of the Quintillion Subsea system serves as a proof of concept, demonstrating that fully Polar systems are feasible despite the region’s unique challenges. Developing submarine systems in the Polar region comes with its own set of hurdles. There are limited time windows during the year when construction can take place, inevitably extending the development timeline and escalating costs.

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Planned Systems:..................8 Planned Capacity:..1,441 Tbps

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | AUSTRALASIA REGION

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

175

REGIONAL ANALYSIS AND CAPACITY OUTLOOK | POLAR REGION TABLE 13: CURRENT POLAR CABLE SYSTEMS RFS

CABLE SYSTEM

DESIGN CAPACITY (TBPS)

LENGTH

2022

EAUFON

1,800

2017

Quintillion Subsea

1,200

2004

Svalbard

4.8

2,800

64.8

5,800

Total

10.7.2 FUTURE SYSTEMS

These systems are primarily designed to serve routes in Canada’s far north, connecting local communities and providing a shorter path between Europe and Asia. For instance, Far North Fiber aims to link Europe to Japan and other points by traversing the top of Russia. A key objective for Polar systems connecting Europe to Asia is to significantly reduce existing latency. Traditionally, data has had to travel either through the Figure 100: Cable Systems by Year – Polar, 2016-2028 United States or via the Suez Canal and the Indian Ocean, requiring systems of at least 20,000 kilometers. Future Europe-to-Asia Polar routes are planned to be approximately 14,000 kilometers, potentially halving latency. Moreover, these Polar systems bypass the politically unstable Middle East and sidestep potential privacy issues in the United States. Of the four systems planned for the Polar region through 2028, none have yet achieved the CIF milestone. This highlights the inherent challenges and risks associated with Polar projects. However, as exploration in this region Figure 101: KMS Added by Year – Polar, 2016-2028 continues, there’s optimism that high-capacity, low-latency fiber connections to Antarctic sustained efforts will pave the way research stations would significantly enhance scientific for more consistent project implementation. collaboration and information sharing. STF Beyond 2027, an early-stage project is being explored to connect South America or New Zealand to research bases in Antarctica. Likely to be a government-backed initiative, this project has a higher chance of success as commercial viability is less of a concern. Establishing 176

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

TABLE 14: PLANNED POLAR CABLE SYSTEMS RFS

CABLE SYSTEM

2027

McMurdo Cable

2026

Far North Fiber

2026

Polar Express

Total

DESIGN CAPACITY (TBPS)

LENGTH 17,000

104

12,650

104

29,650

Figure 102: CIF Rate – Polar Planned

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

177

AFTERWORD BY KRISTIAN NIELSEN

s we close the pages on this year’s comprehensive industry report, it’s clear that the submarine cable industry has navigated through a year of unprecedented challenges and transformative changes. The year 2023 has been nothing short of a watershed moment, marking significant shifts in how we understand, finance, and operate within this crucial sector. The COVID-19 pandemic, which we initially thought would severely hamper the industry, turned out to be a complex catalyst. While it did introduce Video 14: Kristian Nielsen, Vice President - Submarine Telecoms Forum delays and uncertainties, it also underscored the industry’s resilazon, Google, Microsoft, and Facebook. These tech giants ience. New systems became operational, and the inhave shifted the industry’s focus from city-to-city condustry adapted, proving that even in the face of global upheaval, the need for robust, reliable data transmission nections to data center-to-data center links. Their entry has not only enriched telecom infrastructure but has also remains constant. Financing in the industry saw a dynamic evolution. The significantly impacted the local digital ecosystems, setting new standards and expectations for the industry at large. rise of Self-Finance as the dominant funding mechanism Sustainability has also been a focal point, with inis a testament to the industry’s self-sustaining nature. Yet, creased attention on carbon offsetting, renewable energy, the role of alternative financing avenues like Debt/Equity and regulatory compliance. As we stand at this pivotal Finance and Multilateral Development Banks, especially in the EMEA region, cannot be overlooked. These diverse juncture, the industry’s focus on innovation, collaboration, and environmental responsibility positions it well to funding streams have allowed the industry to weather meet the challenges of the 21st century. economic uncertainties and continue its expansion. In conclusion, the year 2023 has been a defining period Technological advancements have been at the heart of for the submarine cable industry. Despite the challenges this year’s narrative. Companies like ASN, SubCom, and NEC have not only led in cable production but have also posed by geopolitical factors, economic uncertainties, and been pioneers in installation and surveying activities. The a global pandemic, the industry has shown remarkable adaptability and resilience. As we look forward to the launch of new cable ships, such as the Sophie Germain, next year and beyond, it’s clear that the industry is wellsignifies an industry committed to enhancing its operaequipped to evolve and meet the ever-growing global tional capabilities. demand for data, making it an exciting time to be a part Perhaps one of the most transformative developments has been the entry and influence of Hyperscalers like Am- of this transformative journey. STF 178

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

179

SUPPORTING AUTHORS ANDRÉS FÍGOLI is the Director of Fígoli Consulting, where he provides legal and regulatory advice on all aspects of subsea cable work. His expertise includes contract drafting and negotiations under both civil and common law systems. Additionally, he has extensive experience as an international commercial dispute resolution lawyer. Mr. Fígoli graduated in 2002 from the Law School of the University of the Republic (Uruguay), holds a Master of Laws (LLM) from Northwestern University, and has worked on submarine cable cases for almost 21 years in a major wholesale telecommunication company. He also served as Director and Member of the Executive Committee of the International Cable Protection Committee (2015-2023).

GREG OTTO is Technical Director at WFN Strategies. His experience includes subsea cable system implementations, program/project management, planning, engineering, product development and O&M. His work brings to WFN Strategies a holistic and integrated approach that integrates the multiple disciplines of project management, technical, operational, commercial and feasibility activities for both implementation and repair of such systems. Greg holds a Bachelor of Science in Electrical Engineering and has worked with multiple Oil & Gas companies during his career. In addition, Greg is the President/CEO of a nonprofit organization where he furthers the use his entrepreneurial skills and capabilities to help others.

ANJALI SUGADEV is Regulatory & Permitting Manager at WFN Strategies, and an independent legal consultant and recipient of the 2015 Rhodes Academy Submarine Cables Writing Award. Her works include “Global Regulation of Submarine Cables and Pipelines: Similarities, Differences and Gaps” (2016), “India’s Critical Position in the Global Submarine Cable Network: An Analysis of Indian Law and Practice on Cable Repairs” (2017) and “Review of Selected National Legislations Relating to Access and Benefit-Sharing” (2019) among others. Sugadev was also the Law and Policy Lead of Sustainable Subsea Networks, that involved examining the legal and permitting frameworks, international and national, to understand the role of regulation and policy in shaping a carbon-reduced future for the subsea cable industry.

GLENN HOVERMALE is Construction & Marine Coordinator at WFN Strategies and possess more than 20 years of consulting experience in undersea cables, including marine survey, Oil & Gas and offshore wind industries. He has held client representative, offshore project management, and survey positions, and he possesses experience working aboard SubCom, Alcatel, Korea Telecom, and Global Marine cable ships as well as Fugro and EGS survey vessels.

Having joined his first Cable ship (CS Edward Wilshaw) in January 1974 at age 21 BILL WALL has over 47 years of worldwide offshore marine construction & development experience specializing in submarine cables and more recently the US offshore wind market. He has held positions ranging from sales, marketing, project management, contract negotiation, project development & project implementation in the marine industry for various companies including his previous positions at offshore wind developer Deepwater Wind, offshore transmission developer The Atlantic Wind Connection and US Wind Inc. in Maryland. He is currently the Project Director at LS Cable Systems America (LSCSA) in Fort Lee NJ. LSCSA is a leading supplier of submarine power cable systems to the Offshore Wind Industry.

180

SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

IAN MCLEAN is situated in Perth, Western Australia, providing dedicated support to APTelecom customers across the South East Asian and Oceania regions. Mr. McLean boasts an extensive background in management and new business development, with a national focus in Australia. Prior to his current role, Ian McLean held the position of Sales Leader at Vocus Communications, where he specialized in new business acquisition within the Mining, Engineering, and Financial Services sectors.Most recently, Ian McLean assumed the role of Senior Channel Manager at Swoop Telecommunications (ASX: SWP), an Australian-based company renowned for its offerings in Fixed Wireless, fiber, and wholesale network infrastructure, both nationally and internationally. During his tenure, Mr. McLean played a pivotal role in the implementation of the Sales and Marketing strategy, which led to the establishment and growth of the Swoop business development team.

KIERAN CLARK is the Lead Analyst for SubTel Forum. He

originally joined SubTel Forum in 2013 as a Broadcast Technician to provide support for live event video streaming. He has 6+ years of live production experience and has worked alongside some of the premier organizations in video web streaming. In 2014, Kieran was promoted to Analyst and is currently responsible for the research and maintenance that supports the Submarine Cable Database. In 2016, he was promoted to Lead Analyst and his analysis is featured in almost the entire array of Subtel Forum Publications.

KRISTIAN NIELSEN is based in the main office in Sterling, Virginia USA. He has 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. JOHN TIBBLES has spent a working lifetime in global

telecoms much of it in the subsea cable arena where he held senior positions responsible for subsea investments and operations at Cable and Wireless and MCI WorldCom and as an internal advisor consultant to Reach and Telstra Reach. John spent many years working for C&W in Bermuda and established the first private subsea cable offshore company and has worked extensively with both consortia and private system models. He has a wide background and expertise in most commercial matters of international telecoms and since ‘retiring’ he has remained active in the industry as a consultant, commentator and at times a court appointed expert and has been a panellist and moderator at international events.

PHILIP PILGRIM is the Subsea Business Development Leader for Nokia’s North American Region. 2021 marks his is 30th year working in the subse a 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. SYEDA HUMERA, a graduate from JNTUH and Central Michigan University, holds a Bachelor’s degree in Electronics and Communication Science and a Master’s degree in Computer Science. She has practical experience as a Software Developer at ALM Software Solutions, India, where she honed her skills in MLflow, JavaScript, GCP, Docker, DevOps, and more. Her expertise includes Data Visualization, Scikit-Learn, Databases, Ansible, Data Analytics, AI, and Programming. Having completed her Master’s degree, Humera is now poised to apply her comprehensive skills and knowledge in the field of computer science. WAYNE NIELSEN is the founder and publisher of Submarine Telecoms Forum magazine, the industry’s considerable voice on the topic. He possesses more than 35 years’ experience in submarine cable systems, including polar and offshore Oil & Gas submarine fiber systems, and has developed and managed international telecoms projects in Antarctica, the Americas, Arctic, Europe, Far East/Pac Rim and Middle East. He received a postgraduate master’s degree in international relations, and bachelor’s degrees in economics and political science, and is a former employee of British Telecom, Cable & Wireless and SAIC, and an American citizen based in Sterling, Virginia USA.

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 SUBMARINE TELECOMS INDUSTRY REPORT 2023 | 2024

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WORKS CITED Berlocher, G. (2009). Subsea Fiber in the Energy Industry. Submarine Telecoms Forum, 11-13. Clark, K. (2019). BUILDING A PREDICTIVE MODEL TO DETERMINE PROBABILITY OF SUCCESS IN DEVELOPING A SUBMARINE CABLE SYSTEM. SubOptic 2019. New Orleans: SubOptic Association. Congressional Research Service. (2022, September 13). Undersea Telecommunication Cables: Technology Overview and Issues for Congress. Retrieved from Congressional Research Services: https://crsreports.congress.gov/ product/pdf/R/R47237 Elias, J. (2022, September 7). Google CEO says he hopes to make company 20% more efficient, hints at potential cuts. Retrieved from CNBC: https://www.cnbc. com/2022/09/07/google-ceo-says-he-hopes-to-makecompany-20percent-more-efficient-hints-at-potentialcuts.html Erb, J. P. (2022, July 26). Facebook employees are preparing for staff cuts of up to 10%. Retrieved from Business Insider: https://www.businessinsider.com/meta-facebookemployees-expect-layoffs-2022-7 European Union Agency for Cybersecurity. (2023, August 31). Undersea Cables - ENISA. Retrieved from ENISA: https://www.enisa.europa.eu/publications/ undersea-cables 182

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Flexera. (2022). Flexera 2022 State of the Cloud Report. Flexera. Retrieved from https://info.flexera.com/SLOCM-REPORT-State-of-the-Cloud-2020 Government of Gujarat Department of Science and Technology. (2022, February 7). IT/ITeS Policy 20222027. Retrieved from Gujarat Informatics Limited: https://gil.gujarat.gov.in/Media/DocumentUpload/ IT%20POLICY-FInal-2022.pdf Haranas, M. (2022, January 20). Data Center Market 2022 Forecast: Private Equity Takes Over. Retrieved from CRN: https://www.crn.com/news/data-center/data-centermarket-2022-forecast-private-equity-takes-over J.P. Morgan. (2022, August 11). Supply Chain Issues and Autos: When Will the Chip Shortage End? Retrieved from J.P. Morgan: https://www.jpmorgan.com/insights/ research/supply-chain-chip-shortage Nielsen, W. (2012). Choices Impacting an Oil & Gas Submarine Cable System Implementation. Submarine Telecoms Forum, 7-14. Otto, G. (2022). Offshore Energy: Thoughts from Greg Otto. 2022/2023 Submarine Telecoms Industry Report, 92-95. Pichai, S. (2022, April 13). Our plans to invest $9.5 billion in the U.S. in 2022. Retrieved from Google: https:// blog.google/inside-google/company-announcements/ investing-america-2022/

Submarine Telecoms Forum. (2021, October 24). Submarine Telecoms Industry Report Issue 10. Retrieved from Issuu: https://issuu.com/subtelforum/docs/ submarine_telecoms_industry_report_issue_10 Sugadev, A. (2017, February 23). India’s critical position in the global submarine cable network: an analysis of Indian law and practice on cable repairs. Retrieved from Springer Link: https://link.springer.com/article/10.1007/s40901017-0050-y Telecom Regulatory Authority of India. (2023, May 2). Recommendations on Ease of Doing Business in Telecom and Broadcasting Sector. Retrieved from Telecom Regulatory Authority of India: https://www.trai.gov.in/sites/default/ files/Recommendations_02052023.pdf Telecom Regulatory Authority of India. (2023, June 19). Recommendations on Licensing Framework and Regulatory Mechanism for Submarine Cable Landing in India. Retrieved from Telecom Regulatory Authority of India: https://www.trai.gov.in/sites/default/files/ Recommendation_19062023.pdf Wall, B. (2023). US Offshore Wind Reaches the Gulf of Mexico. Submarine Telecoms Forum, 64-69. Zhang, M. (2022, May 30). How Much Does it Cost to Build a Data Center? Retrieved from Dgtl Infra: https:// dgtlinfra.com/how-much-does-it-cost-to-build-adata-center/#:~:text=%242%2C200%20per%20NRSF.,Megawatts%20(MW ),the%20data%20center%20 fit%2Dout.

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Submarine Telecoms Industry Report Issue 12

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EXECUTIVE SUMMARY

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