EXECUTIVE SUMMARY
T
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
