Submarine cable operators hunt for new routes to counter congestion, political turmoil

South Atlantic, Northwest Passage become viable options
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Arctic Fibre CS Peter Faber

The cable-laying ship Peter Faber plies the waters of Canada's Lancaster Sound. (Source: Arctic Fibre)

More than 95 percent of all intercontinental Internet traffic travels via submarine cables, not satellite. But these essential conduits for communication are at risk of being cut from a number of threats: accidents, political instability in key countries, and direct attacks on the cables. To keep the globe connected, redundancy is key--leading providers to search for new cable routes to get around critical choke points.

In mid-March, three divers just off the coast of Alexandria, Egypt, intentionally cut through the SeaMeWe-4 submarine cable connecting Europe to Africa and the Middle East (Note: Telecom Egypt disputes reports, saying that divers attempted to cut a different, unnamed cable and that service on SeaMeWe-4, which was lit in 2005, was not disrupted). The service disruption, along with an accidental cut of the SEACOM cable in the Mediterranean a few days earlier, slowed traffic between those continents. Along the East African coast the effect on Internet connectivity was devastating: Internet service beyond the borders of countries from central Africa to South Africa was virtually nonexistent for nearly a week.

The attack on the cable served to underscore frustrations of providers and client companies that rely on the Egypt subsea hub to provide low-latency connectivity to key financial centers worldwide. SeaMeWe-4, like the majority of high-capacity cable builds, was funded by a consortium of companies that expected returns on their investment to begin rolling in from capacity purchases by carriers and other wholesale providers. But that ROI has been significantly delayed not just by the cut but by a holdup in the cable's deployment of almost two years.

"It may be an isolated incident, but it is happening after projects were delayed up to 24 months due to political changeovers," said Eric Handa, a 17-year submarine cabling veteran and CEO of AP Telecom, which provides consulting services to submarine cable providers in developing markets.

Egypt submarine cable routes

Network map of active cables passing through Egypt at the Suez Canal. (Source: Greg's Cable Map)

Political instability in the region, including Egypt during and after the Arab Spring, delayed the installation of other consortium-funded cables and significantly drove up costs, Handa explained. As a geographic and strategic center for communications transport, Egypt is a major landing point for subsea cables. And that's a problem.

Hindering capacity

"It's a chokepoint, there's no other way to say it," Handa said of Egypt.

In the subsea cable market, fluctuations in capacity can be a major problem in certain areas. Between the United States and Europe, a single cable cut causes little to no concern, because several cables cross the North Atlantic. But in the Middle East and India, it's a different story.

"You don't feel it in London or Chicago because there are 12 [high-speed] cables," Handa said. "But if you're sitting in Dubai trying to trade and your Internet is severed, and you only have three cables, you're going to feel it."

When a cable goes down between Europe and the Middle East, traffic from the Middle East to major financial and content centers--many of which are in the United States--reroutes via land-based networks or goes eastbound through Asia, and then to the U.S. via Singapore. That's both a costly option for low-latency providers and another potential chokepoint.

"Going eastbound via Singapore costs more. It puts a lot of stress and strain on Singapore," Handa says. "It's very small, and there is concern from a network planning perspective that if anything ever happened like terrorism or Hurricane Sandy, it could present a single point of failure." With landing points for subsea cable in Singapore only 10 to 12 miles apart, the risk is that much greater.

These chokepoints and other areas of concern have cable systems providers and their customers looking for new ways to cross the oceans.

"Because of Egypt being a strategic chokepoint connecting Europe, Indochina, India, it's forcing companies to look for other routes," Handa said. "In the next 12 months you're going to see new routes open up that weren't conceptualized five years ago."

Between 2007 and 2012, demand for capacity between Europe and Asia, via Egypt, skyrocketed 87 percent per year, an April report by TeleGeography stated. Yet the frustration is such that backers of the next planned cable between the regions, SeaMeWe-5, are exploring options to bypass Egypt altogether, according to a report by the Submarine Telecoms Forum authored by Terabit Consulting. Providers are responding by laying out plans for routes via South America, South Africa, and, most challenging so far, the Arctic region.

Arctic Fibre network route

The proposed Arctic Fibre route via the Northwest Passage, highlighted in white. (Source: Greg's Cable Map)

Going polar

While the South Atlantic is the hottest point of connection for submarine cables, providers are looking at every option. And these days that includes the possibility of building along the polar ice cap.

One company, Ontario-based Arctic Fibre, is planning to prove that it can be done. The company is working to raise $220 million in equity funding from investors for a 40G submarine cable (upgradable to 100G) that connects China, Korea and Japan to Europe and the UK via a 15,000 km route passing through the Bering Strait and along the Northwest Passage. The route, according to a company report, is 4,280 km shorter than current low-latency routes through the Suez Canal. And with the polar ice caps receding--in 2012, Canada's polar ice "shrivelled to a record low last summer," a Globe and Mail article said--the company is confident that the system can be built.

The Arctic route is not a cheap option, even with climate change going in its favor. "I believe it's possible technically. However, there would need to be a conservative deployment of the repeaters," Handa said. On a normal route, repeaters are spaced about 70 to 80 kilometers apart, and can be maintained year-round. "On a polar route you couldn't maintain it for 12 months. You need to make that spacing 40 to 50 km, or even 30 km, which raises costs."

The total cost to build the Arctic Fibre network will be around $604 million; the company says it can get the cable system operational by late 2014.

Polarnet Arctic route

Potential competitor Polarnet's proposed Arctic route to Northern Europe. (Source: polarnetproject.ru)

"Plans for trans-Polar connectivity seem to be afflicted by skepticism on the part of financiers, but from a technological, economic, and geopolitical standpoint, the route has never been more credible," the Submarine Telecoms Forum report stated.

Timing may be critical for Arctic Fibre. A rival company is also looking for investors on another proposed polar route, ROTACS, a 10 Tbps cable network running an estimated 14,700 km from similar landing points in China and Japan, over Russia's northern shore to Northern Europe.

South Atlantic a key point

The rise in demand for bandwidth among Latin American countries has been a boon to submarine cable providers as well.  More than $5.5 billion of proposed investment is directed toward the region, the Submarine Telecoms Forum says. Compare that to the $6 billion invested in China, India and South Africa between 2008 and 2012, and it's clear that fortunes are being bet on the Americas.

"While bandwidth demand on the trans-Atlantic route--which has long been the world's highest-capacity route--increased at a healthy rate of 36% annually between 2007 and 2012, demand for bandwidth from the US to Latin America grew 70% per year over the same period," according to the TeleGeography report.

WASACE and proposed sub cables

Proposed high-speed cables to South America. WASACE (highlighted in white), like SAex, will cross the South Atlantic from South Africa and land at Fortaleza. (Source: Greg's Cable Map)

The GlobeNet, SAM-1, and Consortium cables landing in Brazil, along with even higher-speed systems like the  100G Seabras-1 cable which will connect the United States to Brazil in 2015, are quickly expanding capacity in Latin America. Major carriers like America Movil (NYSE: AMX), Telefonica's  Vivo, Vivendi's GVT, and Telebras, among others, are benefiting from improved connectivity as they market consumer and business broadband in Brazil and other countries.

Alcatel-Lucent (NYSE: ALU) is the major supplier for Seaborn Networks' Seabras-1 installation running between New York, Sao Paulo, and Fortaleza--and the largest supplier of cable systems in the world, with 47 percent of the market. It also will be a key figure in the buildout of a 100G cable to run between Colombia, Ecuador, and the Pacific coast of the United States. And a number of other cable suppliers are joining the rush to South America, notably TE SubCom and NEC, which also hold large shares of the equipment market--30 percent and 12 percent, respectively, according to the Submarine Telecoms Forum report.

This level of connectivity in the Latin America region and the explosion in global demand is bringing up new possibilities for transcontinental cable in the southern hemisphere. Two planned cable systems will tackle the South Atlantic route within the next three years: the South Atlantic Express, which will run from Fortaleza, to Melkbosstrand, South Africa; and WASACE, a massive project that will have both North and South Atlantic routes and will connect up the West Coast of Africa. Another three systems are slated for the Africa-to-Brazil route.

With companies jockeying for investors and interest in previously unfeasible routes suddenly heating up, the subsea cable market, already seeing huge growth in demand, may find itself leading the international high-speed race.

Correction: A Telecom Egypt spokesperson told FierceTelecom on Friday that the SeaMeWe-4 cable was not sabotaged and did not lose connectivity, and clarified the age of the cable. We added to the story to reflect these additional details.