Managing the cost of critical submarine cable routes

Samantha Bookman, FierceTelecomWith so much focus on land-based broadband network expansion, it's easy to take for granted how quickly most Internet users can access data on the other side of the globe within milliseconds. Many don't realize that almost all of our connectivity to other continents is accomplished via submarine cable, not by satellite or other means. Our latest special report, "Submarine cable operators hunt for new routes to counter congestion, political turmoil," discusses one of the biggest challenges faced by subsea providers: routing high-speed connections around current global choke points.

I spoke with AP Telecom CEO Eric Handa ahead of the upcoming SubOptic conference, to be held next week in Paris, about the cost of deploying new undersea cables to combat outages. His facilities-based subsea consulting company focuses on submarine cable system providers particularly in Southeast Asia and also consults for TE SubCom, the second largest subsea systems provider in the world.

"The capital cost to deploy more systems is difficult for a lot of operators," he said. "They may not have the funding."

At the same time, limited connections leave areas of the world like the Middle East, Africa and Australia exposed to potential outages that could last days or even weeks. Egypt, as reported in our latest feature, is a particularly irksome choke point for operators. Political turmoil delayed new installations and repairs of existing cables for several months, costing providers and investors millions of dollars in lost revenue. Cable systems providers are already rolling out alternate routes, like Reliance Globalcom's new Hawk submarine cable with an alternate spur landing on Cyprus, to ensure connectivity between the Middle East and Europe.

On the other side of the world, Australia is of particular concern to Handa, because it's currently in a "precarious situation" due to a break in the sole cable on its west coast in January. "Most of Australia's connectivity [currently] is eastbound out of Sydney and Brisbane. It does not have a westbound cable out of Perth, because it's been broken," he said. "It's a major concern for the country from a commerce and security perspective."

AP Telecom is consulting on the installation of a new cable route that will ultimately reconnect Perth with Singapore, Asia and Africa.

The expense involved with installation, maintenance and repair of submarine cables is large enough that the world's largest subsea equipment provider, Alcatel-Lucent (NYSE: ALU), may be considering bids on its submarine cable division. Reliance Globalcom also pursued an IPO to make its FLAG unit more attractive to buyers, but without success.

Maybe this is a good time to hang onto those divisions. Demand for new routes is at a high point, with providers looking to South America as the next big landing point for submarine cables.--Sam

Take a look at our new feature detailing the search for submarine cable routes.

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