Data Center & Content Providers Contents
DATA CENTER & CONTENT PROVIDERS
- Section 1: Data Center Provider Overview
- Data Center Facilities
- Data Center Market Expansion and Impact on Submarine Cable Growth
- Public Cloud
- New Trends & Technology
- Closer Integration Between Land & Sea
- Section 2: Over-The-Top Provider Overview
- Owners Not Customers
- Impact on Submarine Fiber Optic Systems
- Section 3: Future Outlook
- Potential New Markets
- Supplier Challenges
- Transformation of Global Networks
The world continues to consume more and more bandwidth as digital activity for both enterprise and consumer applications move to “the cloud”. The companies behind these services – including the likes of Amazon, Facebook, Google and Microsoft – continue to grow at rapid rates to keep up with demand which presents numerous opportunities for the submarine fiber industry to provide new infrastructure for the growing digital economy.
Data Center and Content Providers are an increasingly integral part of the submarine cable system development process. Content Providers like Amazon, Facebook, Google and are moving from capacity purchasers to cable owners. While transoceanic cable systems are expensive – well over $100 million USD just to get across the Atlantic – these assets represent business potential in the billions for major Content Providers. Even the annual operations expenditure to manage and maintain cable infrastructure is a fraction of potential revenue that can be realized through implementation of reliable, high capacity subsea network infrastructure.
Additionally, these non-traditional actors are encouraging new routes and growing new markets. South America and Africa are two prime examples of regions changing as a result of the efforts from data center and Content Providers. A Content Provider can be the cornerstone of a cable system project that would otherwise never get past the planning stages and these companies were the driving force behind 31 percent of systems that went into service from 2016-2019. The arrival of a major Content Provider not only brings new telecoms infrastructure to a region but also the cloud services that company provides.
Not only are these players now driving where cables are going, they are helping to push along new innovations inside of the cable systems themselves. New transmission technology to handle higher capacity wavelengths, increased fiber counts for more overall system capacity and streamlined network management and the push for open systems leading to shared system architecture are just a small sampling of new technologies and ideas these providers are backing.
One other significant change, Content Providers have brought to global networks is shifting the focus from city to city connections to data center to data center connections. Unlike an Equinix or a Digital Realty, Content Providers do not necessarily need to build infrastructure in locations with a variety of interconnect options. Instead, they favor locations that provide economic and cost saving benefits to reduce the operational expenditure impact of their data center facilities. For these companies, building a submarine fiber system is equivalent to an offshore energy company building an oil pipeline as the infrastructure is simply a means to move product – data in this case – and is not by itself revenue generating.
Cloud adoption is at an all-time high as companies continue to shift towards both cloud storage and cloud computing to drive their business. Amazon Web Services and Microsoft Azure lead the way in enterprise adoption with no sign of slowing down. These cloud services are global in nature and inevitably their traffic will end up traveling over submarine telecommunications cables. As a result, data center providers have become more involved with the submarine fiber industry, especially around cable landing stations where they can capitalize on interconnection and colocation opportunities – especially in those areas where multiple cables come ashore to a single location.
The International Data Corporation estimates worldwide Public Cloud Services Spending will reach $210 billion USD in 2019 – an increase of 23.8 percent over 2018. (International Data Corporation, 2019) All this reinforces the idea that the cloud is here to stay and will need even more infrastructure to support massive growth in already established markets – let alone new ones.
Additionally, some data center providers work to bridge the gap between the cable landing station and backhaul or interconnection services to maximize network efficiency and throughput for their customers by attempting to bring once disparate infrastructure into a single facility. More closely integrating data center and cable landing facilities cuts down on network latency and increases data security.
As with any market sector involving tech, long term outlook is difficult to forecast. There is always the potential for a disruptive new piece of technology or software to enter the market and upset established dynamics or for a market bubble to burst. Numerous tech companies like Facebook, Twitter, Snapchat and Amazon have stumbled in the past year with both privacy and long-term profitability concerns resulting from declining user counts, increased competition from rival companies and, in the case of Facebook, uncomfortable inquiries in front of the United States Congress about data privacy. Further, ongoing global trade disputes introduce a measure of uncertainty over the global markets at large which tempers expectations that the current rate of growth will continue indefinitely.
However, until something dramatically changes the course of the larger tech and internet-based industries, the immediate future promises a wealth of opportunity for the submarine telecoms industry. Content Providers continue to develop new infrastructure at a rapid pace to meet their bandwidth needs – which seem to grow every year as data and cloud services continue to grow in scale and capability.
This edition of the Submarine Telecoms Market Sector Report was authored by the analysts at SubTel Forum Analytics, a Division of Submarine Telecoms Forum, Inc. It provides submarine cable system analysis for SubTel Forum’s Submarine Cable Almanac, Cable Map, Industry Report and Industry Newsfeed. For the Capacity Pricing edition, SubTel Forum Analytics utilizes both interviews with industry experts and its proprietary Submarine Cable Database. The database tracks some 400+ current and planned domestic and international cable systems, including project information suitable for querying by owner, year, project, region, system length, capacity, landing points, installers, etc.
The Submarine Cable Database is purpose-built by SubTel Forum Analytics’ database administration team, which is powered by SQL and retained on a Microsoft Azure platform. Data is collected from the public domain and validated through interviews with industry experts in order to provide the most accurate, comprehensive and centralized source of information in the industry. At present, SubTel Forum Analytics’ Submarine Cable Database chronicles the work of some 18 financiers, 477 cable owners, 22 system suppliers, 12 upgraders, 15 system surveyors and 25 system installers. In addition, it manages data for some 400+ projects, across seven regions and 780+ landing points.
To accomplish this report, SubTel Forum Analytics conducted continuous data gathering throughout the year. Data assimilation and consolidation in its Submarine Cable Database was accomplished in parallel with data gathering efforts. Trending is accomplished using known data with linear growth estimates for up to three following years.
SubTel Forum Analytics collected and analyzed data from deriving from a variety of public, commercial and scientific sources to best analyze and project market conditions. While every care is taken in preparation of this report, these are our best estimates based on information provided and discussed in this industry.
List of Figures
Figure 1 – Worldwide Map of the Submarine Cable Database
Figure 2 – European Data Center and Transatlantic Submarine Cable Capacity Growth
Figure 3 – Asia Pacific Data Center and Transpacific Submarine Cable Capacity Growth
Figure 4 – Enterprise Public Cloud Provider Usage
Figure 5 – Enterprise Public Cloud Adoption Rate
Figure 6 – Systems Driven by Data Center & Content Providers
Figure 7 – Systems Impacted by Content Providers
Figure 8 – Future Systems Impacted by Content Providers
Figure 9 – Average Fiber Pair Counts
Figure 10 – Future Systems Driven by Data Center & Content Providers
Figure 11 – Worldwide Public Cloud Service Revenue Forecast
Figure 12 – Content Provider Location by Regon