Since the last peak in 2017 – when over 90,000 kilometers of cable was installed – the submarine fiber industry has observed a significant decrease in activity. The years 2018 and 2019 observed 64,000 and 28,000 kilometers of cable added, respectively. Despite continued activity from Content Providers and regional infrastructure projects, output has returned to pre-2017 levels. Several projects that were expected to be complete by the end of 2019 have either been delayed or fallen through completely.
Global economic and political uncertainties have contributed to numerous reorganizations, acquisitions and bankruptcies throughout the industry. As the commercial outlook for the submarine fiber industry becomes less certain, expect this kind of activity to increase as companies work to strategize for potential market downturns.
Additionally, the average capacity for new systems has also fallen. Since 2015, the average capacity of a submarine fiber system had risen steadily from 31 terabits per second (Tbps) to 60 Tbps in 2018 and was overall trending upwards. However, in 2019 the average capacity for a new system returned to the same level as that observed five years ago. Moving forward, this average may increase once again as new systems make use of cutting edge transmission technology and add more fiber pairs to the system design.
Much of the observed industry growth can be attributed to the changing dynamic in system ownership observed since 2016 – when Content Providers began moving from capacity purchasers to cable developers. Companies such as Facebook, Google, Microsoft and Amazon have been building new cables to meet their infrastructure needs. This trend shows no signs of slowing down, with a significant portion of new system builds for the next several years being driven by these companies – 27 percent.
Significant system growth through 2023 will take place in the Americas, Transatlantic and Transpacific regions. This growth is spurred on by the infrastructure demands of Content Providers, new routes in the South Atlantic, additional connections from Europe to Virginia Beach to provide direct access to Ashburn, Virginia data centers and new infrastructure across the Pacific to replace aging cable systems. These new projects will provide both traffic diversity and connect growing markets in South America and Africa directly and work to meet increasing end-user demand for cloud services.
The Europe, Middle East and Africa (EMEA) and Indian Ocean Pan-East Asian regions maintain slow growth compared to historical trends, largely due to sustained political and economic instability in these regions and the saturation of African telecommunications markets. However, the EMEA region does show higher growth compared to a year ago indicating increased market activity – especially around the Mediterranean and East Africa.
According to announced information on the amount of cable each company has supplied over the last five years, SubCom takes the lead. NEC produced the next most, with ASN rounding out the 3 busiest companies. These three companies have been very dominant in recent years, being some of the few companies that can produce cable at a high enough volume to meet demand for large systems. So, while some companies had a relatively high amount of activity, they were not always supplying large systems.
Over the last couple of years, there has been a renewed interest in Transpacific routes and routes connecting Asia and South America directly to Europe. This will involve large systems, requiring thousands of kilometers of cable. Moving forward, the industry will have to rely on only three companies to tackle such large projects.
Looking forward, several new technologies coming to market could disrupt existing business and network models. With the successful test of 400G wavelength technology on live submarine cable systems over the last year, this long-promised capacity leap forward is finally commercially viable. Alongside advancements in C+L band, High Fiber Count (HFC) and Spatial Division Multiplexing (SDM) technologies there is huge potential for a large increase in both system capacity and networking efficiency.
Cash rich Content Providers have ensured system funding and the availability of data center providers at cable landing stations have helped to solidify commercial business opportunities of prospective systems – one of the biggest traditional roadblocks to cable system viability. However, an overall reduction in system activity indicates that non-Content Provider private cables may not be as viable as they once were.
The Global Outlook 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 this edition, SubTel Forum Analytics utilizes both interviews with industry experts and its proprietary Submarine Cable Database, which was initially developed in 2013 and modified with real-time data thereafter. 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 interviews with industry experts and is 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 840+ 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 derived from a variety of public, commercial and scientific sources to best analyze and project market conditions. While every care is taken in preparing this report, these are our best estimates based on information provided and discussed in this industry.
List of Figures
Figure 1 – New System Count by Region
Figure 2 – KMS Added by Region
Figure 3 – Systems Added by Year
Figure 4 – KMS Added by Region
Figure 5 – Planned Systems by Region
Figure 6 – Global Capacity Growth on Major Routes
Figure 7 – Average New System Capacity
Figure 8 – Global Planned Capacity Growth
Figure 9 – Transatlantic Capacity Growth, Current
Figure 10 – Transatlantic Capacity Growth, Planned
Figure 11 – Transpacific Capacity Growth, Current
Figure 12 – Transpacific Capacity Growth, Planned
Figure 13 – Americas Capacity Growth, Current
Figure 14 – Americas Capacity Growth, Planned
Figure 15 – Intra-Asia Capacity Growth, Current
Figure 16 – Intra-Asia Capacity Growth, Planned
Figure 17 – Number of Systems by Supplier, Current
Figure 18 – KMS of Cable Produced by Supplier, Current
Figure 19 – Number of Systems by Supplier, Future
Figure 20 – Number of Systems by Installer, Current
Figure 21 – KMS Installed by Region, Current
Figure 22 – Planned KMS by Region