IDENTIFYING AND ENABLING SUBMARINE CABLES
By Natalia López and Andrés Contreras
March 24, 2022
As published in the March Issue of SubTel Forum Magazine
Investment in infrastructure is necessary for a country development to satisfy its continuous needs and challenges, and it also is a powerful tool for recovering after Covid-19 pandemic hardly stressed our economies. However, infrastructure funding is not an easy task when projects have risks, involve big challenges or during uncertain economic scenarios. Submarine cables projects can be particularly exposed to this. Thus, infrastructure funds can play an important role for encouraging and promoting new projects and let industries growing especially when funding environment is limited. Current demand in connectivity and economic recovery can be both a great advantage and opportunity. This is the case of Chile’s telecommunication industry that is currently supported by Desarrollo País, a Chilean infrastructure fund who is leading a disruptive and long-awaited submarine cable project.
CHILE’S DIGITAL PLAN
Telecommunications infrastructure is a key enabler for digital business. Therefore, three years ago, the Chilean government decided to move forward to make Chile a digital hub, bringing the country to a better place in the digital economy. This plan has been focused on three pillars:
- Development of a nation-wide strategy to strengthen fiber optic networks;
- Rollout of 5G Networks and development of the 5G ecosystem; and
- Opening a new international connectivity route.
For the first pillar, Chile has been deploying more than 15,000 kms of optical fiber, both terrestrial and submarine for high-capacity domestic networks. This deployment will allow all localities to have access to a fiber optic connection, doubling the current backbone capacity of data transmission for those areas.
Alongside that, in the second pillar Chile worked hard to lead the development of 5G networks in our region, by being the first country to make spectrum available for 5G networks (1,800 MHz), which was allocated mostly to multinational telecom companies that show the position that Chile has in the telecommunications industry.
Finally, Chile focused its efforts on having a quantum leap in international connectivity by increasing the number of international interconnections points with neighboring countries, developing terrestrial fiber optic in new border crossings and international submarine cables. If the delivery of these initiatives continues to go as planned, as of 2025 Chile’s international bandwidth capacity will undergo a 40-fold increment.
In a context marked by the pandemic, with economic slowdown and drop in investments throughout the region, the Chilean telecommunications sector is expected to support the national economic recovery effort. Telecoms will bring more than USD 3 billion in investments (new projects), the creation of more than 60 thousand new jobs, and developments in new industries, which will play an important role for the country's economic recovery in the coming years.
We strongly believe in Chile’s technological neutrality, institutional and regulatory strength and advocacy for free competition. Keeping our market open for innovative initiatives will be key to attract investors over the years. Funding and enabling infrastructure are key for supporting country growth and recovery.
FUNDING NEW ROUTES
In 2018, Chile created ‘Desarrollo País’, a state-owned infrastructure fund that seeks to promote infrastructure projects that improve the wellbeing of Chileans by taking care of the country´s long-term needs, through projects that are
A key project is the first fiber optic route to link South America with Asia, the Humboldt System. This new route is critical not just for Chile but for South America as its traffic increases year to year at steady rates. Our region demands capacity and diversity to satisfy its increasing requirements. Under that perspective, the Humboldt cable will provide the first direct route from South America to Asia Pacific providing important benefits such as strong improvement in latency and increased capacity. Currently, South America does not feature any direct rou
te to Asia Pacific, traffic from this continent goes entirely through the U.S. That impacts directly in latency and quality of service which is critical for new technology requirements.
Humboldt is an inspiring project but full of challenges. Submarine cable industry for years have called this route the ‘missing link’ as it is recognized as a necessary link but difficult to deploy because of its commercial and technical risks associated to a new route and its required investment.
Here is when an infrastructure fund acts as an enabler for a challenging submarine cable project. Therefore, Desarrollo País took the leadership of Humboldt and decided to develop it strategically according to its unique characteristics.
From the regional perspective, Humboldt must ensure that is capable to aggregate demand from South America to Australia and Asia. In order to achieve that, the Government of Chile and Desarrollo País as promoters of the Humboldt cable, have been encouraging agreements with its neighbor countries to offer them be part of the project. This is a win-win relationship as it stimulates both parties to direct their traffic to the first route to Asia Pacific, and it also strengthen South American terrestrial networks to facilitate traffic exchange.
On the other hand, funding was a critical issue so Desarrollo País assumed a main part of equity not just by itself but also jointly with other interested parties like development banks, South American public companies and other private financial entities that saw in Humboldt a strategic project supported by a state-owned infrastructure fund. Public private partnerships are a powerful tool for enabling complex projects.
Besides, the operator company was another piece missing in the equation as its role is essential for running the business. Therefore, Desarrollo País conducted a strategic partner selection process to find an operator capable to execute the project. After an exhaustive process, H2 Cable LP -part of Hawaiki group- found an attractive project supported by key South American governments and companies, mostly funded and aligned with its commercial plans and was finally selected as Humboldt’s strategic partner.
Humboldt has a long way ahead but a $3M feasibility study and the strategic partner selection process have been successfully concluded, which forecasts that the milestones to reach CIF will go smoothly as well.
Regarding new opportunities, Chile is also promoting the first submarine cable to Antarctica Peninsula. The potential of this new route is huge because of its scientific impact. In ctica there are numerous research activities that aim to study several global phenomena, such as climate change, evolutionary and ecological processes, astronomy, pollution, fishing activity, among others. Current efforts are heavily constrained because of its lack of connectivity. Bringing a high-capacity submarine cable to Antarctica will dramatically improve their daily communications and research activities.
A submarine cable to Antarctica is an exciting and required project but -again- difficult to execute. Chile is the closest country to Antarctica, and it just makes a bit easier an extremely demanding project that involves challenging engineering, strong coordination among countries based in Antarctica and building alliances with the scientific community. Based on Humboldt’s experience, Desarrollo País will act again as the enabler to make this happen filling those gaps by funding and promoting public private partnerships. A request for information process was recently concluded and it showed a high interest of different players of the industry.
INFRASTRUCTURE FUNDS ARE KEY DRIVERS
Convenient incentives can enable complex projects. Infrastructure funds can play a strategic role for converging interests from different stakeholders. Desarrollo País as a state-owned infrastructure fund has become a key player for both executing Chile’s digital plan and promoting submarine cable projects. Its experience can motivate other funds to lead both submarine cable and countries’ growth efforts.
On one hand, leading the first digital direct link to Asia, along with other initiatives such as the deployment of a national optical fiber, the 5G development, hosting new data centers, and the deployment of the first submarine cable to connect the Antarctica territory national, will strengthen Chile's position on the new world economic map, in addition to positioning ourselves as a digital hub.
On the other hand, after pandemics the need of connectivity is stronger than ever and submarines cables play an important role to satisfy that. Infrastructure funds like Desarrollo País are strong enablers to encourage cable deployments by reducing investments, arranging agreements, capturing operators’ attention and fill gaps to facilitate the development of complex projects. Humboldt is an extraordinary example about how proper incentives can lead to an executable project and making present a ‘missing link’. Antarctica project is supposed to be even more difficult, but we are confident that attempting towards strong signals in funding and collaboration will enable a new link.
Natalia López is Digital Projects Manager for Desarrollo País (Chilean Infrastructure Fund). With over 10 years of experience in telecommunication sector, she possesses a Management Control and Information Systems Engineering from the University of Chile, Master in Consulting Strategic Business and Institutional Communication from the University Rey Juan Carlos in Spain, and International Master in Business Administration from ESERP Madrid School of Business and Social Sciences. Her previous experience in the telecommunications sector includes a role in Management Control Corporative for Telefonica and later a position as the Leader of Network Commercial Planning Department in Business Segment in Entel. Getting back to Chilean public sector, she was in charge of the Telecommunications Development Fund where her role was to drive initiatives to close Chile’s digital divide, leading projects such as Southern Optic Fiber, National Optic Fiber, WiFi-free national network, Internet access to national public schools. Currently, she is the Digital Projects Manager of the Chilean Infrastructure Fund, where her main purpose is propelling, leading, and developing public digital infrastructure as Humboldt project, to enhance the Chilean position in the digital economy.
Andrés Contreras is Senior Digital Infrastructure Engineer at Desarrollo País where he supports technical, commercial, and corporative progress of Humboldt and Antarctica project. He worked for 10 years at the Undersecretariat of Telecommunications of Chile (SUBTEL) planning and designing projects based on fiber optic terrestrial and submarine systems, mobile networks and satellite systems. He also worked as researcher at the University of Chile about bandwidth pricing and allocation mechanisms. Andres holds a BS and MS in electrical engineer both from University of Chile.