SUBMARINE TELECOMS INDUSTRY REPORT – SECTION 1.3: SYSTEM GROWTH
Prior to 2017, the world experienced slow growth in new system deployments due to economic uncertainty and more cost-effective system upgrades. With a greater demand in new markets and route diversity, system deployments experienced a boom in 2017. In all, 45 new systems will have been added to the global network during the period 2017-2019 – however, new system growth is on the decline since the peak in 2017 indicating a slowdown in system deployments. (Figure 17)
The period 2014-2016 saw an average of under 30,000 kilometers added annually, with 2015 adding only 15,800 kilometers. Over 100,000 kilometers of cable was added in 2017 while 2018 and 2019 added just over 60,000. (Figure 18) These past three years have raised the industry out of its previous slump, largely fueled by OTT providers system deployments fueled by their desire for more direct control over their own infrastructure. The next two years will potentially add over 124,000 and 870,000 kilometers of additional cable – a potential indicator of continued healthy growth.
Continuing recent trends, significant system growth through 2022 will take place in the Americas, Transatlantic and Transpacific regions. This growth is spurred on by the infrastructure demands of OTTs, and the desire for routes in the South Atlantic and from Europe to Virginia Beach to provide direct access to Ashburn, VA data centers as well as new infrastructure across the Pacific to replace aging cable systems. These new routes will provide both traffic diversity and connect growing markets in South America and Africa directly.
Despite new cable growth along Transpacific routes, overall growth in the Pacific Ocean has continued to slow down, with only 12 percent of future systems taking place in the AustralAsia. Growth in AustralAsia has continued to slow with reduced system counts observed year-upon-year since 2016. This region will continue to trend downwards, as nearly all Pacific Island nations have now been connected. (Figure 19)
The Europe, Middle East and Africa (EMEA) and Indian Ocean Pan-East Asian maintain slow growth compared to historical trends, largely due to sustained political and economic instability in the region 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.
One of the first major hurdles to overcome is the Contract in Force (CIF) milestone. A system is typically considered CIF when it has secured all project funding and has begun cable manufacturing. CIF rates are reasonably healthy, with 44 percent of the 34 planned systems for the period 2020-2022 having achieved this milestone. (Figure 20) This is a noticeable increase over last year’s rate of 38 percent, indicating a positive change in financing and investment availability. For 2020, 55 percent of planned systems are already CIF – a further positive sign.