SUBMARINE TELECOMS INDUSTRY REPORT – SECTION 1.4: EVOLUTION OF SYSTEM OWNERSHIP AND CUSTOMER BASE

In recent years the way people use and access data has changed significantly – shifting from local or personal data storage to cloud-based file services and applications. This has led to some ownership paradigm shifts in the submarine fiber industry as data and application services become more distributed and cloud based.

Historically, there have been two different types of system ownership – Consortia and Private. A Consortium is a group of companies coming together to build a cable system in such a way that the risk is spread out amongst the members and system management decisions need to be made by committee so as not to negatively impact any one member significantly. Private cables by contrast are comprised of a single or very few owners and while this reduces the complexity of managing a system it greatly increases the financial risk to any single company.

The traditional Consortium model has largely become a thing of the past. As the “buy in” for a cable system these days trends towards a full fiber pair rather than a number of wavelengths, the need for all owners to agree on how their system is managed has reduced substantially. This new paradigm allows for individual owners to manage their fiber pairs how they see fit without worrying about impacting other owners on the cable system. This reduces administrative complexity and streamlines network operations. As a result, cables should now be considered either Single Owner or Multiple Owner.

Figure 21 - Single vs Multiple Owner Cable Systems, 2009-2019

Figure 21 – Single vs Multiple Owner Cable Systems, 2009-2019

Historically, Single Owner cables have made accounted for 60 to 62 percent of all cable builds. However, this percentage has been steadily declining from 60 percent in 2016 down to 57 percent in 2019. (Figure 21) Multiple Owner cables help to spread out financial risk so the increase in these types of systems indicates that cable owners are less willing to take on the risk of a cable system by themselves. Additionally, as OTT providers have entered the market, they have been partnering with traditional carriers and increasing the number of multiple owner cables – though this will change moving forward.

Figure 22 - Single vs Multiple Owner Cable Systems, 2020-2022

Figure 22 – Single vs Multiple Owner Cable Systems, 2020-2022

The prevalence of single ownership will return the future, as more niche and point-to-point systems are implemented. Based on currently announced systems, Single Owner cables will climb from 47 percent of new system builds in 2020 to 67 percent by 2022. Much of this is driven by OTT providers who need to control their own infrastructure and may not necessarily have route needs that align with traditional carriers. (Figure 22)