SUBMARINE TELECOMS INDUSTRY REPORT – SECTION 3: SUPPLIER ANALYSIS
Submarine networks never sleep…
The trend has been confirmed over the last couple of years: the number of new submarine cable projects and capacity requirements are increasing steadily, and fast. On several strategic routes, where installed capacities are already very large, we expect growth rates higher than 50% per annum.
Capacity requirements are mostly driven by web players, who play a growing part in fueling both the number of projects and volume of investments.
While in the early 2000s, traditional telecom carriers were the main investors in submarine network infrastructure, we have seen a profound transformation of the sector in recent years: it is now a volume market, with a world market growth rate of over 10%, driven by the considerable needs of 2.0 players.
OTTs, whether independently or as part of a consortium, have become major players in our submarine cable networks industry. Their key objectives: optimize their network infrastructure, provide superior quality of service to their users and improve connectivity between their data centers deployed around the world.
However, we witness at the same time a growing demand for regional and local connectivity, the goal being to bring high-bandwidth connectivity to people all around the globe, even in remote areas, allowing them to benefit, beyond basic communications, from modern services such as tele-learning, tele-medicine among others. In these cases, building large pipes is not the priority, and business cases are somewhat irrelevant. In that sense, submarine networks contribute to public service missions.
A few other factors contribute to the fast-growing need for submarine networks:
- An ever-increasing number of users connecting to fixed and mobile internet;
- Internet services that are increasingly bandwidth-intensive;
- The growing volume of connected objects (including Internet of Things) that contribute to filling existing pipes.
In the coming years, 5G network deployments around the world will also have a significant impact on capacity requirements for subsea systems: more and more users connected to the mobile Internet, with consumer bandwidth services.
Submarine networks customers are therefore looking for solutions to optimize the cost of building new bandwidth, and in that respect, SDM (Spatial Division Multiplexing) is the latest trend, as it allows to multiply the number of fiber pairs running in a submarine cable, hence offering customers the lowest cost per bit. More generally, the submarine networks industry is continuously looking for technical and operational advances that allow to build more cost-effective and resilient systems.
The submarine systems market was worth $2.6 billion in 2016 and is expected to exceed $6 billion by 2023.