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On day one of Submarine Networks EMEA in London, the first keynote panel of the day addressed the trends, opportunities, and challenges for the global subsea cable market
The panel, which was moderated by Gavin Tully – Managing Partner at Pioneer Consulting, was comprised of Artur Mendes, VP Sales at Angola Cables; Mei Han, Network Planning Manager at China Mobile International; Owen David Bryant, Head of Global Infrastructure at Vodafone; Keri Gilder, CEO of Colt Technology Services; and Tansy McCluskie, Network Investment at meta.
The panel kicked off by discussing the factors that are driving the industry forward.
One of the main factors is AI. It will help boom fibre builds, both subsea and terrestrial. We had a period of overbuilding, especially in FTTH and Europe, but now, the industry is in a period of consolidation. It is essential that businesses are predictable and have a business case to build in the right areas, to make sure the traffic will follow. A big change is that, hyperscalers own most of the routes, but recently private equity has also come in – so we are in a new investment phase.
The process of diversifying the subsea cables was also touched on by the panel. It takes around 4-6 years to develop these cable systems. How do they encourage diversity? Mendes highlighted that the protection issue today is important than ever, especially in Africa, where there have been two huge cable outages already this year. Providing alternative routes, such as Google’s Africa to Australia cable announced last week, will be a solution.
How might new drivers of demand (such as AI) alter the industry?
AI is a buzzword in the wider telecoms industry at the moment, but it is important to the subsea cable industry too. A lot of it is just marketing. It’s unclear how much it will grow the network, but, what they expect to see, is more content being closer to the user, so the edge network as a percentage of the overall will grow. Then issues such as diversity, latency and availability will become more important as AI use expands.
Is there a race between the hyperscalers to “win” AI? For meta specifically, the similar companies such as AWS and Microsoft compete in many ways (in recruiting the best talent, for example), but in the subsea industry they tend to work together much more. For example, the companies band together to lobby governments.
Terrestrial AI, will bring 3 things (the 3ps): Predictability, Productivity and Power. For every 50 Chat GPT prompts, it requires around a pint of water to cool it, the data centre. So it makes sense that the data centres are being placed in extreme or remote areas. But if the enterprise traffic isn’t following that, then the business case does not work.
Regarding the role of governments in the industry, what is the balance of power in the industry?
The panel discussed how we are on the edge of a big change in Europe, based on the European Commission policy that creates on digital single market. They think that this will enable one digital market with similar pricing etc, but the ones in the room today are building those systems, not the governments, so they hold the power in regards to infrastructure.
But governmental regulations are an issue. Colt, for example, had to get regulatory approval in 34 countries when it acquired Lumen in November last year. Vodafone has a cable landing next week, which had regulatory issues in Ireland but they do not even land there.
Some of the regulatory changes happen midway through a project, so you end up rerouting. This is a huge industry challenge. The regulators are large and cumbersome and they move too slowly. There is demand there for the cables, but the bodies are too slow for the speed they need to build at.
Looking ahead to the future, what will be the most influential factor in the submarine industry in five years?
Mei Han: Diversification of cables, which has especially been highlighted with the outages in Africa.
Artur: To be prepared for AI, and having the necessary investments and then return on those investments.
Tansy: Education. Most people in the world have no idea where the internet comes from. If we go and educate people on where it comes from, it will be easier to progress.
Owen: The dot com systems are nearly 20 years old, and they will start to be retired. Working on reusing them and relaying them will be a big factor.
Keri: Extreme weather, it links to diversity. It will move enterprise industries as a whole out of markets.
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