According to Statista, global IP data traffic is expected to amount to 121,694 petabytes per month in 2017. By 2021 this number is expected to reach 278,108 petabytes per month. This is, in part, driven by an increasingly connected global economy itself responding to a digital mobilized consumer that wants access to content, information, goods and services, anywhere and anytime.
But the global connectivity we are experiencing today owes much of its success to some 1.1 million kilometers of submarine cables in service globally today.
While wireless connectivity can bring broadband within a country but to communicate globally you need to span the oceans. That was the view shared by Mike Constable (pictured), chief executive officer of Huawei Marine, who explained that the digitization movement that is sweeping the global economy today owes its possibility to connectivity. "The fundamental backbone of all global connectivity is the submarine cable," he concluded.
Drivers of global connectivity
According to Analysys Mason principal consultant, Patrick Kidney, international bandwidth use continues to soar and in response, the submarine cable industry itself has changed structurally to reflect this demand. He cited data from TeleGeography that estimated annual growth of 40% in global international bandwidth from 2012-2016.
But outside of the international subsea cable industry, few people and businesses realize that much of this international telecommunications traffic flows through submarine cables (subsea cable), that span the world. As of 2017, TeleGeography estimate over 1.1 million kilometers of subsea cable was in service globally.
As of early 2018, there are about 448 submarine cables in service worldwide with Analysys Mason estimating 50 new systems in various stages of completion today.
Profile of cable owners are changing
Historically, the owners of most of the subsea cables of the world are telecom carriers, many of whom have formed consortia to ensure vested interests are met. By the late 1990s, private cables funded by enterprising companies became the norm.
While both consortia and private cable models still exist, the digital economy has seen content and cloud providers like Amazon, Apple, Facebook, Google, and Microsoft, as well as carriers operating outside a consortium deciding they want to own their own subsea cables.
Cable technology innovation
Analysys Mason lists 35 new systems are planned for completion before 2022. "The key to this [cable] business is pushing more light across greater distances. Ten years ago you were transmitting less than 1 Terabit of capacity on each fiber. Today we are pushing 20 Terabits of capacity – a multiple of 20 times the amount of light that we can push across the oceans," predicted Huawei's Constable.
He noted that with the rise of machine-to-machine traffic, the networks are becoming a lot larger, the demand for capacity is exceeding year-on-year by 50%. "The key technical innovations that we are seeing will answer the need for higher fiber count systems. The current standard is 8 fiber pairs. Huawei Marine is looking to launch 16 fiber pair technology next year," Constable said.
He noted that with investors in the traditional consortium now wanting to own their own fiber, this is further driving the need for higher fiber count systems.
Constable also noted calls for more agile and scalable networks. "We are seeing a lot more software driving the configuration of networks. An example is the branching unit product where we are now looking at remotely configuring software-driving branching units so you can select wavelengths individually to drop off or to join a trunk. Cable operators want agile, flexible networks. They want to be able to scale up or swap traffic over to different paths – all on a software configurable basis instantaneously," he elaborated.
The influence of digital transformation on network design
Digital transformation represents a $2 trillion opportunity for the telecom industry and society. The World Economic Forum/Accenture joint report "Digital Transformation Initiative: Telecommunications Industry" estimate that as much as $1.2 trillion in cumulative operating profit from 2016 to 2025 driven in part by initiatives such as the Networks of the Future and Beyond the Pipe.
Constable warned that digital transformation is going to drive more demand for capacity. He noted that when content providers like Facebook say they want to have a billion users on virtual reality that is only going to drive more demand for capacity.
At the 2018 4th Asia Pacific Submarine Networks Forum, Mao Shenjiang (pictured left), chief operating officer for Huawei Marine and organizer of the forum, cautioned that with digital transforming the world economy, there is a need to rethink how international submarine cable networks are designed and deployed.
He suggested a "top design" of international submarine cable network is needed – one that is specific for a country, a region and the world. Countries have actively introduced relevant policies to support the development of their own submarine cable industry. In order to achieve the goal of building a regional ICT Hub, the submarine cable needs to be integrated into the national strategic level for unified planning and construction.
"We believe that submarine cable, as the cornerstone of global data communication, requires unified planning and construction by all governments and cooperation in the region to jointly build a submarine optical cable communication network that enables global information and technology circulation, and promote the development and prosperity of the global economy," Mao suggested.
Challenges arising from digitalization
Digital transformation brings with it new challenges. One particular challenge that both cable operators and industry suppliers must address is cybersecurity. According to Gartner current definitions of cybersecurity are not reflective of the changes caused by digital business transformations. The Gartner report “Cybersecurity redefined for the Digital Era” suggests that Industries and government have used the term with different meanings in different contexts. But cybersecurity's focus is on protecting information across all domains (see Figure 1).
Figure 1: Cybersecurity coverage area
Gartner: Gartner 2018
With submarine cables crossing national borders, industry players need to navigate an increasingly complex regulatory environment and encompassing a wide range of issues including landing licenses, the nature of cables and their impact on the seabed, response to natural hazards and resilience in an increasingly busy ocean.
Future proofing success
When planning their cables, operators must look ahead to make sure that the bottleneck for their capacity is not in their submarine cables.
"Submarine cables are now a critical infrastructure for a nation and a region. Therefore looking ahead you need to start planning your investment now so that you are not going to be the bottleneck, and you can continue to support the transformation of a nation's digital economy," concluded Constable.
What is certain in all of this is that digital transformation is a collaborative effort among partners that bring different perspectives, expertise, and values to the ecosystem. "Faced with the development of new changes and new trends in these industries, we need to work together with all parties to explore innovative modes of cooperation and jointly promote the vigorous development of the submarine cable industry," remarked Mao.
Click here to watch the full video interview to learn more about how digital transformation is impacting the subsea cable market.