IndustryReport 2012

s ub m a r i n e t e l e c o m s
INDUSTRY
REPORT 2012
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1
Submarine Cable Industry Report
Issue 1
July 2012
Copyright © 2012 by Submarine Telecoms Forum, Inc.
All rights reserved. No part of this book may be used or reproduced by any means,
graphic, electronic, or mechanical, including photocopying, recording, taping or
by any information storage retrieval system without the written permission of the
publisher except in the case of brief quotations embodied in critical articles and
reviews.
Submarine Telecoms Forum, Inc.

21495 Ridgetop Circle
Suite 201
Sterling, Virginia 20166
USA
www.subtelforum.com
ISSN: applied for
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2
Disclaimer: While every care is taken in preparation of this publication, the
publishers cannot be held responsible for the accuracy of the information
herein, or any errors which may occur in advertising or editorial content,
or any consequence arising from any errors or omissions, and the editor
reserves the right to edit any advertising or editorial material submitted
for publication. If you have a suggestion, please let us know by emailing
industryreport@subtelforum.com.
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3
Table of Contents
1.0 Introduction 13
2.0 Worldwide Market Analysis and Outlook 14
2.1 Connecting the Unconnected 14
2.2 Overview of Historical System Investment 15
2.3 2008 to 2012 Systems in Review 16
2.4 Systems Investment Beyond 2012 17
2.5 Decommissioning 18
3.0 Supplier Analysis 20
3.1 System Suppliers 20
3.2 Upgrade Suppliers 20
4.0 Ownership Analysis 23
4.1 Financing of Current Submarine Systems 23
4.2 Financing of Proposed Submarine Systems 23
5.0 Recent Events and Potential Impact on Submarine Cables 26
5.1 Macroeconomic Environment 26
5.2 Cable Protection Rules and International Water Rulings 26
6.0 Technology 32
6.1 Overview 32
6.2 Upgrades 32
6.3 Terminal Equipment 32
6.4 Wet Plant 33
6.5 Other Advances 34
7.0 Regional Market Analysis and Capacity Outlook 36
7.1 Transatlantic 36
7.1.1 Bandwidth and Capacity 36
7.1.2 New Systems 38
7.2 Transpacific 39
7.3 North America-South America 42
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4
7.4 Sub-Saharan Africa 46
7.5 South Asia and Middle East 48
7.6 Australia and New Zealand 53
7.7 Polar Route 55
8.0 Conclusion 58
List of Figures
Investment in New Submarine Fiber Optic Projects, 1987-2012 15
Investment in New Submarine Fiber Optic Projects by Region, 2008- 16
2012
Proposed Submarine Fiber Optic Projects 17
Credible (“High-Activity” and “Medium-Activity”) Proposed 18
Submarine Fiber Optic Projects by Region
Financing of New Submarine Fiber Optic Systems, 2008-2012 23
Financing of Credible (“High-Activity” and “Medium-Activity”) 24
Proposed Submarine Fiber Optic Projects
Forecasted Lit Capacity Requirement vs. Current Demonstrated 37
Design Capacity of Transatlantic Systems
Forecasted Lit Capacity Requirement vs. Current Demonstrated 39
Design Capacity of Transpacific Systems
Chinese International Internet Bandwidth by Operator, Year-End 2011 42
List of Tables
Civilian-Inhabited Sovereign States and Territories Without 14
International Fiber Optic Connectivity as of Mid-2012
Market Share for Supply of New Submarine Fiber Optic Systems, 20
2012 and Beyond
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5
Key Submarine Upgrade and Redeployment Projects for Equipment 21
Suppliers
Existing Transatlantic Cable Systems 36
Proposed Transatlantic Cable Systems 38
Existing Transpacific Cable Systems 40
Proposed Transpacific Cable Systems 41
Existing US-Brazil Cable Systems 42
Proposed Latin American Systems 43
Existing West African Systems 46
Existing East African Systems 46
Proposed Sub-Saharan African Systems 48
Existing South Asian Intercontinental Systems 51
Proposed South Asian Intercontinental Systems 51
Existing Australia and New Zealand Systems 53
Proposed Australia and New Zealand Systems 54
Proposed Polar Systems 55
List of Sponsors
Alcatel-Lucent alcatel-lucent.com 19
AP Telecom aptelecom.net 22
Cyta Global cytaglobal.com 25
Great Eastern Group greateasterngroup.com 31
Huawei Marine Networks Co., Ltd. huaweimarine.com 35
SubOptic suboptic.org 8
TE SubCom subcom.com 45
Telecom Egypt telecomegypt.com.eg 52
Terabit Consulting terabitconsulting.com 12
WFN Strategies wfnstrategies.com 57
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6
Foreword
F
or a number of years SubOptic has been looking to undertake interim
activities between our conference events, which are typically held
every three years, to provide a better service to our entire community
of interest.
Whilst we have maintained the interval between our events at a period

long enough for there to be significant developments to discuss, we have
long recognised that an annual report which provides a snapshot of the
state of the many sectors within our industry, could be of major interest and
value to our entire community, especially if it were to be freely available.
We are therefore very happy to support this initiative from Submarine

Telecoms Forum along with Terabit Consulting, which we hope will
provide a good, credible indicator of how the industry is developing to
meet new challenges, both from the demand and the supply areas, and
from external factors both natural and manmade.
There are, of course, risks in trying to produce such a report, and I am

sure there will be some discussion as to whether it is totally accurate or
whether it has managed to capture the key activities and decisions which
are helping to shape our industry, which is so critical to the economy of
the globe.
We think, however, that the debate that such a report will stimulate
could be good for the industry and help to raise our profile amongst the
many outside our immediate community, who still do not recognise how
important Undersea Fibre Optic Communication cables are to our global
economy.
And of course there will always be the next Annual Industry Report where
such matters can be adjusted as the inevitable changes occur. There will
also be next spring, SubOptic 2013 in Paris, where the industry as a whole
comes together to discuss and debate the future of our industry, which
will form the foundation, we hope, for future Annual Industry Reports.
Well done to Submarine Telecoms Forum for taking this initiative.
Fiona Beck
President of the SubOptic Executive Committee and
President and CEO of Southern Cross Cable Network
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7
The
Premier
Event
for the
Industry
For full details go to www.suboptic.org

Executive Summary
A
s the world has become increasingly connected since the dawn
of the internet age in the mid-1990s, there has been a massive
undertaking to “plug-in” every nation. As of mid-2012, only
21 nations and territories remain isolated from fibre optic connectivity,
though projects are underway in many of these markets at the time of
this writing. Since 2008, the submarine cable market has been in a new
cycle, the third of the fiber optic era, dominated by carriers investing in
developing markets such as Africa, India, and China. Approximately $10
billion worth of investment in new projects has occurred during this five-
year period, and there are currently $25.6 billion in new projects being
actively pursued by various sponsors.
Although market share was somewhat uneven in recent years, the near-
term outlook is more equitable, with each of four major new-system
suppliers garnering a 20 to 25 percent share of credible projects in the
near-term. Meanwhile, capacity upgrades have become one of the most
important aspects of the industry, providing a consistent source of growth.
Carriers, both in consortia and on their own, have been the greatest source
of capital for cable projects, but private investors have returned and
government/Development Finance Institution (DFI) interest is steadily
growing.
Macroeconomic shocks have had remarkably little impact on demand for

international capacity for the end user, but at the carrier level, the ability to
purchase bandwidth and invest in new systems has been impacted. The
most profound impact of macroeconomic developments on the demand
for new systems has been the tightening of capital from the project finance
community. Other events such as the strengthening of cable protection
laws and the growing importance of the United Nations Convention on
the Law of the Sea have also impacted the submarine cable industry.
Advances in optical transmission technology have recently returned

to a more natural pattern after the burst of the dot-com bubble. Many
technologies offering the ability to increase data rate, channel count
and overall capacity have come to market. Owners and purchasers of
submarine cable systems must consider potential upgrades, new terminal
equipment technology, new wet plant technology, and several other recent
advances.
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9
Breaking submarine investment into regions provides useful market
insight. The transatlantic market is overwhelmingly wholesale-oriented
and will soon have gone ten years without a new, direct cable system
between North America and Europe. It has become commoditized and
democratized, but its reputed oversupply is not as dire as widely claimed.
The business case for a new transatlantic wholesale cable continues to be
a tough sell to financiers; to differentiate themselves, new projects rely on
low latency, renewable energy sources, and the expansion of connectivity
beyond North America and Western Europe.
The transpacific market suffered a shock with the activation of three

new systems between 2008 and 2010, and without new deployment, a
transpacific capacity shortage is a real possibility within three years.
China and Japan will be the pillars of East Asian bandwidth demand as
next-generation intra-Asian systems (SJC, ASE, and APG) will change
transpacific market dynamics.
The North America-South America capacity market is heavily dependent

on three cables: GlobeNet, SAM-1, and South American Crossing, but a
wave of at least eight new projects hopes to change this dynamic. Latin
America still commands some of the highest premiums of any capacity
market, with 10 Gbps wavelengths between Brazil and the United States
remaining well over $100,000 per month. The Brazilian market has also
been targeted by developers of interregional systems that hope to reroute
the region’s traditional Miami-centric traffic patterns away from the
United States and toward other markets.
Total international Internet bandwidth in Sub-Saharan Africa is 300 Gbps

as of 2012. The design capacity of systems in service as of year-end will be
15 Tbps on Africa’s west coast and 7.5 Tbps on its east coast.
India’s international bandwidth demand, which exceeds 1 Tbps as of

2012, is the primary driver of the region’s submarine investment and
Indian bandwidth demand to the United States has grown considerably,
with India having become United States’ leading voice correspondent.
Despite decreases in extreme poverty and the expansion of the middle
class, Indian income inequality remains a significant obstacle to growth of
the country’s telecommunications and Internet markets. Although growth
in Indian Internet bandwidth has been strong, the sustainability of this
demand will be dependent upon increases in subscribership (particularly
for broadband services) which will only be possible through an expansion
of consumer spending power.
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10
Egypt has historically been the submarine industry’s chokepoint of most
concern, but due to political instability, sanctions, latency issues, and
advantages of submarine systems over international terrestrial projects,
there is no clear alternative to the Suez region. The Europe-Asia route has
historically been dominated by consortia although Reliance Globalcom,
Tata Communications, Bharti Airtel, Seacom, Gulf Bridge International,
and Orascom have opened the route to competition.
Australian international bandwidth demand already exceeds 1 Tbps

and is expected to grow more rapidly than other regions. Pacific Fibre
has faced a variety of obstacles: a risk-averse financing environment; a
dominant competitor that was able to single-handedly alter the dynamics
of the marketplace, making business plan forecasting extremely difficult;
and the defection of Pacnet. Nevertheless, given the region’s advanced
broadband initiatives, there is expected to be a government-led and
popular outcry for additional intercontinental bandwidth within two to
three years.
Finally, in the Arctic, advancements in technology coupled with changes

in climate have made previously unthinkable projects increasingly
credible, and with the new wave of interest, the submarine cable industry
risks becoming the battleground for a Polar proxy war led by three of the
region’s dominant powers: Canada, Russia, and the United States.
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11
Intelligent intelligence -
go beyond the numbers!
The Undersea Cable Report 2013

From Terabit Consulting
Publication Date: September, 2012
The most diligent quantitative and
qualitative analysis of the undersea
cable market - 1,600 pages of data,
intelligence, and forecasts that can
be found nowhere else.
Terabit Consulting analysts led by
Director of International Research
Michael Ruddy tell you what’s real
and what’s not, where we’ve been
and where we’re headed.
YOUR KEY TO UNDERSTANDING AND HARNESSING

THE $20 BILLION UNDERSEA MARKET OPPORTUNITY
The Undersea Cable Report
capitalizes on Terabit Consulting’s
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projects (e.g. AJC, BRICS, EASSy,
Hibernia, SEAS, TBI) - a world of
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The Undersea Cable Report 2013 is your single source of information for top-level decision-
making - with the most detailed profiles, data, market analysis, and forecasts available.
• 680+ detailed undersea cable proﬁles • accurate, reliable data

• Capacity demand, capacity supply, and capacity pricing • valuable intelligence
• Ownership, system supply, ﬁnancing, and project costs • innovative modeling
• The upgrade market • thoughtful insight
• Global, region-by-region, and route-by-route analysis • global perspective
• Reliable, detailed forecasts • respected expertise
Limited time re-introductory offer to celebrate the return

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SAVE 50% UNTIL SEPTEMBER 7, 2012
Single-user license $10,995 limited-time re-introductory offer $5,500
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For more information visit www.terabitconsulting.com
1.0 Introduction
Welcome to the first edition of the Submarine Telecoms Industry Report,
which was authored by the submarine industry’s leading market analysis
firm, Terabit Consulting, with research overseen by Terabit’s director
of international research, Michael Ruddy. It serves as the final chapter
in a trilogy of products beginning with the Submarine Cable Map and
including the Submarine Cable Almanac.
The Submarine Telecoms Industry Report features in-depth analysis and

prognoses of the submarine cable industry, and serves as an invaluable
resource for all who are seeking to understand the health of the submarine
industry. It examines both the worldwide and regional submarine cable
markets, including issues such as the new-system and upgrade supply
environments, ownership, technologies and geopolitical/economic events
that may impact in the future.
In this report, Terabit Consulting identified more than $25 billion in new
projects that are currently being actively pursued by their sponsors. Of
those, more than $5 billion worth of new projects are considered to be
in an advanced state of development and well-positioned for near-term
deployment.
While the crystal ball will rarely be completely clear, one fact remains –
that our 150+ year old international enterprise continues to be a thriving,
exciting and ever-evolving industry.
Our aim is to make this information as timely and available as possible. As

always, we feel that an informed industry is a productive industry.

13
2.0 Worldwide Market Analysis and Outlook
2.1 Connecting the Unconnected

The drive to connect the unconnected continues unabated. In recent years
the submarine industry has expanded its efforts to provide ubiquitous
global coverage, and this trend is expected to continue in the near-future.
As of mid-2012 only 21 civilian-inhabited sovereign states and territories
were not served by international fiber optic connectivity; however, credible
submarine projects have been initiated in many of these markets.
Civilian-inhabited sovereign states and territories without

international fiber optic connectivity as of mid-2012
Somalia (including Somaliland)

Africa Saint Helena, Ascension, and Tristan da
Cunha (British Overseas Territory)
Christmas Island (Australian External
Territory)
Asia
Cocos (Keeling) Islands (Australian External
Territory)
Caribbean Montserrat (British Overseas Territory)
Saint Pierre and Miquelon (French
North America
Collectivité d’Outre-mer)
Easter Island (Chilean Special Territory)
South America Falkland Islands (British Overseas Territory)
Galapagos Islands (Ecuadorian Province)
Cook Islands (Self-Governing State in Free
Association with New Zealand)
Kiribati
Nauru
Oceania
Niue (Self-Governing State in Free
Association with New Zealand)
Norfolk Island (Australian External Territory)
Palau
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14
Pitcairn Islands (British Overseas Territory)
Solomon Islands
Tokelau (New Zealand Dependent Territory)
Oceania Tonga
Vanuatu
Wallis and Futuna (French Collectivité
d’Outre-mer)
2.2 Overview of Historical System Investment

By year-end 2012 there will have been $56.1 billion worth of investment in
fiber optic submarine systems, comprising 1.253 million route kilometers.
Over its 25-year history the market will have averaged $2 billion worth of
investment and 48,200 kilometers of deployment per year.
Investment in New Submarine Fiber Optic Projects, 1987-2012

(Including Projects Under Construction) ($Millions by RFS Date)
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
1987
1988
1989
1990
1991
1992
1993
1994
1995
1996
1997
1998
1999
2000
2001
2002
2003
2004
2005
2006
2007
2008
2009
2010
2011
2012
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15
Submarine cable deployment can be broken down into three distinct
cycles:
1. The first, lasting ten years from 1987 to 1997, marked the advent
of transoceanic fiber optic communications and a predictable,
consortium-dominated market.
2. The second cycle was characterized by unprecedented levels of

investment from 1998 to 2002, fueled by the dawning of the Internet
and WDM eras and the arrival of speculative investment, followed by
a disastrous market collapse that led to what was effectively a five-
year dormancy of the market.
3. The third cycle, lasting from 2008 to the present, represents the era of
carrier-dominated investment in developing markets. To date, most
of that investment has been directed toward Africa, India, and China.
2.3 2008 to 2012 Systems in Review

During the five-year period from 2008 to year-end 2012 there will have
been approximately $10 billion worth of investment in new projects, for
an average of $2 billion and 54,000 route kilometers per year. More than
two thirds of that investment has been in three regions: Sub-Saharan
Africa, South Asia and the Middle East, and the transpacific, with most
investment targeted toward the “anchor” markets of South Africa, India,
and China respectively.
Investment in New Submarine

Fiber Optic Projects by Region, 2008-2012
Latin North America

America/Caribbean 3%
4%
South Pacific
4%
Australia
4%
Africa
East Asia 32%
8%
Europe/North
Africa
9%
Transpacific South Asia/Middle

17% East
19%
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16
2.4 Systems Investment Beyond 2012
Terabit Consulting identified a total of $25.6 billion in new projects that are
currently being actively pursued by their sponsors. These projects were
each classified into one of three categories: “High Activity,” “Medium
Activity,” and “Low Activity” based on various criteria including supply
contracts, funding, licenses, carrier commitments, market opportunities,
marine surveys, desktop studies, and feasibility studies.
The analysis found that approximately $5 billion worth of projects can be

considered to be in an advanced state of development (“High Activity”)
and an additional $15 billion have made significant progress (“Medium
Activity”). A further $5.6 billion worth of projects were confirmed as being
under serious consideration but had yet to demonstrate their true credibility.
Terabit Consulting also classified more than $25 billion worth of projects
as either officially or effectively “cancelled.”

(Excluding Systems Under Construction) ($Millions)
$16,000
$14,000
$12,000
$10,000
$8,000
$6,000
$4,000
$2,000
$0
High Activity Projects Medium Activity Projects Low Activity Projects
Credible proposed investment, i.e. projects falling into the “High Activity”
and “Medium Activity” categories, is characterized by the what would be
the greatest geographic diversity of investment in the submarine market
since its inception, with at least three-quarters directed toward developing
markets and new routes.
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17
Credible (“High-Activity” and “Medium-Activity”)
Proposed Submarine Fiber Optic Projects by Region
Europe/North South Pacific North America

Australia Africa 2% 0%
5% 3%
South Asia/Middle
East
6%
Latin
Multi-regional America/Caribbean
7% 21%
Africa
8% Polar Route
16%
Transatlantic
9%
Transpacific East Asia

11% 12%

2.5 Decommissioning
The decommissioning of the TAT-8 transatlantic cable in 2002 marked the
first major retirement of a fiber optic system. TAT-8 had been the first
transoceanic fiber optic cable to enter service, 14 years earlier, and the
advent of WDM systems in the late-1990s made its continued operation
an unworkable proposition; well before its retirement, new capacity could
effectively be purchased; new capacity could effectively be purchased
on a DWDM system at a cheaper price than TAT-8’s per-unit operations
and maintenance costs. TAT-8’s deactivation was followed by a wave of
retirements that led to the decommissioning of almost all PDH and SDH
repeatered systems, and even some WDM-based cables (most notably,
Gemini). By 2010 most major candidates for retirement had been removed
from service. Consequently as of 2012 most of the existing global undersea
network is, with limited exceptions (most notably some redeployed
systems), theoretically capable of supporting DWDM transmission rates
far in excess of original target design capacities.

18
Realizing the potential
of a connected world
Realizing the potential
of a connected world
3.0 Supplier Analysis
3.1 System Suppliers

The outlook for supply contracts is significantly more equitable than
in recent years. The concentration of market share between 2008 and
2012 was led by Alcatel-Lucent, which captured half the market, and TE
SubCom, with more than a third. Huawei Marine Networks, meanwhile,
made notable inroads during its initial years in the marketplace.
Based on the market share of credible awarded contracts, each of four

major new-system suppliers would have a near-term market share of
between 20 and 25 percent.
Market Share for Supply of New Systems, 2012 and Beyond
Market Share, Market Share of Credible

2008-2012 Awarded Contracts
Alcatel-Lucent 50% 20%
TE SubCom 34% 25%
NEC 7% 23%
Huawei Marine 4% 23%
Fujitsu 2% 4%
Others 3% 4%
3.2 Upgrade Suppliers

Capacity upgrades have become one of the most dynamic aspects of the
submarine cable industry. Beginning in the late 1990’s few, if any, systems
were equipped to their full design capacity at RFS; instead, owners
consciously planned to install additional terminal equipment as market
conditions dictated. Improvements in transceiver technology often
make it possible to provide capacity beyond initial design capacity, even
as systems grow older. Any optically amplified system can potentially
be upgraded beyond its design capacity, and those installed from 1999
onwards are excellent candidates. More significantly, provision of
terminal equipment for upgrades does not require investment in repeater
design, cable manufacturing, or cable ships; this has resulted in many
suppliers beyond those traditionally engaged in provision of submarine
cable systems entering the market for terminal equipment upgrades. This

20
dynamic may be uncomfortable for some suppliers, but has let to some
striking benefits for system owners.
The upgrade market and its technology suppliers are a relatively new
niche to the industry, increasing the utility and longevity of a number
of submarine cable systems. Several key submarine upgrades and
redeployments have been accomplished in recent years, encompassing in
scope both regional and transoceanic systems.
The upgrade market, meanwhile, will arguably be the most consistent

source of growth and has been targeted by four equipment suppliers, in
addition to the traditional submarine system suppliers.
Key Upgrade and Redeployment Projects for Equipment Suppliers
Ciena Southern Cross Cable Network, TGN Atlantic, Japan-

US Cable Network, North Asian Loop, Australia-Japan
Cable, FLAG Europe-Asia
Infinera Pacific Crossing-1, North Asian Loop, Transatlantic cable,
MedNautilus, Kodiak-Kenai, Pacnet
Mitsubishi Asia-America Gateway, TAT-14
Xtera EAC/C2C, AC-1, Gulf Bridge International, GlobeNet,
Arcos, PAC, SHEFA-2, GOKI, Columbus-2, Columbus-3,
Gemini Bermuda, C-BUS, East-West Cable

21
4.0 Ownership Analysis
4.1 Financing of Current Submarine Systems

The financing of current submarine systems consists of consortium,
carrier, investor and government backed models. Projects led by carriers
predominate, but private investors have returned and government/
Development Finance Institution (dfi) interest is steadily growing. Also,
despite global financial uncertainty, there are $8 billion worth of credible
investor-led project finance opportunities on the table in the submarine
market.
From 2008 to 2012 four-fifths of projects were financed by carriers, either

alone, in small groups, or in large consortia, as private investors remained
cautious. Governments and development financial institutions increased
their share of funding to 5 percent of all projects.
Financing of New Submarine Fiber Optic Systems, 2008-2012
Government/DFI
5%
Investor
14%
Consortium
49%
Carrier
32%
4.2 Financing of Proposed Submarine Systems

Of the $20 billion in credible projects, roughly half would be financed by
carriers, and interest among government and DFI sources is increasing.
Notably, 40 percent, or $8 billion of credible proposed projects would be
financed by private sources, although privately-financed projects also
show the greatest risk of not coming to fruition.

23
Financing of Credible (“High-Activity” and “Medium-Activity”)
Other (Research
Networks, Suppliers,
Government/DFI etc.)
6% 5%
Carrier Investor
16% 40%
Consortium
33%

24
5.0 Recent Events and Potential Impact on Submarine Cables
5.1 Macroeconomic Environment

The global economic environment’s impact on the submarine industry
is increasingly complex. At the end-user demand level, macroeconomic
shocks have had remarkably little impact on demand for international
capacity. At the carrier level, however, they have unquestionably impacted
carriers’ ability to purchase bandwidth as well as carriers’ propensity to
invest in new systems. But the most profound impact of macroeconomic
developments on the demand for new systems (i.e. from the supplier
perspective) has been the tightening of capital from the project finance
community.
Increasingly, the industry has sought to temper this effect by looking to

more stable, alternative sources of capital, particularly from development
financial institutions, and by shifting its attention toward areas of growth
in the developing world. Nevertheless the submarine industry will
undoubtedly feel the impact of the European sovereign-debt crisis, most
immediately in the growing reluctance of the private finance community
to fund submarine projects.
5.2 Cable Protection Rules and International Water Rulings

The rules governing the survey, installation, maintenance and repair of
submarine cables within territorial waters are defined by the sovereign
state governments concerned. Within Exclusive Economic Zones (EEZ)
and out into international waters they are covered by the United Nations
Convention on the Law of the Sea (UNCLOS). In the EEZ, the UNCLOS
Articles 58 & 113 – 115 apply; in international waters the relevant the
UNCLOS Articles are 86, 87 & 112 – 115. To date 162 countries plus the
European Union have signed the convention, although a number have still
to ratify it. Most notable of these is United States which only recognizes
the UNCLOS as a codification of “customary international law”.
In the past decade the importance of international submarine cables to

world trade and individual country economies has grown exponentially,
as connection to the internet has become a prerequisite for conducting
business. Major disruptions to the submarine network and the failure
of the internet, as exemplified by the Hengchun subsea earthquake, off
Taiwan, in 2006, has increased pressure on governments around the world
to recognize the importance of submarine cables and the need to improve
legislation for their implementation and protection.

26
At the 65th Session of the UN General Assembly, on 29th of March 2010,
the Secretary-General addressed the subject of the world’s submarine
cable networks. In his report he stated: “Submarine cables. A need has
been expressed by some States, including in recent workshops, to con-
sider gaps in the existing legal regime regarding submarine cables at the
international and national levels, in particular in the implementation of
article 113 of the United Nations Convention on the Law of the Sea. Views
have been expressed that the current legal regime is not adequate with
respect to the operation of, and threats to, submarine cables. In particular,
a need for a code of best practices with regard to the laying and repair of
submarine cables and the conduct of cable routing surveys was mentioned,
among other things. In that context, a need for capacity building activities
facilitating the review of the legal regime and possible gaps therein could
be considered.”
Following this report, in 2010, the International Cable Protection

Committee (ICPC) announced that it had changed its rules to allow
national governments and companies that were key players in the
submarine cable industry to be represented within its membership. The
ICPC’s stated objective in making this change was to foster improved co-
operation between government and industry, which was deemed essential
to enhance the security of submarine cables worldwide.
From studies conducted by ICPC and others, following such disruptions

as the Hengchun earthquake, a key factor that emerged was that national
governments were often in the critical path for the installation of and
remedial work to submarine cables. It was therefore anticipated that having
governments represented within the ICPC would facilitate improved
education and awareness, strengthening of legislative protections and
rights for cable owners, in accordance with the UNCLOS. The latter was
considered essential to help eliminate permitting delays and to facilitate
provision of urgent assistance in the event that the security of a submarine
cable was threatened by illegal action.
In December 2010, the United Nations General Assembly approved an

Omnibus Resolution on the Oceans and Law of the Sea. For the first time
this resolution recognized the critical importance of submarine cables to
the global economy and the security of nations. It also recognized that
they are susceptible to accidental and intentional damage. The resolution
was originally proposed by the Singaporean Government and was
supported by diplomats from other countries who had been briefed by
their respective ICPC Members.

27
Importantly, the resolution called for states to take measures to protect
cables, in accordance with international law. It encouraged greater
dialogue and cooperation between states and relevant regional and global
organizations to promote the security of the critical communications
infrastructure. However, the UN process requires unanimity among all
member countries for any provision to be included, and further hard
work was required to educate the diplomats as to the importance of the
resolution language on submarine cables.
In the autumn of 2011, the nation members of the UN met once again
to define the Omnibus Resolution on Oceans and the Law of the Sea.
The result of this meeting was another positive step forward. In the
2011 Omnibus Resolution on Oceans and the Law of the Sea, for the
first time, the inclusion of the word “repair” was agreed by all nations
to be included in the text concerning maintenance of submarine cables.
However, the proposed language on expediting repairs in the EEZ was
diluted in order to be acceptable to some nations. The agreed language
states that repairs should be completed in accordance with international
law without reference to maritime boundaries. The resolution strongly
encourages nations to implement or update national laws to protect cables
in fulfilment of national obligations under the UNCLOS.
The relevant language from the 2011 Omnibus Resolution on Oceans and
the Law of the Sea is as follows:
PP22: Recognising that fibre optic submarine cables transmit most of the
world’s data and communications and, hence, are vitally important to the
global economy and the national security of all States, conscious that these
cables are susceptible to intentional and accidental damage from shipping
and other activities, and that the maintenance, including the repair, of these
cables is important, noting that these matters have been brought to the
attention of States at various workshops and seminars, and conscious of the
need for States to adopt national laws and regulations to protect submarine
cables and render their wilful damage or damage by culpable negligence
punishable offences,
OP 121a: Calls upon States to take measures to protect fibre optic submarine
cables and to fully ad-dress issues relating to these cables, in accordance with
international law, as reflected in the Convention;
OP 121b: Encourages greater dialogue and cooperation through workshops

and seminars among States and the relevant regional and global organizations

28
on the protection and maintenance of fibre optic submarine cables to promote
the security of such critical communications infrastructure;
OP 121c: Encourages the adoption by States of laws and regulations

addressing the breaking or injury of submarine cables or pipelines beneath
the high seas done wilfully or through culpable negligence by a ship flying its
flag or by a person subject to its jurisdiction, in accordance with international
law, as reflected in the Convention;
OP 121d: Affirms the importance of the maintenance, including the repair,

of submarine cables, undertaken in conformity with international law, as
reflected in the Convention;
This language clearly and specifically encourages Nation States to adopt laws
and regulations addressing obligations to enact modern domestic laws under
UNCLOS article 113 and for the first time uses the word “repair” in the text.
However, as the final language on repair is the result of compromise

required by various nations, it is understood that ICPC will continue to
support continued efforts by Singapore and other like-minded nations in
an attempt to expand the language in the resolution to include expeditious
repairs when the UN meets again to define the Omnibus Resolution on
Oceans and the Law of the Sea in 2012.
The Australian Government has been an early adopter of legislation related

to submarine cables, it was one of the first signatories to the UNCLOS, which
came into force in 1994, and is the first government to become a member
of ICPC. The Australian Telecommunications Act (1997) covers under
Schedule 3A all the principles of the UNCLOS; in particular, Schedule 3A
empowers the Australian Communications and Media Authority (ACMA)
that administers the act to establish Protections Zones around submarine
cables. However, the 1997 Act is designed only to address international
and domestic submarine ‘telecommunication’ cables. At the time of its
drafting the legislators did not have in contemplation the offshore Oil
& Gas industry that has since emerged. Much of the continental shelf
around Australia is rich in oil and natural gas and over the next decade,
major offshore production facilities will be constructed, outside of
territorial waters but within the Australian EEZ. Submarine fibre optic
cables, between these platforms and the main land will be essential to their
operation. The Australian Government has enacted legislation to cover
these offshore production facilities in the form of the Offshore Petroleum
and Greenhouse Gas Storage Act (2006) (OPGGSA); unfortunately, once
again it does not address submarine cables. The OPGGSA is administered

29
by the Department of Resource, Energy and Tourism. The Australian
Government has a dilemma to resolve in the next year or so as to which
legislation should be applicable to these types of cables and how this will
apply if the cable is owned by an Australian carrier providing a service
to the Oil & Gas company or the cable is an integral part of the offshore
facility owned and operated by the Oil & Gas company.
Like Australia, many nation states have, or are in the process of, dividing
their EEZ into leasable blocks for Oil & Gas exploration and later
production. The challenge in drafting the legislation for the necessary
leases and licences will be to protect the rights of the lessee while
maintaining the requirements of the UNCLOS to allow submarine cables
free access to cross these blocks and permit maintenance and repair of
cables within the blocks, when required. The Australian Government
may well be leading the way in developing appropriate legislation to
protect submarine telecommunications cable and will shortly need to re-
address this legislation, as it relates to submarine cable for the offshore
Oil & Gas industry. Therefore, an opportunity exists for rest of the world
to consider the Australian approach, learn from it and where appropriate
adopt their rules and regulations.

30
6.0 Technology
6.1 Overview
Advances in optical transmission technology experienced a brief hiatus in
the aftermath of the dot-com bubble, but have recently returned to a more
natural pattern. The period from 2009 to 2010 saw many lab experiments
demonstrating increases in data rate, channel count and overall capacity,
so it is no surprise that three years later we see many of these capabilities
coming to market. Owners and purchasers of submarine cable systems
must consider potential upgrades, new terminal equipment technology,
new wet plant technology, and several other recent advances.
6.2 Upgrades
Upgrades may utilize 10Gb/s, 40Gb/s or 100Gb/s transmission
technology. 10Gb/s transponders may be used when low cost or rapid
deployment is required; typically from 1 to 1 ½ times the original design
capacity may be achieved; for example a system designed for 32 waves
per fiber pair might be expanded to 40 or 48 waves. 40Gb/s upgrades
have been offered for several years, but are rapidly being overtaken by
100Gb/s upgrades. 40Gb/s upgrades may deliver 2 to 2 ½ times the
original design capacity; it is not usually possible to replace each 10Gb/s
channel with a 40Gb/s channel, thus the improvement factor is less than
4. 100Gb/s upgrades have recently been announced, with the potential to
achieve 4 times the original design capacity on some wet plant.
Owners may choose from these solutions to meet their specific needs:
maximizing capacity, rapid deployment, lowest cost or some combination.
The exact results depend on amplifier bandwidth, equalization, the
chromatic dispersion map, and other factors. A typical upgrade will
involve tests to characterize a fiber pair followed by trials of the equipment
before a supplier commitment is made. Many upgrade designs now
permit new channels to be added alongside existing channels, avoiding
the need to remove existing terminal equipment from service.
6.3 Terminal Equipment

Both 40Gb/s and 100Gb/s terminal equipment is now being offered by
system suppliers. 10Gb/s continues to be offered to support existing
customers and where market demand does not yet justify the jump to
higher bit rates. 40Gb/s equipment is immediately available and may
now be considered mainstream. There are signs, however, that 40Gb/s will
quickly be superseded by 100Gb/s. The adoption of 100Gb/s technology
in terrestrial networks and pressure from non-traditional suppliers

32
will drive the deployment of 100 Gb/s technology on submarine cable
systems. The use of 100Gb/s client signals will further cement 100Gb/s as
the standard bit rate for the next generation of cable systems.
The advances in terminal equipment technology achieved over the last

few years include:
• Coherent detection to improve receiver sensitivity

• Quadrature Phase Shift Keying (QPSK) to modulate 2 bits per
symbol
• Increases in the baud rate to 14 or 28Gbaud (symbols per second)
• Digital signal processing of the received signal to permit partial
compensation of linear impairments in the electrical domain
reducing the need for external dispersion compensation
• Dual polarization to transmit two signals per wavelength
• Frequency division multiplexing, in which two closely spaced
optical channels occupy a single 50GHz channel slot
• Improved Forward Error Correction (FEC) algorithms
40Gb/s systems typically employ several of these, while 100Gb/s

transceivers must use almost all of them. (If all were used, the resulting
bit rate would be 200Gb/s.)
To achieve high channel counts over trans-oceanic distances, some

additional improvements will be added; these may include further changes
to the modulation format and full compensation accumulated CD.
6.4 Wet Plant Technology

Improvements in transceiver design can increase the capacity of existing
wet plant. However, the most dramatic benefits can be achieved through
synergies between transceiver and wet plant design. The ability to perform
dispersion compensation in the electrical domain eliminates the need for
dispersion management in the optical line. This in turn permits the use of
high effective area, low loss fiber which reduces non-linear impairments
and improves end-to-end performance. Systems using coherent detection
and suitably optimized wet plant will support 80 or more 100Gb/s
channels, or 8 Tb/s, per fiber pair over trans-Pacific distances.

33
The need for additional capacity, opportunities to reduce maintenance
costs, and the age of existing systems means that a new round of wet
plant installation on major trans-oceanic routes will eventually be needed.
When that time comes, the stage is set for capacities ten times greater than
those available previously.
6.5 Other Advances

Among the many changes in technology, two other advances are worthy
of note. The first is a new client interface standard in the form of 40Gb/s
and 100Gb/s Ethernet. As with previous generations of technology,
muxponders will fill the gap between the adoption of new line side
interfaces and the availability of client interfaces. Routers with 100Gb/s
interfaces entered field trials by mid 2011, so widespread adoption is
probably still a year or so away. Nevertheless, as 100Gb/s becomes more
prevalent, 100 Gb/s Ethernet is likely to be the client interface of choice.
IEEE 802ba was ratified in June 2010 and updated in March 2011. 40Gb/s
and 100Gb/s Ethernet interfaces are available in formats for copper cable,
multi-mode fiber and single mode fiber.
The second advance of note is Reconfigurable Optical Add Drop

Multiplexers (ROADM). ROADM have seen adoption in terrestrial
networks and are naturally suited to managing capacity on a trunk and spur
configuration commonly encountered in submarine networks. The risks
and challenges associated with any new wet plant technology should not
be underestimated, however ROADM is a technology that bears watching.

34
7.0 Regional Market Analysis and Capacity Outlook
7.1 Transatlantic
7.1.1 Bandwidth and Capacity

No transoceanic market has experienced a more precipitous decline in
investment than the transatlantic market, which is currently enduring its
longest deployment drought in history. Between 1993 and 2003, a new
transatlantic cable system entered service every ten months, on average.
By the time the next transatlantic cable system is activated, the market will
have gone more than a decade without a new, direct cable system.
Existing Transatlantic Cable Systems
RFS System Owner(s)

Atlantic Crossing-1
1999 Level 3
(AC-1)
1999 Columbus-3 International consortium of carriers
Yellow (Level-3) /
2000 Atlantic Crossing-2 Level 3
(AC-2)
2000 Atlantis-2 International consortium of carriers
2001 FLAG Atlantic-1 (FA-1) Reliance Globalcom
2001 Hibernia Atlantic Columbia Ventures Corp.
2001 TAT-14 International consortium of carriers
2001 TGN-Atlantic Tata Communications
2003 Apollo Cable & Wireless / Alcatel-Lucent
The seven lit DWDM systems between North America and Europe are owned
by six entities: Apollo SCS Ltd. (a joint venture between Cable & Wireless
Worldwide and Alcatel-Lucent), Level 3 (formerly Global Crossing, which
operates two systems), Hibernia Atlantic (an 85-percent owned subsidiary
of Columbia Ventures), Reliance Globalcom, Tata Communications, and the
TAT-14 consortium. Consequently, the transatlantic market can be described
as an overwhelmingly “wholesale” market, where operators have opted
to lease capacity from network operators (as opposed to making direct
investment in their own capacity infrastructure).

36
A number of events have brought about the commoditization of
bandwidth between most European and North American endpoints. In
the late-1990s, hundreds of fiber pairs were deployed to metropolitan
areas on both continents, making point-to-point connectivity both
economical and practical, and at the same time retail markets were fully
liberalized. Then, more importantly, in the early-2000s the dot-com bubble
burst drove many cable operators into bankruptcy, allowing investors to
acquire transoceanic networks at pennies on the dollar and unleashing
a downward price spiral that saw erosion of up to 75 percent per year
and the “dumping” of bandwidth onto the market. In the same decade,
new industries emerged offering data center and content delivery services
that further streamlined international connectivity for both operators
and end-users. By the mid-2000s transatlantic bandwidth had become
extremely cheap (sometimes cheaper than its construction cost) and end-
to-end services between North America and Europe were efficiently and
competitively managed, to the point where even small- and medium-
sized enterprises could be characterized as viable bandwidth clientele.
Forecasted Lit Capacity Requirement vs. Current

Demonstrated Design Capacity of Transatlantic Systems
350
300
250
200
Tbps
150
100
Demonstrated design capacity of existing
transatlantic systems: 49.5 Tbps
50
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020
As of mid-2012, lit transatlantic capacity was approximately 15.6 Tbps

and demonstrated design capacity was 49.5 Tbps, for a fill rate of 32
percent. Although 40G and 100G upgrade technology promised vast
design capacity increases in theory, the practical implementation of the

37
technology in ten- to fifteen-year old systems has not shown uniform
success, and even the most optimistic estimates of transatlantic design
capacity using existing systems do not exceed 80 Tbps. Consequently,
the required level of lit transatlantic capacity is forecasted to exhaust the
design capacity of existing systems within three to four years.
7.1.2 New Systems

Consortia of operators were rumored to have been considering the
construction of a TAT-15 system as early as 2002, and the first ten years
of inconclusive discussions seem to have served primarily as an ongoing
pressure tactic on wholesalers to lower prices. With price erosion having
leveled off at between 10 and 15 percent annually and the long-term
viability of TAT-14 in question, a clearer case can be made that tier-one
operators ought to invest directly in their own infrastructure rather than
continue purchasing bandwidth from wholesalers.
Planned Transatlantic Fiber Systems

(Europe to the Americas)
System Owner(s)
ACSea-EUR Cable System Telebras
Emerald Express Emerald Networks
Europe Link with Latin America (ELLA) Research community
Project Express Columbia Ventures Corp.
International consortium
Transatlantic Consortium System / TAT-15
of carriers
WASACE Cable
WASACE North
Company
Although financiers have shown continued commitment to submarine

investments in general, they have shown a strong aversion to the
transatlantic bandwidth market since its meltdown and subsequent
commoditization in the early-2000s. In an effort to attract private
investment and overcome this commoditization, the three new announced
North America-to-Europe projects each draw on special characteristics to
differentiate their bandwidth offerings. Hibernia Atlantic’s Project Express
hopes to shave five to ten milliseconds off of current roundtrip transatlantic
latency, with a target of 59 ms between New York and London and the

38
hope of attracting the patronage of the high-frequency trading (HFT)
community. Emerald Networks’ Emerald Express would also offer low
latency but would position access to Icelandic data centers, powered by
low-cost, renewable energy, as a cornerstone of its market strategy. A third
project, WASACE Europe, would be a follow-on phase of development for
the ambitious WASACE network, with earlier phases connecting Africa,
South America, Central America, and North America; WASACE would
thus promote its wide geographic reach as a differentiator. Despite these
strategies, each of the proposed wholesale projects will face an uphill
battle without strong commitments from tier-one operators, particularly if
forced to compete against a next-generation consortium-led system.
7.2 Transpacific

The demonstrated design capacity of existing transpacific systems is just
above 40 Tbps, and although additional capacity may be possible with
100 Gbps line rates, the length of transpacific spans is expected to pose a
practical obstacle to the full realization of targeted upgrade capacities. It
is therefore a genuine possibility that lit capacity requirements will exceed
the design capacity of existing systems within three years. Given the
extended time-to-market of transpacific networks, any new project will
likely need to be finalized before year-end 2012.
Forecasted Lit Capacity Requirement vs. Current Demonstrated

Design Capacity of Transpacific Systems
300
250
200
Tbps
150
100
Demonstrated design capacity of existing

transpacific systems: 40.8 Tbps
50
0
2011 2012 2013 2014 2015 2016 2017 2018 2019 2020

39
The transpacific market suffered a shock with the activation of three new
systems between 2008 and 2010. Each of the three new systems targeted
its own market segment: Trans Pacific Express (TPE) catered to China’s
transpacific demand; Asia-America Gateway (AAG) was the first cable to
connect North America directly to Southeast Asian markets; and Unity/
EAC Pacific, led by Pacnet and Google, positioned itself as a complement
to data center infrastructure in the United States and Japan. Between 2008
and 2010 the number of active transpacific systems increased dramatically,
from four to seven. Furthermore, the Unity/EAC Pacific project, with
more than two-thirds of its capacity controlled by non-operators, opened
up the Japan-US wholesale market, which until then had been dominated
by TGN Pacific and Pacific Crossing-1. As a result, transpacific prices fell
by as much as 50 percent in one year.
Existing Transpacifc Cable Systems
RFS System Owner(s)

2000 Pacific Crossing-1 (PC-1) NTT
International consortium of
2001 China-US Cable Network
carriers
2001 Japan-US Cable Network
carriers
2002 TGN-Pacific Tata Communications
2008 Trans Pacific Express (TPE)
carriers
2010 Asia-America Gateway (AAG)
carriers
Pacnet / Google / Bharti
2010 Unity / EAC Pacific / Global Transit / KDDI /
Singtel
China shows the strongest prospects for growth in the region and already
claims the status of being the world’s largest broadband market: the
country has ten times more fixed broadband subscribers than India and
surpassed the United States in 2008. The number of fixed-broadband
subscribers is expected to exceed 200 million within two years. ADSL
remains the country’s dominant fixed-broadband technology, although
the Chinese government has called for increased FTTH investment and

40
current fiber deployment already totals more than 8 million kilometers.
Japanese bandwidth demand, meanwhile, remains the largest in the
region and is 50 percent larger than China’s, although for the near future
the transpacific bandwidth demand of the country’s leading operators
NTT and KDDI will likely be accommodated by their investments in the
PC-1 and Unity systems, respectively.
7.2.2 New Systems

Most of East Asia’s 20 largest operators will have equity in next-
generation intra-Asian submarine capacity infrastructure by 2014
following the expected activation of the Southeast Asia-Japan Cable,
Asia Submarine-cable Express, and Asia Pacific Gateway systems. The
mesh of connectivity provided by the networks will allow the region’s
largest capacity purchasers to have more cost-effective access to each of
the competing transpacific systems.
Planned Transpacific Fiber Systems
System Owner(s)
China-US-2
carriers
Malaysia-US
carriers
Trans Pacific Express (TPE) Expansion
carriers
Thailand-US
carriers
China’s international Internet bandwidth was 1.4 Tbps as of year-end

2011. Although China Telecom and China Unicom have respective shares
of 13 and 26 percent in the Trans Pacific Express system, sources indicated
that the confirmed design capacity of the system as of 2012 was only 2.5
Tbps. If further upgrades cannot be effected, China Telecom’s allotment
of design capacity will be less than half of its total international Internet
bandwidth demand as of year-end 2011. Furthermore, China Mobile is
reportedly seeking its own investment-level transpacific bandwidth. As a
result, a new China-US system is expected to enter service in 2015.

41
Chinese International Internet
Bandwidth by Operator, Year-End 2011
China Mobile Other

83 Gbps 30 Gbps
China Unicom China Telecom

467 Gbps 810 Gbps
7.3 North America-South America

The North America-South America capacity market is heavily dependent
on three cables: GlobeNet, SAM-1, and South American Crossing.
Existing US-Brazil Cable Systems
RFS System Owners

2000 Americas-II Consortium
2001 GlobeNet Brasil Telecom (Oi)
2001 SAM-1 Telefonica
2001 South American Crossing (SAC) Global Crossing
Latin America has commanded some of the highest premiums of any

capacity market, with 10 Gbps wavelengths between Brazil and the United
States still well over $100,000 per month.
Pricing on the North America-South America route is as much as ten

times higher than transatlantic pricing. This is due in large part to the
three wholesalers’ relatively tight control over the marketplace, as well as

42
unforeseen bandwidth growth in the region’s major markets, especially
Brazil.
The Brazilian telecommunications market is strong, with high levels of

investment on the part of Oi and foreign investors including Telefonica,
America Movil, Vivendi, and Portugal Telecom. The Plano Nacional
de Banda Larga (PNBL), administered by state-owned Telebras, aims
to provide 1 Mbps high-speed Internet connections for between USD$8
and USD$20 per month and has attracted commitments from most
major operators. The country’s economic growth has been strong and
more equitable than in other developing markets, resulting in a larger
addressable base for telecommunications and Internet services, and the
2014 World Cup and 2016 Summer Olympics are expected to result in
even greater increases in bandwidth demand.
7.3.2 New Systems

According to most of the sources interviewed for this analysis, two
major North America-Latin America projects are in advanced planning
stages: AMX1, led by America Movil, and Transamericas Broadband
Infrastructure, led by a consortium of operators and investors. America
Movil is one of the world’s five-largest mobile operators in terms of
subscribers, and its Claro subsidiary operates throughout Latin America;
its takeover of Telmex was approved by Mexican regulatory authorities
in 2010, giving it control of the Brazilian fixed-line and long-distance
operator Embratel (as of 2010 Claro was Brazil’s second-largest mobile
operator and Embratel had a majority share of the country’s international
long distance market). TBI, meanwhile, is reportedly led by AT&T,
Google, France Telecom, and least a dozen Latin American operators,
possibly including Telefonica, which is also considering the construction
of the Pacific Caribbean Communications System to the northwest corner
of South America.
Proposed Latin American Systems
RFS System Owners

2013/14 America Movil-1 (AMX1) America Movil
2013/14 Pacific Caribbean Consortium
Communications System
(PCCS)

43
2013/14 Transamericas Broadband Consortium
Infrastructure (TBI)
2014 Atlantic Cable System Telebras / Odebrecht /
(ACSea) Angola Cable
2014 BRICS Cable Imphandze Subtel Services
(S. Africa)
2014 Seabras-1 Seaborn Networks (USA)
2014 South Atlantic Express eFive (S. Africa) / Globenet
(SAEx) (Oi)
2014 WASACE WASACE Cable Worlwide
/ Aterios Capital
The Seabras-1 project was unveiled in March of 2012 by Seaborn Networks,

a group of Boston, USA-based businessmen; unlike other Latin American
cable projects, Seaborn-1 would connect only the United States and Brazil.
The project would pursue a “carriers carrier” business plan, and given
the relatively high concentration of Brazilian market share in the hands
of a few operators (especially Oi and Telefonica, which operate their own
networks), this strategy is not without risks. A May, 2012 announcement
that Tata Communications would become an “anchor tenant” on the
system was a significant step forward although Tata is not currently a
major player in the region’s end-user markets. Nevertheless, if Seabras-1
or similar investor-led projects such as Project Express or Emerald Express
succeed, it could embolden future “carriers’ carrier” projects in other
regions.
In addition to the three major projects that would primarily target the
North America-South America route (i.e. AMX1, Seabras-1, and TBI), a
growing list of projects would attempt to capitalize on Brazil’s economic
emergence in order to promote ties to developing economies including
sub-Saharan Africa and BRICS markets. Some of these would also link
Brazil, the world’s largest Portuguese-speaking country, with the world’s
third-largest Lusophone community, which is located in Angola. The
overall strategy of these projects, which include the Telebras’ Atlantic
Cable System (ACSea), the BRICS Cable, South Atlantic Express (SAEx),
and WASACE, would be to capitalize from the perceived shift in the
balance of power away from the traditional G7 economies.

44
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7.4 Sub-Saharan Africa

Until 2009, Sub-Saharan Africa was served by only two fiber optic systems:
SAT-2 and SAT-3. SAT-2, which entered service in 1993, bypassed the west
coast of the continent and terminated in South Africa. SAT-3 and its partner
cable SAFE were activated almost a decade later, finally bringing the first
fiber connectivity to Sub-Saharan countries other than South Africa.
On the eastern side of the continent, the coastline between South Africa
and Djibouti remained the longest expanse of coastline in the world
without fiber, prompting a memorandum of understanding for the
consortium-led EASSy project in 2003 and the development of private and
government-sponsored projects (Seacom and TEAMS, respectively) when
the consortium encountered delays. By 2010 each of the three east coast
projects had entered service and two private west coast projects, Glo-1
and Main One, were also activated. In 2012 connectivity to west coast
countries was further expanded by the consortium-led WACS and ACE
projects.
Existing West African Systems
RFS System Owners

1993 SAT-2 Consortium
2002 SAT-3/SAFE Consortium
2010 Glo-1 Globacom
2010 Main One Main Street Technologies
2012 Africa Coast to Europe (ACE) Consortium
2012 West Africa Cable System (WACS) Consortium
Existing East African Systems
RFS System Owners

2009 East Africa Marine System TEAMS Ltd. / Etisalat
(TEAMS)

46
2009 Seacom IPS / Remgro / Herakles /
Convergence / Shanduka
2010 East African Submarine Consortium
Cable System (EASSy)
Sub-Saharan Africa has 47 markets and dozens of operators with

international bandwidth demand, none of whom are dominant on a
continental basis, and many of whom were until recently paying inflated
satellite capacity prices – so the buildout of multiple fiber systems on each
coast may not have been as irrational as many observers assert.
Although the design capabilities of sub-Saharan Africa’s submarine

cable systems will greatly exceed demand for the foreseeable future, the
dynamics of the African telecommunications market allow it to support
multiple submarine cable projects. Submarine connectivity offers the most
cost-effective solution for the continent’s major markets, and most African
operators are financially healthy and willing to invest in or purchase
submarine cable capacity.
Prior to the buildout of next-generation African fiber between 2009 and

2012, most sub-Saharan African operators were limited to either unreliable,
expensive satellite bandwidth or overpriced capacity on the monopolistic
SAT-3 system. Operators’ investments in the next-generation fiber
provides them with many times more bandwidth at a fraction of the cost
they had been paying.
Although the African market may be fertile ground for multiple submarine
cable projects, governments’ investment in incumbent operators and
those operators’ control over international gateways and terrestrial
infrastructure make it difficult for wholesale cable projects to succeed
without the equity participation of operators within each landing country.
The perceived overbuild of Sub-Saharan African capacity is not similar to

the overbuild of capacity on the transatlantic route in the late-1990s.
Unlike the transatlantic route, only two of the next-generation African

systems are considered to be investor-led (as opposed to consortium- or
carrier-led), and both reportedly received commitments from operators
prior to their construction. Any bankruptcies of African cables would
have a more limited impact than in the North Atlantic, due to the more
direct participation of operators in submarine infrastructure. Furthermore

47
the complexities of the African market make the commoditization of
international capacity in the region unlikely.
7.4.2 New Systems

The success of the newest African cables will be dependent upon the
buildout of infrastructure throughout the terrestrial network, particularly
at its extremities: backhaul and local access. Currently, both are generally
controlled by former monopolies; their insulation from competition
has arguably been the biggest obstacle to the full exploitation of next-
generation international bandwidth.
For there to be significant South Atlantic demand between Africa and South
America, there may need to be greater progress in economic development,
geopolitical relations, Internet routing patterns, and Internet content
development; in the meantime there is a more immediate opportunity for
single-system connectivity between Africa and the United States.
At least four credible proposals are on the table for connectivity between
Sub-Saharan Africa and South America; the most successful of these will
focus on providing connectivity onward to the United States.
Proposed Sub-Saharan African Systems
RFS System Owners

2014 Atlantic Cable System (ACSea) Telebras / Odebrecht /
Angola Cable
2014 BRICS Cable Imphandze Subtel Services
(S. Africa)
2014 South Atlantic Express (SAEx) eFive (S. Africa) / Globenet
(Oi)
2014 WASACE WASACE Cable Worlwide /
Aterios Capital
7.5 South Asia and Middle East

India, with international Internet bandwidth in excess of 1 Tbps as of
2012, is the leading generator of bandwidth demand in South Asia and
the Middle East. India’s demand far exceeds the combined demand of the

48
next four largest bandwidth markets, which in descending order are Saudi
Arabia, the United Arab Emirates, Pakistan, and Iran.
As of 2012 India is the United States’ leading voice correspondent, with

the number of international minutes between the two countries far in
excess of the second- and third-place correspondents, Mexico and Canada.
Direct and connecting international Internet bandwidth between the two
countries is greater than 500 Gbps.
In less than ten years, between 2002 and 2010, the Indian middle- and
upper-class (characterized as households with incomes in excess of
USD$4,000 per year) grew from 13.8 million households to 46.7 million.
Extremely impoverished households earning less than $1,000 per year fell
from 65.2 million to 41 million. Yet despite the country’s income gains,
middle- and upper-class households still account for less than 20 percent
of the population. The size of the country’s so-called “in-between class,”
classified as those households with income of between $1,000 and $4,000
per year and thus considered to be relatively poor but not explicitly
living in poverty, has remained steady at more than three-fifths of the
population. Specifically, as of 2010 there were 140.7 million households in
the “in-between class,” representing 61 percent of all Indian households.
Although mobile voice services are affordable – Indian ARPU is among

the lowest in the world at approximately 113 INR (USD$2) – broadband
Internet services have failed to achieve significant penetration outside
of the country’s upper class. A primary obstacle is the country’s low
computer ownership, at only 6 percent of households. Affordable ADSL
packages exist but fiber-based broadband services are significantly more
expensive than in the rest of the world; the country’s largest Internet
service provider recently launched a fiber-to-the-home service priced at
INR 2,999 (USD$53) per month for the lowest bandwidth of just 1 Mbps.
On the mobile side, 3G adoption has been weaker than expected, and has
been affected by widespread consumer complaints about high prices,
weak coverage, incompatible handsets, and “bill shock.” The latter was
experienced by “a majority of customers who are subscribing to 3G,”
according to telecom analysts at Goldman Sachs. The analysts observed
that watching one hour of a sporting event via 3G typically costs 300 INR
(USD$6), far in excess of what most consumers were willing to pay.
The concentration of Europe-to-Asia cable systems in the Gulf of Suez

was a concern of telecommunications operators since the 1990s. Fears
of catastrophic cable outages were realized multiple times, most notably

49
in 2008 when Sea-Me-We and FLAG cables were cut simultaneously,
prompting speculation of a political or military conspiracy. Frustration
increased when Egyptian authorities delayed the landing of new cable
systems in order to allegedly accommodate surveillance requirements put
in place by the Egyptian Office of Military Services and Reconnaissance.
Cable operators’ concern was further heightened by the political
uncertainty accompanying the Egyptian Revolution of 2011. Simultaneous
cable outages in Egypt have resulted in the loss of as much as 80 percent of
India’s international bandwidth.
Various routings have been constructed or proposed in order to compete

against cables passing through Egypt. One of the first submarine
alternatives was the SAT-3/SAFE project which in 2002 provided the first
Europe-Asia connectivity via South Africa but with greater latency. Fiber
optic systems connecting India eastward started to appear at approximately
the same time but created an equally-risky chokepoint in the Strait of
Malacca. Then in 2011, largely as a result of political uncertainty in Egypt,
plans were finalized for multiple terrestrial networks bypassing Egypt
to the east including Europe Persia Express Gateway (EPEG), Regional
Cable Network (RCN), and Jeddah-Amman-Damascus-Istanbul (JADI
Link). Notably, options for American operators wishing to bypass Egypt
are restricted by U.S. Government-imposed economic sanctions against
Iran, Syria, and Sudan so that American operators wishing to invest in
projects bypassing Egypt are effectively limited to two relatively narrow
passages across the 4,700-kilometer expanse between western Sudan and
eastern Iran: a 200-kilometer-wide corridor in the Kurdish-inhabited area
along the Iraq-Turkey border, and a 400-kilometer-wide corridor through
Jordan which would require a submarine connection via Lebanon, Israel,
or the Gaza Strip.
In the mid-2000s it appeared that the string of Sea-Me-We systems, led by

most of the dominant operators along the route, would continue. In 2007
the Sea-Me-We-5 consortium held a meeting in Gibraltar but BT, which
had originally emerged as a leading proponent of Sea-Me-We-5, reportedly
called for the dissolution of the consortium when it perceived that France
Telecom was not fully committed to the project and would instead be
devoting its effort to the I-Me-We project. By the following year Sea-Me-
We-5’s members had chosen between either I-Me-We and Europe India
Gateway, with the majority opting for the latter. Although both I-Me-We
and EIG encountered difficulties in their development, EIG’s were more
severe and when the system was activated in 2011 its connections through
Egypt remained incomplete.

50
Existing South Asian Intercontinental Systems
RFS System Owners

1997 FLAG Europe-Asia (FEA) Reliance Globalcom
1999 Sea-Me-We-3 Consortium
2002 i2i Bharti Airtel
2002 SAT-3/SAFE Consortium
2004 TGN-TIC Tata Communications
2006 Falcon Reliance Globalcom
2009 Seacom / TGN Eurasia IPS / Remgro / Herakles /
Convergence / Shanduka
2010 I-Me-We Consortium
2011 Europe India Gateway (EIG) Consortium
2012 Gulf Bridge International Gulf Bridge International /
(GBI) / MENA Orascom Holdings
7.5.2 New Systems

Bharti Airtel, China Mobile, China Telecom, France Telecom, Saudi
Telecom Company, and Singtel have been identified as the leaders of the
new Sea-Me-We-5 consortium, which is reportedly considering options to
bypass Egypt. The project would be the first Sea-Me-We endeavor with
strong influence from Chinese operators, and would compete against the
roughly one dozen international cables already serving India, as well as
two other proposed systems: the BRICS cable, which would be the first
system to provide a direct link between India and the United States, and
the proposed “Tagare Cable.”
Proposed South Asian Intercontinental Systems
RFS System Owners

2014 BRICS Cable Imphandze Subtel Services (S. Africa)
2014-2015 Tagare Cable Neil Tagare / Consortium

51
Unique Geography
Wholesale Solutions
EGYPT
icn@telecomegypt.com
7.6 Australia and New Zealand

The rollout of the $40-billion Australian National Broadband Network
(NBN) is well underway, with more than 3.5 million residences and
businesses set to be connected to fiber by 2014 and fiber connectivity for
more than 90 percent of the population by 2021. The NBN, with its promise
of 1 Gbps connectivity to the home, has the potential to be a severely
disruptive technology from the perspective of bandwidth demand.
Four operators, Telstra, Optus, Telecom New Zealand, and Vodafone

Hutchison, control over 90 percent of the consumer market in Australia
and New Zealand; the success of any long-haul submarine system serving
either of these markets will likely be dependent on the participation of one
of these four operators.
As for submarine cable capacity, Telstra has AJC and Endeavour; TNZ
and Optus have Southern Cross. The major only operator without a
direct investment in transpacific infrastructure is Vodafone Hutchison,
which indicated in late-2011 that it intended to switch its capacity from
Southern Cross to Pacific Fibre. Consequently, the region’s three largest
operators largely control the dynamics of both demand for and supply of
international bandwidth.
Existing Australia/New Zealand Intercontinental Systems
RFS System Owner(s)

1997 Jasaurus International consortium of carriers
1999 Sea-Me-We-3 International consortium of carriers
Southern Cross
2001 Cable Network TNZ / Singtel Optus / Verizon
(SCCN)
Australia-Japan
2002 International consortium of carriers
Cable (AJC)
2008 Endeavour Telstra
Pipe Pacific
2009 TPG Telecom
Cable-1 (PPC-1)

53
7.6.2 New Systems
Pacific Fibre has faced a variety of obstacles: a risk-averse financing
environment; a dominant cable system that was able to single-handedly
alter the dynamics of the marketplace, making business plan forecasting
extremely difficult; and the defection of Pacnet.
The business plan of Pacific Fibre were impacted by other cable operators’
simple ability to “move the goalposts,” particularly with respect to the
pricing of capacity. The financing of any private cable system is increasingly
difficult in the current economic environment, but Pacific Fibre’s head-to-
head faceoff with incumbents was exceedingly challenging.
Once the next-generation networks begin to achieve significant levels of

penetration, government support and popular expectations for Australia’s
NBN and New Zealand’s Ultra Fast Broadband Initiative will likely lead
to demand for more abundant international bandwidth in order to ensure
a quality experience for the networks’ customers. Because the majority of
international demand in the region is still directed toward North America,
it is expected that there will be a strong business case for a new transpacific
system to Australia and New Zealand in the near-future.
Sources have indicated that the Pacific Transit Cable, first proposed
approximately 12 years ago as a South Pacific link between Australia,
New Zealand, and Chile, is once again under consideration.
Proposed Australia/New Zealand Intercontinental Systems
System Owner(s)
Australia-Singapore Cable (ASC) Leighton Contractors Telecom
Australia-Singapore Submarine
JPC International
Cable (ASSC-1)
Matrix Cable System Expansion Matrix Networks
Pacific Fibre Pacific Fibre Ltd.
International consortium of car-
Pacific Transit Cable
riers
Southern Cross-2 TNZ / Singtel Optus / Verizon

54
7.7 Polar Route
Long considered outside the realm of practical possibility, the concept of
a trans-Polar cable has never been more credible with respect to each of
the major considerations: technology, economics, and geopolitics. Cable
projects have been proposed by investors from each of the three largest
powers present in the Arctic, although each has varying degrees of
support from their home governments. Given the strategic importance of
the Arctic region with regard to petroleum and gas deposits, freshwater,
seafood, and transport, it is expected that government support for each
prospective project will increase, with the projects allowing for increased
influence in the region and also expanding surveillance capabilities.
Proposed Polar Systems
RFS System Owners

2014 Arctic Fibre Arctic Fibre, Inc.
2014 Arctic Link Kodiak-Kenai Cable Co. / Khanjee
Holdings
2014 Russian Optical Trans Government of Russia / Polarnet
Arctic Cable System Project Ltd.
(ROTACS)
The Arctic Fibre system, led by Canadian investor Douglas Cunningham,

would connect Japan, Alaska, and the United Kingdom via northern
Canada, with the possibility of future expansion to China. The project
would provide a route between North Asian and European markets,
avoiding what company representatives identified as “problematic areas”
including the Luzon Strait, the South China Sea, the Suez Canal, and the
Mediterranean. A low-latency path of 168 milliseconds would be created
between London and Asian destinations including Tokyo, Seoul, and
Shanghai. The project would also seek government support to provide
connectivity to Arctic communities in both Canada and Alaska as well as
the proposed Canadian High Arctic Research Station.
Arctic Link, led by the Kodiak-Kenai Cable Company and Khanjee

Holdings, was originally proposed as an extension of a proposed Alaskan
domestic network, Northern Fiber Optic Link, which unsuccessfully
applied for stimulus funding under the Broadband USA component of
the American Recovery and Reinvestment Act. The project would connect
Alaska to the United Kingdom and Japan.

55
ROTACS and its predecessor, Polarnet, have been under consideration
since at least 2002, and can be considered as the first serious proposal for
Arctic connectivity, having completed route surveys in 2003. The project
was effectively shelved between 2005 and 2011, but comments from
the Russian government in 2011 indicated that the system, connecting
England, northern Russia, and Japan, would receive its support.

56
innovative.
independent.
inspired.
8.0 Conclusion
With $10 billion of new investment over the last five years, the submarine
industry successfully recovered from its crisis period of 2003 to 2007 (when
the market contracted to one-eighth of its value over the preceding five
years). $20 billion worth of credible projects are on the drawing board; the
question that will shape the industry is: are they quality projects?
On paper, it would seem that most of them are. Developing markets, long
deprived of affordable and abundant international bandwidth, continue
to be targeted and Latin America has been of particular interest in an
effort to compensate for more than a decade without a new Brazilian
intercontinental system. Bold new endeavors to transit and serve the Arctic
are gaining credibility. Vast interregional systems look to interconnect
markets that could previously only reach each other via costly transit
paths through developed markets.
On the one hand, the industry seems to be returning to its roots as carrier
participation is the new key to project success. On the other hand, new
players continue to appear. Google confounded market observers in 2007
when details of its investment in a transpacific cable began to emerge.
Five years later Facebook has entered the fray, and a new wave of over-the-
top (OTT) content providers seem ready to use international bandwidth
infrastructure to directly tackle one of the major threats to their business
models: poor network performance.
As with all industries, the global economic crisis has slowed the
development of many projects, not only those seeking private financing
but operator-led systems as well. However the case for increased
connectivity and a new way of connecting markets is a viable one and
solid opportunities exist, particularly with the right local partners.

58

59

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s ub m a r i n e t e l e c o m s

Copyright © 2012 by Submarine Telecoms Forum, Inc.

Submarine Telecoms Forum, Inc.

ISSN: applied for

Whilst we have maintained the interval between our events at a period

We are therefore very happy to support this initiative from Submarine

There are, of course, risks in trying to produce such a report, and I am

Well done to Submarine Telecoms Forum for taking this initiative.

For full details go to www.suboptic.org

Macroeconomic shocks have had remarkably little impact on demand for

Advances in optical transmission technology have recently returned

The transpacific market suffered a shock with the activation of three

The North America-South America capacity market is heavily dependent

Total international Internet bandwidth in Sub-Saharan Africa is 300 Gbps

India’s international bandwidth demand, which exceeds 1 Tbps as of

Australian international bandwidth demand already exceeds 1 Tbps

Finally, in the Arctic, advancements in technology coupled with changes

The Undersea Cable Report 2013

YOUR KEY TO UNDERSTANDING AND HARNESSING

• 680+ detailed undersea cable proﬁles • accurate, reliable data

Limited time re-introductory offer to celebrate the return

The Submarine Telecoms Industry Report features in-depth analysis and

Our aim is to make this information as timely and available as possible. As

2.1 Connecting the Unconnected

Civilian-inhabited sovereign states and territories without

Somalia (including Somaliland)

2.2 Overview of Historical System Investment

Investment in New Submarine Fiber Optic Projects, 1987-2012

2. The second cycle was characterized by unprecedented levels of

2.3 2008 to 2012 Systems in Review

Investment in New Submarine

Latin North America

Transpacific South Asia/Middle

The analysis found that approximately $5 billion worth of projects can be

Proposed Submarine Fiber Optic Projects

Europe/North South Pacific North America

Transpacific East Asia

3.1 System Suppliers

Based on the market share of credible awarded contracts, each of four

Market Share for Supply of New Systems, 2012 and Beyond

Market Share, Market Share of Credible

3.2 Upgrade Suppliers

The upgrade market, meanwhile, will arguably be the most consistent

Key Upgrade and Redeployment Projects for Equipment Suppliers

Ciena Southern Cross Cable Network, TGN Atlantic, Japan-

4.1 Financing of Current Submarine Systems

From 2008 to 2012 four-fifths of projects were financed by carriers, either

Financing of New Submarine Fiber Optic Systems, 2008-2012

4.2 Financing of Proposed Submarine Systems

5.1 Macroeconomic Environment

Increasingly, the industry has sought to temper this effect by looking to

5.2 Cable Protection Rules and International Water Rulings

In the past decade the importance of international submarine cables to

Following this report, in 2010, the International Cable Protection

From studies conducted by ICPC and others, following such disruptions

In December 2010, the United Nations General Assembly approved an

OP 121b: Encourages greater dialogue and cooperation through workshops

OP 121c: Encourages the adoption by States of laws and regulations

OP 121d: Affirms the importance of the maintenance, including the repair,

However, as the final language on repair is the result of compromise

The Australian Government has been an early adopter of legislation related

6.3 Terminal Equipment

The advances in terminal equipment technology achieved over the last