At Submarine Networks World 2017 earlier this year, we brought together a group of esteemed panellists to discuss the future of industry and where its headed in the next 5 years. Moderated by DRGUC’s Elaine Stafford, the panel touched on new builds, network design and technologies, new players and who will finance the new projects going forward.
Some key highlights from the discussion include –
On new partners and players:
Steve Grubb, Facebook – “We choose partners which have complementary sets of skills, and typically one of our partners would be the operator. What we don’t want to worry about are the PFEs (Power Feed Equipment) and when these alarms come and ship repairs, so typically we’d have one carrier or partner who’d be the operator of the cable.”
Mike Constable, Huawei Marine – “I think it’s a natural evolution for data centres to start investing in connectivity infrastructure, and I think it’s only going to be a matter of time before we see a major data centre player becoming an investor.”
On capacity prices:
Donald Tan, China Telecom Global – “I think the trend of prices dropping will continue, but traffic demands are still booming (with traffic growth advancing faster than the decline of wholesale pricing)…and I think the pricing decline is due to the demand for the requirements of competition, but if Internet subscribers are increasing together with traffic requirements, investment will still continue.”
On technology development:
Mike Rieger, TE SubCom – “As much as we’ve raised up the curve and offered products and solutions that increase the value density of bits per fiber, we also now have a competing paradigm (from customers) that says I want security, I want to own a fiber pair so how can you give me secure fiber pairs that I can control… and I might not need a higher density, so we have dual arguments here that want us to have multiple fiber pairs that give me the security while at the same time the economics of ownership…at the same time we also have to think about the commercial relationship; How are all these cables going to be managed, how are they going to be maintained? How is that going to match the cost efficiency of getting all these bits into the water, and what is the paradigm that is going to be managing all these extra kilometers. So it really comes to – are we buying bits or buying kilometers or buying fibers? That’s what I think is going to be driving the technology for the next generation and listening to the changing characteristics of the underlying owners who are buying from us suppliers.
On new routes:
Russ Matulich, RTI Connectivity – “The utilisation of the cable is very much a function of the population its serving, so in our case we’re focusing on how many combinations can we provide that’ll allow other cables to be protected, and we’re trying to do that in such a way that we’re not competing on the primary routes …what we’re trying to do as well is to add optionality to cables and because we have the economics and the ownership of all the various cables we’re allowing customers to move traffic in such a way they don’t have to commit to one destination, they can take one destination and route it over all our cables.”
Paul Gabla, Alcatel Lucent Submarine Networks – ” What we can see today is that we’re moving in two directions – one is that there are new players, wiling to develop a global network, more than before, and another factor coming into that is they are trying to connect demographics as opposed to just business centres. So that creates a new demand even on routes that are moderately profitable, from an economic point of view, and it serves to connect people to the overall internet network, even going as far as saying you’re providing a public service to communities, where its not just economics.
On the purported industry ‘bubble’:
Steve Grubb, Facebook – “A lot of people say we’re over-building systems, I disagree with that; we’re going to keep building even at an accelerated pace, and I think there are new drivers out there that people are underestimating – AI, VR, and AR. For instance AI requires a tremendous amount of bandwidth to learn more about you, your behavioural patterns and how machines can help you in your daily life what you need and anticipate..so I think those new bandwidth drivers will keep us investing and building new submarine cables for the foreseeable future.
Paul Gabla, Alcatel Lucent Submarine Networks – “15 years ago traffic growth was predicated on people, just demographics, voice circuits and maybe a bit of Internet but that was just the start so it was really based on people. Now the growth is not depending on people it’s on the applications that grow in order of magnitude, so I think comparing to the bubble we had last time the industry has become reasonable and when I look at the numbers it looks like we’re talking about 2-3 times smaller than the bubble from before so I think it’s reasonable and palatable.
On the next five years:
Russ Matulich, RTI Connectivity – “I think you’ll see closer cooperation between companies that have nothing in common…just like our culture even the purchaser groups will be made up of different companies from very different backgrounds.”
Mike Rieger, TE SubCom – “I think we’re looking at a shift and moving into a commoditization of the underlying assets, that’s going to drive a fundamental change in the ownership, the ownership economics and practices around the owning of the cables. We’ve already seen that step through the phases of people buying capacity or leasing capacity to owning fibers and owning cables. In 5+ years from now I think we’re going to have a changing profile of the ownership and we’re going to have a substantial change in the ownership model that fit into the role of an infrastructural element offering a higher order service, and I think that will change the complexion of who’s attending these conferences and who’s sitting on these panels.”
Mike Constable, Huawei Marine – “I think security would be an issue, with the new Chinese cyber security laws that were announced earlier this year; and how that’s going to impact the suppliers building, maintenance providers, right down to the survey companies – what sort of data they’re handing over. So fundamentally as we are enablers of the world being connected, we’re seeing isolationist economic policies that are coming out in some parts of the world and inherently, the opposite of what we’re trying to do and that would cause some problems for us going forward.”
Steve Grubb, Facebook – “In five years we’ll see a validation of these new drivers, AI-driven, VR/AR-driven traffic. We’ll also see some new entities buying fibers or driving projects that you don’t know of today, or don’t exist today. For SNW you’ll have an attendee option that’s VR – if you can’t make the trip you can put on an Oculus headset…and you can have a some control and shoot a laser beam to send a message, things like that. So VR attendee option, 5 years from now!”
Check out the full session “Cables for changing tomorrow” here:
Want more of such great content? Then you should book your calendar for Submarine Networks World 2018, taking place 24 – 26 September at Suntec Singapore Convention Centre. Firmly established as the must-attend annual meeting for industry players from all around the world, preparations are already underway for another year of inspiring ideas, extensive networking and lively debates.
Keen to learn more? Get in touch with the team: