We often say that we'll be taking a "deep dive" into an issue at the beginning of our podcasts. Today we almost mean that literally, as Greg welcomes TeleGeography Research Director Alan Mauldin to talk about submarine cables.
Whether you're joining us from the vendor side or enterprise side, you might want to know why submarine cables—usually thought of as a wholesale telecom issue—are relevant to the corporate WAN.
Alan walks us through the considerations and discusses enterprises who are interested in building out their own backbones, acting almost like a mini-internal telecom. He also expands on how pricing for wholesale transport services leads to the trends we see for enterprise transport.
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Key Takeaways
Submarine cables are crucial for global networks and directly impact WAN performance for multinational corporations.
WAN managers rethinking their network architecture, potentially building their own backbones, can source capacity directly from smaller specialist companies or cable owners, bypassing traditional carriers.
It's important to consider the age and potential lifespan of a cable when sourcing capacity; newer cables are engineered to last a minimum of 25 years and offer better scalability, whereas older cables may become economically obsolete if they cannot scale enough to keep pace with costs and new technologies.
There has been a significant shift in who builds and operates submarine cables, with content providers becoming major players.
Historically, cables were built by consortiums of national telcos. Since 2010, companies like Google, Facebook, Amazon, and Microsoft have invested in cables. Google has even started building entirely private cables, such as the Dunant cable between France and the U.S.
Although privately owned, these cables are often used by parties other than the owner, through capacity swaps or direct sales, allowing other carriers and enterprises to utilize them. This trend coincides with the expansion of cloud and data center footprints globally.
Despite growing demand for bandwidth, submarine cable prices generally trend downward.
This is due to the continuous reduction in the unit cost of bandwidth as cable capacity increases.
Cables are constantly being upgraded, and newer cables are being deployed with significantly more fiber pairs than older ones, allowing for massive increases in total capacity.
This increased supply, combined with competition among carriers and cable owners, leads to lower prices for wavelength services, with annual price erosion rates varying geographically but potentially being quite high.
