John Hibbard Member, PTC Board of Governors and CEO, Hibbard Consulting Pty, Australia

by: John Hibbard, Member, PTC Board of Governors and CEO, Hibbard Consulting Pty, Australia

In May this year, the SubOptic meeting demonstrated the growing surge of interest in submarine cables. While clearly a high point in any calendar because of its strong technical content, Sub-Optic is only held every few years. To fill the intervening gap, PTC has assumed the role of providing a more regular update of the industry.

The sessions planned for PTC'08 will be timely and significant.

Submarine Cable Workshop
Sunday 13 January 0900-1145

Submarine Cable Roundtable
Tuesday 15 January 1130-1230

The activity of the last few years has seen the planning of many submarine cables of which a number have been constructed. Others are in the development stage, and a number of them have quite some mystery about them, waiting to be revealed. A clear factor in the enthusiasm for cables is that having a submarine cable (or for those landlocked countries, access to one) is an indicator of the development of a country’s ICT development.

The wave of development and the aspiration for submarine cables have created two major issues:

• Is the wave growing too fast and will it crash violently as in 2001?

• How can smaller communities have their desires satisfied?

The glut of capacity created in 1998-2001 period has just about been absorbed and much dark fibre is being lit. Capacity to support the Internet is being rolled out in vast quantities and has been occurring rationally. However, as carriers aspire to be controllers of their connectivity, rather than just buyers from other suppliers, we are seeing a spate of new cables owned by carriers with substantial capacity.

Upon investigating why such seeming excesses are being pursued, one of the arguments is that such cables will provide competitive advantage. How you might ask? Consider you can own a cable and have sufficient of your own demand to produce a unit cost lower than the wholesale market rate. A rate, in other words, that is lower than other competitors in the market have to buy at. You can now reduce your retail prices in the market that your competitors will have to match. However, in doing so their margins are greatly reduced limiting their ability to compete. Hence cable ownership is becoming a competitive weapon with the consequent motivation of carriers to own their own.

But, will these carriers be able to maintain their wholesale price if many carriers build competing cables? This is what we are seeing across the Pacific and Indian Oceans today. The glut of new systems may again cause a cataclysmic fall in the market. This is a possibility that warrants a healthy discussion.

There are emerging technologies able to assist those countries with smaller demands. Those with smaller budgets are more able to justify cables. Low-cost, thin-route solutions are being generated. A mix of thick and thin routes, longer un-repeatered cables, re-use of retired cables and new financing structures are all techniques being refined to make cables more affordable.

These are but two topics that will be covered at PTC in January. Another is the new permitting arrangement in the U.S. that may challenge traditional norms for landing licence approval. How will this impact the provision of cables? An interesting topic for all to understand.

We hope to see you at PTC in January and have you to engage in our discussion. Make sure you are there in time for the Sunday morning workshop session.