A short post on what I learnt at the Submarine Networks World conference in Singapore last week.
If you’ve never been to one, international telco bandwidth conferences are a clubby affair. Most of the people know each other in what is, a bit counter-intuitively, a small business.
Subsea cable investment is now about $1.9 billion annually – that’s higher than the long-term average of $1.3 billion, but just a sliver of global carrier investment of around $150 billion.
International bandwidth growth has slowed in the last couple of years, although still expanding at 40%, and thanks to mobile broadband and the cloud will continue to grow at a healthy clip.
Many are worried about how profitable that demand is going to be. Julian Rawle, managing partner at Pioneer Consulting, is one of the optimists, mainly on the strength of the demand for new cable systems.
“We have done studies which indicate there’s still going to be a steady requirement for new cable systems over the next ten years,” he said.
Of course, that very growth in capacity may drive down pricing.
But bigger things are afoot. Cable owners spent years waiting for 40G wavelengths, but that is now being seen as a transition technology, and the industry is now moving rapidly to 100G. That’s one change in the cost structure.
Another and even more important are the new optical technologies and software being pitched by Ciena and Infinera that will collapse the boundaries between subsea and terrestrial networks. A single network
Which brings me back to the early point: it’s a small sector because subsea cables are essentially point-to-point networks, separated from the rest of the network by dedicated optical terminal hardware. THe single, unified network will be simpler and cheaper to build and operate, and will deliver much more flexibility in network management.
That network barrier is going to break down – sooner rather than later if Pioneer’s forecast about new cable buildouts holds true. International bandwidth guys will still gather at their conclaves around the world, but they will be fully integrated into the telecom world, not confined to the ocean depths.