conference & convention enabling the next generation of networks & services The Submarine Cable Industry at a Crossroads: A Macroeconomic Evaluation of the Industry’s Future Michael Ruddy Terabit Consulting
conference & convention enabling the next generation of networks & services Presenter Profile Michael Ruddy is the author of Terabit’s 1,500-page Undersea Cable Report and has completed feasibility studies for dozens of undersea networks including Hibernia, Australia-Japan Cable, and EASSy. Prior to co-founding Terabit in 2000, he was responsible for undersea cable research at Pioneer Consulting, where he created the Worldwide Submarine Fiber Optic Systems report. He was also an analyst at Kessler Marketing Intelligence and a Foreign Service Officer at the U.S. Department of State. Michael Ruddy Director of International Research mruddy@terabitconsulting.com Tel: (+1) 617 444 8605
conference & convention enabling the next generation of networks & services Evaluating and Analyzing the Submarine Cable Market (around the world in 15 minutes) 1. Overview of current subnet market scenario 2. Market forecasting methodology based on macro- and microeconomic criteria 3. Geographic markets: special considerations 4. Market Outlook
conference & convention enabling the next generation of networks & services Part I. Where Are We Now?
conference & convention enabling the next generation of networks & services The Submarine Cable Market in 2010 $51 billion, 1.1 million km of fiber optic deployment More than half entered service in 1999-2002 Since then, new routes, business models to stimulate the market
conference & convention enabling the next generation of networks & services Terabit-Capable Systems Geographic Distribution of Terabit-Capable, Inter-Regional Systems, as of YE2011 (Includes Highly-Probable Systems) • 44 systems • 8 serving South Asia/Middle East, 7 in Africa
conference & convention enabling the next generation of networks & services Terabit-Capable Systems: Ownership Pro-Rata Share of Terabit-Capable, Interregional Systems, as of YE 2011 Route % Km World Consortia 208,553 37% Tata Communications 41,185 7% Pacnet 40,500 7% Global Crossing 35,480 6% Southern Cross Cables 28,847 5% Reliance Comm. 27,425 5% Brasil Telecom 22,000 4% Telefonica 22,000 4% NTT 21,000 4% Telstra 18,525 3% Columbia Ventures 11,700 2%
conference & convention enabling the next generation of networks & services Economic Nature of the Terabit-Capable Systems • The threat of reorganized operators with lower cost bases is somewhat overstated • Of the 44 terabit-capable systems, 19 were constructed prior to 2003 • Of these, 12 systems (pro-rata) belonged to owners that fell into bankruptcy or to failed ventures that were written down • Another 2.5 were sold at (near-fire-sale) discounts • Projects with explicit new cost bases = 33% of total • Mostly older systems, some with flaws in business case; design capacities are not guaranteed; Opex • Conclusion: The reorganization of cables was the industry’s worst event ever, but its impact is fading
conference & convention enabling the next generation of networks & services Part II. Deconstructing and Forecasting the Market: A Macroeconomic Approach
conference & convention enabling the next generation of networks & services Three Tiers of Bandwidth Demand
conference & convention enabling the next generation of networks & services Class A Markets (>10 Kbps per capita) • 55 countries, all with high HDI; mature mkts. • US/Canada, Europe, Japan, Australia/NZ, Asian Tigers, Israel, UAE, Panama • Total int’l. bandwidth 40 Tbps
conference & convention enabling the next generation of networks & services Class A Submarine Routes
conference & convention enabling the next generation of networks & services Class A Markets: Considerations • Markets where international capacity is rarely a constraint: – 10+ kbps per inhabitant • Fixed broadband – DSL = technology of choice • ADSL2+ maximum speed = 24 Mbps down, 3.5 Mbps up – Cable modem = significant penetration in US, Canada, Benelux, and South Korea • FTTH – Japan, South Korea = >50% of broadband subs on fiber • 3G/4G – Avg. iPhone speed on US 3G network = 700-800 Kbps
conference & convention enabling the next generation of networks & services Class A Markets: Considerations • OECD markets have leveled off at 30-35 broadband subscriptions per 100 inhabitants
conference & convention enabling the next generation of networks & services Class A Markets: Expectations • Expect uneven growth in broadband demand – Short-term: mortgage crisis has some considering broadband as a luxury good – Long-term: penetration has leveled off, but expect a step-change adjustment to access infrastructure (beyond DSL) • In Class A markets, purchasers of capacity have shown inelastic demand for primary bandwidth, but elastic demand for redundant paths
conference & convention enabling the next generation of networks & services Class B Markets (1-10 Kbps per capita) • 55 countries • Much of Latin America/Caribbean, Russia, North Africa, South Africa, Saudi Arabia, Thailand, Malaysia • Total int’l. bandwidth 3 Tbps
conference & convention enabling the next generation of networks & services Class B Submarine Routes
conference & convention enabling the next generation of networks & services Class B Markets: Considerations • DSL has been the broadband technology of choice • However, DSL subscribership has fallen in some Class B markets • Some missteps – High per-Mbps broadband costs in Mexico • Demand growth in Class B countries is now coming from 3G deployment • Class B Capacity mkts. fared well
conference & convention enabling the next generation of networks & services Class C Markets (<1 Kbps per capita) • 115 countries • Low Human Development Index, widespread poverty • Total int’l. bandwidth: China 1 Tbps, India 0.2 Tbps, all others 0.3 Tbps
conference & convention enabling the next generation of networks & services Class C Submarine Cable Routes
conference & convention enabling the next generation of networks & services Class C Markets: Considerations • Mobile networks have formed the core of infrastructure in less-developed countries • Weak fixed-line infrastructure • Mobile broadband is emerging as the access technology of choice
conference & convention enabling the next generation of networks & services Class C Markets: Concerns • Linguistic issues / lack of content • Little progress in the fight against poverty means that long-term market growth will be constricted – Also: literacy, electrification • Volatility: many LDCs were hit hard by commodity crisis in 2 nd half of 2008 – examples: Chad, Congo, Nigeria, Yemen, Angola, Azerbaijan, Sudan – Many were using commodity revenues to fund telecom development plans
conference & convention enabling the next generation of networks & services Part III. Driving Growth: The BIC Countries (*apologies to Goldman Sachs)
conference & convention enabling the next generation of networks & services China • 384m Internet users @ YE09 (29% penetration) • 232m between ages 10-29 (59% penetration) • = Much room for growth (86m new users in ‘09) • Bandwidth demand heavily influenced by shift from “world’s factory” to “world’s laboratory”
conference & convention enabling the next generation of networks & services China’s Internet Bandwidth • 866 Gbps as of YE09 (‘09 growth: 35%; ‘05-’09 CAGR: 59%) • By next year, China’s Int’l. Internet bandwidth will exceed Japan’s
conference & convention enabling the next generation of networks & services China’s ISP Bandwidth Share TPE Design Capacity: 5 Tbps
conference & convention enabling the next generation of networks & services Transpac: Fighting Commoditization • Pacific: Three very different market segments – TPE = China and North Asia – AAG = First direct transpacific link to Southeast Asia – Unity/EAC Pacific = Japan-US data- center cable
conference & convention enabling the next generation of networks & services India • Beyond “outsourcing” phase of economic growth – supporting itself with resilient domestic economy insulated from global crisis • 231 Gbps Internet bandwidth as of YE2009 • For the time being, a disconnect between infrastructure and carriers’ bandwidth – Abundance of international capacity potential has taken time to reach the users • Large English-language demand makes IP capacity market unique
conference & convention Brazil enabling the next generation of networks & services • Brazil’s economy has consistently underperformed, but the 2010s may be different – Moving beyond “world’s farmer” – Progress in wealth distribution has led to an emerging middle class – Growth this time has been internally supported – 2016 Olympics • Design capacity of existing Brazilian systems: 4.5 Tbps – Concentrated system ownership: Global Crossing, Telefonica, Oi
Recommend
More recommend
