We live in the connected age, and the rise of cloud computing that creates previously unheard of value in our professional and personal lives is at the very heart of those connections. The world continues to consume ever increasing amounts of data, with SubTel Forum predicting bandwidth demand to almost double every two years for the foreseeable future. This demand is largely being driven by increasing reliance upon cloud services, sustained growth in mobile device usage and mobile technology like 5G, as well as demand for low-latency, high-bandwidth international connections.
Not surprisingly, media attention on the subsea cable market has increased dramatically, especially as big cloud providers like Google, Facebook, Microsoft and Amazon Web Services have invested billions in new and upcoming cables. According to TeleGeography, Google now has an ownership stake in at least 16 current or planned undersea cables, and it’s the sole owner of five.
But while the media is focused on every move that cloud providers are making in the subsea market, the reality is that subsea cables provide capacity – and have done so – to meet the demand that enterprises and consumers increasingly have for communications networks. In fact, Defense News states that existing submarine cables carry approximately 95 percent of the world’s international internet, voice and data traffic.
To clearly understand the importance of the entire subsea market and the services it enables, it’s imperative that we look behind the splashy headlines being afforded the tech giants and examine the technologies that impact the growth of the market and the capacity availability on all cables – not just those owned by big tech.
Impact of technology
As cable ownership has shifted, so, too, has there been a shift in the types of data and traffic that’s carried over cables. Some of the technologies and their impacts include:
- The cloud: Cloud adoption is showing no signs of slowing, as companies increasingly shift to cloud storage, while also using cloud computing to drive business. Recent Flexera company data shows that 99 percent of enterprise technical professionals have adopted the use of cloud computing, with the average company leveraging three public and five private clouds. Additionally, Flexera stated that a third of companies are spending more than 12 million a year on cloud, and another third are spending between $2.4 and 12 million a year.
- Data centers: Another major change to global subsea networks is a shift to data center-to-data center connections. Unlike the traditional subsea cable development, which was focused on providing a variety of interconnect options to support infrastructure build outs, cloud providers tend to build or support cables that provide economic and cost saving benefits to reduce the expense of running their own massive data centers. But other data center providers need capacity on subsea networks to meet the demands of cloud and other technologies. In fact, Gartner analysts predict the data center market is expected to grow by 6 percent this year – growth that’s expected to continue through 2024. A key part of this will be the integration of data centers with cable landing stations to provide more efficient backhaul and interconnection opportunities on international telecommunications routes. This type of configuration is especially attractive for cable landing stations that house multiple cable systems as they provide access to a much wider array of customers and interconnection opportunities.
- New applications: Artificial intelligence (AI), machine learning and the Internet of Things (IoT) are expected to join a massive uptick in video surveillance and IP WANs to further drive demand for subsea networks. By next year, Cisco predicts that IP traffic is expected to hit 4.8 zettabytes (ZB). Worldwide data is expected to grow 61 percent, so that by 2025, the world’s total data output is expected to be 175 ZB per year.
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- Bridging the digital divide globally: For all of the technological advancements that are pushing up the need for subsea cables, there remains the fact that cables are needed to provide basic services to underserved countries. About half of the world still does not have access to the Internet. In China, there are 745 million people who have Internet connectivity in a country of more than 2 billion people per BroadGroup. Likewise, India has a population of more than 1.5 billion people, while only 345 million are connected to the Internet. Not only do subsea cables connect these citizens to a global community, they enable enterprises to grow and positively impact the world economy.
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Capacity outlook
The great news is that existing submarine cables have capacity available to meet the demand that exists – as well as much of what’s expected. According to SubTel Forum, capacity on major routes – Americas, Intra-Asia, transatlantic and transpacific – has grown by 27 percent since 2016. Moreover, global capacity is expected to increase up to 100 percent by the end of 2023, a CAGR of 26 percent.
While some of that growth is attributable to routes being constructed by big cloud providers, the reality is that existing subsea networks will continue to provide the connectivity that the world needs – even if the splashy headlines only focus on the plans of content providers.
Be sure to read the next installments of this series, which explores the impact of geopolitics on subsea cables.
Jim Fagan
Jim is Global Cloud xChange’s (GCX) Chief Strategy and Revenue Officer, responsible for keeping GCX at the cutting edge of innovation. Jim is a transformative and proven technology executive with more than 20 years of experience spanning across small private and public companies, private equity-owned to large publicly traded multi-national companies across the US, Asia Pacific, and China. Previously, Mr. Fagan led financial operations at Rackspace, assisting with their first IPO. Also, he was the founder and Managing Director for their Asia Pacific business, based in Hong Kong. He subsequently joined Pacnet, a subsea cable and a data center provider (later acquired by Telstra), responsible for developing its product portfolio, data center business, and the build and deployment of the world’s first international SDN platform. At Telstra, he was responsible for their Cloud and SDN business, and their global and Australia domestic Enterprise connectivity platform.
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