It all starts in the Atlantic. Transatlantic routes have set trends throughout the history of the submarine fiber industry and will continue to do so in the future. The New York – London route is the most commercially competitive in the world and will continue to be so through the foreseeable future.
The Transatlantic will be greatly impacted by the market shift from connecting cities to connecting data centers. As Over-the-Top (OTT) providers like Amazon, Facebook, Google and Microsoft continue to expand their infrastructure and drive cable development, continue to expect new cables that do not follow the more traditional routes.
Like the Transatlantic routes, Transpacific routes will be shaped by the market shifting towards interconnection of data centers instead of simply connecting population centers. Cloud service providers are developing infrastructure in a major way all throughout East Asia and the Pacific. Expect new cables to connect to critical trade and technology hubs that will not necessarily adhere to traditional cable routes.
As OTT providers are driving several new Transatlantic and Transpacific cables, the possibility of these cable owners selling off their excess capacity and negatively impacting the market needs to be considered.
Capacity pricing for routes in the Americas region will depend heavily on economic health in South America. While these routes may never see the same level of demand as the Transatlantic and Transpacific, they are becoming increasingly important to OTT provider infrastructure plans and global economic development.
Intra-Asia routes will continue to provide important paths between Tokyo, Singapore and Mumbai. While the Tokyo – Singapore route should remain relatively unchanged in the future, the Singapore – Mumbai has the most potential for growth. As new cables and telecoms development turn towards India’s growing technology sector, this region is prime for growth.
EMEA to Asia routes have been well established for decades and carry important traffic between Europe and Asia. However, they are high latency and expensive to operate. Threats to the health of this route will be planned systems that bypass the Suez Canal to avoid sustained economic and political instability in the Middle East and Arctic routes that connect Europe to Asia via much shorter pathways. Should these alternatives become truly competitive, these routes will be negatively affected.
STF Analytics has developed a new Pricing Benchmark model to help identify healthy cable routes. This model considers several cost and pricing factors to provide a quick reference score to help the industry better understand the economic health of submarine cable systems from a route and regional perspective.
Overall, there seems to be a healthy global market, but a lot depends on what OTT providers will do and how cost-effective system upgrades and new cables can be implemented.