The submarine fiber industry has seen something of return to form the last two years with 17 cable systems and over 90,000 kilometers of cable added in 2017 and 15 cable systems and 64,000 kilometers in 2018. The last time more than 90,000 kilometers of cable were added to the global network was 2009, and from 2011 to 2016 no more than 40,000 kilometers were added each year.
System capacity has also risen alongside an overall increase in systems added, resulting in a nearly exponential increase in global capacity. Since 2014, the average capacity of a submarine fiber system has risen steadily from 25 terabits per second (Tbps) to 60 Tbps. Additionally, more new systems are making use of 6, 8, or even 12 fiber pairs, providing an even higher capacity ceiling.
Much of this growth has been spurred on by the changing dynamic in system ownership observed since 2016 – when Over-the-Top (OTT) providers began to move from capacity purchasers to cable developers. Companies such as Facebook, Google, Microsoft and Amazon have been building new cables at a rapid pace to meet their infrastructure needs. This trend shows no signs of slowing down, with a significant portion of new system builds for the next several years being driven by these companies.
Regional trends have changed slightly, with the AustralAsia region no longer leading system growth. New interest in alternative north Transatlantic routes — particularly to Virginia Beach — and increased desire to connect to South America and Africa have pushed the Transatlantic and Americas regions to the top for new system growth.
Contract in Force (CIF) rates have remained steady since 2017, indicating the current level of growth is sustainable. Cash rich OTTs have ensured system funding and the availability of data center providers at cable landing stations have helped to solidify commercial business opportunities of prospective systems — one of the biggest traditional roadblocks to cable system viability.
SubCom, ASN and NEC continue to be the top suppliers with relatively little competition. In fact, with other companies like Nexans and NSW seemingly pulling away from the submarine fiber market, the supplier industry is more consolidated than ever. However, with SubCom having recently been sold and ASN currently in acquisition talks there is some potential for a dynamic shift. While unlikely, if either of these industry behemoths begin shedding assets under their new ownership significant changes can be expected to how the industry does business.
Looking forward, several new technologies coming to market could disrupt existing business and network models. With the successful test of 400G wavelength technology on a live Transatlantic system at the end of 2018 this long promised capacity leap forward is finally commercially viable. Alongside advancements in C+L band and Spatial Division Multiplexing (SDM) technologies there is huge potential for a large increase in both system capacity and networking efficiency.