The Undersea Cable Market Is Booming Again, This Time Funded by Big Tech

Posted by freemexy on July 22nd, 2019

The Undersea Cable Market Is Booming Again, This Time Funded by Big Tech During the 1990s dot-com boom, phone companies spent more than billion laying undersea fiber-optic cables from New York to London, through the Mediterranean, across the Indian and Pacific Oceans, and beyond. They were preparing for an expected explosion in internet traffic, but when the bubble burst at the turn of the millennium, operators unloaded cables for pennies on the dollar. That fiasco discouraged investment in the industry for the better part of a decade. Now, with data traffic surging—videos on Netflix and YouTube, songs from Spotify and Pandora, innumerable posts on Twitter and Facebook—the excess capacity has been absorbed, sparking another investment boom, with more cable laid in 2018 than in any year in almost two decades. The industry “is as strong as it’s been since they all went bust,” says Tim Stronge, vice president for research at telecom consultancy TeleGeography. “There’s an awful lot of cable going in.”Fiber optic patch cord The leaders of today’s boom are two of the biggest generators of data traffic: Google and Facebook. Internet companies are behind about four-fifths of transatlantic cable investment planned for 2018-20, up from less than 20 percent in the three years through 2017, according to TeleGeography. Google has become “by far the biggest investor” in submarine cables, even taking full ownership of two of them—a reflection of the vast amounts of data the company transmits, says Mike Conradi, a lawyer at DLA Piper in London who’s been working on undersea fiber deals since 1999. Content companies “can make or break these cables.” The digital giants, also including Microsoft Inc. have reshaped the way the industry works. Before the newcomers arrived, phone companies typically formed single-purpose businesses to build cables, primarily from England to the U.S., which mostly connected old-fashioned voice calls and a smattering of data traffic. Today the internet companies can dictate where the cables land, bringing them out of the water close to their data centers. And they can tweak the structure of the lines, which typically run about 0 million for a transatlantic link, without waiting for partners to approve changes. “There are geographical pinch points in a global network—based on the reality of populations, oceans, and geography—that can’t be avoided, just planned and engineered around,” says Jayne Stowell, a leader of Google’s cable team.