2024 in review: Submarine cables become battleground
2024 is bookended by major submarine cable ruptures that have rocked the global community, once again underscoring the need to protect the critical infrastructure that carries more than 95% of the world's intercontinental data traffic.
In late November, two undersea cables in the Baltic Sea were damaged: a 1,170km submarine cable between Finland and Germany was severed, while a 218km Internet connection between Lithuania and the Swedish island of Gotland stopped working. Security experts believe an anchor dragged the cables some 100km, and they have noted the presence of a Chinese ship, the Yi Peng, in the area.
In February, four cables – the AAE-1, Seacom, EIG and TGN systems – were severed in the Red Sea near Yemen. This single event disrupted Internet services to more than 100 million people across West and North Africa and affected 70% of data traffic between Europe and Asia, far exceeding initial estimates. It is believed that an anchor drag from a ship sunk by Houthi rebels caused the cable cut. The Houthis denied directly attacking the cables.
These two incidents were by no means the only ones in the past 12 months. The global submarine cable industry typically experiences around 200 incidents of disruption to cables every year.
Amid growing risks to this critical piece of telecommunications infrastructure, the United Nations launched on November 29 its first-ever advisory body on subsea cable networks. Called the International Advisory Body for Submarine Cable Resilience, it will be overseen by the International Telecommunication union (ITU).
The new advisory body, which is partnering with the non-profit International Cable Protection Committee (ICPC), will serve as a platform for governments and industry players to talk to each other, with a twice-a-year meeting scheduled in its calendar.
Citing ITU deputy secretary general Tomas Lamanauskas, Nikkei Asia reported that the main goal of the new advisory body is to draw up agreements on "basic cable resilience practices." These include protecting cables from accidents caused by fishing or natural disasters, and facilitating government approvals when damage occurs in territorial waters or on continental shelves.
The report added that the advisory body will not discuss or address geopolitical issues, including supply chain decisions, national security and ownership of or investment in undersea cables.
US and Chinese government representatives have seats on the newly formed advisory body. Other members of the group include China Telecom, China Unicom, HMN Tech, Meta, Google, NEC, ASN and the North American Submarine Cable Association.
Hyperscalers drive growth
In its latest forecast published in November, Analysys Mason predicted that the global submarine fiber optic telecom cable market will grow from $7.96 billion in 2023 to $9.8 billion in 2029. This includes investment in new systems and spending on the operation and maintenance of existing submarine cable systems.
Submarine cable market investment and expenditure, worldwide
"Our new forecast predicts that significant market growth will come from hyperscalers, which are investing in new routes to support the launch of services in new regions, or to maintain control of costs," Simon Sherringon, research director at Analysys Mason, said in a statement.
"Growth will also come from a continued increase in traffic on key routes, as well as efforts to improve the resiliency of international communications by increasing route diversity," he added.
Between 2024 and 2029, Analysys Mason found that the trans-Pacific and intra-Asia–Pacific routes will account for the largest share of deployed submarine cables (in terms of cable length) during this period.
According to Telegeography, the number of submarine cable systems worldwide has reached a milestone of more than 600, with 532 systems in operation and another 77 planned as of September 2024. About 140,000km of such cables will be completed this year, three times more than five years ago.
Content providers – also known as hyperscalers, over-the-top (OTT) players, cloud service providers and Internet content providers – now dominate the subsea business as they shift from buying bandwidth to investing in cables. They now own 59 international submarine cables, up from just 20 in 2017. Some $11 billion in new cable builds is planned for 2024-26, double the amount in the previous three years, and these Internet giants account for the bulk of cable investment, typically as part of a consortium.
Google, which started the trend more than a decade ago with its investment in the Unity cable consortium, is now the sole owner of more than ten submarine cable systems. Rival Meta, which owns Facebook, Instagram and Whatsapp, is now taking a page out of its playbook.
In early December, news reports indicated that Meta was planning to build a new $10-million fiber optic cable system that would span more than 40,000km around the world. Meta will be the sole owner of the new cable system, a first for the company.
Tension in the South China Sea
The disputed waters of the South China Sea are a growing headache for cable companies caught in the middle of the territorial struggle between China and its neighbors. Industry insiders say it has disrupted construction of new submarine cables and caused delays in much needed repairs, as well as increased the cost of submarine cable operations.
For decades, a network of 11 submarine cable systems under the South China Sea has connected the major Asian hubs of Singapore, Hong Kong and Japan to the rest of the world. China, on the other hand, has 15 of these submarine cable systems – all operational since 1994 – that serve as its links to the outside world.
According to a Nikkei Asia analysis, the tech war between China and the US has affected at least six international cable projects, with more than 50,000km being delayed, halted or needing a route redesign in the past five years.
Three US-financed trans-Pacific cable projects have been rerouted to avoid the South China Sea by crossing waters bordering Indonesia and the Philippines as a result of concerted US lobbying.
Three international cables connecting Hong Kong are scheduled for completion in 2025. But in the past four years, the US government has blocked at least three cable projects that would have connected the city to the US, citing concerns that China could spy on or sabotage communications.
On the other hand, there are plans to lay four cables to Japan and seven to Singapore after 2024. In addition, nine cables will be laid to Guam, midway between the US mainland and Southeast Asia.
One big casualty of geopolitical tensions in strategic waterways is the repair and maintenance of the submarine cables beneath them. This was brought home this year when all five undersea cables connecting Vietnam went down and it took nearly eight months to get them all back online, according to the Washington Post.
The delays are largely due to the cumbersome process of obtaining the necessary permits, especially from China. whereas it used to take ten days, industry insiders say it now takes four months.
This does not bode well. Cables under the South China Sea, a major shipping lane and one of the world's most important fishing grounds, are more vulnerable to damage than anywhere else in the world. Citing the ICPC, the Washington Post reported that at least one cable failure is recorded in the waterway every few weeks.
Looking for a new path
In the same report, the Washington Post quoted anonymous sources as saying that a consortium of companies that excludes Chinese firms is planning a new cable that will pass through the South China Sea just outside waters claimed by China.
However, submarine cable operators are increasingly looking for new ways to connect the East and West to avoid the challenges of laying new cables in disputed waterways.
But the more circuitous route is less direct and costs tens of millions of dollars. And experts say the most direct and efficient way to meet the booming demand for connectivity within Asia is to run cables through the middle of the South China Sea, with a main trunk branching off on either side.
Australia Connect
Nevertheless, Australia seemed to have emerged as a safe destination for companies seeking a new trans-Pacific route between Asia and the US.
In November, Google and three Australian digital infrastructure companies – Vocus, NextDC and Subco – announced that they will build a new 42,500km submarine cable network called Australia Connect, which will significantly increase capacity on routes between Australia, Southeast Asia and the US.
Australia Connect will consist of two cable systems: The Bosun submarine cable will connect Darwin, Australia, to christmas Island with onward connections to Singapore, while a new interlink cable will connect Melbourne, Perth and christmas Island.
It will complement the Pacific Connect cable network, announced in October 2023, which connects Australia and the West Coast of the US with a multi-terabit ring network through and between Fiji and French Polynesia.
"Asian traffic is now finding its way through Australia to get to the US just due to the lack of supply between Singapore and the US due to issues of right of way in new cable systems. We haven't seen new cable systems built through the South China Sea since 2017," Michael Ackland, general manager for federal government and strategic projects at Vocus Australia, told Light Reading.
He added: "Australia is low sovereign risk and it has quite a reliable path forward for those who are investing and planning in cable infrastructure. So, it's always going to be an attractive destination. Yes, perhaps, it is a diversion on a path where you might want to go on a straight line, but for many applications, that's just fine."
