Submarine Cable Technology, Strategy, Regulations and Politics Actionable Intelligence
Catch-22 For Google And SMART Cables
While there has been significant activity in the SMART cable arena with formal technical committees interacting with vendors to commercialize the technology, Google and Facebook have been on the sidelines although they do attend the sessions every now and then. The SMART cables under discussion with the vendors will mean addition of new sensors in the cable and most definitely in the repeaters for detection of all kinds of activity in the ocean and above it.
The benefits of SMART cables are huge for climate monitoring, disaster warnings including earthquakes, tsunamis and seismicity. There are also massive benefits to better understand marine life under the ocean which we know little about.
In fact, very recently, the International Telecommunications Union (ITU), the World Meteorological Organization (WMO) and the Intergovernmental Oceanographic Commission of the United Nationals Educational, Scientific and Cultural Organization (UNESCO/IOC) created a joint task force to study and create regulations for the SMART cable industry.
But Google in my mind, made a massive faux pas by announcing they were working with Caltech researchers to detect earthquakes and tsunamis using existing submarine cables. This is the first time researchers have been able to detect earthquakes and ocean waves — without the need for any additional equipment or sensors. So in short, any lit fiber in the world can now be a SMART cable without the need for additional sensors to some degree.
In light of the current caustic regulatory climate in the world as it pertains to submarine cables especially in Asia as well as in the United States, Google’s timing couldn’t have been worse. Now in addition to the fishing and environmental industries which were skeptical of submarine cables, the defense organizations of every country in the world will be extremely worried that their submarine and other naval defense activity will now be monitored by Google and Facebook — who are now the largest owners of submarine cable bandwidth in the world.
Which means that the 7-year gestation period of a submarine cable going from Concept To Reality just went up by an unknown number of years. And of course, an additional headache and supervision by governments of all the existing cables owned by carriers and OTTs around the world. And of course, additional senate hearings in every country in the world of how powerful Google and Facebook are. Read More………..
A Mad Rush To Announce New Data Centers In India
And of course, Iron Mountain agreed to invest $150 million in Web Werks which is owned by my favorite Indian entrepreneur Nikhil Rathi whom I have written previously about. As I had predicted, Web Werks is now clearly the Equinix of Navi Mumbai and will expand rapidly to other cities in India.
There is no question there is a data center boom in India and will continue at least for another decade. But why this flurry of announcements of multi-billion dollar investments 10 years out in the future?
It has little to do with the real demand which is undeniable but more to do with the biggest land grab going on in India with several states offering free land for future data center development. Anywhere from 20 to 100 acres of free land is being given away to those who can make big announcements. Read More………..
Facebook Is Right, Australia Is Wrong
I am a firm believer that the OTTs need to abide by the rules of every country they are operating from. So while I totally disagree with Australia’s new law asking for OTTs to pay for content originating from the country, everyone needs to respect the law. But wait a minute….the law specifically singles out Google and Facebook and is not applicable to Twitter and any other OTT. Now that is unacceptable. The law is biased against those two OTTs.
Secondly, the media houses who are crying like babies do have an option — to inform the search bots not to search their content. Ah, but then who would read their content? So they want it both ways — they do want the content to show up on Google and they want to get paid for it.
There is also a lot of difference in how both the OTTs carry the content. While Google bots search for content online, the media houses themselves put content on Facebook. So all they have to do is stop putting the content. Also, the Australian government has no business to force one media business to pay another media business just because one of them is Australian. Some senators surely got paid under the table by the Australian media houses.
While both OTTs refused to pay, Google was cornered in to paying by its rival Microsoft which has a 3% market share in the search business and Microsoft was thrilled to replace Google search in Australia and become a monopoly there and was willing to pay the media houses. Microsoft has nothing to lose and is more than happy to throw Google under the bus. So Google had no choice from a competitive perspective although if Microsoft was not an issue, it would have surely walked away from Australia just like Facebook. Microsoft is also instigating the European government to take a similar stand against Google. This is not right on part of Microsoft. It has to remember — What goes around comes around.
But Facebook has no such competition and frankly speaking Australian news is less than 4% of the global news anyway. When was the last time you went out searching for Australian news? There was no reason for Facebook to pay and create a precedent for every country in the world to follow. So Facebook, in adherence to Australian laws, decided that it would not carry any news from Australia. If Facebook agreed to pay content providers, tomorrow the governments of the world will force it to pay every individual content provider — it’s user. So it’s a slippery slope for Facebook. With no upside.
And all of a sudden, the liberal media went crazy and started a campaign to put Facebook out of business. Of course, no mention of how they had a conflict of interest writing about this story as they would make millions of dollars if Facebook lost. So ya, I think Facebook is absolutely right in their stance and I predict that Australia will blink unless they also force Twitter and others to start paying. This blatant discrimination of Google and Facebook will be Australia’s undoing. Read More………..
The Chickens Are Coming Home To Roost
For the first time in his life, Ravi Shankar Prasad, the Minister of Communications of India koo-ed instead of tweet-ing. Koo is a new Twitter-like app for the Indian market. And since then, almost every top Indian politician followed suit and joined Koo. Of course with less than 10 million subscribers, Koo is just getting started compared to 330 million subscribers for Twitter. But this is a wake-up call for not only Twitter but also all other social networking sites.
With the trillion-dollar market cap ceiling now broken, the OTT market caps are bigger than most countries’ GDPs. And with that has come arrogance when dealing with politicians of most countries. The OTTs have their own Supreme Court if you will over content and they believe that has higher standing over the Supreme Court of any other country. For example, this is Facebook’s Supreme Court and the judges are paid six-figure salaries and hired by……….Facebook! through a $130 million trust. I find it really amusing when Washington Post says they don’t tell their reporters what to write. Of course they don’t have to. They only hire those who will write exactly what they want! And they know their job is on the line if they write anything remotely not ultra left.
So when the hashtag #ModiPlanningFarmersGenocide started trending on Twitter, the government of India told Twitter to take down accounts with that hashtag as it was inciting riots — which Twitter complied and then reinstated those accounts under the guise of freedom of speech. The Indian government then called Twitter on its hypocrisy where it took one stand during the Capitol riots (favoring the government) in the US and exactly the opposite stand during the Red Fort riots (favoring the rioters) in India.
It also did not help that Jack Dorsey, CEO of Twitter ‘liked” some anti-India tweets which promptly resulted in Twitter’s neutrality being called in to question. And of course, it permanently banned President Trump but refused to do the same with politicians in India who were also inciting people to riot.
In Australia, Google and Facebook are facing yet another problem where they have refused to comply with the government’s order to start paying the content providers as per rules passed in the senate.
So is Twitter going to be replaced by Koo in India and Google search by Microsoft Bing? Read More………..
Malaysia Cabotage Issue Is Not Going Away
So just like I had predicted, Malaysia is not giving up on its cabotage issue. And all the OTTs are up in arms. It seems that employees of Facebook, Google, Amazon and Microsoft gave all kinds of threats and ultimatums to the Malaysian government pretty much telling the government they would pull out of Malaysia and turn it in to a technology barren land.
There is only one problem. The idiots don’t understand that this is not about them. If it was about them, the Malaysian government would have agreed long time ago. This is a fight between the governments of Malaysia and Singapore and the OTT idiots keep on thinking they can threaten the Malaysian government and everything will be back to normal.
The problem all the OTTs are in a panic is because desperation has set in. They have pretty much lost billions of dollars while making Hong Kong the premier hub of Asia fully knowing that the place belongs to China and sooner or later they will have to face the music.
So they shifted all their marbles to Singapore and started playing there. And less than a year after Hong Kong imploded, the Straits of Malacca started burning. Which by the way, is the only gateway left to India from the East. And Google in particular, has never served India from the West and now finds itself in a big soup. And they need to find someone to blame.
Instead of trying to find solutions to the problem (like looking at alternate ways to reach India), they have picked the mother of all fights with Malaysia not really understanding what is behind the government’s cabotage stand. As Singapore is now pretty much maxed out on land and power for data centers, it is trying to buy or lease both land and power from neighboring countries. Which is creating its own regional political and military issues — far above the pay grade of the OTT minions.
I pity the OTTs because all of the existing and future cables they are involved in, go through the Straits of Malacca. Give it a couple more years. And then they will realize they need to write off those investments and start looking for alternatives. This is a repeat of the Hong Kong disaster. Read More………..
This Changes Everything In India
Today, I had the pleasure of speaking to the founder of PM-WANI in India — the new project announced by Prime Minister Narendra Modi which will light up 10 million new WiFi hotspots all over India. It’s truly an amazing story and I was humbled to speak to the person who will be responsible for changing the lives of 1.3 Billion Indians and the generations to come.
So this person — an employee of TRAI — reached his mobile carrier bandwidth limit one day while walking on a street in New Delhi in 2017 and wondered why he could not stop at a local grocery store and buy some bandwidth. Which led him to coming up with a business plan to sell bandwidth coupons. But then who would buy a bandwidth coupon if it only worked at that store? So he started thinking of a coupon that would work anywhere one went throughout India.
From these humble beginnings, PM-WANI was born which is going to change India forever. Of course, the coupons are gone. One needs to authenticate himself only once in his lifetime and he can continue using WiFi in each of the 10 million locations. And entrepreneurs are going crazy to get in on this platform. Hundreds of new business proposals are being put forth by entrepreneurs wanting to light up entire villages with WiFi to all kinds of add-on services like micro-edge data centers to edge-CDN’s.
This gentleman who came up with the concept spent most of his time convincing his colleagues in the government to allow entrepreneurs to provide the WiFi service without the need for any licenses and without paying the 8% fees required of every telecom service.
He mentioned one village where the new WiFi service is up and the 3,000 school children who were given free IPads by the government 3 years ago — which remained unused — suddenly realized they could use them and all of them joined in one day.
This is the birth of a new India and everything negative I have ever said about TRAI just doesn’t matter anymore. Read More………..
Namaste Cable Ver 2.3
I am a big believer that things always happen for the best and for good reason. Take the example of the Sing-india-Sing cable I had announced in 2017.
I spent a good year trying to put this deal together but was put off by the regulations in India. Also, the Indian telecom industry was going through a major upheaval with carriers just trying to survive with the super aggressive competition from Jio. So the timing was just not right. And so I decided to drop the project.
And thank God I did. Because I would have been bankrupt with the new cables announced on exactly the same route: IAX, MIST and Sea-Me-We-6. Not to mention the new political and regulatory problems in the Straits of Malacca which could potentially delay these projects for a long time.
So because of what happened with AAE-1 which terminated in Malaysia and carriers were trying to be cute by bringing traffic on land to Singapore and the Singaporean government basically stopped all traffic from coming in, there is now a huge fight looming between the two governments.
Which is evidenced by Malaysia’s first step of applying cabotage laws for submarine installation and maintenance cableships. There is no telling how far this fight is going to go. In any case, the Straits of Malacca is becoming yet another single point of failure.
Another major problem is Indonesia is 100% dependent on Singapore for all its internet connectivity and needs a diverse and direct path to the rest of the world. So here is my modification of the Namaste Cable to address these and a bunch of other issues. The Government of Indonesia will be ecstatic with this new development.
Who in their right mind will now want to go through the Straits of Malacca until the two governments resolve their differences? I am now taking orders for fiber pairs on this route which I believe is the only way to address the Singapore situation. Here is my business plan. Read More………..
State Of The Submarine Cable Industry 2021
Every year I write a report on the State of the Submarine Cable industry. This year is especially important as the industry is going through a fundamental transformation with the closure of the dark chapter under the leadership of AT&T by the retirement of TAT-14 — the last remaining vestige of the evil empire.
Although one of AT&T’s side-kick KDDi has also suffered the same fate as AT&T, two other partners in crime — SingTel and Orange are still very much active, although they are now a sideshow to the new Masters of the Universe — Facebook and Google who have pretty much taken over the leadership of the industry — with their ability to write blank checks and build out massive networks.
The situation is similar to people now thinking of George W Bush as a saint and a genius compared to Donald Trump. Similarly, there are many carriers who now think AT&T days were far better compared to those under the OTTs where they are facing an existential crisis.
So I have identified 15 major trends for 2021 that will define the year ahead.
1.) Submarine cables will get more expensive. If you are not Facebook or Google, you are screwed. Because the two companies now have a lock on the submarine cable supply chain, right from cable vendors to the installation ships. And they have inundated the supply chain with so many and such huge projects (like 2Africa), that while the vendors are working for the OTTs at minimum wages, they are increasing prices for the entrepreneurs and carriers — by a lot.
2.) Data centers will get more expensive. With the passage of the green data center laws in Europe on Thursday, it is going to be far more expensive to operate data centers and subsequently the additional charges will be passed on to the customers. Also, I foresee a huge disparity between haves and have-nots — data centers that conform to the green laws and those who don’t. And the price differential between those two will be substantial. And customers will face a major moral and ethical dilemma which way to go. Read More………..
Desperate Need For Government Regulations In The Internet Infrastructure Industry
I have been watching with great interest the aftermath of President Trump’s Capitol fiasco and how companies have reacted to this event pretty much on a one-on-one basis.
So first Facebook decided it was going to suspend Trump’s Facebook page in eternity or at least for 2 weeks, followed by Twitter permanently taking down Trump’s Twitter channel because he had breached their Terms & Conditions. This was almost immediately followed by Google and Apple taking down Parler (a conservative social media site favorable to Trump) from their App store.
But more interestingly, Amazon decided it was no longer going to host Parler on its cloud platform — AWS. So while Parler was fine with the content on its website, the cloud hosting company was not. And today, Stripe made a decision that it was no longer going to process payments for Trump’s website.
So my worry is how far down the internet infrastructure supply chain are companies going to make these political and/or legal/criminal decisions? If tomorrow, Equinix and Google get on the opposite side of the political ideologies (or Google is linking to websites Equinix feels are violating its T&C’s), can Equinix boot Google Cloud from its data centers?
Or if tomorrow, Washington Post starts a crusade to free Kashmir, can Bharti Telecom refuse to carry AWS on its submarine cables since Jeff Bezos owns the Washington Post?
I think the world needs to have a regulatory framework on how these tech giants should respond to political events and not be left to their individual decision making mechanisms. It is in fact not fair to them either — because no matter what decisions they make, they will have alienated part of the population. Governments of the world need to get involved asap and pass clear and precise laws as to how to deal with such situations.
From a purely infrastructure perspective, do companies now have to control their own infrastructure supply chains and how much further down the line? Read More………..
Google Throws Telecom Egypt A Bone
I am now convinced that Blue Raman is not only on track but is surely going to happen. Google is making sure that Telecom Egypt is happy and will not interfere in the permitting process of Blue Raman. First of all, Telecom Egypt will benefit from Egypt crossing of the Majan cable by tens of millions of dollars.
In addition to that, Google just signed a deal buying capacity to cross Egypt and including purchase of additional capacity on TE North — which in the industry is also known as the Scam Cable. Why is it called by that name? Just take a look at this map of TE North.
Now look closely at the name of the cable. It is called TE North. It is also called TGN-Eurasia. It is also called SEACOM. It is also called Alexandros. It is also called Medex. Hmmmm….what’s going on here?
It is very easy to explain. Telecom Egypt forces cables crossing Egypt (who they can bully) to buy one or more fiber pairs on this single fat cable called TE North but allows those cables to rename the same cable with the name of the cable that wanted to build its own fiber to Europe. So everyone can claim they have their own cable all the way to Europe. TE North is by far the single biggest point of failure in the entire world. If that one cable goes down, the so-called other cables also go down.
Did Google also fall for this scam? Of course not. They know what they are doing. It’s payback time to make sure Blue Raman goes through without a whimper from Telecom Egypt.
A Tall Leader In The Middle East Has Retired
Abdullah Al-Samhan, General Manager of International Cable Systems at STC has retired although he still server as a Senior Advisor at STC.
I have known Abdullah for many years and was always impressed by his ability to forge extremely strong ties especially with SingTel and Orange which enabled Saudi Arabia to now host about 15 submarine cables. Abdullah took full advantage of Saudi Arabia’s key location and made sure he signed up for every cable that passed through the region.
Abdullah’s latest major accomplishment was to get an entry in to the 2Africa consortium which will put Saudi Arabia in the center of the action as it relates to Africa.
Abdullah hands over the reins to Adil Alaskah to take the Kingdom to the next level. With so much capacity at his disposal, Adil will now have to manage the delicate relationship with Telecom Egypt as there are a number of cables that want to traverse Saudi Arabia on to Jordan and Israel for route diversity and significantly reduced cost which represents a massive pot of gold and will separate the Kingdom from its competitors in the Middle East.
Abdullah’s major contribution was his innate understanding of the C&MA document which enabled him to get the lowest cost of bandwidth compared to UAE and Oman which have been vying desperately to compete with STC.
Abdullah clearly was responsible for putting Saudi Arabia on the global submarine cable map. He was a tall leader in the Middle East and Adil has big shoes to fill. Read More………..
What Is Jio Hiding?
The CIF of IAX (India to Singapore) and IEX (India to Europe) cables was signed in 2020 with Subcom and thousands of kilometers of cable has already been manufactured. Both the cables together represent more than $750 million worth of contracts to Subcom. And yet there has been no press release from any of the concerned parties.
Usually, the vendors and sub-vendors are desperate to send out a press release on such a big deal as it tends to attract a lot more business. But there is a gag order that prohibits them from opening their mouth.
While Jio won the war when it came to government regulations and pretty much destroyed the mobile industry in India, they are having a tough time with public sentiments. I guess this is the price one has to pay to becoming God overnight.
There have been farmer protests going on in India for the past two months because the government wants to change the archaic system of buying food grains to a more market oriented one. And because Jio is known to be close to the current government, some of the farmers believe that Jio will enter the farming sector with their ability to raise ungodly amounts of money and therefore make the farmers bankrupt.
So with that crazy and atrocious assumption, the farmers particularly in the state of Punjab vandalized about 1,500 Reliance Jio cell phone towers resulting in millions of dollars of damages and of course service interruptions.
Jio is extremely wary about what information gets out in the public domain. So what is Jio hiding in the IAX/IEX deal? Read More………..
Facebook Is Extending 2Africa To India
Wish you all a Happy and Prosperous New Year. 2021 certainly brings good news for India as Facebook will be extending the 2Africa cable to Mumbai. (The map will be updated when Facebook makes a formal announcement)
If you are looking for a piece of that cable, don’t bother. The cable is 100% sold out even if the final landing party issues are being worked on. This will be India’s first cable with a true open architecture and none of the Indian carriers will be able to hold anyone ransom for the last mile.
This is certainly a big blow to Oman as it tries to become the next Marseille. The politics in that region is changing rapidly and here is the full analysis of the situation. Read More………..
2020: A Horrible Year For Submarine Cables
While 2020 has been nothing short of a spectacular year for the telecom infrastructure industry (3 trillion Zoom meeting minutes, 6 billion monthly hours of Netflix, 100% plus increase in online store vs in-store purchases and so on), the submarine cable industry has been an exception to the global telecom party.
Interestingly, that is not true for the vendors and service providers of the industry who are under servitude by the OTTs and have enough business to keep them busy for several years.
So why do I say it is terrible? Number of things. Government regulations in particular the US-China feud has completely upset the trans-Pacific market affecting cables worth at least a couple of billion dollars. It’s not so much the money but the uncertainty of how to plan for the future that is troubling. Hong Kong has been the hardest hit and so also the uncertainty around the data center market there for the foreseeable future is deeply concerning.
The largest private submarine cable owner, Telxius went on the market and will be sold in 2021 possibly with a huge haircut to Telefonica. Multiple attempts to sell it or to go public have failed. And Telxius is not the only one selling its submarine cable assets. There are others too who find it impossible to stay in the wholesale business. You will see multiple private cables coming on the market in 2021. Telxius will likely be sold to the clueless private equity guys who will have to unload it again after suffering huge losses.
The traditional wholesale market meant that the carriers were selling to the OTTs. 2020 has proven otherwise. Google is now the wholesale provider of dark fiber pairs selling Blue Raman and MIST capacity to the same carriers for a 100% plus markup with other cables on the horizon with the same business plan.
There is only one really tiny positive spot in the submarine cable industry. Read More………..
Equinix Is On The Defensive
When the Equinix Cloud Exchange (ECX) was introduced, I had written about the potential for conflict of interest with some of its customers. Frankly speaking, introduction of the cloud within a single data center was an absolutely right thing to do as it saves significant provisioning time and benefits everyone.
But as soon as Equinix started selling interconnectivity across regions even though to its own data centers, that started getting the attention of one third of its customers, the carriers who provide the same service and in fact, connectivity is the only business they are in.
One of the reasons Equinix is in a bind is because it is afraid of Megaport and other upcoming services like PCCW Console Connect where customers now have the option to colocate in cheaper data centers and get connected by these virtual networks to Equinix data centers which are quite expensive compared to competition.
The success of Equinix has been built around the fact that you are just a cross-connect away from any of your partners because all of them will be in the same data center. That is a great selling point but the issue is how much of a premium are people willing to pay in light of the virtual networks showing up. And if Equinix wants to compete in that space, are they killing their own newborns or they have realized that the writing is on the wall?
There is now a whole new business model emerging around this evolving nexus of data centers and virtual connectivity. Read More………..
Something Interesting Is Going On In The Global Networking Space
I have been watching the stock price of Megaport with great interest and fascination. The market cap is now nearing US$2 Billion. This is for a company that resells bandwidth connecting various data centers and to the cloud providers among other services. Its annual revenues were US $45 million and the company has been losing money every year since its birth. Megaport does not own any submarine cable or any data center.
Compare this to the US$2 Billion I Squared Capital agreed to pay for GTT’s assets in Europe. Assets sold included 100,000 route Km of fiber network, 3 trans-Atlantic submarine cables including one with the lowest latency across the Atlantic and preferred by the financial institutions, 14 Tier-3 data centers and over 100 colocation facilities. Revenues are close to $400 million with EBITDA of around $175 million.
Or let’s compare it to another $2 Billion deal in the making where Telefonica is in the process of getting rid of all its submarine cable assets through a sale of Telxius. This is a 100,000 Km submarine cable network including the very lucrative and monopoly routes in South America. Roughly speaking, Telxius’ subsea revenues are in the range of $600 Million with an EBITDA of around $150 million. This is after the tower business assets are spun off in to another deal.
And guess which company was valued at under $2 Billion just before the pandemic? Tata Communications which owns 500,000 Km of subsea and 200,000 Km of landline fiber, has revenues of $2.5 Billion and has been consistently profitable every year from its birth.
So what’s going on? Read More………..
Jio Now Faces An Existential Competitor
As the saying goes, If you play with fire, be ready to get burnt. Jio’s core competence in the initial stages was its amazing ability to wade through the Indian regulatory waters and get the government’s approval to start its service. Of course, once it got that, nobody can take away the tremendous organizational and financial prowess it got to the table to create the world’s largest startup.
Now the same government that approved Jio’s foray in to telecommunications just announced a new program in India called the PM-WANI which stands for Prime Minister WiFi Access Network Interface. Basically, the government just allowed public access to WiFi hotspots which enables any small shopkeeper or hawker or homeowner to provide WiFi services by selling Internet service for a few Rupees at a time. Basically, you don’t need a license to provide WiFi services and you can sell it at any price you want.
The government wants to have tens of millions of such WiFi hotspots throughout the country so everyone can enjoy broadband services even if they do not have a cell phone provider. All you need is a simple Android handset and install OTT services on top.
Ouch. Jio just raised $15 Billion to fund its investments in 5G among a host of other services. The money raise was based on the add on services it would provide to its customers which would keep on growing by an additional 200 million users or so. Of course, I am not predicting gloom and doom for Jio. Jio is one of the smartest organizations in the world and they will figure out how to deal with the situation.
But the game has suddenly changed and the sand just shifted from under their feet. I can see a new unicorn being born to take advantage of this unique situation — one that can provide a seamless interconnection between those tens of millions of hotspots.
This reminds me of the early days of Cable TV in India where thousands of local entrepreneurs were stringing cables from one building to another and providing their own version of Cable TV services. In the WiFi version, these entrepreneurs could also target broadband landline services by providing a pay-as-you-use option instead of the monthly subscription model.
And who are the winners in this round? Facebook, Google and Amazon who will get tens of millions of new eyeballs without doing anything. The game is On. Read More………..
Malaysia Cabotage Issue Plunges Asia In to Another Crisis
Malaysia revoked the exemption enjoyed by the submarine cable industry with respect to cabotage — which means that now only Malaysia-flagged submarine cableships can install and repair submarine cables in Malaysia. Except there is a slight problem — Malaysia has zero Malaysia-flagged cableships ready to step in to that role.
Which means that foreign cableships (read Singapore) can still service the cables in Malaysian waters except with a slight delay — of say 2-3 months. This is in direct retaliation to Singapore not allowing AAE-1 traffic from Malaysia to terminate in Singapore unless there is equivalent traffic originating in Singapore that wants to terminate in Malaysia — on a per carrier basis. Which has pretty much made AAE-1 useless as nobody wants to terminate traffic in Malaysia and they cannot take it to Singapore.
The biggest sector affected is the Malacca Straits where all of the cables from Singapore to India and Europe ply. Of course, the Malaysian government is using MASA — the shipping union as the front to fight this political battle with Singapore.
So who’s affected? All of the carriers and of course, Google, Facebook and Microsoft — who had a massive fight with the Malaysian government and one of them threatened to walk out of Malaysia if this issue was not resolved to its satisfaction.
Of bigger consequence than the repair of existing cables is whether or not the Malaysian government would become a hindrance to getting permits for future cables that pass through its waters in the Malacca Straits. Malaysia can easily delay giving permits by a couple of years. And in this strange industry where 7 years is now the norm for getting a cable from concept to reality — what’s 2 more years? Read More………..
And Now the Finger Pointing Starts At Google And Facebook
Hong Kong in particular and Asia in general have been an unmitigated disaster for Google and Facebook in terms of their submarine cable strategy and deployment. Show me one trans-Pacific cable that can be declared a success story for either of them and I will show you the warts in it. There are cables in operation but no traffic on them. There are cables that are working partially but not to the originally intended destinations. And of course, now the US-China trade war has thrown everything in to turmoil.
But even before the US-China trade war, the writing was on the wall for Hong Kong. If I knew that Hong Kong was going to implode two years ago, surely Google and Facebook knew way before that. After all, they have the cream of the crop working for them. So someone knew and yet did not press the panic button because of internal politics.
So from what I hear, the finger pointing war has started within both the companies with the data center guys blaming the submarine cable guys and vice versa. And from what I hear, heads are going to roll.
I think this is a good time for both companies to do some deep introspection of what they are doing in the submarine cable space. In my opinion, the fundamental problem is both the companies think that controlling the entire submarine cable supply chain including vendors and global bandwidth, will create a massive moat around their properties so no startup would dare to compete with them. With this big picture folly, they have created enemies with every carrier in the world.
A perfect example of the chasm created is the IEX/IAX cables. With unlimited money at their collective disposal, Jio, Facebook and Google cannot pull the trigger because of fundamental differences of opinion on how the deal needs to be constructed so it is fair to all.
Both Google and Facebook have totally different philosophies but they end up doing the same thing. While Facebook management is clueless about the industry and has resulted in multiple fiefdoms doing their own thing in different parts of the world. While Google is the true evil incarnate with a clear agenda from the very top to build monopolies and control the eco-system in every part of the world.
I suggest both companies take time out and think about what went wrong and how they should change to avoid history repeating itself. Maybe even listen once in a while to what outsiders have to say. Aah, that’s probably asking for too much. Read More………..
RTI: Down But Not Out
So you might think that RTI must be having an existentialistic crisis after losing 2 cable deals they have been working on for almost 3 years (HKA and HKG). Of course it has hurt them. But Russ Matulich, in my opinion, is the best submarine cable entrepreneur in the world. He shrugged off the losses and immediately, started work on his latest cable: IBC — which does not touch any Chinese waters at all.
IBC is a proposed Guam to Singapore cable with branches to Darwin, Australia and Jakarta & Makassar, Indonesia. Not going through Chinese waters really limits where this cable can land. It will be a minimum 6 fiber pair cable.
The other thing Russ is looking at is taking the wet plant which is already manufactured for the HKG (Hong Kong Guam) cable and morphing it to land in Philippines instead of Hong Kong. Seems like Philippines is becoming the defacto beneficiary of the US-China regulatory fallout with Facebook also doubling down on the country.
If you ask me, I would tread with caution unless the big bad boy PLDT is in on the same side of the table as you. People have lost count of the dead bodies of those who tried to take on PLDT.
Russ is the smartest submarine cable entrepreneur and it is going to take more than a few regulators to keep him down. Read the details about how neither he nor RTI got hurt when he walked away from the HKA and HKG deals. Read more……..
Two Hong Kong Cables Postponed Indefinitely
For those that have been waiting anxiously for Joe Biden to take up his Presidency in January hoping that his China policy viz-a-viz the telecommunications industry will be different from Donald Trump, I have some very bad news. The Department of Justice is pretty much in charge of the telecom policy through Team Telecom and they are not going to change their stance at least for the next 2-3 years even if Joe Biden decides to take a softer approach towards China.
The fallout has begun and it is not pretty. Two private cables, Hong Kong Americas (HKA) and Hong Kong Guam (HKG) are the first victims with several more to come in the coming few months. Between those two cables, that’s more than half a billion dollars in total investments.
US DoJ has certainly become a huge gating factor. But the Chinese government is no different. Unfortunately for HKA and HKG, they had to deal with both governments on each cable. Not a single cable has landed in Chinese territory unless the landing party has been either China Telecom, China Mobile or China Unicom. Hong Kong was a different issue until now. No more.
China has been planning for this event from the start of the Internet. They have been building an Internet for China from the beginning and while they do need to access US traffic, it is less than 10% of the overall traffic. Whereas for all other Asian countries, they need to go to the US for at least 60% of their traffic. In addition, accessing Chinese content is about 15 times more expensive compared to US content pricing.
While it was clear that the Chinese would be going after every OTT owned cable, I was expecting that the private cables be shown more leniency. But a war is a war and nobody is being spared both by the US as well as the Chinese authorities. So new cables are being planned now that will avoid Chinese waters, both official as well as claimed. I am really upset that so much money and effort has gone down the drain because of poor governance. Read more……..
Impact Of Amazon’s $2.8 Billion Data Center Investment In India
Amazon just announced that it would spend $2.8 Billion on a number of data centers in Telangana, a newly formed state in South India. This is Amazon’s second major data center investment and the cluster will be operational in 2022. The first cluster is operational in Mumbai.
This changes everything — for Amazon, for India as well as for the rest of the OTTs. Until now, mainly because of India’s telecom regulatory nightmare, OTTs were hesitant to invest in hyperscale data centers in India. Instead they preferred having them located in Hong Kong and Singapore in the APAC region and were serving India from there.
But everything that could go wrong has gone wrong in those two locations. Because of the US-China trade war and subsequent submarine cable regulatory battles in Hong Kong, its future is clearly muddied and OTTs have lost billions of dollars in the bet they made that Hong Kong would be off-limits for China.
The second major problem is Singapore. Not only is it the world’s 2nd largest single point of failure, it has no more space or power left to build new data centers. And no approvals for new data centers are to be granted until 2021 as Singapore figures out whether it makes sense to buy power from neighboring Malaysia to feed the almost 10% of Singapore’s power dedicated towards data centers.
And the major market in that region is India anyway. So Amazon decided to swallow the pill and take its chances on betting that sanity will prevail in the Indian government’s regulatory policy over time, if not right away. Google and Facebook are not there yet. But I am betting that they will have no choice but to invest in the Indian data center market especially as India promotes the Atmanirbhar (self-reliance) policies of Prime Minister Narendra Modi.
In anticipation of that happening over the next 3-5 years, already the Indian carriers are making changes in their submarine cable and infrastructure investments. I have spoken to all of them and their perception of what’s going to happen is extremely consistent And that is why Jio’s submarine cable deals are taking so long to get done. Read more……..
A Coup For Facebook
The day Facebook invested $5.7 Billion in Jio Platforms and set the high valuation which enabled Jio to bring in an additional $10 Billion worth of investments, I had predicted that the government of India would approve Facebook’s request for the WhatsApp payment module. Of course, those are unrelated events….of course…..sure…..absolutely…..without question……
In any case, the Indian government’s approval of Facebook’s first foray in the fintech industry anywhere in the world and its ability to serve 20 million Indians, is a coup of the century. This now will be a transformation of Facebook in to the fintech and e-commerce worlds all around the globe — forever changing its trajectory.
Just think about it. Alibaba’s Ant Financial’s botched IPO notwithstanding, it was valued in excess of $300 Billion. That’s for the fintech play in China alone. So the stakes are huge and Facebook has figured out how to play Indian politics. And I suspect it will invest in several other carriers around the world. The returns on investment are just amazing especially when you consider the fintech and e-commerce angle.
Investing in carriers has a 3-pronged angle. First the investment by itself is stable. I would say a comfortable 2X return on investment. Secondly, that money will be used to increase the eyeballs and therefore the valuation of Facebook. That’s a 10X return. And finally, the fintech deal which is potentially a 100X return. I predict that Facebook is going to give away money to carriers as if there is no tomorrow. Read more……..
The Next GPX Of India
I have written a few times about the huge success of Nick Tanzi’s GPX data center in Mumbai which was sold not too long ago to Equinix for $160 million. I was particularly amazed that a foreigner had to come to India all the way from the US and show Indians how to do a data center deal. Well guess what, I have found India’s own Nick Tanzi and it is an amazing story.
I have come across dozens of entrepreneurs but Nikhil Rathi of Web Werks Datacenters is in a whole different league and in my opinion, the next big success story coming out of India. Nikhil was barely 16 years old when he caught the entrepreneurial and computer bugs at the same time. Of course, without telling his parents, he went out and found his first customer and built his website. When he came home with a check for Rs.1,500 ($20), his mother told him to go and return the money right away. She was afraid that her entrepreneur son would become crooked in his ways.
Well, she doesn’t have to worry about it anymore. Nikhil, a Chartered Accountant by training but a technocrat at heart, went on to form Neosoft Technologies which employs 2,500 software professionals and is a fast growing IT outsourcing company.
Soon, Nikhil’s customers started asking him to host their websites and Web Werks Datacenters was formed. With the massive cash flow coming out of Neosoft, Nikhil decided to build his own data centers without taking any outside funding. As a side gig, Nikhil also founded the Mumbai Internet Exchange, India’s first private exchange now owned by De-Cix.
Web Werks now has 3 data centers in Navi Mumbai, Pune and Delhi, serves 1,500 clients including 160 ISPs. And finally NIkhil has decided to take outside money and is raising $200 million to build several 10MW data centers in major cities in India. In Mumbai, Web Werks has operations in Navi Mumbai where almost all the new data centers are being built as land is one tenth the price of Mumbai and there is plenty of power available.
So while Equinix will rule Mumbai, I predict that Web Werks will be the Equinix of Navi Mumbai. What I like about Nikhil is he is not doing it for the mohey — he has plenty of it. But rather he is doing it for his love for the business. His mother should be proud. And I have found the destination for my Namaste cable. Read more……..
An Eye For An Eye Makes The Whole World Blind
Ever since the US regulators denied Hong Kong landings for PLCN and Bay to Bay Express (BtoBE) cables, the OTTs have been anticipating a backlash from the Chinese government.
And now it is confirmed that the backlash is coming for sure. China will start creating hurdles for cables owned by the OTTs that pass Chinese waters including near the South China Sea. And now the OTTs are scrambling to reroute their cables including BtoBe so they do not cross Chinese waters.
It is not only the US OTT-owned cables that are in trouble. Even privately-owned HKG and HKA cables are potentially in trouble both from the US regulators as well as China. And any new cables planned to cross Chinese waters are also redrawing their maps to steer clear of the danger zones.
Since Hong Kong is now off-limits, there are a couple of new cables planned to go directly from Singapore to USA including the Facebook-owned BiFrost cable and Google-backed Echo cable.
And a major battle is being fought in the boardroom of Sea-Me-We-6 with Huawei and Subcom fighting it out to get the contract. And there is big division among carriers whom to award the contract to. But if the cable wants to land in Europe, there is no way Huawei will be allowed to get the contract. The US authorities are watching the deal very closely just as they are watching the Jio deal unfold after kicking out the Chinese.
I am told by people in the know that this telecom fight is going to escalate to a number of industries. This is not a telecom fight per se. This is a fight for global domination with the US and China about to start a new Cold war. God save the world. Read more……..
Jio’s IEX Cable Is No More
There is a reason outsiders don’t understand the submarine cable industry at all. Take the example of Jio which just finished a $15 Billion raise but have been unable to build the IEX and IAX cables which have been on their drawing board for almost 4 years. And this is with Google and Facebook both sitting on the same side of the table with open checkbooks.
The reason IEX had to be scrapped is because it had Chinese partners and under the present circumstances, it was impossible for Jio to do that deal. So Jio has quietly changed its partners and has changed the name of the cable to BAR. My understanding is the supply contract for BAR has been signed with Subcom although the internal funding structure is still not finalized.
What outsiders also don’t understand is the ability of this industry to provide instant Karma. When Thief Telecom Egypt stole my Tagare cable and renamed it to AAE-1, the euphoria was unbelievable. They showed their 8-packs and forced carriers to invest $750 million in the stolen cable. But Karma was watching patiently.
As soon as the cable was built and ready for service, the Singapore regulators decided it was violating their regulations and decreed that no carrier could terminate their traffic in Singapore. And over the years, it has become almost impossible for AAE-1 to do business in Singapore. The rumors that I had something to do with it are totally unfounded. Just because I watch this video every day when I wake up?
Ah, but carriers can still drop traffic in Hong Kong right? That game has yet to be played out but with the recent political implosion in Hong Kong, that is also looking dire.
Karma has won. Karma’s message is loud and clear. Stop stealing from entrepreneurs. Are you listening Blue Raman?
If there is one takeaway, just because you have unlimited money, does not guarantee the deal will go through or do well over time. And just because one has no money, does not mean one cannot put a deal together. Welcome to the submarine cable industry. Read more……..
Defund The Submarine Cable Regulators
Even though I was never a big fan of the PLCN cable because of the technology used, I am now a huge supporter. And as far as I am concerned, it is unconscionable that after spending half a billion dollars in building the cable, the US regulators decided they were not going to support its Hong Kong landing.
This changes everything. Used to be, cable developers including carriers and entrepreneurs used to build a cable with the assumption that the landing license was just a formality. And that is now a rude shock to a number of cables that were supposed to land in Hong Kong. We are talking at least another billion dollars worth of investments in limbo.
First of all, I have a big problem when fiber is used as a political tool. In good times or even in bad times, reliable communications is always a positive thing. Even during war time. I cannot imagine any scenario when better communications is bad for the world.
So I have two major problems with this. One, it is now going to be impossible to launch a new cable unless all the permits and licenses are in place. Which by itself is a 2 year process depending on which country you are dealing with. And it was not such a big issue as it would take that long to build a cable. Now if this process becomes serial in nature, then a new submarine cable build is at least a 5 year process instead of 3. That is assuming all the money is in place. Which takes another 2 years if you are not Google. This is now a 7 year process to build a new cable. At a minimum, I would like the regulators of the world to pre-approve (or reject) a new submarine cable build within 6 months of application. To be clear, I am not advocating that all cables be given the green light. What I am against is why make that decision after the cable is already in the water and ready for operation? Why does it take the regulator 7 years to make the Go/No-go decision?
My second problem with the regulators is passing orders that are retroactive. Take the example of Iran. If someone built a cable during peace times and 5 years later, one cannot use that cable because the regime changed, who is going to compensate for the investment loss? Any cable investments approved prior to the fallout, must be grandfathered. After all, this is a 25-year investment.
In general, I am extremely upset with the submarine cable regulators of the world. Instead of being a positive force, they are dragging the world down based on their whims and fancies. So who is going to regulate the regulators? Read more……..
Rampant Discrimination In The Submarine Cable Business
As a general rule, I would accord a solid “F” to the telecom regulators of the world. The OTTs have made them a laughing stock and frankly speaking, no carrier is afraid of the regulators. Everyone is acting as they please assuming that the regulators are going to look the other way in most cases.
Let me give you an example. Let us say that you have capacity on a certain cable up to a cable landing station and you want to go to the nearest Equinix or equivalent data center. The backhaul and the cable landing station operator will quote you a price depending on who you are.
There is a special price for Google and Facebook. There is another price for the so-called Tier-2 OTTs like Amazon. Then there is a different price for friendly carriers and another price for competitors. The price for competitors is so high, it is designed so that they will never buy on that route. And of course, if you happen to be an enterprise customer, you are screwed anyway.
Google is going around the world selling monopolies on each of the cables they build. Price of entry is $50 million. Facebook is openly discriminating against Israel. Its the only country they have not invited to land the 2Africa cable when every country with a shoreline in Africa, Red Sea, Mediterranean and Southern Europe has been invited. This is common knowledge. Only the regulators are not aware of it — even though many of them read my blog.
I am so upset with the regulators, I think they should be disbanded. They are useless anyway. Let the free markets prevail. Let the cowboys take over. Why put up a facade of orderliness when none exists? Read more……..
Announcing The Namaste Cable
I had promised myself I would not get involved in any new submarine cable to India until the Indian Government gets it’s act together. But the frenzy of failed Indian real estate owners trying to convert their properties to the only silver lining in the business — data centers — is beyond imagination. There are so many new data centers popping up in Mumbai, pretty soon you will have one at every street corner.
So I cannot ignore India anymore. Secondly, even Jio — which has more money than God — has not been able to put together the IAX and IEX deals — because they cannot announce their Chinese partners at this time, has created a deep void. Not to mention the same problem afflicts the Sea-Me-We-6 cable which also is stuck in a limbo.
Truth be told, I have been sitting on this deal since the very early stages of the pandemic as I thought the big boys would get their act together due to the seriously increased demand for Internet bandwidth. Here is my Namaste cable.
This is a Ver 1.0. I have three more versions developed depending on how the deal develops. As my Premium members have known for almost a year now, Oman in my opinion, is the next Marseille — at least for the Middle East.
I continue to talk to the Government of India folks to bring changes to the industry and I am hopeful that I may be able to convince them soon enough.
There Goes The Banana Republic Again
I don’t know what it is about Egypt but it seems to always act against the grain. Take the latest act: Egyptian police using dating apps to go after and imprison LGBT+ people.
There are reports that Egyptian police are creating fake profiles on apps like Grindr that cater to the gay, lesbian, bi and trans community and arrest them. You can read the gory details of what they do with the arrested people here.
The carriers who do business with Telecom Egypt cannot be expected to do anything about this — they are scared to death of TE and with good reason — all of their Asia to Europe cables pass through Egypt. Nobody wants to take a risk of what would happen to their cables.
But what about Facebook? Which is a partner with Telecom Egypt in 2Africa and will end up paying Egypt hundreds of millions of dollars for that cable alone? Does Facebook have no responsibility to speak up against this kind of behavior?
And what about Google? Google has been really smart in not relying on Egypt for the most part and in fact, now is engaged in a Egypt-bypass cable called Blue Raman. Surely Google should have something to say about this?
Atmanirbhar Bharat For The Telecom Industry
Globalization as we knew it in 2019 is dead and a new world order is in the making. Especially given the situation with Tik Tok where of all countries, the US will ban it if it does not sell its US operations to an American company.
You can call it coincidence or serendipity, but this is precisely the same time that Prime Minister Modi announced the Atmanirbhar Bharat project. What is it? Basically, it is India’s game plan to be self reliant in every aspect so that it can deal with such globalization issues.
Which brings us to a What If analysis. What If the Democrats win the US elections and over Kashmir or the CAA issues, US and India have a fallout? Is it possible that the US could direct the OTTs to no longer provide their services to Indian citizens unless Kashmir is declared an independent country?
Of course, this scenario is too far fetched and will not happen but what I am describing is the futuristic thinking behind Atmanirbhar Bharat and the government’s plan to make India self reliant under all conditions. Also, not too long ago, the idea that the richest country in the world would have the maximum deaths in a pandemic was too far fetched. And also what was too far fetched was the idea that you could not walk in to a bank unless you had a mask on.
So I have analyzed the telecom and Internet industries from this perspective and have laid out what needs to be done in India taking in to account potential conflicts that could come up.
Of course, all of that is in the Premium version but let me give a freebie. The first order of business is for India to have its own cable maintenance ships so the cables can be repaired without relying on ships from the Middle East and Chinese-dominated Singapore. I know at least one company is working on this deal but there is a big difference between planning and execution. Read more……..
RCom’s Mumbai Cable Landing Station Is In Play
The banks holding the debt on RCom have started selling off the assets. One subsidiary of RCom which is on the block is the Mumbai cable landing station in Versova where many of the submarine cables land in Mumbai.
I have been to the RCom property and it is a fine bunglow right on the oceanfront with connectivity to other cable landing stations and data centers. And it is almost impossible to get land on that strip. I know I have tried.
While there are no carrier-neutral cable landing stations in India and it certainly is a major problem, that is the smallest issue with landing cables in India. Unless the government changes its mindset and decides to encourage cables by creating a single window of clearance for all submarine-related regulatory and political issues, nothing is going to change in India.
Currently the RCom CLS has only one customer — GCX and unless the CLS is bought by a completely carrier-neutral entity, the chances of getting additional customers is zero as they have seen in the last 20 years. GCX has only one cable — Falcon in that CLS.
Secondly, smart cable operators have figured out ways to completely bypass the CLS and go directly to their end destination. So Blue Raman will have its SLTE in GPX (soon to be Equinix). That is the main reason Equinix jumped at the opportunity of buying GPX and paid them a handsome premium.
Finally, I was told the only space left in RCom’s CLS is on the second floor which could house 2 or 3 cables at most. What kind of revenues can you expect even if one were to assume that the CLS would be sold out? How much money would cable owners be willing to pay just to house the PFE? I could be completely wrong but I doubt any carrier-neutral entity would end up owning the property. I think someone like Jio or Bharti could pick it up for strategic reasons if the price was right. No prizes to guess what would be the right price for Jio to pick it up. Read more……..
Facebook Must Wake Up And Smell the Coffee
With all the changes going on in the Middle East, there is absolutely no reason Facebook should keep on discriminating against Israel. Here is my writeup — Facebook’s Apartheid of Israel in 2Africa.
As can be clearly seen from the map, 2Africa is landing and/or has Branching Units for future landings in every coastal country of Africa, the Mediterranean Sea and Southern Europe — except Israel. So while the deal was being negotiated, there was tremendous political pressure from Egypt for 2Africa not to land in Israel because Egypt’s biggest nightmare is someone opening up the Israel corridor and them losing their ransom money worth hundreds of millions of dollars every year.
But now the situation is completely different. Since the announcement of 2Africa, Blue Raman has announced it will go through Israel and very recently, UAE and Bahrain signed a peace accord with Israel. Pretty soon, almost all of the Sunni Muslim countries will have done the same.
And because of the Covid-19 pandemic, the suppliers have been slow on manufacturing the cable. So there is still an opportunity for Facebook to squeeze in a branch in the Red Sea to Elat. Or at a minimum, it can add a branching unit for a potential future branch.
Facebook not grabbing this unique opportunity will be disgraceful and will have proven my point about its discriminatory actions against Israel. Now is the time for Facebook to redeem itself. Unless of course, Facebook is afraid of Thief Telecom Egypt. In which case, it should say so publicly.
Dawn Of A New Middle East For Submarine Cables
Whether or not you like or intensely hate President Donald Trump, the newly signed UAE, Bahrain-Israel accord is nothing but amazing and a once-in-a-lifetime event. While I certainly won’t go in to the politics of the region, I do want to comment on the implications of this for the submarine cable industry.
In my humble opinion, this is the beginning of a much larger peace treaty between Israel and the Sunni Muslim world which also includes the largest country in the region, Saudi Arabia. In addition, Oman chose to be friendly with Israel, accord or no accord with the launch of the Blue Raman cable.
This changes everything especially for the submarine cable industry which has been held for ransom by Thief Telecom Egypt for 3 decades. And just think of the deep irony of this situation. All of the Muslim countries were opposed to building cables through Israel because of religion and put all their eggs in one basket, Egypt — another Muslim country — which sucked the last drop of blood from their own Muslim brothers when they wanted to cross the country.
The timing cannot be better for a plethora of new cables wanting to cross Israel for their Europe-Asia traffic fix. Bezeq is building a new 100 plus-fiber count cable connecting Tel Aviv to the south of the country in anticipation of the anticipated avalanche of new cables.
Any cable that goes through Egypt now has to have retarded management teams — and I am sure there are a couple that I know where they like business as usual. There is a fear that Egypt will cut their existing cables or not maintain them properly if they were to invest in a cable through Israel. But with the new politics emerging, Egypt would not dare.
Blue Raman has selected Bezeq’s new cross-country cable and they have also selected Med Nautilus’ existing cable landing station in Tel Aviv which also hosts the Lev cable and the MedNautilus submarine cables. In addition to submarine cables, there is also a huge spurt of activity in the buildout of new data centers in anticipation of Israel becoming the new Middle East hub. The land grab has begun. Read more……..
OTTs Just Realized Singapore Is Single Point Of Failure
Building new data centers and submarine cables in Hong Kong and Singapore was the easy way out. Nobody would question the decision and you didn’t have to take on hard problems of asking the What If questions. But 2020 has unraveled the reality of global politics and forced the OTTs to finally admit they were complacent and not really thinking through the hard issues.
It is of course easy to criticize after the fact since hindsight is 20/20 but seriously, it doesn’t take a rocket scientist to figure out what was going to happen especially after the US China relations went in to a tailspin after China accused the US OTTs of instigating and fueling the Hong Kong protests.
But few people could predict that SingTel also shared the same views and started retaliating against the US OTTs by either kicking them out of the cables they controlled or not inviting them to the party which in my mind is the same thing.
Now the US OTTs are running around like headless chicken as two of their three Asian data center and submarine cable hubs are in deep trouble. And that means not only billions of invested dollars are at stake but they have no idea what to do and are scrambling around looking for alternatives. And the internal blame game has already started in each of these OTTs.
It was bad enough that PLCN’s Hong Kong connection was taken out. But to take out both Hong Kong and Singapore from BtoBE shows a 180 degree turn in their thinking. In addition, the SING cable had signed up with SIngTel and Google was backing the cable as an anchor tenant. But now, Google no longer wants SING to land in Singapore. The new destinations? Thailand and Indonesia. The interesting thing is these destinations are not additions but in lieu of Singapore.
Each OTT is now trying to find its new hub destination. They should have done that 5 years ago. They have lost the battle in Asia. While they keep on showing their 8-packs in the trans-Atlantic space, they are big fat lazy slobs in Asia and in the trans-Pacific arena. Read more……..
Hong Kong Is Imploding
For the past year, I have been regularly writing about all the problems the OTTs are having in Asia. While that is still the case, the biggest headache for the OTTs is Hong Kong where they have invested billions of dollars in data center investments and consequently in the cables connecting Hong Kong to the US and its other Asian hub countries, Japan and Singapore.
Yesterday, Facebook withdrew its application at the FCC to pursue the Bay to Bay Express Cable System (BtoBE) months after it withdrew its application for PLCN to land in Hong Kong. Instead, Facebook, Amazon and China Mobile want to build a new cable called CAP-1 which will have the same configuration as BtoBE but will be a direct cable connecting the US and Philippines.
I believe this is just the beginning of a complete implosion of cables planning to land in Hong Kong. The next in line to face reality are the Hong Kong Americas cable (HKA) and the Hong Kong-Guam (HKG) cable system — both of them are seeking the nod from Team Telecom and the FCC.
The problem is it leaves only Singapore as the last bastion of the OTTs in that part of the world other than Japan. Which is a huge risk as SingTel is increasingly gravitating towards China.
While Facebook is putting all its eggs in the Philippines basket with both BtoBE and PLCN terminating there, taking on PLDT and other Filipino carriers is a political nightmare with scores of dead bodies over the years and in my opinion, a disaster waiting to happen. Unless of course, Facebook buys its way through by investing a few billion dollars in a Filipino carrier like it did in India. Read more……..
Bangladesh Needs To Grow Up
It is my understanding that Bangladesh had an opportunity to join NTT’s MIST cable system shown below but they declined since they are already part of the Sea-Me-We-6 consortium and MIST is seen as a competitor to that cable.
For years, I have advised Bangladesh that they have been taken for a ride by SingTel and they really need to break their cycle of always being conned in to paying the highest amount of money for the lowest amount of bandwidth on every Sea-Me-We cable until now.
But they are still a great believer in the idiom You cannot get fired for buying IBM which ironically makes no sense in today’s world. Bangladesh will have to pay $70 million in total to join Sea-Me-We-6 and get $30 million worth of bandwidth whereas SingTel gets $30 million of bandwidth for $30 million.
So the poorest country on the Sea-Me-We-6 map will get bandwidth for the highest price whereas the richest countries such as Singapore, India and France get the lowest price.
It would have been so easy to go to Bangladesh from Myanmar and pay roughly 50%-60% of what it would cost them to join Sea-Me-We-6. Why bother going to Europe when you can get all your OTT fix from Singapore and Hong Kong? Read more……..
MIST Cable System Has Amazing Configuration
NTT’s MIST cable system contract was awarded to NEC and the construction has finally started. This cable has been at least 3-5 years in the planning stages.
I knew about the rest of the landing points except Thailand. In my opinion, that is a masterstroke of genius by NTT. This creates a way for the first time ever for Indian traffic to go directly to the US through Satun/Songkhla and onward to Hong Kong via AAE-1 and then to the US. Kudos to NTT for adding that landing point. I am very much familiar with that route as I had negotiated both those landing stations for Flag Telecom.
This is an expensive cable about $500 million worth but NTT’s game plan is very unique. Basically it is connecting all the data centers NTT owns in India, Myanmar, Singapore and Malaysia. While its data center in Thailand is in Bangkok, if they play it right, they will build a new datacenter in Satun.
NTT won’t be making too much money from this cable. Rather this is an incentive for its customers to pick up space in its data centers which is a much better business compared to the submarine cable business in any case.
Google is the anchor tenant on this cable and they were able to get the cable at cost but in return had to pick up space in NTT’s data centers. This is a great addition to India’s much needed submarine cable industry and will also be very profitable for NTT in the long run. Read more……..
Don’t Call Us, We Will Call You
A historic call was made some time ago from the topmost officials of Etisalat to OmanTel requesting a fiber pair on the Blue Raman cable. And that is exactly what OmanTel told Etisalat “Don’t call us. We will call you.”
Its not OmanTel’s fault. The fault lies with Google who has set up a 3-party monopoly structure in place so nobody can make a decision unless Google agrees. So out of the 16 fiber pairs, 8 fiber pairs will go to Google, OmanTel and Telecom Italia Sparkle. The remaining 8 fiber pairs will be sold at 100% margin by this consortium.
So in effect, Google will get up to 4 fiber pairs on Blue Raman for free. This has been their modus operandi in all new submarine cable builds starting with the Equiano cable. They announce the cable, then look for suckers to pay for the cable and Google ends up with free fiber pairs.
And even though Google clearly borrowed from my India Direct cable design (like 98% of the design), they refused to give me one fiber pair at cost. In any case, now that the dam has broken and the Arab countries realized that their own Muslim brother Egypt was screwing them in the guise of religion, a whole lot of new cables will be passing through Israel.
The irony is that Google now wants to screw everyone by taking Egypt’s place in Israel. My recommendation is not to give the any markup to Google under any situation. There are a lot of cables coming and opportunities will be plenty for everyone. I would rather give a small markup to a carrier-neutral cable like Centurion than let Google get away with free fibers so they can screw you even more.
If Google tries to sell you Blue Raman at inflated prices, you need to tell them “Don’t call us, we will call you.” The industry clearly does not need another Telecom Egypt. It took 30 years to get rid of one and my work is still not done yet. Read more……..
Egypt: Game Over
Thief Telecom Egypt played a very strategic and successful game in the submarine cable industry for the last 3 decades. Knowing fully well that the Muslim countries were all prohibited from doing business with Israel, Egypt realized they were the only game in town for all Asia to Europe traffic transiting the Middle East. Ironically, they cheated their own Muslim brothers for decades knowing fully well they had no choice by making the 200 Km Egypt transit price exorbitantly expensive — sometimes even more expensive than the rest of the cable from Singapore to Marseille.
The Arab countries — some of the smartest businessmen in the world — have had enough of Egypt’s ransom tactics. And as the political winds shift with UAE announcing normal diplomatic relationship with Israel, going through Israel on a fiber optic cable is no longer taboo in the Muslim world.
The main weapon Egypt had to prevent cables from going to Israel was they own 50% of the water close to Elat — the small coast Israel owns in the Coast of Aqaba. And the remaining 50% is owned by Saudi Arabia. As long as Saudi Arabia was on their side, nobody could land a cable directly in Elat.
But of course, STC from Saudi Arabia was playing a double game. On one hand, they were preventing other cables to transit their waters and on the other hand, they were bootlegging illegal traffic through Israel and making a killing.
I predict that if Donald Trump wins the election this November (which is a Big IF), there will be at least a dozen cables going through Israel. Of course, Egypt realizes their game is up and this is what they are doing to counter the big wave. Read more……..
Now UAE Wants To Build A Cable To Europe Through Israel
The ink is not dry yet on the agreement between UAE and Israel agreeing to full normal relations between the two countries when Etisalat has started looking at the possibility of building a cable linking the two countries connecting to Europe. Oman is also expected to make a similar announcement and OmanTel was obviously given advance notification as it entered in to an agreement with Google to build the blue Raman cable earlier this year connecting India to Europe via Oman and Marseille.
While Etisalat would love to be part of the Blue Raman cable, that is not in the cards as OmanTel and Etisalat don’t see eye to eye and are in a stiff competition to be the Biggest hub in the Middle East. And as of right now, OmanTel is winning and while UAE had the lead, Oman is now clearly the Marseille of the Middle East.
Etisalat might still be able to get a fiber pair in the open market from Telecom Italia Sparkle at 100% markup if it is available. According to my sources, the cable is sold out at that markup with Google playing hardball with its usual monopolistic attitude. Blue Raman is moving at a rapid pace and recently chose Bezeq to build a domestic loop within Israel to cross the country.
A Perfect Startup
Nick Tanzi is a down to earth unassuming entrepreneur. An American, he decided to raise money in New York and open his first data center in Mumbai 7 years ago in 2013. This was an interesting time in India where every carrier had its own data center subsidiary and there seemed to be way too much competition for too little business.
When I met Tanzi, he was extremely clear about his vision. While he knew that the big boys would trample him if he played in their turf, he took a completely different path. Having raised about $20 million for the India operations, he decided to build India’s first carrier-neutral data center.
The timing couldn’t have been better. The carriers would rope in a customer in their submarine cables and force it to use their data centers at exorbitant prices. They also would force their customers to use their last mile fiber which typically was and in some cases is still more expensive than the submarine cable bandwidth.
With complete freedom to choose their fiber and backhaul providers, customers just piled on. GPX’s first big break came from Google in 2015 and after that there was no looking back. 12 telcos, 130 ISP’s, 3 Internet exchanges, 8 cloud service providers, majority of the CDN’s and all of the OTT’s came rushing in to GPX. And the network effect took hold. Last year, GPX opened another 60,000 sf facility in Mumbai, twice the size of the first one.
Two months ago, one of the OTTs told me that they are worried about GPX as it has now become a single point of failure since everyone is there and they need to look to diversity away from GPX. It was that moment I knew that GPX had played out the game as far as they could and it was time to go to the next level.
And sure enough, Equinix came in and picked up GPX for $161 million. The irony is that it took an American to come in and create the perfect data center startup in India when the rest of the carrier-owned data centers were sold, closed down or just went out of business.
The Needless Brouhaha Over The Andaman Cable
A couple of days ago, Indian Prime Minister Narendra Modi inaugurated a submarine cable linking Chennai to Port Blair in the Andaman and Nicobar Islands. And of course, this has created a hype of untold proportions in India Now don’t get me wrong. Was this cable required? Obviously yes. It should have been in place 10 years ago.
The problem is when governments get involved in these projects, they generally do a pretty bad job. For one, the project has been in the pipeline for at least 7 years and possibly longer. When it was first proposed, I met the top officials running the project and they were excited that they would be overseeing a billion dollar cable.
Really? For 2,300 Km of fiber? I didn’t want to burst their bubble but did tell them to check prices from multiple sources. In this day and age, this is a $50 million project at best. The official sources say the government spent $175 million on it. But that’s not even the point.
If the government of India had just focused on making it easy for entrepreneurs and carriers to build submarine cables, this cable would have been built by private capital years ago without the government having to fork out any money through its coffers.
The situation is so bad in terms of regulations that no vendor wants to build cables to India if they can help it. The only reason NEC did the job was because they made a killing on it and more importantly hoping to get more domestic non-submarine cable business from the government.
India is bleeding in the submarine cable industry because of the incompetence of the government. Neighboring countries like Oman, Djibouti, UAE, Singapore and Malaysia are leeching the country from money that legitimately belongs to India. Stupidity can still be cured but there is no vaccine for incompetence. Read more……..
The US China Telecom War Is Getting Ugly
Even among criminals, there is an unwritten code no matter how ugly things get — that they will not snitch against each other to the authorities. Similarly, there is an unwritten code between governments and business — that no matter how bad things get, prior deals are almost always grandfathered. And that sets the trust factor for businesses to deal with each country.
I now understand that the US is about to break this cardinal rule in the submarine cable industry. PCCW is the proud owner of a full fiber pair on the Jupiter cable which will connect the US to Japan and Philippines when it goes live later this year. Other owners are Amazon, Facebook, NTT, PLDT and Softbank.
Google Launches Yet One More Monopoly Cable
One thing about Google, they are totally committed to going it alone in the submarine cable industry. Google announced the Grace Hopper cable, named after the famous computer scientist. This is a trans-Atlantic cable going from the US to U.K. and Spain.
So this is interesting from a number of perspectives. As TAT-14’s retirement is around the corner and a number of other trans-Atlantic cables like TGN-Atlantic and Flag-Atlantic-1 are nearing their end-of-life, the OTTs are looking to build new cables to the U.K.
In addition to Google, Facebook is also in the process of putting together a similar cable deal starting at their new cable landing station they are building near Boston. That cable will also go to the U.K. and probably also to Portugal or Spain.
My beef with Google is that they do not allow any carrier or OTT in to the deal. This is yet another 16 fiber pair cable with half a Pbps capacity. Google is falling in the same trap that carriers found themselves trying to build monopolies around the world and ultimately failed. Google’s attempt to create a huge moat around itself so that no start-up or smaller competitor can ever dream of replicating its network is a fallacy. Time will tell they have misjudged the industry.
Another interesting thing going on is that Bilbao is certainly gaining traction as a mini hub in Southern Europe because of its proximity to Madrid, Paris and Marseille, although the connections to those places are iffy at best with some portion of the landline cables going on top of electricity poles. I am surprised that they did not land the cable in Portugal to connect with Equiano directly. Facebook’s cable, on the other hand will have a direct connection to 2Africa.
The cost of the cable will be under $200 million, a fraction of Google’s annual spend on global infrastructure. While this is certainly a good addition to the trans-Atlantic infrastructure, I am quite disappointed with their strategy of going it alone. I am also deeply disappointed with the US and EU regulators and Team Telecom for looking the other way as it certainly is not in the best interests of the industry. Read more……..
After 2Africa Announcement, African Cables On The Block
The writing was on the wall. And this comes as no big surprise. All of the African cables pre-2Africa and Equiano will start coming on the block for a fire sale. Already, Seacom announced its sale to The Aga Khan Fund For Economic Development (Akfed).
There is no way any regional African cable can compete with Google and Facebook’s initiatives. With almost half a Pbps cable each staring at every country when no country has more than 1 Tbps traffic requirement, there is just no way anyone can compete with the OTTs. Any country that dared not join so far, has a Branching Unit staring at them like a loaded gun in case they ever try to build their own cable.
In effect, Africa has now been pretty much taken over by non-African outsiders with the intent of ruling the continent just like The East India Company took over India a few centuries ago. The local carriers in every African country are at the mercy of the OTTs and their few select buddies who will rule the continent.
And of course, if you are deep pocketed, you can buy a monopoly for any country in Africa you want from Google on the Equiano cable for a paltry sum of $50 million. It is really a shame that Google has stooped to such a low level selling monopolies in countries that desperately need competition.
Much Ado About Nothing: Cable Transoceánico
So this week, the Internet is all excited about how the Chilean government kicked out the Chinese from their proposed submarine cable to Asia — Cable Transoceánico — and instead decided to go with the Japanese solution which is supposedly pro-USA since now the cable will go to Australia and New Zealand who are of course US allies. Here is the map.
Remember I had written about this cable a while ago when the Chilean government had awarded a $3 million contract for a feasibility study of the cable — about 10 times the price for an average cable feasibility study. So after spending so much money and after receiving professional advice, that study went in to a garbage can and politics took over.
I had also mentioned in my previous blog that both these routes are significantly flawed in their own ways. For example, do you seriously think the Japanese will use this route to go to Chile given the atrocious latencies resulting from a 20,000 Km ride? Building a cable is no big deal. Any idiot with money can build one. But the main issue is whether it enhances the global network and solves the problems one is facing. I can assure you this one satisfies neither of the two.
In general, I am a huge proponent of building new submarine cables. But sometimes, someone has to call out the stupidity in the industry. Here is what I would do if I was building this cable. Read more……..
Aging US Networks Get A Bandaid
This quarter, a new company, Confluence Networks will get funded which will connect New Jersey, Virginia Beach, Myrtle Beach (SC), Jacksonville (FL) and Miami with a 16 fiber pair submarine cable called Confluence-1. This cable will connect most of the major submarine cable stations on the East Coast of the United States.
This is a major development in the submarine cable industry and in particular in the US where landline fiber traditionally has been available in plenty. Also with domestic cables being able to carry 100, 400 or even 1,000 fiber pairs in some cases, there was absolutely no way a submarine cable could compete with just 16 fiber pairs or less.
But there are multiple forces at work, centrally revolving around aging US networks and rising costs of digging the roads ($250,000 per mile), monopoly of dark fiber by a couple of companies, no route diversity among carriers and reliability of cables in dense metro areas which makes a solid case for the rise of the submarine cable competition. It also helps that the cost of laying submarine cable has reduced by over 50% and the number of fiber pairs are steadily increasing.
A perfect case for building submarine cable diverse routes is in India where then VSNL (now Tata Communications) had a grand plan called Jalmala (ocean necklace) which would connect all major cities along the vast coast of the country with fiber. Tata, of course gave up the plan but Jio has been sitting on the plan for a couple of years and I believe now that they are flush with money, will likely revive the project.
Google Buys Jio’s Friendship for $4.5 Billion
Sundar Pichai will announce today at Jio’s Annual General Meeting that Google will be investing $4.5 Billion in Jio Platforms — joining pretty much the who’s who of Silicon Valley and the tech world including Intel Capital, Qualcomm and of course Facebook who was the first to bite.
What is going on in India? Tech companies are pouring money like there is no tomorrow. In addition to the $4.5 Billion investment in Jio, Google will be investing an additional $5.5 Billion over the next few years in India on its own. With 9 out of 10 users using Android, India is by far the largest market for Google in the entire world.
And that is precisely why there was a massive rift between Google and Jio since November of 2019 when Jio decided to fork Android in an attempt to deprive revenues that would normally go to Google. Since that time, intense heated fights were going on between the two companies who finally realized they needed each other as friends rather than enemies.
The real big news is that all of the around $15 Billion investments announced so far have gone only to Jio and not to Bharti Airtel or Idea Vodafone. Which means that Jio will be the most powerful telecom company in India and possibly the world when it does an IPO at some point in the future when it will have a valuation in excess of $100 Billion.
Both Google and Facebook will easily recover their investment and a whole lot more when Jio adds another 300-400 million users over the next 5 years and their market cap will increase 10 times more than their investment in Jio alone.
Why Did The OTTs Fail Miserably In Asia In The Submarine Cable Industry?
The OTTs made two major mistakes. First, they hired people in their submarine group exclusively from the carrier industry — people whose DNA is to build monopolies and crush everyone else including their own kind. Secondly, they gave them blank checks and based their incentives on how fast they could spend the money. That combination turned out to be their undoing in Asia.
Unlike in other parts of the world like Europe where they could ram through the regulations and pay off carriers like Orange to look the other way, Asia is very different. Of course, money plays a role in Asia. But more than money, it’s all about relationships and trust. And the OTTs have failed spectacularly in both these areas. The situation is so bad that most Asian carriers trust the Chinese government more than they trust Facebook and Google as can be seen in their tie up in the ADC (Asia Direct) cable where both Facebook and Google were not invited to participate.
What is worse is that the Asian carriers are now getting united in their opposition to Facebook and Google led by the granddaddy of the business is Asia — SingTel. This is really troubling because with Hong Kong’s future now being extremely uncertain, the OTTs cannot have an adversary in Singapore — the only Western friendly bastion left in Asia other than Japan.
The Asian carriers have long memories. They remember how AT&T treated them a couple decades ago and with the same or similar people leading the charge, they know it is going to be no different.
In my opinion, the OTT’s submarine cable strategy is a complete mess. Yes of course, they can continue to throw money and buy off carriers like Jio (public deal) and Bharti Airtel (secret deal), but a billion here and a billion there will soon add up. More importantly, the money is not building long-lasting relationships and trust. The deals are strictly transactional.
The Runaway Success Of RTI Baffles The OTTs
One would think that the most successful startups in the entire world — Google and Facebook would be at the forefront of encouraging entrepreneurs. That is exactly the opposite of what these two companies have done in the submarine cable space — systematically planning and destroying the startup space completely.
But as is said in Jurassic Park, life always finds a way and so has one amazing entrepreneur — Russ Matulich — a true rags to riches story that keeps on baffling the OTTs in Asia where they have faced nothing but rejection and have been a colossal failure.
About 5 years ago when Google and Facebook realized they could control the submarine cables of the world with sheer money power, the first thing they did was to completely kill the wholesale market so that nobody other than them and their select friends could ever enter the industry. And the first order of business was to kill the entrepreneurs. They did that by instituting an Investment Committee which had to approve every deal and crafted the rules so that it was impossible for them to approve any investment in a startup submarine cable.
That along with the stupid infrastructure investors who think every deal in the world is a toll booth deal — and demanded a minimum of 50% pre-sales with soft circling of 100% of the cable at market prices killed the entrepreneurs completely. And if you wanted pre-sales, guess who you would have to approach? The OTTs. The circle was complete and the OTTs won. the OTTs started treating entrepreneurs like beggars and laughed at them at every opportunity.
Except they should have known the power of entrepreneurship. Along came Russ Matulich and changed the industry forever. First of all, he did not approach the OTTs for pre-sales. In fact, his pre-condition of talking to the infrastructure funds was that he would have zero pre-sales. And he made pitches to and got rejected by over 250 funds.
And then he found 2 Asian Billionaires who believed in him. And he built his first cable connecting Guam to Asia and the US a couple of years ago and there was nothing the OTTs could do but to watch. RTI now has half a dozen cables in various stages of completion and he just announced the RFS of the JGA North cable connecting Japan to Guam and Australia.
Today the situation is that Russ is the only trusted US partner of the Chinese carriers who despise the OTTs because of their empire-building and exclusionary strategies. The Asian carriers trust Russ because he is one of their reliable vendors and Team Telecom has approved every deal Russ brought to them with zero delays. Everyone knows that he has no other ulterior motives or designs other than to sell bandwidth to everyone.
And the OTTs are lining up to buy from Russ — at market prices — who is careful not to sell them too much bandwidth or else he knows what happens when they get too much control. Russ now has $1.5 Billion worth of cables in the ocean. Entrepreneurship has found a way — in spite of Facebook and Google. Read more……..
India Bans 59 Chinese Apps Including TikTok
In a sudden and surprise development, India banned 59 Chinese Apps. This is the list of the banned apps. The list is mostly all of the communications and gaming apps coming from China. So far, Alibaba has been spared which means that the Indian government is not closing down trade between the two countries
Part of the reason I am sure is the on-going war between India and China where 20 Indian soldiers recently died. It is unbelievable that China started the war right in the middle of the pandemic when India is already suffering.
From a telecom and submarine cable perspective, it means that there is no way Jio can take money from the Chinese carriers for investment in to IEX and IAX. So either Jio has to find a $100 million replacement partner very quickly or make peace with Google and let them in.
It also means that the US OTT traffic will surge as Indians will have no choice but to go back to the trusted brands. What happens to the Indian traffic passing through Hong Kong?
This also brings up the reverse scenario. Hypothetically speaking, what if there is a war between the US and Country X? And the US decides that none of its OTTs can serve Country X. Can that happen? Why not? So does every country now have to worry about building its own equivalent apps like WhatsApp and YouTube for national security purposes?
The Start Of The Smart Submarine Cable Revolution
It is said that we know more about space than we know about our oceans. Just imagine how the world would have been different if all the 500-odd submarine cables existing today were equipped with sensors to better understand the seabed conditions resulting in better prediction of weather, seismology, volcanology and marine ecology.
So while it took the sensor technology 3 decades to catch up, the good news is we are there today. Ellalink, the submarine cable connecting Europe with Latin America, announced today that it will equip its branch to Madeira (probably around a couple hundred kilometers) with the smart sensor technology which would help its anchor tenant, GEANT get access to the data for research purposes.
While this is a very small initiative, I believe this is the beginning of a trend which will become commonplace over the next 5 years. And I am sure the sensors will also become more creative possibly adding cameras over time so we can also hear, see and feel what is going on at the bottom of the oceans.
Of course, now we are trampling on the domain of the spooks so it will become harder to get permits for these cables. I am just excited about how the big data guys are going to have a field day trying to decipher the massive streams of data coming in.
There is of course, nobody better in the entire world than the OTTs in making sense of all of that data. And that is why Facebook is seriously thinking of venturing in the smart cable space in its next trans-Atlantic cable deal connecting the US to the 2Africa cable. I believe it has more to do with giving a boost to its Education portal and thus the initiative to rope in the research institutes.
The technology is not there yet. And people will probably start implementing it on smaller systems first before it is available for the trans-Atlantic market. But I think there could be small steps in that direction starting to be implemented soon. Read more……..
Intense Submarine Cable Rivalry Between Facebook And Google
When Facebook approached Google a couple of months ago requesting to join the Blue Raman cable, Google just laughed at them. So I don’t feel so bad that Google won’t let me in either.
There are many instances when both of them have been really upset at each other. At the beginning of the Simba cable which has been renamed as 2Africa, Google and Facebook had signed an agreement in London to work with each other on building a joint cable in the 2016/2017 timeframe. Both of them worked along with a bunch of carrier partners for almost a year. And one day, Google just announced the Equiano cable without informing Facebook and left the Simba consortium. That really upset the folks at Facebook.
It has gotten to a point where if one is present, the other either is not invited or walks away anyway. The IEX cable for example just has Facebook but not Google. The IAX cable was planned much before IEX and both of them had initially signed up with Jio. I won’t be surprised at all if Google is thrown out of that consortium since Facebook now has a lot of influence on Jio having given it billions of dollars recently. In any case, Jio is either going to demand a huge premium from Google or will want access to the Blue Raman cable at cost. Google is not going to get a free ride on IAX. The relationship between Google and Jio is antagonistic at best.
Facebook is also in the process of putting together a new trans-Atlantic cable and as far as I know, Google is once again not invited. That cable is an interesting deal where Facebook is planning to give one fiber pair free to a university consortium for research and will be the first smart cable with sensors to cross the Atlantic. This cable will connect to the 2Africa cable either in the U.K. or in Portugal, which incidentally also hosts the Equiano cable. Google is going to be really pissed not to be part of this game-changing deal.
The main reason for the rivalry is that both of them see a future where many of their products will overlap such as in Fintech, Marketplace, Shops, Video, Education and so on and who knows, maybe even Search. As Facebook’s core product (social) starts seeing a significant downward trend and is certainly a non-starter with the millennials, it will increasingly have to depend on other verticals which will compete with Google.
Now Let’s Blame The Russians
We live in a strange world where you cannot trust the popular media and have to become your own analyst even to understand the local news. New York Times lost me about 5 years ago and I just don’t trust anything they say or always wonder what the ulterior motive is.
Take the example of this article in NY Times. On the face of it, it is a very compelling story. A Russian mother submarine goes out looking for submarine cables to tap. Then it releases the baby submarine from its belly that can house up to 80 engineers and scientists. And that baby submarine has the power to tap any submarine cable in the world. And of course, there is a tragedy to this story. On one such clandestine operation, the baby submarine catches fire and 14 of them are dead. And instead of showing sympathy towards the dead, the New York Times would rather depict them as the Big Bad Russians.
So I became curious and started digging deep in to the story. And talked to a few people who might know about these things. And the story makes no sense. So let’s assume all of this is true. And let’s assume the baby submarine can tap in to a submarine cable. Depending on which one, it can easily carry 320 Gigabit per second of traffic. That is per second.
Do they store all of that data on the submarine? Is the submarine also a data center? What’s the capacity of the data center? For how long do they connect to the cable? Or do they divert it all to Moscow without anybody in the entire world finding out about it? How long does the connection last for? Or do they just point their Vodka bottles in the direction of Moscow and the traffic magically is transported there?
If any smart person wanted to tap a submarine cable, would he tap one off the coast of Norway where there is no traffic or would he tap a real submarine cable like TE North which carries traffic that could affect 25% of the world’s population?
The story makes no sense. There are no details. Just hubris. NewYork Times thinks everyone in the world is stupid except them and people will believe anything that is printed.
The real story is how governments of each country in the world (including the US) are tapping in to the traffic that comes on shore in the cable landing stations and how they snoop on their own citizens and of course the bad guys. That is where the real snooping takes place. Let me give you a real example of how that happens every day. Read more……..
The India China War Puts A Damper On the IAX And IEX Cables
After raising billions of dollars in Jio Platforms from Facebook and a bunch of private equity firms, Jio is almost ready to announce the IAX (India-Singapore) and the IEX (India-Europe) cables. The announcement is expected anytime now.
Except there is a problem. There is a real war going on between India and China on its Northern border in Ladakh. And Indian soldiers are dying as we speak. Already more than 20 have been killed.
China Mobile has signed up with both the IAX and IEX cables and has agreed to put in more than 20% of the capital for both cables which together will cost around $700 million. The minimum amount Jio is expecting them to cough up is $100 million.
There is a massive anti-China sentiment in India with millions of people deleting their Tik Tok accounts and calling for everyone to stop buying Chinese goods.
It is impossible for Jio to announce them as a partner in the cable at this point of time. If they do, they will lose all the public goodwill they have in India. So what will happen now? Read more……..
What Goes Around Comes Around
After I wrote a note on how Facebook and Google have been denied participation in the Sea-Me-We-6 and ADC cables, I received a lot of emails displaying anger and intense hatred of the Chinese government and the Asian carriers. To these people I say, don’t shed any tears for the US OTTs. They got what they deserve. Let me explain.
When Facebook and Google initiate a new cable, they do not invite all the carriers in the world to participate. In fact, in the case of Google, they invite not a single carrier. Over time as the cable develops, they will invite one carrier per country to pay a massive premium so that carrier gets a monopoly for that cable in each country it wants to sign up for.
Forget about carriers. They don’t even invite each other or other OTTs like Amazon or Microsoft to the table. The reason is they want the best infrastructure for themselves and hope their competitors end up getting terrible infrastructure. It reminds me of a distant relative of mine who wanted the best for his children and at the same time wanted all other relatives’ children to fail miserably. And that is why I have been a huge critic of this industry for more than a decade.
The OTTs are no different than the carriers (where the OTTs got most of their infrastructure employees from). Take the example of India. Each of the 4 carriers have their own cables, their own cable landing stations and do not even like to share traffic with each other unless forced through regulations.
I have my own beef with Google regarding the Blue Raman cable. While clearly borrowing from the design I published 3 years ago, Google did not even have the humility to invite me to participate in the cable as one of the partners. Of course, multiple emails proving that they directly used my design and that I am willing to pay in full for a fiber pair, have gone unanswered. It’s not like I am asking anything for free. I am happy to pay for the fiber pair.
I believe that I have been working on an Israel cable solution for 10 years now and a trillion dollar behemoth like Google should show some empathy and understanding. No wonder hardly any entrepreneurs remain in the industry. And of course, I will stop publishing any new ideas going forward.
This is the design I had published in 2017. The difference between this and Blue Raman is same as the difference between a 2019 Camry and a 2020 Camry. The grill looks different, the tail pipe is bending downwards. The lights are halogen and curved. Other than that, it is the same thing. In this case, the European destination is Italy and the cable through Egypt is called Majan. And the entry in to the Red Sea is from Saudi Arabia instead of Eilat (south of Eilat on the Red Sea). Other than that, from a strategy perspective, it is 100% the same deal.
In any case, we can blame China all we want. But our own house is not in order. Let us not throw stones at others when we ourselves live in glass houses. Read more…….. P.S. The Blue Raman map floating around the Internet is wrong. The reporter published the map without my input.
Facebook And Google Thrown Out Of ADC Cable By The Chinese Government
As was expected, this is the second time Facebook and Google have been denied participation in submarine cables either controlled or highly influenced by the Chinese government. The first cable they were thrown out of was Sea-Me-We-6 in retaliation of the Chinese government’s claim that Facebook and Google were responsible for initiating and fanning the Hong Kong protests. Below, is the map of the ADC cable which was announced a couple days earlier.
This time the retaliation is for Team Telecom denying permission for PLCN to start operations in Hong Kong even when the cable has been ready for more than a year. Indeed, it was clearly evident in this article from the South China Morning Post while announcing the ADC cable.
Of course, there is a lot more to the story than the Chinese government’s involvement. Part of the problem is also the arrogant attitude of Facebook and Google in dealing with the Asian carriers. Asia has been an extremely sore point for the US OTTs and as a general rule, both of them have easily earned an “F” in their Asian submarine cable strategy.
Net Neutrality Is Dead In India
Well ok, it’s not yet dead. But my thinking is at least 3 years ahead of the current time. With Facebook investing in Jio, Amazon circling around Bharti Airtel and Google looking at investing in Idea, I think the writing is on the wall.
With billions of dollars invested in these companies, legal or not, they will figure out ways to make Net Neutrality a thing of the past. The breaches could be as simple as offering the Libra currency on an exclusive basis on Jio to higher speeds to download YouTube if a customer subscribes to Idea for example.
India is fast becoming the major battleground for these OTTs because it is the largest single unified market in the world and a democracy with a decent legal system where justice is guaranteed even if delayed.
All of the OTTs are looking to expand eyeballs as increase in eyeballs is directly proportional to increase in the market cap of the company on Wall Street. India is also a country where one can experiment on various fintech initiatives before introducing them to the rest of the world. So as the control for India intensifies, Net Neutrality is sure to suffer no matter how hard the netizens of India try to defend themselves. Read more……..
Congratulations! You Now Own A Data Center In China
Of course, hind sight is 20/20 and it is easy to criticize after the fact. But seriously, before plunking in hundreds of millions of dollars or more in a data center in Hong Kong, did anyone ask themselves: Under which conditions, would China let go of Hong Kong?
Carriers and OTTs thought it was cute that they could be in China and yet not be under Chinese telecom regulations. In a sense, they thought this loophole will work forever. So they poured in billions of dollars in to data centers in Hong Kong and even worse, brought in all their enterprise customers who decided to build their Asian POP in Hong Kong.
The writing was on the wall ever since the protests began in Hong Kong and the Chinese government blamed the US government and the US OTTs for initiating and flaming the protests. So the Chinese government made sure that none of the US OTTs were given a spot in the Sea-Me-We-6 cable as well as unconfirmed news of similar actions on 2 other cables in Asia.
It did not help that PLCN’s Hong Kong landing was rejected by Team Telecom and to boot, the airline wars between the 2 countries. So the big question for everyone is whether to pray that the Chinese government will all of a sudden become kinder and gentler or to cut the losses and get out of Hong Kong before stringent data laws are applied for everyone in the Hong Kong data centers. Read more……..
Mohamed Nasr Named Deputy Minister For Telecom Infrastructure In Egypt
In a surprise move, the Communications Minister of Egypt, decreed that Mohamed Nasr would be named the Deputy Minister for telecom infrastructure.
This is a very important development because for the first time, the Egyptian Ministry has someone on board who has operational experience in the submarine cable industry not only at Telecom Egypt but also working for PCCW, an Asian carrier with a global footprint in submarine cables. He also worked extensively with the Chinese carriers while heading up the PEACE cable on behalf of PCCW.
Nasr understands the problems faced by international carriers vis-a-vis Egypt and also he very well knows the thin margins at which the wholesale industry operates. Having said that, he is going to do what is in the best interests of Egypt.
My hope is that he will bring in two major changes: drop the prices to cross Egypt significantly and create an eco-system which will attract data center operators to come in. I think his major challenge is to work internally with the government and convince them that it is in Egypt’s interest to drop the bandwidth rates and move on to the next phase of the industry. I also hope he will find a way to work with Israel rather than continue the decades-long standoff.
I think this is a good development. Nasr is smart, young and is probably the only hope Egypt has to move away from the murky past so that Egypt is looked upon as a friendly nation rather than with fear and anger as it is today as it pertains to the submarine cable industry. Read more……..
The Submarine Cable Industry Finally Gets A Human Face
So Vodafone announced yesterday that the portion of the 2Africa cable owned by them along with a few other offshoots is going to be named SHARP which is a short form for System Honoring Achievements of Rick Perry. Rick is the Head of International Network Planning for Vodafone and has been in the industry since 1974 and is the longest serving submarine cable expert at Vodafone.
I have always admired Rick and have always fondly called him Sir Rick Perry. We have had our battles especially in the Bay of Bengal Gateway (BBG) cable but I have tremendous admiration for him, especially his Never Take No For An Answer attitude. For example, it took almost 10 years for him to put the BBG deal together but he stuck in there in spite of the gloom and doom around and finally won. I have not seen this kind of doggedness in any person ever. He is perfect for the submarine cable industry.
And I am really happy that Vodafone has acknowledged his contribution and named a cable after him. This is the first time the submarine cable industry has seen a human face with most of the cables given nonsense names like Sea-Me-We-6 and TAT-14. Thank God Rick works for a large corporation which is open to change. Because this industry has had an absolute terrible record of acknowledging talent, leave alone rewarding them right from the dark days since AT&T was the self-proclaimed God of the industry.
The innovators of the industry — the entrepreneurs — are treated worse than the untouchables of India. Bullies like Telecom Egypt steal projects like AAE-1 and the rest of the industry looks the other way because nobody wants to speak up for fear of reprisals. There is another project where yet another large corporation is in the process of stealing a project from an entrepreneur. With their armies of lawyers and unlimited money, they can and do get away with these shameful acts.
And that is why there are very few entrepreneurs left in the industry and those that are left will also be gone sooner rather than later. More than the money involved, at least the entrepreneur wants to be acknowledged for the contribution and encouraged to come up with more innovation and better ideas which will help the industry in the long run. But this industry would rather run away the innovators and out-of-box thinkers so they can retain control. And that is why I don’t see a future for this industry other than the sheer acts of throwing money at the problem by large carriers and OTTs. I hope Vodafone’s act of kindness becomes a trend and not a one-off act. In any case, it is too little, too late for the handful of entrepreneurs left who have been advised to close the door when they leave. Read more……..
No News Is Good News For Tata Communications
When ALS (Amur Swaminathan Lakshminarayanan) succeeded Vinod Kumar as CEO at Tata Communications in October 2019, I was pretty certain ALS was brought in to sell the company either as a whole unit or in pieces. After all, he came from TCS (Tata Consultancy Services) and headed its Japan office. What would he know about running a global telecom company?
But his recent actions suggest that he is here to run Tata Comms and is modeling the company with his own expertise in mind: Services. Tata Comms went through the most spectacular transformation of any company I have seen since the early VSNL days when it was a 100% India-based carrier. Tata’s brought in professional management and transformed the company to a global entity especially when it bought the submarine cable assets of Tyco Submarine Cables as well as Canada-based Teleglobe which made a global leader in voice.
Vinod transformed the company from an infrastructure-based wholesale carrier to an enterprise-focused global carrier. And I believe ALS has started the transformation from enterprise to a focus on services since he took over Tata Comms about 6 months ago.
It just so happened that the COVID situation has created an unprecedented demand for video-based communications and Tata too has jumped on the bandwagon with a very powerful relationship with Microsoft Teams acting as its platform partner. On the other hand, there is severe cost cutting going on resulting in hundreds of employees being laid off or leaving to join other companies.
Is Tata Comms going to be an outlier with an amazing transformation from infrastructure to services? And what are the new services that are going to make Tata one of the winners in this pandemic? And is this model worth replicating for the rest of the carriers of the world? And which is the submarine cable it has signed up for recently going to India? Read more……..
Facebook’s Apartheid Of Israel In 2Africa
2Africa will land in 23 countries in Africa, the Middle East and Europe. And to its credit, no country, however small, has been ignored — even Djibouti with a population of less than 1 million and a GDP of $3 Billion has found a place on the 2Africa map.
More importantly, there are about 10 branching units that will be deployed in the water for future connections to 2Africa. The countries targeted are: Morocco, Tenerife Islands or Western Sahara, Sierra Leone, Liberia, Cameroon, Namibia, Comoros Islands, Somalia (2nd landing), Cyprus and Greece.
But there is one country missing that neither has a landing point nor a branching unit for a potential landing point in the future — Israel — America’s ally and the most high tech country in the region with a GDP of $370 Billion. A country that has the least number of cables in the region. Look at how many cables Djibouti has. And for its size and influence, Israel needs 2Africa more than any country on the map. To add insult to injury, Israel is a stone’s throw away (no pun intended) from the route of the cable especially when it is extended to Cyprus.
Every small and large country or island along the cable route either has a landing or a branching unit planned for future landing — except Israel. So why this blatant discrimination of Israel by a US company? Read more on LinkedIn……..
2Africa Is Good For Africa
To be honest, I had apprehensions last year that 2Africa would turn out to be an oligopoly cable. But after going through multiple documents and phone calls with many people, I am now convinced that 2Africa is anything but an oligopoly. This is the best thing that has happened to Africa.
And after a bunch of mishaps especially in Asia, Facebook has finally found its groove: a formula for building cables that is good for the entire ecosystem. Facebook’s challenge is now to replicate this formula around the world. That is not going to be easy. With 4-5 kings running their own fiefdoms in different regions of the world with no strong leadership, each king wants to build cables in his/her own way.
Unlike Google which has a central leadership running its submarine cable group, there is no chance to do anything different but build monopoly cables in each region of the world. Google’s monopoly cable building is an insult to every regulator in the world who has worked hard to break down barriers in the telecom industry. This is my take on Google’s Equiano cable. Facebook’s 2Africa cable on the other hand is a breath of fresh air and good for the entire ecosystem.
The 2Africa formula has a whole bunch of winners in every country in Africa and only 6 losers. But until there is a vaccine for stupidity, Facebook will keep on finding such stupid carriers around the world for its formula to work effectively. Trust me, there are a lot of them out there.
So what is this Facebook’s formula that has worked? And who are these 6 stupid carriers? And why should Facebook get rid of the fiefdoms and centralize its submarine cable strategy under a central leadership? Read more……..
2Africa Is NOT A Submarine Cable Deal
Don’t get me wrong. I think 2Africa is a fantastic project and I have nothing but good things to say about Facebook’s initiative and leadership in getting the deal done with a number of industry stalwarts. And frankly speaking nobody else would have been able to pull it off. Even Google’s Equiano cable deal is still struggling and nowhere near the scale and audacity of 2Africa. And ASN’s world class engineering feat to build this cable along with Facebook’s technical team is going to be off the charts.
But let’s be clear here. 2Africa is NOT a submarine cable deal. To understand Facebook’s motivation, you need to closely listen to my speech (45 minutes) on Simba (now 2Africa) in Johannesburg last year at SAFNOG.
The entire story revolves around increasing Facebook’s valuation by increasing eyeballs in Africa. And that is why if you really want to analyze the deal, you need to focus on the side deals done by Facebook and not the cable itself. I focus more on the side deals than the real deal in any cable project because that tells you the real motivation and intention of the cable investors.
I have spent a lot of time in analyzing each one of 2Africa’s side deals including the Oman landing. I have reason to believe that Facebook’s side deals go way beyond the minimum $100 million amount I mentioned earlier in my last blog. Here is a list of winners and losers in Facebook’s 2Africa side deals. Read more……..
The Side Deals Of 2Africa
Back in the go-go days of Global Crossing when just an announcement of a new cable was worth a few billion dollars in the stock market, all the meetings used to be in really exotic places like Cebu, Bali and Phuket. And while the meetings used to go on throughout the day, the real action was negotiation of the side deals at night. To make sure nobody else could see them, the ones doing the side deals would go to smoke filled dingy bars and do their side deals over cigars and cognac.
Not too much has changed even today and as early as this January, I witnessed several such deal making going on in dingy bars in Hawaii over glasses of Bourbon but without the smoke. That was just before COVID-19 started.
I can just imagine the anguish of the deal makers when travel was out of question and the deal making had to be done in order to close the 2Africa deal. I am sure there is some seedy room on Zoom where the deal making happened.
At least $100 million worth of side deals were made by Facebook in order to get the main deal done. And the beauty of it is that the side deals were not necessarily done with the consortium members of 2Africa. They will find out now after reading my blog.
Let me explain exactly how the deals went down and who got the free moolah. And why these side deals make perfect sense for Facebook. And why nothing has changed in 3 decades in the submarine cable industry. Read more……..
Oman Gets A Free Ride On 2Africa
No, OmanTel is not a system owner nor an investor in 2Africa. Yet, Oman gets a landing point on this $1 Billion cable.
The branch to Oman was negotiated at the last minute and Oman held its ground and said it would not invest any money in the cable.
In spite of this, the system owners of 2Africa decided to extend the cable at their own expense and will also pay the O&M on the cable for 25 years. The branch cost is around $15 million. Let’s put this in perspective. On an average, carriers had to shell out $40 million per landing point. And this was the only exception made by the consortium to give anyone a free ride.
Yet this is probably the best decision the 2Africa consortium has made. Oman is the only country that gets a free ride.
What is going on here?
2Africa Is A Done Deal
You have to hand it to Facebook. Getting a deal done during the pandemic is one thing but getting the $1 Billion 2Africa deal done connecting all the African countries is a whole different level, especially since it has been tried multiple times before and failed every time. The system lands in 23 countries in Africa, Europe and the Middle East and spans 37,000 Km under the ocean.
This is probably one of the most complex deals to put together. So far, Sea-Me-We-3 was the most complex deal to get done in the submarine cable industry with 93 investors and 5 different suppliers followed by the Flag Telecom deal. But those deals was put together in a series of meetings at exotic locations like Phuket while sipping Singapore Slings.
While 2Africa has only 8 partners, bringing all the African countries to the same virtual table is no small task either. Especially under the current circumstances with kids running around the Zoom conference table and dogs barking to get attention. Let us all bow down with respect to Ricardo Orcero who put the deal together.
There are a few interesting things to note: For the first time after Flag, 2Africa has been granted a new path parallel to the Suez Canal which is much safer compared to the traditional route.
More importantly, the cable also lands in Salalah, Oman which as I said before, is the new Marseille. This also cements Portugal as yet another upcoming interconnection point in Europe.
This is a consortium cable and the partners are: Facebook, China Mobile, MTN GlobalConnect, Orange, STC, Telecom Egypt, Vodafone and WIOCC. The cable has a maximum of 16 fiber pairs and a minimum of 8 fiber pairs depending on segment and will carry an average of 180 Tbps of traffic.
Post-COVID Mantra For The Telecom Infrastructure Industry
Just like the perennial mantra for the real estate industry is Location, Location, Location, the post-COVID mantra for both the global submarine cable as well the data center industries is Diversity, Diversity, Diversity.
The entire industry must come together and try to eliminate or at least substantially reduce the impact of the single point of failures in the entire telecom infrastructure chain — no matter how painful it is.
On the submarine cable side, it means immediately finding solutions for Egypt, Singapore, Japan, Hong Kong, Miami and New York. Fortunately the UK situation is now under control because of Brexit related build outs to Southern Europe. Of utmost importance in Asia is to find a replacement hub for Hong Kong and a hedge against Singapore.
On the data center side, there are many candidates — one of them being GPX in Mumbai which has become a single point of failure ironically due to its huge success. Here is a list of several single points of failures and potential solutions — chief among which is my take on the new proposed Asian hub as a counter to Hong Kong and Singapore.
The long-term thinkers should also start thinking of changing the network architecture from a hub-and-spoke architecture to a distributed model which in my opinion is the right model for the industry — which was my thinking when I designed Project Oxygen 20 years ago. Which means going back to the drawing board for all of the OTTs — something that is impossible to envision. Read more……..
Invoking Force Majeure To Void Lousy Business Deals
In the pre-COVID days, the focus of the submarine cable vendors was on getting the contracts at any cost to keep the factories going. And there were quite a few deals that were signed which did not make business sense — especially with hard charging clients like Orange.
But now things are different all of a sudden. Submarine cables are now identified as critical infrastructure and a lot more projects are being planned. And because there is a limit on suppliers and their capacities, prices for new projects are going up.
So there are reports that at least one submarine cable vendor is going through each signed deal to see if they can get out of it using the Force Majeure clause. If they cannot get out, at a minimum they are trying to re-negotiate the contracts to extract more money out of the customers.
All of the submarine cable projects that were under construction are going to be delayed by at least one year. And that gives the submarine cable vendors a lot of leeway to re-negotiate prices and timelines or both. In fact, there is a third element to this — technology. If the projects signed with the older technology are delivered one year late, the technology signed-up for is already economically obsolete. In my opinion, every submarine cable deal under construction needs to be re-evaluated. Here is a list of projects that definitely need to be re-evaluated. Read more……..
With Unlimited Money At Their Disposal, Why Can’t OTT’s Build Submarine Cables Fast Enough?
Talk to any OTT and they will admit that their Asian submarine cable strategy has failed beyond repair. I can cite major problems in every Asian cable the US OTTs have invested in and in almost every case, they have regretted their decision.
And as far as timing goes, the OTT cables are no different compared to the carrier cables. Take the example of Simba (aka 2Africa), the African cable. 5 years in to planning, by the time it is built — if at all — it will be at least 7-10 years since Facebook had its first Simba meet in London with Google and a bunch of carriers.
Now with carrier-led or entrepreneur-led cables, the time delay is understandable because there are always funding or financing issues. But in the case of Google and Facebook, they are eager to write the checks on Day 1. In fact, one of the biggest complaints carriers have against them is they flood the supply chain with so many projects — in many cases — just to keep the carriers from getting in the vendor queue. And the amount of money they spend of submarine cables is a fraction of the amount they spend on data centers every year. So why can’t the OTT’s build cables faster than the carriers?
Because the OTTs are arrogant, selfish and only think of themselves. They are not trying to solve the industry problems. Just like the carriers fight with each other while building cables, the OTTs are no different. They not only fight with the carriers, they also fight with each other. For years, I have tried to tell them to try and solve the industry problems and they will get nothing but total cooperation from the carriers. But treating the carriers like their retard cousins does not motivate anyone to help them move the project faster. What are the industry problems the OTTs can solve? Read more……..
India’s Telecom Laws Need Revamping
A common joke when Russia was the USSR was that the government pretended to pay its employees and the employees pretended to work. There is a similar joke about India: The Indian government pretends to make sane telecom laws and the carriers pretend to adhere to them.
Take the example of the Lawful Intercept and Monitoring project also known as LIM where the government wants to monitor every bit of information coming in to the country including voice, video, text and so on. So the government has mandated that every carrier must install LIM equipment for the entire traffic coming in to the country at the carrier’s own expense.
Now this LIM equipment is very expensive and the only way the carriers can afford to pay for it is if they can pass on the expense to its customers. And therein lies the problem. No customer wants to pay for this imposition of the government.
And in this great country that invented the word Jugaad (loosely translated as hack), a formula is derived which suggests the amount of cheating everyone in the system from customers to the carriers to the government is comfortable with. You will be shocked to know what that discount percentage is. Read more……..
The Largest Potential Market For Submarine Cables Is A Basket Case
India is a total basket case when it comes to submarine cables although having the potential to at least double it’s more than a dozen cable count. A cottage industry has developed around the stupidity of the Indian government to exploit this resource with countries like Singapore, Malaysia, Oman, Hong Kong, UAE and Djibouti mooching off huge chunks of the Indian market.
The last cable connecting India was the Telecom Egypt-stolen cable called AAE-1 in 2017 after 5 years of dirty politics. Oman, Saudi Arabia, UAE — each with a fraction of a fraction of India’s population have almost the same number of cables landing. India should have been and still has the potential to be the largest hub of submarine cables in the world.
What went wrong? For one, nobody in the Indian government understands or cares for submarine cables. TRAI, the regulatory body is probably the most incompetent telecom entity in the entire world as far as submarine cables are concerned. And all of this coupled with greedy and constantly at war Indian carriers have kept the market lukewarm. Bharti Airtel has been accused of cheating its partners of $200 million over the years on account of the RIO regulations.
The Indian Government impounded a cableship that was installing the EIG cable. And the $50 million bond posted by Bharti Airtel was not released for almost 10 years.
You have to add at least an extra year if you want to land a cable in India to account for the government nonsense. So no foreign carrier wants to come to India. And no cable vendor wants to supply to India. Even I have given up on India — even though I have been its biggest supporter for 30 years. Read more……..
Parked Oil Tankers Pose A Big Threat To Submarine Cables
There are more than 9,000 oil tankers in the world representing 11% of the total ships around the world. And guess where they are all right now? They are all parked in shallow waters along the coast lines of all the countries in the world, each billing their clients $30,000 per day just to sit. There is no more demand for oil and no customers wanting delivery.
Below is the map of all the tankers in the world. And how interestingly, they mirror the landing points of all the submarine cables in the world,
OTTs Take 2 Different Paths To Address Hong Kong Crisis
The OTTs are a strange bunch. While they are mandated internally to connect their data centers with around 5 different submarine cable paths, they have created a number of single points of failure in the data center destinations they chose. One among many is Hong Kong. With the current state of affairs in terms of US-China relationship and in light of Team Telecom not approving the Hong Kong destination for PLCN, billions of dollars of data center investments in Hong Kong are in trouble,
To address this situation, two solutions are emerging. Google and Facebook are in one camp as to how they see the situation evolving whereas Amazon and Microsoft are in the other camp. Interestingly, they are not working with each other in both the cases but it shows the thinking. In my opinion, both solutions are flawed as they are perpetuating the same old problems. There is no creative thinking at all.
It Took A Pandemic To Ease Permitting For Submarine Cable Repairs
Used to be that getting permits for submarine cable repairs used to take weeks if not months in most countries. And even after getting permits, a whole range of government bureaucrats like customs, tax authorities, etc. used to bother the cableship personnel especially in countries like India. There was no understanding why a foreign cableship would want to repair a cable in their country and there was always suspicion about its real objectives.
The pandemic has changed all of that. Now telecom infrastructure is classified as critical infrastructure and the fear of the country losing Internet access means the authorities go out of their way to make sure that all permitting activities are done quickly.
To make sure that personnel are not held up due to Coronavirus issues, cableship personnel are sent to the country where repairs need to be done 2 weeks in advance where they self-quarantine under government supervision while the permits are being processed. And after testing negative, they board the ship to do the repairs — permits in hand — and no more interference from anyone. Read more……..
The Post-Covid-19 Rise Of India As a Manufacturing And Technology Hub
I have always wondered how highly professional companies like Apple allowed China to be the single point of failure as far as their supply chains go. Yes, it has taken them decades to get the efficiencies and price points in China they need. But one thing every company in the world will have to think post-Covid-19 is how to eliminate single points of failure at every phase of the supply chain.
Already, more than 100 large companies have started thinking of either shifting all their manufacturing to India or to have a second base. I think eventually nobody will completely move out of China because of the eco-system that has developed there. But I am convinced that India will become a second manufacturing base for most of the large companies. Which means hundreds and thousands of new manufacturing plants and millions of new jobs.
Which means that the submarine cable guys need to start building cables to India now. The last cable that went to India was the stolen AAE-1 cable. Since then, nobody has been able to build a new cable there. The demand will be staggering and cable owners will mint money. And of course, more money will be made by the new data center investors. And a lot of new data centers are being planned. Read more……..
The Die Is Now Cast In India
With its $5.7 Billion investment in Jio picking up almost 10% equity, Facebook has bought political patronage in India. For years, Facebook tried to go it alone starting with Free Basics where it spent $100 million campaigning in India but could go nowhere.
And with 400 million WhatsApp users, India represents the single largest market in the world which could potentially go to zero as politicians of all parties are miffed with it for its end-to-end encryption making it the social network of choice for terrorists and the underworld.
This is a huge win for Jio which has been desperately looking to raise money after its deal with ARAMCO fell through. And as it tries to compete with Amazon and Walmart in India — not to mention building out its 5G network, it needs deep pockets. And there is no better company in india than Jio to provide the political patronage Facebook seeks as it tries to monetize WhatsApp. And perhaps the launch of Libra? Read more……..
Google Will Not Pay Any Taxes On $400 Million Blue Raman Profits
Blue Raman is going to be the most profitable cable for Google. And the cable is already sold out — even before the supply contract is signed. But the most important news is that Google has structured the deal in such a fashion that it will not end up paying any taxes on the profits it makes on the cable.
Zoom Wine Tasting Anyone?
Welcome to Silicon Valley where wine making is classified as an Essential business. So guess what? The wineries and liquor stores are all in full swing and liquor sales have gone up by 40% — more than bandwidth increases on the last mile network.
And of course, Silicon Valley has to start a new trend — no matter under what conditions. So wineries are now sending you wines by mail and you can join in from your home on Zoom and be part of the wine tasting group — joined by fellow wine enthusiasts.
And of course, there are Zoom Happy Hours where employees of all companies hang out and gossip as they usually do in the office. Of course, the Google and Facebook employees are not happy because they have to cook their own food! OMG.
So this little Silicon Valley company Zoom went from 10 million subscribers to 200 million in a matter of weeks. It is being used by almost all educational institutes and more than 50% of the Fortune 500 companies.
Now how did this happen when all of the heavyweights like Google, Facebook and Microsoft have their own video solutions like Hangout? For one, Zoom as designed from the start to scale whereas other solutions lacked the scalability and the quality because of the architecture.
Zoom is now worth $35 Billion and was the only stock going up while the rest of the market was crashing.
So what’s the story with Zoom’s privacy issues? And what’s the Chinese connection here? Read more…….
Getting Your Urgent Message Out
As most of you probably know, my blog has a wide reach and is read by almost every carrier in the world. In addition, there are about a couple dozen regulators that also read my blog. So in light of the COVID-19 pandemic, if you need any urgent message to be sent out to the entire community, I am very happy to send it out, of course complementary. There have been a few times when carriers have requested me to send out urgent messages. The one that was the saddest was when the Chinese government called me at 3am in the middle of my sleep and asked me to inform the carrier community about the sad demise of Happy Zhang, the China Telecom executive who was on the Malaysian Airlines flight that went down. And within a couple of hours, the entire industry knew about it even before the press found out about it. I am really worried about the logistics of the telecom industry including the equipment and the movement of cable ships and will be monitoring that closely with the help of my industry friends. This is a time when we need to come together as one unit and help each other to the fullest. Read more…….
Facebook To Get 10% Stake In Reliance Jio
Facebook is in talks with Reliance Jio to pick up 10% equity in the company. The deal was supposed to close by the end of the this month but has been delayed because of the COVID-19 situation. It is now becoming clear why Jio had a big fallout with Google last year. First Jio embraced Microsoft with a cloud partnership and now with an even stronger equity partnership with Facebook, Jio has chosen its allies. Jio needs the billions of dollars from Facebook for its 5G infrastructure as well as its submarine cable expansion through the IEX and IAX cables which could also potentially see Facebook as a customer or partner. The Indian carrier situation is quite bleak with most likely Jio and Bharti Airtel being the only remaining survivors. Read more…….
Giving Up Privacy To Save Your Life
There are multiple reasons why China has been able to contain the COVID-19 pandemic in a matter of 2 months. But the most important reason is that the Chinese government knows where every person has been and who are all the people that have been in the vicinity at that time. Basically, there is no privacy at all. The Chinese government has a back door entry in to the carriers’ database. In addition, in cities like Nanjing, every person had to log in his personal QR code even if he wanted to eat at a restaurant. And this pandemic has proved to the Chinese government that this strategy works perfectly. So going forward, in my opinion, the Chinese government will be able to contain any further outbreaks of this and other pandemics very quickly and with precision. This is impossible to do in the West at this time. But I have a feeling that the Chinese success is not going to be overlooked by the West given the grave situation of the economy and the ability to save millions of lives. Perhaps the governments will set up a separate body to use the information only in emergency situations like the current one. But my bet is that privacy is dead going forward. Read more…….
European Commission Issues Guidelines To Streaming Services, Operators And Users
In light of the significant increase in Internet traffic due to everyone locked in their homes 24/7, the European Commission has advised streaming services like Netflix to downgrade the quality to standard from high definition and to co-operate with the telecom operators to their fullest. Users are also advised to apply settings that reduce data consumption by opting for lower resolution for their content viewing. The EU is also setting up a review board to monitor the Internet traffic situation in every member state so the EU can respond to capacity issues any member has. Basically, the EU is of the opinion that the streaming services, operators and users are all responsible for the continued well being of the Internet. Here is what I think. Read more…….
Globalization Is Dead
Whether it takes 18 weeks or 18 months to get out of the current situation, one thing is for sure. Globalization as we know it is dead. And it is going to have a massive impact on the submarine cable and the telecom infrastructure industry. The entire global infrastructure developed by the OTTs has been based on the bet that globalization would be around — forever. That is why you see the hyper scale data centers in the Scandinavian countries with almost no populations feeding data to the rest of the world. The new era will demand exactly the opposite. Each country will want to be self reliant and will demand independence from their data being controlled from outside of their countries. The OTTs will have to completely rethink their global architecture. They never learnt their lesson even after the Hong Kong PLCN and China NPC debacles. Now not only the carriers but the OTTs will have to first pledge data localization to every country in the world. Each country will also demand that Internet services will continue uninterrupted even if they were isolated from all other countries or even if all submarine cables were cut. The OTTs will spend the next decade undoing everything they did until now. Read more…….
Team Telecom Needs To Get Off The High Horse And Approve PLCN ASAP
I am increasingly getting nervous that Egypt is going to implode. I have been literally begging the carriers of the world for years to build a Egypt-bypass cable but to no heed. I even got death threats from Telecom Egypt asking me to shut up. If Egypt implodes, you can pretty much see most of the Middle East go dark or be severely limited in terms of Internet bandwidth as 100% of the Middle East and Asian traffic from Asia to Europe goes through Egypt. If we lose Egypt, most of the Middle East, India and Asia will be dependent on the trans-Pacific routes. PLCN is a cable that is already built and is waiting for Team Telecom approval for years. Facebook and Google have a 40 Tbps-fiber pair each on the cable which terminates in Hong Kong. And the sole cable that connects Hong Kong to the Middle East is the Telecom Egypt-stolen cable called AAE-1. Given the extraordinary situation the world is in right now, I think it is extremely important that Team Telecom make a temporary one-time exception and allow traffic to flow all the way to Hong Kong with immediate effect. Let us not wait until it is too late. I request all the regulators who read my blog to write to Team Telecom and ask them to do the right thing. Read more…….
Global Disaster Recovery System Needs To Be In Place ASAP
So far, each carrier has been on his own as far as restoration is concerned. Almost no carrier has an inter-carrier restoration plan laid out in case of a real disaster. With submarine cable maintenance ships most likely to be delayed for mundane reasons like visas, permits, customs and personnel issues (shipping personnel are from all over the world), cable repairs are going to take longer and individual carriers are going to face the brunt of it as they are at the mercy of their competitors who have historically been reluctant to help. There is an urgent need to create a global disaster recovery plan and carriers have to realize they are all in it together. If one carrier fails today, they are the next in line. This is not a time to profit from someone else’s disaster. The global bandwidth supply chain is dependent on the carriers doing the right thing in these difficult times. Read more…….
An Appeal To The Interconnection Companies
Talking to a number of carriers, a theme is emerging as to what would make it easier for them to share their excess capacity with each other for restoration purposes in times of crisis. I appeal to the interconnection companies like Equinix and Interxion to offer free cross connects for incremental connections for all their customers until this COVID-19 crisis passes over. This action on part of the interconnection companies will go a long way in potentially building a long-term global restoration network and every one in the eco-system will benefit eventually. As the world leader in the space, I think Equinix should step up to the plate and take the leadership in this area. Read more…….
Forget Net Neutrality Until Things Get Back To Normal
I have been in touch with multiple carriers and regulators with regards to how they are tackling the current situation. One of the European regulators mentioned that it is becoming very active in trying to change regulations to deal with the situation. They are trying to pass new laws in short order to address some of the issues I brought up. One additional thing they are thinking about is to repeal Net Neutrality until this issue is behind us. That will enable carriers to intervene through traffic management and prioritize some kinds of traffic. Although I am a big proponent of Net Neutrality, I think given the situation, it is a good idea to put it on the back burner until business is back to normal. I will keep on updating my blog as I hear from other carriers and regulators as to what steps they are taking to address the difficult situation we are in.
Global Networks Are Being Tested
As each home is being transformed in to a mini office, the networks and the last mile in particular is being tested to its fullest. With both parents working from home and kids using video conferencing to log in to their schools, the networks were not designed to take the load. So networks will slow down and there will be disruptions. In my opinion, the biggest problem is a 180 degree change in how the networks were designed to work — from a point-to-point network to a distributed model. Already, there are indications that some data centers belonging to Google could be affected which will have an impact on some services being shifted or reduced temporarily. It is time that every content player and carrier decide to work with each other not withstanding who would win or lose temporarily to do whatever is necessary to make the networks more resilient. If that means opening up more ports for peering or sharing excess bandwidth with one another so as to achieve maximum restoration possible, it is time the carriers and content players step up to the plate and do what is right for the industry as a whole. If the global networks go down or if entire countries go off the grid, the carriers and content players will have themselves to blame for the disaster and anarchy that will follow. My suggestion is that Google take the leadership role in this regard since it has the relationships with all the carriers and also their respect.
Bandwidth Hoarding Should Be Outlawed
The most inefficient supply chain in the world is the telecom network, specifically the bandwidth supply chain worldwide. Used to be, carriers would come together and build submarine cables for their requirements 25 years ahead of time and most cables used to be no more than 10% lit for years. Things have significantly improved since then, yet still carriers build cables for their requirements about 10 years ahead of time. Consequently in the early years, few cables are more than 25% lit. So every carrier in the world has excess capacity on certain routes and not enough bandwidth on others. And that’s how carriers make money from each other — by selling the excess capacity at high prices. In light of the COVID-19 pandemic, I think it is imperative that the bandwidth supply chain becomes highly efficient for no other reason but to make the global network extremely resilient. I am not proposing that carriers give away their bandwidth for free to others. But I am proposing building a platform which will enable carriers to borrow excess bandwidth from each other until the COVID-19 pandemic is no more. While the rest of the supply chains go under, at least the bandwidth supply chain needs to function in perfect order to save the world from a meltdown. I am happy to share my solution to any carrier in the world. This is the time for all carriers around the world to come together and work with each other for an urgent cause.
Responsibility Of The Telecom Services Industry In Light Of Coronavirus
While the supply chains of the world are faltering and tens of millions of people have stopped traveling, the online services industry will see an upsurge like never before. As people stay at home, they are ordering more stuff online, they are logging in to their office from home, video conference calls have replaced one-on-one interviews and meetings, doctors are encouraging video calls instead of going in to the facilities, people have more time to catch up on digital educational programs. Harvard just announced that classes will be held online. Bottom line is the people have no choice worldwide but to embrace the digital lifestyle. So the most important thing from the carriers’ perspective is to make sure that the telecom facilities have a flawless execution. In order to effectively to that, it is of utmost important that carriers forget their petty politics and open up their infrastructure to their competitors, especially those that have excess capacity. In fact, regulators and governments of the world should pass laws that force carriers as well as content providers to share facilities with each other in these difficult times. And that has to be done immediately because if is far easier to do it when the networks are running smoothly compared to when entire countries are off the grid. And that day may not be too far away. I am happy to take the lead on this if any government or carrier in the world wants me to.
Team Telecom Is Hurting The US Cloud Business
Personally, my experience with getting licenses approved by the US Government has been amazing. I had no problems in obtaining licenses for both Flag Telecom and Project Oxygen. That was pre-Team Telecom. Things have changed significantly since Team Telecom has taken over the approval process. While I completely understand that it is Team Telecom’s responsibility to keep America safe and they have major concerns with Huawei and other vendors, the telecom industry has now shifted to the cloud model and Team Telecom has not kept pace with the times in my opinion. So PLCN was founded 7 years ago and still does not have permits to land the cable in the US. Admittedly, a lot of the time was spent in trying to put the deal together but the reality is the technology, configuration and pricing are all obsolete and in a sense it does not matter whether or not the approval is given at this point. The bigger issue is the billions of dollars the cloud companies have invested in Hong Kong — they are now in limbo. The OTTs and cloud companies now are dependent on their global operations and data centers around the world. In my opinion, Team Telecom needs to review their policies taking in to account the new business models. Read More……
Google Running Circles Around Jio In The Submarine Cable Industry
Jio is the undisputed King of the Indian telecommunications industry but when it comes to the submarine cable industry, it is merely a pawn. Last year, Google had a falling out with Jio when Jio embraced Microsoft and consequently demanded a huge premium from Google to participate in its IAX cable to Singapore. At the time of the fallout, it seemed that Google was in a fix since Jio was so powerful in India. But Jio did not realize that Google has become politically very savvy in the global submarine cable industry with more than 10 years and billions of dollars behind it. So Google joined hands with NTT and got fibers on the MIST cable from India to Singapore. And now is working on a India to Europe Egypt-bypass cable called Blue Raman which will completely change the economics and make Jio’s IEX cable economically obsolete even before they sign the supply contract. That’s what they call Check and Mate! Read More……
Egypt-Bypass — Holy Grail Of The Submarine Cable Industry
Egypt is the biggest single-point-of-failure in the entire world. With 15 cables crossing Egypt and another 6 or so waiting to be signed, almost a third of the entire world’s population is dependent on Egypt for its Internet access. To make matters worse, Telecom Egypt has built a cable called TE North and forces cables to buy fiber pairs on that one single cable. A cut on this cable alone will disrupt traffic in a dozen countries. And of course, it costs more to cross Egypt than to build a cable all the way from Singapore to Marseille. The Egyptian Army and the Prime Minister’s Office sets the political landscape for all cable crossings. So Google’s planning of the Blue Raman cable is the biggest news in the submarine cable industry since the start of the industry 3 decades ago. Not only will this cable provide the ultimate route diversity going through Israel, it will also decrease the cost of Asia to Europe traffic by at least 50%. Google gets all the credit for achieving the impossible. Find out the exact route, how the deal went down, who are the parties involved and why this is not going to be easy for others to emulate. Read More……
Who Is The Biggest Winner And Loser In The Oman Australia Cable (OAC)?
One would assume without a doubt that the man with the golden touch, Bevan Slattery is the biggest winner in the latest deal he announced today — the Oman Australia Cable or OAC — the cable from nowhere to really nowhere. But there is indeed a method to the madness. And the biggest winner is not Bevan. And obviously, the biggest loser is not Bevan either. Find out how the deal went down and who is the biggest winner and the biggest loser. Read More……
Why Does SingTel Hate Apricot With A Passion?
SingTel’s SJC-2 cable is being constructed as we speak and will have an RFS date of Q1, 2021. It is almost exclusively a carrier cable except Facebook has been allowed to participate by SingTel as a favor for giving it some data center business in Singapore. Apricot is a new cable that already has chosen Subcom as the vendor and has been waiting for its CIF for more than a year. Given the Coronavirus issue in Asia, that could take some time although it shouldn’t as majority of the cable is owned by the OTTs. The configuration is pretty much the same except a few changes such as adding a branch to Guam. But this is SingTel’s worst nightmare as its entire new strategy I spoke about in my previous blog SingTel Changes The Consortium Model is being challenged by Apricot. And SIngTel is not taking this lying down. This is war and that’s the main reason for the significant delay in Apricot’s CIF. Read More……
Why Is Topaz So Critical For Google?
Topaz is the next-generation trans-Pacific cable that Google is working on. And this one is mostly a solo cable with nobody else getting access to it. I think it is fair to say that Google is relying heavily on this cable for its Pacific strategy which has changed significantly because of recent regulatory decisions by Team Telecom. With 7 years in the planning, PLCN is still not approved. A final decision is expected by April but with the Coronavirus issue, there is no telling what will happen. This has made Google completely re-think how it’s traffic will flow from the US to Asia. Carriers and OTTs not privy to this deal are at a significant disadvantage. Read More……
2020 Is Pretty Much Shot For The Submarine Cable Industry
The submarine cable industry is quite unique in the sense that every deal is very much international and cross-border. And ironically, while the video conferencing industry boosted the fortunes of the submarine cable industry, all the meetings have been held in person at exotic locations like Hawaii, Bali, Amsterdam, Cebu, Dubai and so on. Also, it is almost impossible not to have these negotiations in person because all of side deals take place one-on-one in dark bars after the general meetings are over. Now that travel to Asia is pretty much out of the question due to the Coronavirus problem, it is becoming an issue even in Europe with Italy under the scanner. Two of the biggest deals in the pipeline to be closed are 2Africa (Simba) and Blue Raman. But I know that already 2Africa is getting delayed as 2Africa North lands in Italy. And Blue Raman has a huge Telecom Italia component. There is no way that can be resolved by video conferencing. In my opinion, 2020 is going to be a time for reflection for the carriers of the world. Where did they go wrong and give up control of the entire industry to Facebook and Google? Read More……
XSite Modular Sold: Huge Win For Amy Marks
Prefab Cable Landing Station maker XSite Modular has been sold with Amy Marks keeping some equity in the company and cashing out at a very handsome profit. Amy has been relentless in her pursuit of convincing carriers in more than 40 locations that prefab CLS’s are better, more economical and can be constructed faster compared to custom builds. What I admire about Amy is she has been very successful in mostly a man’s world paving the way for scores of other women to enter the submarine cable industry. And selling a CLS in remote places in Africa or in one of the islands in the Pacific Ocean is no small feat — for a man or a woman. She achieved this success because she has been the best evangelist I have ever met and never taking No for an answer. Another reason I am happy for Amy is in an industry where there is one bad news after another in the private cable industry, there is finally some good news. I wish her the best of luck at her next gig with Autodesk. Read More……
Technology Change: Clear Path To A Petabit Cable
A major submarine cable vendor is planning to significantly upgrade its technology from SDM to SDM2. The SDM technology allowed for long-distance (trans-Atlantic) cables to carry 320 Tbps of traffic. The new SDM2 technology will enable achieving the 1 Pbps speed — something that is hard to get your head around. And it will be much more than that taking in to account the Shannon Limit. So what does that mean to the business? Well, to me its very clear. All of the cables that are being funded today will be financially obsolete within X years (X in the paid version). Now the game of Pass the Hot Potato will start. The game is to pass on the bandwidth to the next sucker as soon as you can and not be left with anything before the new technology hits the market. Let me tell you more about the change in technology, the vendor, the exact timeframes and precisely how the vendor is able to add so much new bandwidth. Read More……
I Have Found The Next Marseille
It is with 100% certainty I can say that I have found the next Marseille. As you know, Marseille not only changed the fortunes of the city but also that of France and to a large extent that of Europe as well. So this is a really big deal for the country I am talking about. There are only 4 companies (couple of usual suspects and couple of others) who are pouring money in to this place as if there is no tomorrow. Within the next 3-5 years, everyone will be saying I wish I knew about this before it is too late as it is in Marseille now. The influence is already huge. Google just told a private company that the only way Google would consider buying a fiber pair in that cable was if it landed in that country — and the cable configuration was changed. Is this place justified in being the next Marseille? Absolutely. I think I am pretty good at submarine cable strategy. But these guys are in a whole different league. You think Jio is good? These guys can run circles around Jio in the submarine cable space. Google and Facebook are bending over backwards to cater to their demands. Below is a complete analysis of why I am betting this place is the new Marseille with facts and figures and stories that will amaze you. Read More……
Billions Of Dollars Worth Of Bandwidth Will Now Be Financially Obsolete Even Before The Cables Are Funded
When I designed the Egypt-bypass cable 2 years ago, I knew I had a winner. However, I was not able to raise the $500 million it would take to build the cable — story of my life. To Google’s credit, they were able to do the deal because money is not really an issue for them. And I congratulate Google for running with my idea and turning it in to reality. Now the issue is what happens to the half a dozen other additional cables planned to go to Europe through Egypt? With heavy Egyptian signing fees of $XX million per fiber pair plus $YYY,000 to have the privilege of lighting up a 100 Gbps circuit (X & Y values in the paid version), the Blue Raman cable is at least 50% cheaper compared to the Egyptian route. Now the question is will the arrogant owners of the cables planning to cross Egypt put their heads in the sand and actually invest billions of dollars just to prove they can close the deals they started even if the cables will be financially obsolete before they are lit up? So they can declare victory and claim their hefty bonuses? Or will they stop the stupidity and copy the Blue Raman cable design and go through Israel? Do you hear me 2Africa (ex-Simba), Sea-Me-We-6, IEX, Majan, PEACE, Africa-1, AquaComms and the rest of the Masters of the Universe? Read More……
Google’s Behavior Is Shameful
Google has finally cracked what seemed like an impossibility to the entire telecom community for 3 decades — they figured out how to bypass Egypt through its new proposed cable, Blue Raman. And I am really happy they were mostly inspired by my design of this route 2 years ago. But hey as far as I am concerned, I am happy to contribute to the efforts of anybody who can achieve the impossible — bypass Egypt which has been the holy grail of the industry. But I am absolutely furious at Google that they are not sharing their cable with anyone else — unless of course for a huge premium. But the whole point of bypassing Egypt was that Thief Telecom Egypt has been stealing from the community for decades. Now Google wants carriers to give them the money instead of to Egypt? This is utterly shameful and reprehensible behavior on part of Google. Carriers of the world should condemn this greedy act on part of Google. Read More……
The Unbelievable Indian Telecom Disaster
From zero spectrum charges to the highest spectrum charges in the entire world, India never got the telecom industry right. From outright corruption in 2G spectrum allocation (giving one hour to submit multi billion dollar bids) to not changing the laws because they would get accused of corruption (in spite of a very clear unfair revenue sharing agreement), the Indian telecom industry is in a huge mess. Starting with a dozen or so carriers, they are down to 3 and most likely 2 after the dust settles. Investors and lenders have lost almost hundred billion dollars. And at the end of the day, what is this uniquely Indian and totally unfair tax called AGR? And which is the one single company that is not affected by it and will rule the Indian market probably forever? Read More……
The $900 Million Centurion Cable
We live in a strange industry where a $900 million cable does not raise eyebrows. And the Centurion cable is not the only one with that price tag — there is also the 2Africa cable — the Simba replacement. But there is a difference. The promoters of the Centurion cable — the mirage of the Egypt-bypass cable — are not the Facebooks of the world by any stretch of imagination. So are these guys on to something or never really left the pre-2000 submarine cable boom time and are stuck in a time warp? Read More……
SingTel Changes The Consortium Cable Model
SingTel has from the early days been a bellwether of changes to come in the submarine cable industry. For example, it was SingTel that introduced the concept of MIU*Km pricing for the first time in the industry in Sea-Me-We-We-3 that was responsible for the downfall of Flag to a large extent. Since then, the MIU*Km model became common in most consortium cables. SingTel is now focused on the demand/supply equation and the resulting price wars and low bandwidth prices which will have an existential impact on the carriers. I believe this new formula introduced by SingTel will be the de facto formula used by most consortium cables going forward. To get an early glimpse of SingTel’s thinking, I have spent a lot of time analyzing the impact on the global submarine cable industry. Read More……
How Much Impact Will Coronavirus Have On The Submarine Cable Industry?
With 3 cruise ships under quarantine in Japan right now, things are not going to go well for the installation and maintenance cable ships that ply the oceans of the world. This is especially true since much of the personnel from cable ships are sourced from multiple countries. In fact there are several Asian crewmen on board the ships that are working in Europe, Middle East and the Americas as well — all of whom need visas to enter the countries. So I think the next few months at least are going to be extremely difficult for the industry. It is possible that cable faults will not be repaired on time, ships will not be able to sail on time, there will be personnel issues on almost every ship, and so on. I pray that I am wrong and things will be business as usual but at a minimum, the industry has to prepare itself for the worst case scenario. Read More……
Amazon Shareholders Hurting Because Of Jeff Bezos’ Personal Hobby: Washington Post
You can argue both ways whether or not Washington Post is justified in writing what they write. But the reality is that Washington Post has nothing to do with Amazon — except it does. Because Jeff Bezos the founder and CEO of Amazon is also the 100% owner of Washington Post. And the biggest problem with WaPo is that it is no longer a newspaper. It is an extreme liberal mouthpiece and in this era of right-wingers coming to power in multiple regions around the world, WaPo is not liked — to put it very mildly. So what? Well, it didn’t matter until Amazon shareholders were not affected by Bezos’ pet hobby. But this is becoming a huge problem for them not only in the US but also in other countries around the world — and Amazon has lost Billions of dollars already — and more on the way. And how does this affect Amazon in the submarine cable space? Huuugely….. Read More……
PLCN Disaster Does Not Bode Well For Hong Kong As An Asian Data Center Hub
So finally, Google and Facebook got tired of waiting for Team Telecom to make a decision on PLCN, a submarine cable connecting the US to Hong Kong, Philippines and Taiwan. How much longer can you wait if permission is not granted for 7 years even when the entire cable is built with $500 million down the drain? So finally the US content providers have asked Team Telecom to allow them to send traffic only to Taiwan and Philippines and not to Hong Kong where the landing party is Dr. Peng, which is suspected of ties to PLA. With this development coupled with the political protests and the Coronavirus problem, Hong Kong in my opinion will become the pariah of the submarine cable industry. And Singapore is now the reigning king of Asia for data centers and as a hub. But there is a desperate need to find another data center hub — as replacement to Hong Kong. I have suggested one and am seriously thinking of building a cable there. Which is this country I am a big fan of? Read More……
Why Do Private Submarine Cables Fail?
From time to time, I get invited to bid on doing a feasibility study for a new submarine cable. And before I sign the NDA and get to know the project, I have a very simple question for the company wanting to do the study. Are they looking for a real study or they are looking for a CYA study? Because I will not take on a CYA study no matter how much money is at the table. Let me explain. First of all, CYA stands for Cover your A**. So typically in any private cable, you need a minimum of 3 studies — one by the entrepreneur, one by the fund investing equity and one by the bank or lender. Sometimes, even the vendor may need one if they are taking on substantial risk. Now let me explain how the system works. Read More……
Fiber Meltdown Starts In The Atlantic
As expected, GTT is about to officially put Hibernia on the block. GTT had bought Hibernia which includes Hibernia Express and Hibernia Atlantic cables for $590 million less than 3 years ago. GTT is seen as largely getting out of the pure infrastructure business and focusing on IP network services. So what has caused the meltdown so quickly? And what is the price carriers would be willing to pay for Hibernia’s assets? And how is it going to affect the remaining players in the Atlantic such as AquaComms? More importantly, who is going to buy this white elephant? The last I head in the market, GTT was willing to let these assets go for $400 million. What is the maximum I would be willing to pay for them and why? Read More……
I Have The Right To Re-Name The Blue Raman Cable
I was really happy when Google decided to name the India to Europe cable after Sir Chandrashekhara Venkata Raman. After all, he also also been honored by getting the Nobel prize as well as Bharat Ratna, India’s highest civilian award and represents the new India with its high tech force around the world. However, the politics that went on behind closed doors where certain people did not want to honor an Indian were just horrible. And as a compromise, the Blue Raman name was agreed to keep everyone happy. The official reason given is it is an amalgamation of the Raman cable and Telecom Italia’s Blue Med cable which has been merged together. I totally disagree with this compromise formula. Raman should be honored in the entirety (Raman Cable). If that is not possible, then I should have the right to rename the cable. After all, the cable design has largely (98%) been influenced by the design I had published 2 years ago which is attached. I have submitted a new name — the Freedom Cable which represents freedom from Egypt. Blue Raman is not acceptable. Read More……
NTT’s MIST Deal Is In Danger
I first reported on NTT’s $350 million MIST deal (Singapore-Myanmar-Chennai-Mumbai cable) a couple of months ago and it really fascinated me because it was different than the usual submarine cable deals. So I spent a lot of time peeling the layers of the onion and trying to understand what was going on underneath. And I am convinced that this deal will be in financial trouble if it does go through. In order to analyze the deal, you need to first understand the motivation of NTT with their data center assets in every landing location and how the cable fits in to the equation. NTT is normally a very conservative company but the MIST deal is anything but. It is a pure speculative play and therein lies the trouble. Read More…
Chinese And Indians At Each Other’s Throats Over The Sea-Me-We-6 Cable
A war of sorts has erupted in the inner sanctum of the Sea-Me-We-6 Management Committee as Indians and Chinese have started fighting with each other over control of the $600 million cable. There are at least two major issues which has led to this unfortunate situation which I will talk in great detail as if I was the fly on the wall. One of the two issues revolves around the vendor selection. The Chinese carriers are adamant that Huawei should be given the contract and in fact, Huawei has been shortlisted and close to being awarded the contract. And what is Singtel’s stand on this issue? After all, SingTel is the Godfather of the Sea-Me-We franchise. And what is the even bigger second issue that has pitted the Chinese and Indians at each other’s throats? Read More…
I Am Proud Of Google’s Blue Raman Cable
More than 2 years ago, I had proposed a new cable which would be an acceptable solution to the Egypt crisis. And I am really happy that even though it took a while for Google to decide to finally have a face off with Egypt, they now have adopted the design I had proposed for the most part. Attached is the solution I had proposed. You are welcome, Google. The pleasure is mine. That doesn’t mean it is going to be easy sailing for the cable with intense opposition from Egypt. With regards to the name, Google is still having problems. They had proposed Infinity as the new name but unfortunately, similar to the Simba cable having IP infringement issues with Disney, Google ran in to the same issues with KDDi. This is why. So search for the new name continues. Read More…
Facebook’s New Strategy: Steal From Stupid Carriers And Give To The Smart Ones
For someone who needs to invest $150 to $250 million all in, in Facebook’s African network, these are the stupidest carriers in the entire world. You would think before investing that kind of money, they would at least spend 45 minutes hearing my speech on The Submarine Cable Crisis in Africa. But as they say, the stupid and their money are soon parted. And yet, there are the really business savvy carriers who have taken the time to really understand the game and negotiated a deal with Facebook which has resulted in them getting $50 million of free bandwidth without investing any money. Of course I am not kidding. Want to know more? Read More…
Massive Changes Expected In Egypt This Year
I can tell you with almost surety that massive changes will be forthcoming in the telecom sector in Egypt this year. For those that pay out tens of millions of dollars to the Egyptian government, this is a critical year. To begin with, the tree will be shaken and the the topmost branches will be the first to fall. Am I involved in some way in this shakeup? I can’t say but as they say, a picture is worth a thousand words. And I have two. Below are the pictures that will give some indication of what is going on. In my opinion, Egypt is sitting on a goldmine worth billions of dollars which is not being exploited. Read More…
Google Search Is On For A New Name For Blue Raman
After a huge embarrassment for the Google team who could not justify the name Blue Raman to their management after I called them out on my blog, search is on for a new name. One Googler was so mad at me that he said he would be happy to name the cable after me if I were to die soon enough. Aw…..so sweet of Google to consider giving me such an honor. But no thanks. I don’t want my soul to be in misery after my death for 25 years going from one cable to another, unable to find moksha. In any case, I have suggested one name which I think reflects the essence of the cable. Read More…
I Stand With Facebook On The Tierra Del Mar Cable Landing Issue
I blame the media for hyping up the story about Facebook’s Oregon landing of the Jupiter cable which also is owned by Amazon, NTT, Softbank and others. I am convinced that if Facebook were not involved in this cable, there would have been absolutely no news about the cable landing in Tierra Del Mar. The left media generally hates Facebook and often times, they go overboard. It is not fair. I cannot believe that a small hamlet of a town like Tierra Del Mar can hold a major submarine cable hostage. You may not like some things that Facebook does but to hold up a major cable that will be the lifeline of communications between Asia and the United States is just wrong. Read More…
Strange Request At PTC
Now I have been to every PTC meeting since the start. And I have had my share of interesting experiences. But this time, there was one request that came for 3 different people from 3 different companies that was the strangest of all. Each one independently requested me to write about their companies because they said their management gives them little information and they learn more from my blog about their companies than as an insider. Go figure. Read More…
Simba Is No More
For one of the largest corporations in the world in terms of market cap, I really don’t understand whether it was the arrogance or don’t care attitude of Facebook which resulted in getting a legal notice from Disney not to steal their intellectual property by naming the cable Simba after their world famous movie character. So Simba, the cable is no more. So what’s the new name of the cable now? Read More…
Microsoft Once More Enters The Submarine Cable Industry As An Investor
This is the third time Microsoft in entering the submarine cable industry. The first time was a complete and total disaster when it invested $50 million in Asia Global Crossing along with Softbank and lost all the money when the company went bankrupt. This was especially painful for me because I had a received a term sheet from Bill Gates and Masayoshi Son from Softbank to invest $50 million each in Project Oxygen but decided to opt for glamor rather than substance. Read More…
Google Should See a Psychiatrist Before It Names Another Cable
I mean seriously what is wrong with Google when it comes to naming cables? It has this obsession of naming cables with dead people’s names. And I have explained in detail why I don’t think it is ok in my LinkedIn article. I think they are confused now whether to listen to me or not as it has given two names to a project. Would any sane person even think of naming a cable Blue Raman? Most of the you would have a fit if you found out why. Read More…
I started thinking early last year: How can I contribute to the submarine cable industry in the coming decade that could have a lasting impact on the industry? Of course, I am a submarine cable developer Read More…
As everyone knows, I love writing I Was Wrong blogs which I write from time to time based on additional information my readers provide me on my initial observations. Read More…
In the last month, I have been writing pretty depressing articles about the submarine cable industry. But secretly, I was hoping I was wrong. Read More…
Facebook Wants Jio To Land Simba In India
Facebook is desperately trying to find sucker carriers to fund the $1 Billion Simba cable. And truth be told, carriers are falling for it. Read More…
NTT’s MIST Is Not A Submarine Cable Deal
I am sorry to throw a spanner in the works in to what seems from outside as a fast growing industry with huge potential and exciting growth prospects. Read More…
Do you remember when was the last time a new cable to India was announced? That was 2 years ago — a cable called IOX which never got fully funded and is now defunct. Before that? AAE-1. The Tagare cable stolen by Telecom Egypt 7 years ago. Before Read More…
Hong Kong’s Future As An Asian Hub Is Tainted
For the largest content providers in the world, the three biggest hubs in Asia have been Singapore, Hong Kong and Japan. While Japan is a hub to many cables, it also is a destination country Read More…
Orange Is Hard Of Hearing
I mean seriously, how many times have I said that customers do not want to put their valuable data in a carrier-owned data center? Show me one carrier in the entire world Read More…
GTTs Fall A Writing On The Wall For Infrastructure Investors
Not too long ago, GTT was on a roll as everyone looked on in amazement as it bought company after company in disparate sections of the communications services industry and created a behemoth. GTT investors were thrilled to death as they saw the market cap of the company zoom up to $2.5 Billion Read More…
Indian Carriers Get A 2-Year Reprieve
The Indian Government came up with a financial package to help the carriers. Basically, they do not have to make the payments for 2 more years. Read More…
The Core Problem Facing The Industry
So with almost a dozen cables being planned for India, none of them have seen the CIF signed. And the companies behind these cables range from the largest content providers in the world to all the large carriers in India all the way to entrepreneurs with a powerpoint presentation and a dog. Read More…
A Solution For India
(And The World)
I forgot to mention one more thing about why I believe the private cable investments are dead. It’s the valuation. I mean seriously, these projects are so hard and when I looked at the valuation I received, I was saying to myself Read More…
The End Of Private Investments In Submarine Cables
Having gone through 2 years of trying to raise money for the Octopus cable — and having received a term sheet — and having turned it down — I have a very unique inside in to the investment climate for submarine cables. Read More…
Indian Carriers, Submarine Cables In Deep Trouble
Depending on whom you talk to, there are at least half a dozen to a dozen new cables being planned to land in India. Unfortunately, most of those cable plans will either not go through or will be put on hold indefinitely. Read More…
Smoke And Mirrors: New Orange Strategy
So Orange put out a press release Orange To Build International Network in West Africa. The press release is pretty impressive — it gives the impression that Orange is building out something similar to Google’s Equiano submarine cable plus additional cables in a number of West African countries. Seemed like at least a $500 million build. Pretty impressive. Read More…
Egypt Won The Battle But Lost The War
If there is any country in the entire world that could have been the world’s hub of the Internet, it was surely Egypt. With close to 20 cables now passing through Egypt, it could have been bigger than Marseille, Singapore and Hong Kong combined for hosting the world’s data. Read More…
Google Building An Egypt Bypass Cable
STC from Saudi Arabia initiated the Egypt-bypass industry about 5 years ago. What started off as a totally illegal, undercover business is now a healthy portion of STC’s wholesale revenues — and quite profitable as they do not have to pay the heavy Egypt-bypass fees. Read More…
Interxion Sold To Digital Realty
In what could probably be the largest merger in the data center industry, Digital Realty bought Interxion mostly for its 53 carrier-and-cloud carrier-neutral facilities in Europe. Read More…
Orange Cannot Be Trusted Any More
I have been trying to put the Octopus deal together for close to 2 years now. And while it took Ellalink 7 years to put its deal together, I was not willing to wait that long. Read More…
OTTs, Global Politics And Policy
So what prompted this blog was the recent decision by the US Defense department to award a $10 Billion War Cloud contract to Microsoft for its Azure platform rather than to the Amazon AWS platform. Read More…
Orange Is Not Acting In The Best Interests Of France
I have been really impressed by the Port Authority of Marseille with their bold initiative of creating a passage for submarine cables clear from the shipping routes to encourage more safety and security for the cables. Read More…
Orange Wholesale Nemesis Got A Huge Funding
When the undersea fiberoptic cable business got started in 1989, it quickly became a mafia business headed by AT&T with its side-kicks British Telecom, KDDi, SingTel and France Telecom (Orange). Read More…
Why I Am A Big Supporter Of Libra
Remember the pre-Uber days when calling a taxi was expensive, difficult and not to mention, a cumbersome process. And God forbid if you hailed a taxi on a street. More than likely, the taxi driver would refuse to take you Read More…
I Was Wrong About Egyptian Crossing Pricing
A happy day for me is when I get email from my dear friends in the industry telling me that I made a mistake. Because that keeps me grounded and I get to learn from my mistakes. Read More…
Israel Is Planning A High Density Cable To Europe
For more than 10 years, Bezeq has been trying hard to build a submarine cable from Elat to Djibouti. But no matter how hard they tried, it has not worked out because they realized it was impossible to get Egypt’s approval for permits to cross Egyptian waters in the Red Sea. Read More…
Why Is Nobody Talking About AAE-2?
What happened to the genius at Telecom Egypt who claims to have come up with the brilliant idea of AAE-1? Why is he not continuing to innovate and enrich the submarine cable world with his God-given super intelligence and wisdom? Read More…
The Black Marketeer Of The Submarine Cable Industry
India has 14 submarine cables landing in the country. India’s population is 1.4 Billion. Saudi Arabia’s population is 34 million of which 11 million are temporary workers Read More…
WhatsApp At The Heart Of The Kashmir Internet Blackout
Its been almost two months since the Indian government abrogated Articles 370 and 35A from the Indian constitution and made the region a formal territory of India administered as two separate centrally ruled regions called Ladakh and Kashmir. Read More…
Reliance Jio And Its Dhando
First of all, let me talk about the major embarrassment that took place in Singapore at SNW. On the very first day, Bill Barney, CEO of GCX was supposed to deliver the keynote speech and we all read in the news the very same day that GCX had filed for Chapter 11 bankruptcy. Read More…
Cybersecurity And Spooks In The Submarine Cable Industry
I have not seen as much talk about cybersecurity as there was in Singapore at SNW. There were only a handful of talks on the subject but the amount of talk on the sidelines was surprising. First of all, let me admit that I have been interviewed by the spooks multiple times. It goes with the territory. Read More…
The Many Woes Of PLCN
PLCN looked like a guaranteed winner on paper. What with Google as the US landing party with supposedly deep ties to Team Telecom joined by Facebook to the hip to share the CAPEX and Dr. Peng as the landing party in Hong Kong with deep ties to the PLA and therefore the Chinese government. Read More…
And Now India Interferes In US Presidential Elections!
Tired of always being on the receiving end of the Western media constantly interfering in the Indian elections and constantly telling Indian voters to vote against the Modi government, in a twist of grand irony, Read More…
Sea-Me-We-6 Sold Out Even Before Submitting An RFQ To Vendors
So Sea-Me-We-6 is sold out to any additional investors. An RFQ will be sent out to the vendors in the next couple of months. This is quite unusual even for SingTel. Usually, they involve the vendors much sooner in order to get a price point. Read More…
Africa Will Be Controlled Mostly By Non-African Carriers and OTTs
So now I have a clearer picture of what is going on with Simba. Facebook is expecting to have the CIF for Simba by the end of the year. Facebook along with five other carriers will be the only ones sitting at the table. Read More…
US Presidential Candidate Sues Google
Tulsi Gibbard, a Democratic Presidential candidate has sued Google for banning her advertising account after the first presidential debate when she was the number one candidate trending in the debate. Because of this ban, she did not even make the third debate and is now considered out of the race. Read More…
The Submarine Cable War Between Facebook And Google
Exactly two years ago in 2017, there was a grand meeting held at Google London headquarters between Google, Facebook, Vodafone, Seacom, MainOne and a couple other carriers interested in Africa and it was decided that everyone would participate in a single cable surrounding Africa Read More…
“I have known Sunil since the last 25 years and I look forward to his views on the industry. OpenCables blog has opened up a new window in to the industry of submarine cables and in my role as regulator it has helped me to better understand the fundamental role that submarine cables play in international connectivity.”
José S. Barros, Director of External Affairs, ANACOM (Regulator), Portugal