Today's Interview With Eastern Light - New Nordic Undersea Dark Fibre Ring

Eastern Light is building a hybrid subsea-terrestrial dark fibre ring connecting Sweden, Finland, the Baltics, Germany, Denmark, and Norway. This morning I interviewed their sales director to better understand this ambitious project. The fibre pair count is 3x 144 pairs or 432 in total. No lit optical circuits or wavelengths will be sold. Instead, customers will be leasing or purchasing via IRU fibre pairs that they will light using their own equipment. There are ILAs for the subsea spans located on islands, but the short distances make them an option, not a necessity. However, some customers will undoubtedly prefer buying less and optically amplifying to juice the transmission rates.

Because it is a dark fibre network, the customer base will be predominantly hyperscalers, big carriers including the incumbents (Telia's internationl network is old), university research consortiums, governments including their national militaries, NATO, and banks. In particular, hyperscalers are extremely active in the Nordics. For example, Microsoft has three operational Swedish data centers and is building three more in Finland. It has $3 billion construction budget. Google has a large data center in Finland. Facebook has a large facility in Lulea, Sweden. So I expect plenty of Digital Giant demand for the project's fibre pairs. Much of this is AI-driven. Large language models are power intensive and give off huge amounts of heat, but are not latency sensitive. AI data centers are estimating large scale non-linear statistical models. The finished estimated models can then be distributed to data centers closer to the end user. 

Right now the Sweden-Finland 1 route is operational with RETN is a client. The parallel Sweden-Finland 2 cable is under construction. The next step will be a subsea cable connecting the three Baltics to Germany. Sweden-Finland 1 has already been operational for 4 years, yet has not had a subsea fault. The overall project is expensive because it is being done the right way. Bore pipes are used to bring the subsea cables to the beach manhole. The terrestrial routes are being trenched and are diverse to existing telecom conduits. This is good news given the lack of physical diversity in the Nordic long haul networks. The network is being built from the ground up, but given that this project could dominate the market for the next 20 years, it makes sense. A well executed, high fibre count project eliminates potential competitors. It is a barrier to entry. 

The fibre is standard ultra-low loss G652.D. There is no need for submarine cable fibre given the short subsea distances involved. Management estimates the entire project to take 5 more years. Burial depths are surprisingly shallow at 70 to 80 centimeters.

What I find most impressive is the company's aggressive vision plus their ability to raise money as well as their high construction standards. Independent operators are pretty rare in the subsea cable industry. PTT dominated consortiums are the norm even though there is often a clear conflict between seeding telecom competition, a vibrant telecom ecosystem, and PTT involvement. Most independent operators are frankly recycled distressed assets. I worked for the most successful of these independent operators, Hibernia Atlantic, whose assets GTT purchased for $600 million in 2016 after an initial out-of-bankruptcy venture capital purchase in 2001 for $25 million. The five Hibernia Atlantic cables (three Atlantic and two Irish sea are now EXA's Atlantic backbone.