Iceland's Dirty Telecom Wars: FARICE, IRIS, And Vodafone

Sources tell me that the Iceland Iris cable was originally a Vodafone project that FARICE effectively highjacked. FARICE is a government-owned telecom incumbent with limited regulatory oversight due to legal loopholes. Indeed, Vodafone even built a data center in Reykjavik to serve as the cable landing station that the data center company Borealis eventually bought after Vodafone gave up on the subsea cable project. FARICE used its control of telecom infrastructure to block Vodafone. Here is the initial Vodafone project announcement: https://lnkd.in/d2aYnWnJ. Emerald was Vodafone's name for a high capacity cable project that would connect the US to Ireland and including an Iceland branch. After the branch was dropped, Aquacomms finished the project under the name of AEC-1. The projects reflects the insider nature of Icelandic society. Because Iceland has only 400,000 people competition in many industries is limited and everyone knows everyone and everything. For example, a handful of families dominate the important fishing industry. Even foreign investors have struggled to get the power pricing they wanted due to the power companies coordinating prices. 

Iceland could be a great digital hub but it will not get there if FARICE continues to block telecom competition. I know one Icelandic insider who says structural separation into a retail and wholesale division is coming, but I have heard nothing to corroborate it. Right now Iceland needs dramatic reforms to make a quantum leap into the future and allowing the old boys club to dominate will simply hinder the desired transformation. Iceland has one of the best educated work forces on the planet and one of its highest standards of living, but it open up the system which incumbents in most sectors dominate. Among the reforms required is to create a wholesale transport market. Housing is another area. Sky high prices are due to the government's slowness in issuing permits despite the lowest density population in Europe. Like much of Europe it stands at a crossroad with one path pointing to the Past and another leading to the Future.


IRIS Subsea Fibre Optic Cable


Comments

Post a Comment

Popular posts from this blog

Breaking Story: Facebook Building Subsea Cable That Will Encompass The World

Image
Several sources have whispered in my ear that META is planning a new 16 fibre pair cable that will encompass the world going from the US East Coast to the US West Coast via the Atlantic, Indian Ocean, and the Pacific. The most ambitious subsea project ever undertaken. I do not know the exact routing. I know that the cable will launch from the American East Coast and will go down the West African Coast to South Africa and then head straight to Mumbai. It is not clear if Europe will be online or not. From Mumbai it will head straight to Australia and then up to the US West Coast. I speculate that there may be branching units to Singapore, Malaysia, and Indonesia. But the basic routing is US/South Africa/India/Australia/US. What is not clear is if there will be branching units to add more countries to the cable.  This semi-secret cable reflects META's desire for network resiliency given the four month Red Sea down time that AAE-1 and other subsea cables suffered during the first half ...
Read more

Facebook's Semi-Secret W Cable

Image
 A few days ago I wrote that Facebook was planning a new subsea cable directly linking the US East Coast to South Africa, then up to India, onward to Australia, and finally to the US West Coast. Clearly resiliency is a big theme. It avoids Lisbon, Marseille, Egypt, the Red Sea, and Singapore. All choke points due to their telecom hub status. Note that the map below shows lots of branching units, but I don't have insider confirmation although they make perfect sense. The cable is 16 fibre pairs.  This cable may be heavily influenced by AI considerations. AI data centres require lots of space and power. The US, South Africa, India, and Australia are good candidates for AI data centres in terms of space. All of them except for South Africa have modern power grids. But South Africa is still the best place on the continent for large scale AI facilities. An AI theme makes particular sense given the cable's high latency. An AI data centre does not directly serve custo...
Read more

How To Calculate An IRU Price For a 100G Wavelength

The IRU price should reflect your forecast of future lease revenes. If the current MRC is high and prices have been stable and are expected to remain so, then the opportunity cost of selling an IRU is high. You are sacrificing a lot of lease revenue if you sell that capacity. In this case the upfront IRU price should equal the three year MRC multipled by 4 to 6 years. So if the three year Faster cable MRC is $17K, then 48x to 72x times that number is fair value. So 48*$17K=$816K. Plus a standard 4% annual fee to cover the wavelength's share of maintenance and operations.. So strong markets and tight capacity mean that leasing is more attractive than IRUs to the supplier. Vice versa, the buyers will be desperate to lower their long term costs via an IRU. In my example, $816K divided by 15 years equates to $4500 per month excluding O&M. Bad for the seller. Good for the buyer. That's why so many of you are looking for IRU capacity to resell to your clients, but finding few se...
Read more