The Risks & Rewards of Arctic Cable Projects: Polar Connect & Quintillion - Part 1

The EU recently gave 6 million Euros to the Northern European Polar Connect Initiative which aims to build a subsea cable connecting Japan to Europe via the Far North. See the map below for routing. NorduNet is a network linking universities and research organizations in the five Nordic countries of Denmark, Finland, Iceland, Sweden, and Norway. It is taking the lead on this project which is looking at two alternatives routes to reach Asia. One route would be via the North Pole and the other via the Northwest Passage. This would give Europe access to Asia without traversing the US or Canada and hence offer better privacy and more secure communication as well much lower latency. Because the proposed paths are highly diverse to the usual suspects of Atlantic cables landing in Canada or the US, they might be attractive for resiliency purposes. One can imagine carriers splitting their traffic between the Polar routes and the more traditional cross-US routes for Pacific/European traffic. Clearly some European low latency traders would be interested as the polar cap route would shave quite a bit of latency off Tokyo to Europe trading and market data flows. 

Some of the interest reflects pure research benefits such as an arctic cable equipped with sensors to monitor the ocean, ice, and wild life. Another part stems from the understanding that global warming will long term break up the ice masses and raise temperatures enough to increase economic opportunities in terms of mining, shipping routes, forestry, and military routes. It may be that the Far North is the New Wild West. This is why Canada and the Nordic countries are ordering new icebreakers. 

However, it is not easy to build an Arctic cable as the fact that there are none today demonstrates. NorduNet itself has been working on this project for probably a decade with an unlikely go live date of 2030. It is unlikely because the challenges are immense. To go across the North Pole will require at least two icebreakers to protect the cable ship laying the cable. While NorduNet has in the past thrown out figures of 180 million Euros, by any reasonable calculation this is a half billion Euro project. The icebreakers will sharply raise the deployment costs. Design and planning costs will be extraordinary by subsea cable standards due to the lack of experience in working in such harsh conditions. And imagine the maintenance contracts for such a project. One would need an icebreaker as well as specially designed cable ship to operate in such circumstances. Maintenance could be double or triple the rates for Atlantic cables. 

Other problems include the price sensitivity of Internet backbones. The fibre optic networks that connect the world are struggling to get good return on their capex. So buying extremely expensive arctic subsea capacity might deter customers.