The Risks & Rewards of Arctic Cable Projects: Part II

Nordunet's cost estimates are way off base. It is not a 200 million Euro project, but a half billion Euro project. It would require a special cable ship designed for Arctic climates together with two icebreakers to be on the safe side. The proposed paths are as long as many non-Arctic cables whose construction costs were in the $200 million to $300 million range. But those projects did not require specially designed cable ships nor icebreakers for deployment or for the necessary geophysical survey undertaken before construction. The cable would probably be double armoured and the design phase costs alone probably twice the norm. 

So it is a given that upfront costs will be extraordinarily high. And here is the dagger in the heart: ice scouring. Floating glaciers scrape the bottom of the sea floor in the Arctic coastal areas. One or two meter burial won't be enough for the Northwest passage route raising the cost. But going deeper for burial may require special equipment or not be possible due to rock. A real life example of a subsea cable being gouged out by a floating glacier just occurred on Alaska's coast. The Quintillion cable connects communities along the Western and Northern Alaska coast and floating ice just severed its cable with an expected repair time of six months: https://lnkd.in/dCjA3M-c. Icebreakers and cable ships are scarce in the polar region so a two to three week standard repair is highly unlikely.

I don't have a good feel for the dangers of laying the cable across the polar cap. The sea under the ice cap is very deep. So I imagine ice scouring is probably not be a problem. One other type of risk would be deep sea currents that would move the cable around and lead to abrasion. More than one Trans-Atlantic cable has seen its protective polyethylene coating eroded by deep sea currents causing water to reach the power conductor. 

This combination of high costs, outages, and long repair times will definitely spook investors. You can't bill customers if you declare force majeure due to outages. Investors will ask themselves who is willing to pay a huge premium to get to Tokyo at a lower latency. Some financial traders, yes. But Internet backbones would shy away from placing significant traffic on a high outage prone route at a premium to market pricing. It is also important not to get crazy about global warming. It will take centuries for the polar ice to complete vanish. There is no geopolitical gold rush. Despite Trump's raving to the contrary, Greenland is not particularly abundant in mineral resources and the layers of ice make what is there distinctly unprofitable to mine. The costs of subsea oil drilling are also extraordinarily high. 

When one looks objectively at this project weighing costs and benefits and the needs of private investors to make a satisfactory return, it looks dubious. Yes, some day far in the future it will happen. But that Day is Not Today.