Three Examples of Dubious EU Subsea Policy: Political Favoritism - Ellalink Cable

1. Ellalink connects Europe to Brazil. It offers a unique fibre optic path between Brazil and Europe. It is also much shorter than combining an Atlantic cable with a South American cable or an African cable with SACS or SAIL. Ellalink sharply lowers latency for traffic whose end points are South America and Europe. It adds resiliency as well to the regional telecom ecosystem. Wave costs are over $10K for a 10G and from the upper 20s to low 30s for a 100G. 

Nonetheless, it struggled to get private funding because there is simply not a lot of traffic between Portuguese speaking Brazil and Europe. Most South American ISPs can more cheaply and conveniently do their peering and pick up content in Miami. A 100G wave from the Sao Paolo Equinix complex to the Miami NAP is now under $10K. That is a third less than going to Europe via Ellalink to pick up the same content or peer with the same counterparts. In fact, Ellalink should be cheaper than moving traffic from South America to Europe via the US, but it is not. Total 100G cost from Sao Paolo up to Virginia and across the Atlantic to Slough is $15K per month. So 50% less than the lower latency Ellalink route. A 2x premium is pretty high.

Ellalink is a four fibre pair cable. Winston Qui at Submarinenetworks.com has detailed the huge money this project received. I think the least Ellalink management could do is rename the cable, 'My Friends In Brussels'.

1. A 25 million EU grant under the BELLA program.

2. A 9.57 million EU grant to connect Mauritania to Lisbon.

3. A 13.69 million EU grant for an Ellalink branch to the Canary Islands.

4. A 29.9 million EU grant to extend Ellalink to French Guinea.

5. Another 9.6 million grant to connect the Sahel region to Europe.

The five items above are just the grant aid. The European Investment Bank also loaned Ellalink $25 million to build its Cape Verde branch. You can bet the house that those funds were subsidized and charged below market loan rates. That project cost $30 million and Ellalink only contributed $5 million in equity. Now is $30 million to provide Cape Verde 30 Tbps of bandwidth really a good use of European resources? Cape Verde has 600K people, but it is not part of the EU. It is just a former African colony. I find it hard to believe the archipelago really needs 30 Tbps or that any more than a tiny fraction of that capacity will be activated. 

The project smells of soft corruption. By this I mean political favoritism as opposed to table length funding based on cold hard calculations of where the funds would trigger the biggest benefit for Europe and its allies or trading partners. After all, large parts of Europe still don't have fibre to the home. I strongly doubt that Cape Verde will ever be a major digital hub due to its very warm climate and high energy costs. But hey, it is a cool pace with great beaches, so why not spend $30 million?

Map of the Fibre Optic Ellalink Cable System & Extensions


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