EXA Ups The Ante: The Meridian Half Petabit Trans-Atlantic Subsea Cable

EXA unveiled its first home grown long haul subsea cable project today. Meridian is a 24 fibre pair cable that should reach or exceed the half petabit per second transmission milestone. It will land in New Jersey, and at Brean, UK, where EXA's low latency Express cable (a Hibernia Atlantic project that was RFS in 2015) lands. I believe EXA will deploy a prefabricated, modular cable landing station in New Jersey to ensure the physical diversity that hyperscaler clients desire. Another possibility is the NJFX facility. The term 'Meridian' can refer to the Meridian line that goes through Greenwich, UK and connects the North and South poles. The term also means 'the peak of success or excellence'. 

This cable project is a gutsy move. There have no pure carrier projects connecting North America to Europe since the Express cable went live. From 2016 to the present all Atlantic cables have been hyperscaler owned and designed. So EXA is counting on hyperscalers to take fibre pair IRUs and also spectum on Meridian. Eventually, EXA will migrate the EXA North and South Cable traffic to Meridian. Unfortunately, Meridian does not the unique physical diversity of EXA North and South. These two cables land in Canada.

EXA is also stepping outside of the conventional comfort zone in terms of subsea cable vendors. None of the Big Three, ASN, Subcom or NEC, won this business. Instead, EXA choose Xtera: https://xtera.com/. Xtera has done a number of medium and short haul subsea cable projects, but nothing comparable in length or complexity to Meridian. If Xtera succeeds, it would break open the tight oligopoly of ASN, Subcom, and NEC and might sharply lower cable construction pricing. A rule of thumb is that 3 suppliers in a market leads to limited price competition whereas the entry of a fourth player often causes 20% to 30% declines in per unit pricing.

In my opinion, EXA was gutsy in terms of vendor selection and in undertaking by itself a huge capacity Atlantic cable. However, this cable lacks significant physical diversity. Maybe senior management views latency as more important than physical diversity, but I doubt the hyperscalers share that view. Now the AI data center providers, also known as NEO clouds, probably care more about latency and less about resiliency than the hyperscalers. However, the hyperscalers are likely to still be here in ten years whereas the NEO clouds appear financially fragile due to high capex and operating costs (usually high capex projects have low operating costs, but AI data centers have enormous power costs). The RFS target is 2029 and it is likely that Meridian will hit it given it is fully funded and has only decision maker.

Map of EXA Infrastructure's New Fibre Optic Subsea Meridian Cable


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