Subsea Cables & Internet Infrastructure

1. The intra-Asian APG cable has been down for an entire year. Forecast is that it will go live again end of April. 2. Bombing the Houthis is unlikely to get resolve the Red Sea impasse. Air power alone is generally ineffective. Military history says change requires boots on the ground. Indeed, most likely outcome is that the US bombings will delay any resolution. Expect futher delays for 2Africa, Blue-Raman, and SWM6 RFS dates.  3. Got 100G AAE1 wavelength capacity on non-express route for Marseille/Singapore. Available below $25K MRC per month. Big Chinese social media buyer Tiktok looking to take 10x 100Gs on same cable. So you better hurry or end up empty handed. 🙂

Latency: Under 63.3 ms RTD. A point: Singapore CLS. Z point: Maruyama CLS, Japan. Service: 100G Wavelength. MRC: $15.5K. Term: 1 Year. APG has a very short subsea path from the all-important Japanese financial exchanges to their Singapore counterparts. It enjoys lower latency than ASE. But uptime has been poor so you will need redundancy on a physically diverse cable. This is challenging because Pacific Rim cable landing stations often serve a multitude of subsea networks. A typical CLS may be home to as many of 8 cables or more. I can help you in designing your trading and market data networks.

The East Africa capacity shortage is real and chronic. A cable serving the East Coast recently upgraded its network, but sold almost everything before the upgrade was complete. The 100G prices along the coast vary from $35K to $110K per month depending on end points. Not exacly cheap. Peace is not helping ease the crunch as the Chinese carriers are not providing leases into Kenya, but instead offering just IRUs. This eliminates most of the market as the capital required is simply too great for most players except PTTs, OTTs, and mobile carriers. The 2Africa cable is simply insufficient as Facebook kept 4 fibre pairs for itself leaving only 12 pairs for carriers' internal traffic and wholesale sales. The only other significant cables serving the Coastd are Eassy and Seacom. Neither is really high capacity by today's standards. Furthermore, 2Africa's Marseille/Mombasa segment may not be ready until 2026 given Red Sea hostilities. So regional ISPs have little choice but to hau...

1. The eternal East African capacity crunch with 100G pricing ranging from $35K to $110K leads to a new East African cable being announced in quarter two or three of this year. Thanks to Mark Tinka for this brave, but plausible prediction. Peace has proven to be a disappointment for East Africa with capacity owners focusing on selling IRUs into Kenya. 2. In 2026 a consortium decides to build a new West African cable as 2Africa is hopelessly inadequate in terms of footprint and capacity. Facebook is using 4 pairs for its own traffic leaving only 12 pairs for the rest of the market. But 4 pairs is not enough for Facebook's own long term needs. 3. Africa-1, SWM6, and Blue-Raman are all delayed into 2026 due to the threat of Houthi attacks. 4. The collapse of the AI speculative binge begins second half of 2025. AI disappoints because large language models are not capable of logical reasoning nor can they distinguish truth from falsehood. Lack of applications leads to too much money cha...

I am trying to estimate Starlink's total annual depreciation. The reason is quite simple. These LEO satellites have five year life spans. Five years is very short. So depreciation is quite high. Each year a fifth of the fleet is retired. This means depreciation is high relative to revenues and also the steady state capex is quite large. Most telecom infrastructure enjoys a longer life span. The depreciation rate is a bit scary in my opinion.  Starlink had  5,200 operational satellites in May 2024. Construction costs vary from $200K for the earliest models to $800K for the more powerful recent models just being deployed. Let's figure $500K is the average weighted construction cost. Then annual depreciation is roughly $520 million per year.  Right now all you read in the press are good things about Starlink financials. But a private company intending to IPO generally only discloses flattering news. So far we have only been told revenues are in the billions and that the comp...

Naive speculators including a large part of the foreign policy establishment have pushed the idea that Russia is paying Chinese ships to drag their anchors to damage NATO members in the Baltic Sea. Historical records clearly debunk the notion that anchor dragging is a sure sign of intent to sabotage. ***The Chilean flag container ship Aconcagua dragged its anchor while sailing from Philadelphia to New York in 2008. It severed three high capacity Trans-Atlantic cables. The anchor had not been properly secured, which requires doing three separate tasks, and it dropped back into the water. An anchor typically weighs 5 to 10 tons versus 50,000 to 200,000 tons for a cargo ship. This means a ship can drift dragging an anchor even if propulsion has been halted and the anchor dropped. A good example is the infamous Rubymar, an abandoned freight ship, that drifted across the Red Sea for 31 kilometers in the Spring of 2024 causing three key subsea cable outages. In the case of the Aconcagua, the...

The conventional wisdom has been that trawlers are the primary culprit of outages. These ships deploy fishing nets attached to sand skies (my term) that slide along the sea floor. Typically they sink 40 centimeters or even more into the muck catching the very thin fibre optic cables. Sometimes the cables break. In other cases the crew intentionally cuts the cable in its haste to resume harvesting. It is illegal, but the sea has few spectators. BT studied causes of subsea damage in the vicinity of the UK using the AIS (automatic identification system) to track ships involved in incidents. The chart below shows that prior to 2006 fishing was indeed the primary villain. But an evolution has occurred. Global trade expanded over the period while at the same time governments and voluntary organizations like Kingfisher worked hard to protect subsea cables by providing accurate maps of cable routes. Since global trade has only expanded since 2010 it is likely that the trend has continued. Ship...