Subsea Cables & Internet Infrastructure

 At the 2026 Submarine Networks World in Singapore Ciena pitched the MOFN business model, the managed optical fiber network. This is a network dedicated to a single customer like a hyperscaler, large enterprise, government, and the like. It involves dedicated fibre pairs and equipment. Very often the customer buys the equipment and ships it to the network operator. It is quite common in Africa where network operators provide such services to the American Tech Giants. But carriers have often found that hyperscaler forecasts of capacity needs are often wildly off. The result is poor MOFN economics and low rates of return.

Ciena seems correct when it asserts massive growth from here to 2035. Heck, that is a 35 year Internet trend. But claiming that traffic will be 85% AI sounds like a very bad forecast. Right now the world is spending $2 trillion each year on AI infrastructure versus $100 billion in AI service revenues. A pretty big gap. We have experienced cycles of excess technology enthusiasm over the last 150 years and bullish forecasts have almost always proved wrong. 

The second Kenyan data center (IXAfrica Nairobi) I've visited with a large Starlink presence. IXAfrica is on Nairobi's outskirts on Mombasa Road and is pretty damn difficult to find as I and the taxi driver learned to our dismay. 😃 Starlink normally requires 20 degrees of line of sight in all directions for its earth stations. A condition clearly violated here. I suspect Starlink is using free space lasers to transmit traffic to satellites high enough in the sky to reach this limited-line-of-sight facility. From my point of view all this talk about Starlink building a parallel Internet infrastructure qualifies as nonsense. It is just another niche ISP using a different and bandwidth-limited Last Mile infrastructure to reach end users. No revolution. Just hype.

Subco announced recently four new 24 fibre pair cables connecting Australia to Japan, Singapore, Guam, and the Continental US. This is obviously a multi-billion dollar undertaking. Now Subco owns the Oman-Australia and SMAP cables. It is also a consortium member on Indigo West and Indigo Central. So I believe Subco has significant retained earnings. Nonetheless, these new cables together probably come close to the $2 billion construction dollar mark. Moreover, hyperscalers don't buy capacity prior to successful execution. Indications of interest, yes, but not contractual commitments. LOIs are soft commitments. So this is a daring undertaking by one of the most successful private operators on subsea cables. For those new to the industry, a private operator generally is a wholesale player that owns an entire cable as opposed to a consortium member or a hyperscaler. However, the historical track record for private operators has not been great. So far Subco has an exception. By 2001, p...

Looks very similar in design to our present fibre optic subsea cable networks. For example, the Red Sea is a telegraph cable highway and Singapore is a telegraph cable hub. However, the Persian Gulf is not important because hydrocarbons won't be discovered there for another 30 years. Note the cable connecting South Africa to Australia, which is reminiscent of Google's Umoja cable. Note the cables connecting Argentina and Brazil to Senegal and South Africa, but Nigeria, a major hub today, has no connectivity.

I came across several instances of dubious subsea cable business models at the conference. 1. For example, one subsea cable startup thinks it can skip equity investments and actually finance its project via debt in the form of bonds. This idea makes absolutely zero sense to anyone with a finance background or experience in the field. The problem with debt is that you must make payments even through your revenues will be zero for several years while the project is executed. Furthermore, it is total crap to claim you will sell capacity IRUs prior to RFS. The simple fact is that sales prior to substantially finishing the project never happen. In the six months prior to RFS sales can happen because carriers can see the project is almost ready. Indeed, that is when the hyperscalers sell capacity. But a debt-financed project needs big IRU deals from the day that bonds are issued. Financial history is quite clear on this point. Telecom infrastructure projects in their early stages are almost ...

This is the Peace cable's Marseille backhaul. It illustrates standard landing architecture as well as good network design. First of all, the cable comes ashore outside Marseille Port's own cable landing facilities for the sake of physical diversity and resilience. Always put some distance between a cable and others if possible. This increases the cable's value and demand for its capacity because diversity means adding it to the network portfolio improves its resilience. It is analogous to the role of diversification in a financail portfolio. Like all other subsea cables, Peace terminates in a beach manhole where it was spliced to a terrestrial fibre cable that also contains a power conductor just like the subsea cable. Then the terrestrial fiber goes to an Orange 'CLS', really just a power feed hut. From there the cable becomes part of a fully diverse fibre ring that includes dual entrances into MRS2 where most of the cable's SLTEs are kept. Most likely this fib...