NewIssues 71 | September 2012

UNDERSEA CABLES: Supporting growth in offshore energy and internet bandwidth ICF News | Issue 71 ICF News

ICF Congress RIO

This year’s Congress will be held at the Hotel Sofitel in ICF CONGRESS Content Rio de Janeiro starting with our traditional Welcome Reception on 2 October and finishing with an excursion on 5 October. The ICF Standing Commission led by Peter Ford is in the RIO DE JANEIRO process of finalizing the program for this year´s Congress. undersea cables: 2 - 6 OCTOBER 2012 supporting growth in offshore energy and internet The Sessions this year will cover: bandwidth (pages 1-13) • The Brazilian Perspective, with high ranking speakers from politics, Statistics economy and industry • Electrification & Sustainability in Brazil (Region, Globally) • Global Perspectives, including a presentation on the regional wire & cable industry and • Successful Brazilian Industry Leaders

We would like to thank our friends of Prysmian and General Cable in Brazil who have been providing great support to identify the “right” speakers for our Congress.

ICF New Member

We welcome Diamond Power Infrastructure Ltd., India, as a new member of ICF. Information can be found on their website www.dicabs.com. I.C.F P.O.BOX 26 Graben 30 ICF Sponsorship in Cape Town – Update A-1014 Wien Austria After some delays the construction Phone +43-1-532 96 40 of the Hoofweg Community Learning Fax +43-1-532 97 69 Center is on its way. The projected Web www.icf.at completion date is November 2012. Contact [email protected] We will keep you posted. The ICF Newsletter is published several times each year by the International Cablemakers Federation. The ICF accepts no responsi­bility for the accuracy or the content of materials provided by third parties Thomas Neesen as identified. Secretary-General ICF News | Issue 71 Undersea Cables: Provided by CRU Supporting Growth in offshore Energy and Internet Bandwidth 150 Years of Undersea Applications in Telecom and Power Cables: Developments in the Last Decade Mirror Efforts to Stay Abreast of Demand and New Requirements

Growing Significance of Subsea Cables: maintaining lines of communication and power supply have been strategic imperatives for millennia. Roman engineering delivered roads and aqueducts that allowed a republic and then an empire to span diverse peoples, languages and cultures and thrive for more than 700 hundred years. In this edition of the ICF newsletter CRU highlights the vital contribution that undersea power and communication cables have made to society as well as discuss new develop- ments in both power and optical cables used to connect continents and communities.

FROM GUTTA sea applications. The first undersea tele- deployment of the first undersea HVDC phone cable was built in 1921 linking power cable wasn’t until 1954 when ABB PERCHA TO XLPE Florida to Cuba; this cable was insulated installed a 98 km, 20 MW, 100 kV cable with a blend of gutta percha and rubber. to connect Gotland with the Swedish Insulation for Seawater in 1840s Subsequent materials advancements mainland. The cable was upgraded The first undersea telegraph cable was allowed this cable’s replacement in 1950 several times over the following decades installed in 1849, but failed after only a with a cable using polyethylene (PE) and to deliver more power. A key advance- few weeks. The key technical advance butyl rubber insulation. The first trans­ ment nine years later—the advent of that made this endeavour possible was oceanic telephone cable was built in 1956. crosslinked polyethylene (XLPE) devel- the use of an insulating material called, oped by a GE Research Laboratory in gutta percha—also used in golf balls. The first subsea power cable was New York further improved power cable’s The cable was “redeployed” and saw the installed in 1811 in Germany and insu- reliability—from ten to fifteen years to as first transatlantic telegraph sent via cable lated with natural rubber. Over the years, many as thirty years. The cable’s ability to in 1858. A second cable was completed various other approaches towards cable cope with higher operating temperatures in 1866. Those first baby steps of an protection were: Use of extruded lead as also was increased to keep pace with industry 150 to 160 years ago began the a water barrier; and the introduction of modern society’s ever increasing energy history of insulated cables used in under- oil-filled insulation in 1952. Commercial consumption.

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NOTEABLE 1954 first submarine HVDC cable installed POWER CABLE between Gotland and Västervick (Sweden) – 98 km long DEVELOPMENTS 1963 first cross linked polyethylene (XLPE) insulation

1811 1924 1937 1962 1990s first submarine power first oil filled cable first synthetic insulation first ethylene-propylene oil-filled insulation mostly cable installed in installed (132 kV) cable: butyl rubber rubber (EPR) insulation abandoned and replaced Germany, insulated with by plastics for under- natural rubber ground cables

Slide 1 | Source: International Cable Protection Committee

Higher Power for Undersea Cables (XLPE) insulated 345 kV AC cable, and Netherlands was installed, making it the In January of this year, Con Edison it was extruded in a single continuous longest subsea power cable. This ca­ble activated a 345 kV, undersea cable in length without factory joints. operates at 450 kV DC and has a capa­­ ­ New York harbour to deliver 512 MW of city of 700 MW. At that time, it was said power to the New York area wholesale Longer Spans for Power Cables the 123 kV, 75 MW XLPE cable was the market. The cable runs 10.4 km from Energy projects, including offshore wind longest, most powerful cable to be a new gas-fired generating facility in farms and platforms for oil and gas ordered for an offshore oil and gas Bayonne, NJ, to Brooklyn, NY. ABB, production are requiring longer power application. The cable contains a fibre which supplied the cable, said it was the cables. In 2006/7 a 580 km subsea optic distributed temperature sensor world’s first cross-linked polyethylene power cable between Norway and the and communication functions. TYPES OF POWER CABLES

polymeric HVDC VSC B cable for DC A C D paper-insulated mass- impregnated cable for HVDC

XLPE-insulated three-core cable for AC

XLPE-insulated cable for AC

Slide 2

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Slide 1 provides a timeline of significant developments relating to the develop- ment of undersea power cables, while Slide 2 depicts several subsea power TRANSPORTATION AND STORAGE cable designs. OF POWER CABLES

Subsea power cables are akin to high voltage transmission lines, thus these undersea designs mean cables are either: high voltage (HV), which CRU defines as 60 kV to 230 kV and extra high voltage (EHV), which we define as greater than 230 kV. Subsea power cables are generally installed as single core cables and so for AC links typically three cables are used and for DC two cables, so a 100 km AC link would use 300 km of cable and a 100 km DC link would use 200 km of cable.

Cable costs in any undersea deploy- ment are typically a line item as part of the whole project, and since these are almost always turnkey projects, won in a competitive bid, total proj- ect cost is used to describe both the power cable itself and the optical unit Slide 3 | power cable loaded on turntable prior to ship transfer (Source: ABB) deployed within it for supervisory con- trol and data acquisition (SCADA) pur- poses, plus accessories and instal- lation.

Power Cables: Primary Building Block in Economic Development Undersea power cables are nec- essary for a number of reasons. The rationale for investment origi- nally was: 1) they delivered bulk power to island com­munities or to inaccessible locations, and 2) they provided a means to arbitrage energy usage between countries where high power generation capacity and relatively lower domestic demand could be sold to neighbouring coun- tries that require additional power to Slide 4 | power cable loaded on cable ship; power cable storage tank on laying ship meet peak demand. (Source: Prysmiangroup)

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For example the link between the UK way to achieve this is by using a 3. Increased difficulty in obtaining and France has allowed power to be submarine cable. Thus a large num- authorisation for new transmission sent from the UK to France when France ber of new links have been planned lines on shore due to environmental experienced peak power demand and with the majority of HVDC cables considerations or community outcry then power could be sent in the opposite installed in the last several years against transmission towers built in direction during the UK peak, with the having been in Northern Europe their locale. One option is to run a time difference between the two countries linking Scandinavian countries with length of submarine cable along the and cultural differences resulting in peak power company grids in Germany, coast of a country rather than over power being at different times. Poland and the Baltic countries; other land. This option works for links close projects connect UK to France and to the coast, but it is a viable alternative These two drivers remain relevant, but the Netherlands. and is receiving serious consideration. a number of new factors have served to 2. Development of offshore wind Just recently Prysmian has won a give this market a big boost. The new farms, along with other potential off- contract to supply a subsea power drivers can be grouped into four areas. shore renewable energy generation cable down the west coast of the UK, such as wave power. By definition an option that has been chosen over 1. Deregulation of the power sector you need to get the power from a land based transmission line. has opened up the market to much an offshore wind farm to shore 4. Growth in offshore oil exploration and greater trading of power between and the only practical method extraction. In the past rigs had their countries, coupled with the targets for this is by using a submarine own power generation facilities, but an for renewable energy generation. power cable. Power is generally alternative is to supply power to a rig With the growing internationalization transmitted from the individual using a submarine cable. This means of power companies, this trend turbines to a central point using sub­ the rigs can be smaller and a more has been enhanced. Both of these marine MV cables, where the power efficient source of power generation trends will increase requirements is aggregated using an HV cable, can be used. This is not a big part of for higher transmission capacity which transmits power to a shored- the market but it is another area that between countries; often the only based substation. is growing.

Subsea power cable market rebounds

3,000 3,500

HV+EHV (US$M) 2,500 3,000 HV+EHV (km)

2,000 2,500

2,000 1,500 1,500 1,000 1,000

500 500

0 0

Slide 5 | Source: CRU

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renewable energy sources, such as wind grids of different countries, for instance, POWER CABLE: power and hydro power, have become the NorNed link between Norway and MARKET AND increasingly popular where geographical the Netherlands. This is mainly to tackle factors allow. The need to connect energy price volatility, improve power DEVELOPMENTS these sources to main grids will continue supply reliability and allow access to to remain a significant driver for the renewable energy. When we look further Demand for HV and EHV subsea cables HV/EHV submarine power cable market into the period 2010 to 2015, these declined following the economic crisis in in the coming years. In 2008 to 2009, projects are becoming increasingly 2008, but rebounded in 2010 and 2011 this counted as the biggest driver of the popular particularly in Western Europe. as shown Slide 5. global market (54%). From a business perspective, efficient electricity connection often improves Green Energy is a Growing Industry A number of projects were designed to profitability because of lower energy costs. In the last four to five years, wind power connect the power supply on an island projects were concentrated in the to that on the mainland in order to ensure Undersea Power Cables: Possible Americas and Western Europe and were the reliability of power supply. This was Solution to NIMBY obstructionism all of significant size. More than half of the second largest driver (23%) for the A May 2010 article in the NY Times the projects were driven by an increase submarine power cable market. These highlighted the proposed underwater in renewable energy capacity as national power transmission projects for isolated Champlain-Hudson cable proposed by utility companies connected offshore islands are often constructed in line with Transmission Developers, a Toronto- wind farms. Early examples include the urban plans to develop local tourism based company. The plan proposes to Thornton Bank and the Thanet offshore or business parks, and are especially deliver to the New York City metropolitan wind farms linked to domestic power common for Asia and the Middle East, area, including crossing Long Island grids. Due to high energy prices and but also in the Mediterranean. There Sound and transiting to Connecticut. targets on renewable energy generation, are also larger projects to connect the A major challenge in building overhead

TRANS BAY CABLE ROUTE 400MW, 200kV

San Pablo Bay Pittsburg

Richmond

Berkeley

San Francisco Bay

San Oakland Francisco Slide 6 | Source: Prysmian

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transmission lines is resistance to new would eventually be part of a much towers/lines being installed in local com- longer cable continuing to Greece and munities. This stance has been labelled, interconnecting from there to European “not in my backyard” or NIMBY. The electricity grids. If approved, the EuroAsia Champlain-Hudson cable would be Interconnector will stretch 1,000 km installed for virtually the entire length and be installed at a maximum depth (595 km) of the Hudson River, although of 2,000 m according to DEH Quantum along certain sections where industrial Energy, a consortium of Greece’s TSO, chemicals are known to have saturated PPC, Cyprus's Quantum Energy and river sediment, the cable will be installed the Bank of Cyprus. DEH signed a along railroad rights-of-way that run on memorandum of understanding with the east side of the river. The cable also state-owned Israel Electric Corp (IEC) in will come ashore to avoid spawning March 2012 initiating a feasibility study areas for some species of fish. that should be completed by year end. Slide 7 | STC undersea cable samples The cable itself will take three years to (Fotos: P. Fay) Typically undersea power cable projects build and install. cost the equivalent of $15 million per kilometre. A significant portion of the Surrounded by Arab countries, Israel supply on the Islands. Supplementary cost covers equipment that transforms transmission system lacks interconnec- benefits include improved efficiency, electricity to direct current, a form that tion agreements with its neighbours that higher operational savings and reduced is required for efficient long distance are common in other markets. The cable emissions. underground or subsea transmission. reportedly will carry 2,000 megawatts In comparison, power lines hung on in both directions, allowing Israel to sell Last year REE invested in the ROMULO towers run from $1.6 million to $6.4 electricity when production is high and project, a 400 MW high-voltage direct million a kilometre, depending on terrain have a back-up when reserves drop. current (HVDC) link of 240 km between and other factors. Israel recently discovered huge deposits Spain’s 400 kV grid and Mallorca. In of natural gas in the eastern Medi­ this new contract, the connection to Cost notwithstanding, underwater power terranean and is studying ways to export Ibiza will be extended by constructing a cables can provide a net benefit when much of the reserves once the offshore 132 kV AC submarine cable featuring considering the big picture. The same fields begin production in the coming XLPE insulation. Nexans, the cable NY Times article cited the 85 km Trans- years. Israel stands to suffer from energy supplier in both REE projects, said the Bay power cable installed from San blackouts as power usage has climbed. 100 MW link will establish two world Francisco to Pittsburg in Contra Costa records for both the longest 3-core high- County across the San Francisco Bay Cyprus has reported its own natural voltage AC connection and the deepest (see Slide 6). Built by Prysmian this cable gas discovery and last month opened a deployed such cable, at an installation allowed old power plants that burned second hydrocarbons licensing round, depth of 750 metres. natural gas to be retired. offering 12 offshore blocks for potential exploration. Brazil: Subsea Oil Wealth Requires Undersea Cables are also Built for Undersea Power Cables and Umbilicals Political Reasons: Israel Some Recent and Notable Power With more than 76% of its domestic In March of this year Israel and Cyprus Cable Projects: Europe and Brazil proved oil reserves in large, contiguous announced a feasibility study to REE (Red Eléctrica de España), Spain and highly productive fields in the off- construct a subsea power cable transmission system operator is building shore Campos Basin, Petroleo Brasiliero between the two countries that would a 90 million Euro high-voltage (HV) sub- or Petrobras is one of the global leaders simultaneously guarantee their mutual marine power cable spanning 115 km in deploying offshore cables. In 43 years energy security and offer Israel a channel between the Islands of Mallorca and of developing Brazil’s offshore basins, to export energy to Europe. Ibiza. This project is part of REE’s invest- Petrobras has developed expertise in ment to interconnect the Balearic Islands deepwater exploration and production The Israel-Cyprus leg, with an estimated with the Iberian Peninsula to guarantee to benefit oil fields in both Brazil and in cost of half a billion Euros ($660 million), and improve the reliability of the electricity other offshore oil provinces.

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To support this growth, Petrobras has helped finance a 900 mile natural gas FIBRE OPTIC ordered the construction of 22 new pipeline in May 2010. In 2009 the China FPSOs (Floating Production, Storage Development Bank loaned Petrobras UNDERSEA CABLES and Offloading) platforms and 33 drilling US$ 10 billion to help develop its vast rigs and also investing in new infrastruc- offshore oil reserves in exchange for Fibre optic undersea systems have been ture. The company has planned capital future oil supply. deployed since the early 1980s, although expenditures and investments of US$ only cables serving domestic markets 50.6 billion in 2012 and of US$ 224.7 Brazil’s role as a leading undersea oil pro- were installed for the first six years. Most billion from 2011 through 2015. ducer has meant on-going development of these cables were deployed in the UK, of power cables and umbilicals to support Italy, France and Japan. The first inter- Petrobras say it operates more exploration and production. Both Furu- national cables were installed in 1987 production (on a barrel of oil equivalent kawa and Prysmian, which are major between the UK and Belgium and the (boe) basis) from fields in deep and ultra- optical and power cable manufacturers UK and Ireland. deep water than any other company. In in Brazil are working to supply both 2011, offshore production accounted for subsea power and optical cables The first transoceanic cable was TAT- 89% of its production and deepwater to meet challenges in bringing this 8, installed in 1988 from the US to production accounted for 77% of its oil to market. Europe. Since then hundreds of trans- production in Brazil. The company is oceanic and regional undersea sys- increasing the number of its deep water Staggering debt loads and a need to tems have been installed. Some of the rigs, capable of drilling in water depths generate cash are forcing some southern notable developments related to fibre greater than 2,000 meters (6,560 feet) European companies, (chiefly from Spain optic undersea cables are shown in the from 19 at year-end 2011 to have 33 and Portugal) to sell off assets acquiring accompanying table. The effect of annu- by 2013. prior to the 2008 economic crisis. The al cable- km installed plotted against beneficiaries are cash-rich Chinese cumulative installations provides some Brazil’s oil wealth has attracted companies that are now gaining access sense of the surges and lulls in subsea foreign investment from Sinopec, which to transmission assets in Brazil. telecom cable activity, which has been

annual and cumulative route-km of optical undersea systems

200,000 1,600,000

180,000 1,400,000 160,000 1,200,000 140,000 1,000,000 120,000

100,000 800,000

80,000 600,000 60,000 400,000 40,000

20,000 200,000

0 0

1983 1985 1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Slide 8 | Source: CRU

page 7 ICF News | Issue 71 optical submarine cables through the years

Route or Service No. Gbps λ per max. Installed Installed System Location Date Fibers per Fiber Gbps Cost Cost Comment λ Pair US$ M Gbps • Transatlantic Systems TAT-8 US to UK 1988 6 0.3 1 0.84 357 $ 425,000,000 1st transoceanic, retired in 2002 TAT-12 US to UK 1995 4 5 3 30 338 $ 11,267,000 1st WDM system AC-1 US to UK 1998 8 10 2 80 290 $ 3,625,000 1st investor owned (non-consortium) TAT-14 US-DK-GER-F-US 2001 8 10 16 640 1500 $ 2,344,000 multi-node ring Hibernia US-CAN-UK-IRL 2001 8 10 48 1,920 865 $ 451,000 self-healing SDH-ring Apollo US to France 2002 8 10 80 3,200 1200 $ 375,000 high price due to 2 separate routes Proj. Express US to UK 2013 8 40 300 can upgrade from 40 to 100 Gbps Emerald Express US-IS-IRL-UK 2013 12 100 100 60,000 (est.) 300 $5,000 2012 »state of the art« technology • Transpacific Systems TPC-3 US to Japan 1989 6 0.28 1 0.84 500 $ 595,238,000 Hawaii to Japan TPC-5 US-Japan-CAN 1995 4 5 2 20 750 $ 37,500,000 1st transpacific ring CUCN China to US 2000 8 2.5 8 80 825 $ 10,313,000 2nd transpacific ring TPE US-Japan-China 2008 8 64 10 2,560 300 $ 117,000 undersea branching units Unity US to Japan 2010 16 10 96 7,680 300 $ 39,000 Pacific Fibre US-NZ-Australia 2014 4 40 128 10,240 350 § 34,000 • Other Regions, Systems with Repeaters MED Nautilus-1 Italy-Greece-Israel 2001 12 10 64 3,840 250 $ 65,000 3,500 km Alaska United Alaska to Oregon 2004 4 10 32 640 50 $ 78,000 2,500 km EASSy E.Coast of Africa 2010 4 40 59 4,720 263 $ 56,000 undersea branching units • Systems without Repeaters Great Belt Denmark Islands 1985 12 0.14 1 0.84 1 $ 1,190,000 among world's first undersea sys. USA domestic NY to Connecticut 1993 96 0.622 1 30 4.3 $ 144,000 64 km, no repeaters KJCN Korea to Japan 2002 24 10 24 2,880 60 $ 21,000 2 routes, no repeaters Sweden-Latvia Sweden-Latvia 2004 48 10 8 1,920 34 $ 18,000 no repeaters • Recent Developments GlobeNet Seg. 5 US to Bermuda 2012 4 100 150 30,000 upgrade on existing fiber route SeaBras-1 US to Brazil 2013 32,000

Slide 9 | Source: CRU

characterized by two growth periods in spread use of the Internet and growing and Pacific by investors that all believed the last fifteen years. requirements for higher capacity their system was indispensable. At the increments. time the mismatch between capacity Speculation v. True Demand availability and bandwidth requirements The preceding figure highlights two growth Billions of dollars were raised through resulted in severe price competition that periods in the undersea cable industry. capital markets to finance construction torpedoed many business plans, which The first spike affected both under- of undersea systems: 1) in parts of the were later sold. Systems deployed in sea and terrestrial cable markets. The world that at that time couldn’t justify the Atlantic, Pacific and Southeast Asia mania surrounding both cable segments that level of investment, and 2) the mass dominated the five-year period from in the late 1990s was due to wider overbuilding of systems in the Atlantic 1998-2002.

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Selected cumulative route-km

(km) 400,000

Higher BW & 350,000 New Markets Telecom Boom 300,000 Atlantic 250,000 Pacific SE Asia 200,000 Mediterranean Caribbean 150,000 Africa 100,000

50,000

0

1988 1990 1992 1994 1996 1998 2000 2002 2004 2006 2008 2010 Slide 10 | Source: CRU

Shift towards Emerging Market FACTORS Internet Traffic Growing 32% per Economies Year Investment in the second phase INFLUCENCING Cisco Systems, which publishes an was founded on meeting increasing SYSTEM annual assessment of Internet traffic, band­width requirements from both said in its September 2011 report, ad­vanced and developing markets. DEPLOYMENTS “Overall [worldwide], IP traffic will grow at a compound annual growth rate This phenomenon is especially evident Internet Drives Bandwidth (CAGR) of 32 percent from 2010 to in systems serving Southeast Asia and In the 1980s and early-1990s, under- 2015.” The rates in some regions will Africa. System growth in the Pacific sea cable operators referred to the be considerably higher, with traffic fore- also was driven by growing economic capacity of new systems in terms of cast to increase with a CAGR of 52% influence of China and other markets in voice circuits. As Internet data traffic in the Middle East and Africa, and 48% Southeast Asia. increased, announcements of new in Latin America. systems omitted any mention of voice The focus on these developing markets circuits, describing a system’s capacity More Devices, Data, and Data reflects the growing impact of non- solely in terms of bit-rate, first in Mbps Centres traditional undersea cable owners in the and more recently in Gbps or Tbps. Factors in this growth include more industry. devices, particularly smart phones and Whereas cables were once built Most of the capacity on undersea tablets, greater use of data appli­cations by consortia of incumbent carriers cables now is not used for voice on mobile devices, increasing use of in the US and Europe, many private circuits, at least not directly. Circuits of digital video, and all the hosting and investors in developing markets have 2.5 or 10.0 Gbps are sold to Internet storage needed to deliver the services. either acquired systems as in the case backbone operators, Internet hosting As of year-end 2011, the world had 6.0 of India’s Reliance Globalcomm buying companies, and other data network billion mobile users, 1.2 million of whom FLAG and Tata Group purchasing Tyco operators, in addition to telecom oper- were using mobile broadband services. Global Network. ators. For fixed line Internet, the world had

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0.6 billion fixed-broadband subscribers. New Routes Optimized for Latency week interview with Joseph Hilt, senior Another figure of merit is “Internet Another development in recent years vice president of financial services users”, which is separate from sub- has the imperative to reduce latency at Hibernia Atlantic, “That extra five scribers and is based on surveys for financial trading traffic and real- milliseconds could be worth millions of Internet usage in each country. time video conferencing. Low latency every time they [electronic trading provides a significant financial advantage firms] hit the button.” At year-end 2011, the world had for investment firms that use computers 2.3 billion users. for programmed trading. This has led Point-to-Point vs. Network to some upgrades in transmission sys- Many of the latest cable systems, Data Centres Contribute to Traffic tems on existing systems, as well as including the new systems serving Load to the planning of new routes with the Africa, take advantage of undersea Of course, only part of all Internet traffic goal of reducing the span lengths and branching units. This technology was is on undersea cables, but the inter­ lowering latency, which is measured in developed in the late 1990s and has national traffic is considered to be rising milliseconds (ms). proven effective for managing traffic with comparable rates, partly due to and optimizing cable placement. the new connections serving Africa AC-1 reportedly has held the trans- and South Asia. Trends in the location Atlantic lowest latency record of Recent examples can accommodate of data centres also can affect the 64.8 ms since it was introduced in three cables, including configurations demand for circuits on undersea cables. 1998. with high-count cables and cables having different fibre counts. Thus, an A recent development is the loca- Both Emerald Express and Hibernia international cable may have “drops” to tion of data centres in Iceland, where Project Express claim their respective individual countries with a lower count there is low-cost and low-carbon systems will both transit the Atlantic than the total system. The upshot is energy, and in markets such as more quickly: In Hibernia Atlantic’s that undersea cable systems are now Sweden and Greenland, where the cli- case, latency from New York and configured as multi-node networks, a mate is attractive for lowering cooling London will be as low as to 59.6 ms. significant change from the early years costs. In a March 2012 Bloomberg Business- when all routes were point-to-point.

technical advances achieve greater bandwidth

(No. of Channels) 350 45 (Gbps/Ch.)

40 300 Channels 35 Gbps/Ch. 250 estimated migration path 30 of number channels used 200 25

150 20

15 100 10

50 5

0 0

1987 1989 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 Slide 11 | Source: CRU

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Dispersion Problems Defeated in distances, the challenge for telecom cables over the last twenty years? There 1990s cables is higher bandwidth over long are three factors to consider: 1) number In the 1990s, the new technologies distances. The main difference is that of fibre pairs, 2) number of wave- of optical amplifiers and wavelength most advances in recent years have lengths, often referred to as lambdas division multiplexing led to bit rates of little to do with the fibre or the cable (denoted by the Greek letter lambda, λ) 2.5 to 5 Gbps per fibre pair. itself, but have been achieved with or channels, and 3) the speed at which These advances drove a major improved technology for the amplifiers the optical signal travels in each of advance in the design and production and transmission systems. After the the wavelengths, which is measured of optical fibres for undersea sys- first fibre optic undersea cables were in Gbps. In an undersea system, fibre tems – control of the fibre’s disper- installed in the 1980s, the bit rates per counts are termed as “fibre pairs”, sion characteristics or spreading of the fibre pair increased from 280 Mbps to so that bi-directional traffic may be optical signal across long distances. 622 Mbps, based on improvements in accommodated. As multiplexing and laser and modulation electronics. de-multiplexing technology used Controlling dispersion allows the to aggregate and separate wave- number of wavelength channels to Figure 9 details the growth in band- lengths has advanced, the number of be increased without penalties from width capacity and the implementation wavelengths that can effectively be dispersion and other optical effects. in international systems from the late managed and delivered has significantly 1980s through the early part of the 21st increased. Since 2000 the advances of more century. The stronger growth occurring closely spaced wavelengths and in higher bandwidth capable systems Wavelengths/Channels faster modulation rates have pushed deployed in the last 8 years, shown As the next slide shows, WDM sys- transmission rates above 1 Tbps per in Slide 10 would minimize the detail tems were not deployed until 1995, but fibre pair. shown in early system developments. only three systems: TAT-12 with three wavelengths, TPC-5 with two wave- Bandwidth Continues to Scale Up Bit Rate: Simple Explanation lengths and a Japanese domestic cable Whereas the challenge for power How has the industry managed to using 4 wavelengths used WDM. (WDM cables is higher voltage over long increase the bandwidth capacity of covered systems of up to four wave-

Gbps/CH. FOR INTERNATIONAL CABLES

(Gbps/Channel) 12

10 Low Average 8 High

6

4

2

0

1985 1990 1995 2000 Slide 12 | Source: CRU

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lengths.) The undersea cable industry deployed prior to the introduction of Flag Atlantic-now Reliance Global- didn’t realize an average of two or more TAT-8, the first transatlantic optical comm and Tyco Global Network. TGN transmitted wavelengths until 1998 cable. sold for US$ 130 million in 2005 to with widespread adoption or use of VSNL (Tata) after having been valued DWDM technology (more than four λs) The following slide illustrates the at US$ 3 billion at the height of the finally occurring in 1999. DWDM route-km of optical cable systems telecom boom. systems have improved the channel installed beginning in 1988. Up until spacing from 100 GHz (0.8 nm) in the the mid-90s these cable systems were These systems obviated the need for late 1990s to a 50 GHz spacing option built by consortia of incumbent pro- the older TAT systems, which all were if desired. These advancements have viders on both sides of the Atlantic. retired by 2004; TAT-14 is the sole TAT allowed manu­facturers to effectively cable still in operation. The retirement transmit up to 360 wavelengths in Atlantic Crossing, cutover in 1998, was of those systems is show by the decline laboratory testing in preparation for the first of many privately funded trans- in route-km from 2003 through 2008. commercial deployment. oceanic cables that were installed The Atlantic remained free of new during the telecom boom of the late submarine cable activity for ten years, Transatlantic Systems Overview 1990s. It’s hard to believe now, but which will soon be remedied by the As we read in the introduction, the when the feasibility study for AC-1 was introduction of two low-latency cable Atlantic Ocean was the first ocean to be conducted in late 1996 and early 1997, systems: Hibernia Project Express and spanned with a telegraph cable. From European incumbent providers were Emerald Express. The significance of the 1920s to the mid-50s, transatlantic still talking about needing capacity in these two new systems is shown in telephone service was delivered by increments of E-1s or 2.048 Mbps. the right hand figure of Slide 12, which radio. In 1956, the first Trans-Atlantic The data show only those transatlantic shows transatlantic capacity increas- (TAT-1) system was commissioned systems crossing from North America ing by more than four-fold when these providing 36 telephone channels. A to Europe. The flurry of new systems cables come on line. succession of similar coaxial cables announced and installed from 1998 designed with higher capacity— through 2002 include TAT-14, AC-2, the BIT RATE: 100 Gbps Being Trialled upgraded to 10,000 channels were Apollo system, Gemini, Colombus-3, As the number of wavelengths capable

transatlantic systems (1988-2013) Slide 13 | Source: CRU

180,000 12,000

160,000 Route-KM 10,000 140,000 Cost (US$M) 120,000 8,000

100,000 6,000 80,000

60,000 4,000

40,000 2,000 20,000

0 0

1988 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

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of being deployed has increased so too early 2012 that their system would be ated by PCCW Global; FNAL belongs have higher bit-rates been realized that upgraded to 40 Gbps by the end of to Reliance Globalcomm, which permit higher capacity payloads. In Q2 2012 and also would be equipped upgraded FNAL to 40 Gbps in August 2011, NTT successfully tested a trans- with 100 Gbps interface cards to 2011. mission speed of 100 Gbps on a single deliver even higher bandwidth as the wavelength channel, and decided need requires. The company said SUBSEA CABLES to upgrade its PC-1 Trans-Pacific cable that demand is growing at 35% to with this technology by 2013. The 100 40% annually with estimates of total OUTLOOK Gbps transmission system uses a international­ bandwidth usage out of coherent detection scheme and pho- Australia and New Zealand at Strong economic growth in highly pop- tonic integrated circuits. And last 620 Gbps. In February 2011, SME4 ulated emerging economies suggests month, Gulf Bridge International­ awarded contracts to upgrade link that power consumption will only announced deployment of the first capacity to 40 Gbps with landing site increase. Add ever-growing needs in commercially available 100 Gbps equipment to be upgraded to 100 Gbps advanced markets and the market for repeatered system in the Mediterra- for future needs. The 2012 upgrade subsea power cables will increase. This nean Sea on the network connecting is the com­pany’s fifth and increases includes cable demand linking offshore Egypt to Italy using Xtera’s Nu-wave network capacity to 6 Tbps, a 25x wind farms to national grids and deploying Optima platform. Hibernia Atlantic also increase from the original design umbilicals to more efficiently produce is trialling 100 Gbps technology. capability of 240 Gbps in 2000. and monitor acquisition of natural resources beneath the ocean floor. 40 Gbps is the New 10 Gbps PCCW Global and Ciena Corporation The market for undersea optical cables A number of systems in 2012 have jointly announced on January 11, 2012 has been characterized by surges in announced bandwidth upgrades to to upgrade the RNAL submarine cable demand and periodic lulls as the market 40 Gbps or planned migrations to to coherent optical 100 G networking rationalizes need for additional capacity. 100 Gbps; in some cases, the transition solutions. RNAL is a part of the As we have seen, increased deployment to 40 Gbps has already have imple- FNAL/RNAL submarine cable system, of undersea cables to sub-Saharan mented. Southern Cross announced in which is privately owned and oper- countries has produced a multiplier effect in infrastructure investment, for both Transatlantic Capacity (Gbps) Slide 13 | Source: CRU telecom and non- telecom purposes. 100,000 As many of these for- merly undeveloped 90,000 markets become 80,000 economic hubs,more investment will flow 70,000 into those countries, 60,000 raising the standard of living and increasing 50,000 investment in pow- 40,000 er infrastructure. This trend of strong 30,000 growth followed by 20,000 subsiding acitivty should continue as 10,000 the market antici- 0 pates future growth opportunities. 1988 1991 1993 1995 1997 1999 2001 2003 2005 2007 2009 2011

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