Submarine Cables

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Submarine Cables SUBMARINE CABLES The business of constructing and then maintaining DLA Piper is one of the largest global law firms in and selling capacity over submarine fibreoptic cables the world. We have a particular focus on this sector is fascinating, and is absolutely fundamental to and are very familiar with its specific idiosyncrasies modern day communications. The sector has its own and requirements. Whether it’s negotiating a new unique challenges due to the extraordinarily rapid consortium agreement, arranging finance, undertaking pace of development in transmission technologies pre-investment due diligence, advising on taxation as well as the timescales and levels of investment matters, dealing with regulatory matters, purchasing required to build new systems. infrastructure or capacity (on a lease or “IRU” basis) or advising on the effects of insolvency we have sector-specific experience which we don’t think can be matched by any other law firm in the world. UNRIVALLED SECTOR EXPERTISE ■ Advising Main One in connection with the extension of their existing West African cable system to other Offering outstanding legal support to the industry requires countries in the region. a complex mix of international law, financing, tax, regulatory, property and commercial expertise. It requires ■ Advising Broadband Infraco, one of the principal a thorough understanding of the sector in all its aspects, investors in the (consortium) West Africa Cable and it requires experience going back many years. System (WACS) in relation to its investment in WACS. The bulk of the work was to help them sell a significant Our unrivalled international network matches perfectly percentage of their entitlement under the consortium’s the international nature of the business, and allows the construction and maintenance agreement (the firm to provide timely and relevant advice to submarine “C&MA”) to another African telecoms operator. cable clients wherever they are doing business. ■ Advising the Matrix cable system which connects RECENT INTERNATIONAL EXPERIENCE Singapore and Indonesia. This involved drafting and Lawyers at the firm have recently worked on: negotiating many of their capacity sale contracts and advising on Matrix’s maintenance arrangements. ■ The acquisition of the Globenet submarine cable ■ system by BTG Pactual for US$750 million – Advising the Farice system connecting Iceland to we think the world’s largest ever pure submarine Scotland and Denmark. This involved assisting on a cable acquisition Our role included work on the central very innovative deal to sell part of their system and also “take or pay” contract – using a model that has never helping with capacity sales, their extensive backhaul before been applied to this sector. procurement and on the “cable crossing agreements” with other infrastructure owners. ■ The new Hibernia “Express” low-latency trans-Atlantic ■ system (US$200 million) where we have worked on the Advising Islalink and Canalink in the development, system supply negotiations – these had some very unique financing, construction and operation of submarine features because of the overriding need to achieve the telecommunications cable systems between the Spanish latency target; we also advised the incoming purchaser Peninsula and both the Balearic and Canary Islands and who has taken a significant equity stake in the business. on INUs, O&Ms and co-location agreements. ■ The new southern-Atlantic system (eFive’s SAEx system) planned to connect Brazil to South Africa CASE STUDY (US$300 million). Scandinavian Fibreoptic Cable System ■ The purchase of capacity (by way of IRU) by our client Lawyers at the firm advised a Scandinavian Fibreoptic (a pan-African mobile operator) from a member of the Cable System in connection with the structuring and West African ACE consortium – this project included drafting of a very complex deal allowing the system speaking to the consortium itself to get them to pre-agree owners to sell one (of two) fibre-pairs contained within rules under the C&MA protecting our client in the event part of their cable, but to retain responsibility for the of the insolvency of the vendor. This had never before whole cable’s operations and maintenance whilst still been done. allowing the purchaser, as much as possible, to operate ■ The highly innovative APX-West system from Perth- their purchased assets independently if necessary. Singapore which will, for the first time, sell spectrum This type of deal has never, to our knowledge, been and not capacity and which also involves a very done before and it required us to understand and think- interesting commercial model involving the transfer through: of the cable system from private ownership into a true consortium system. ■ how such systems are constructed; ■ ■ A new “spectrum” IRU and maintenance agreement on the regulatory background and impact of the deal; a trans-Atlantic route. Our client is the cable operator ■ the effect on existing backhaul arrangements; and their customer is a large multinational enterprise. ■ the position on insolvency; ■ Advising Global Crossing against Global Marine in the ■ the difference (if any) between an “IRU” and a Commercial Court regarding termination of a contract “normal” capacity lease contract. for providing maintenance services for a submarine cable network. 02 | Submarine Cables The pace of change in the industry means that we are frequently required to “think outside the box” to develop contract solutions for new technologies. CASE STUDY Sale of spectrum A relatively new concept in the industry is the sale of spectrum not capacity. Given the novelty, there are as yet no commonly-accepted standards for how the contracts should be structured. In this “vacuum” we have developed a contracting model to address some of the complexities and risks. For instance, some sections of spectrum on any given fibre-pair will be more useful than others. In a recent contract upon which we advised, the customer’s spectrum is “virtual” – they are allocated an amount of spectrum equivalent to a given percentage of the total spectrum on a single fibre-pair, but this could be sub-divided into smaller sections of spectrum across several different fibre pairs on the same cable. This then introduces additional concepts – if, for example, there is a problem with one of the fibre-pairs in the cable but not the other, does the customer lose part of their spectrum or does the supplier have an obligation to switch them to the fibre-pair which is still functional? OUR VALUE ADDS We have developed a set of truly innovative project management tools a key feature of which is the Submarine Cable Supply Contract Dashboard. This allows customers to evaluate competing offers from vendors in a simple and objective manner, with a very visual output that ranks contracts according to various weighted criteria. It is designed to be useful in a tender exercise whether for identifying areas to focus on in negotiation, for helping pick a preferred bidder, or for reporting on the progress of negotiations to the board. CONTRACT DASHBOARD SUBMARINE CABLE SUPPLY CONTRACT DASHBOARD SCOPE OF LATENCY PERFORM- SURVEY DELIVERY WARRANTY IPR LIABILITY PERMITS TERMINA- SERVICES ANCE AND COSTS INCENTIVES AND PROVISIONS TION WARRANTY DESIGN LIFE RIGHTS BONDS 7 7 6 6 9 6 10 10 6 6 8 9 9 6 6 5 5 5 5 5 8 8 7 5 5 7 7 4 4 6 4 4 4 6 6 4 4 5 49.5% 3 3 3 5 5 3 3 3 3 4 4 4 2 2 3 2 2 2 2 2 3 3 2 2 2 1 1 1 1 1 1 1 1 1 1 0 0 0 0 0 0 0 0 0 0 OVERALL WEIGHT 6 WEIGHT 8 WEIGHT 6 WEIGHT 5 WEIGHT 6 WEIGHT 7 WEIGHT 2 WEIGHT 7 WEIGHT 6 WEIGHT 3 WEIGHTED SCORE © 2013 DLA Piper UK LLP | Contract Dashboard | Legally privileged and confidential Page 1 out of 4 www.dlapiper.com | 03 DLA PIPER RELATIONSHIP FIRMS AUSTRALIA BRAZIL GERMANY KUWAIT POLAND SLOVAK UNITED ARAB UNITED STATES New York ALGERIA ETHIOPIA MOZAMBIQUE SWEDEN Brisbane São Paulo Berlin Kuwait City Warsaw REPUBLIC EMIRATES Albany Northern Virginia Algiers Addis Ababa Maputo Stockholm Canberra CHINA Cologne LUXEMBOURG QATAR Bratislava Abu Dhabi Atlanta Philadelphia BOSNIA- GHANA NAMIBIA TANZANIA Melbourne Beijing Frankfurt Luxembourg Doha SOUTH KOREA Dubai Atlantic City Phoenix HERZEGOVINA Accra Windhoek Dar es Perth Hamburg Austin Raleigh Sarajevo Hong Kong MEXICO ROMANIA Seoul UNITED INDONESIA NEW ZEALAND Salaam Sydney Munich Baltimore Sacramento BOTSWANA Shanghai Mexico City Bucharest SPAIN KINGDOM Jakarta Auckland Mwanza AUSTRIA HUNGARY Birmingham Boston San Diego Gaborone CZECH NETHERLANDS RUSSIA Madrid IRELAND Wellington TURKEY Vienna Budapest Edinburgh Chicago San Francisco BURUNDI REPUBLIC THAILAND PORTUGAL Ankara Amsterdam Moscow Leeds Dallas Seattle Bujumbura Dublin BAHRAIN Prague ITALY St. Petersburg Bangkok Lisbon UGANDA NORWAY Liverpool Houston Short Hills CROATIA KENYA Manama FRANCE Milan Kampala Oslo SAUDI ARABIA TURKEY London Los Angeles Silicon Valley Zagreb Nairobi RWANDA BELGIUM Paris Rome OMAN Riyadh Istanbul Manchester La Jolla Tampa MAURITIUS Kigali VENEZUELA Antwerp JAPAN DENMARK GEORGIA Muscat SINGAPORE UKRAINE Miami Washington, DC Port Louis SOUTH AFRICA Caracas Brussels Tokyo Copenhagen Tbilisi Minneapolis Wilmington Cape Town ZAMBIA Singapore Kyiv EGYPT MONGOLIA Cairo Ulaanbaatar Johannesburg Lusaka ABOUT DLA PIPER DLA Piper has over 4,200 lawyers located in over 30 countries throughout the Americas, Asia Pacific, Europe and the Middle East, positioning us to help companies with their legal needs anywhere in the world. FOR FURTHER INFORMATION You can find further details of our international network overleaf. Mike is one of the firm’s lead partners on telecoms matters and he has a particular interest in, and focus If you would like more information on how we can help on, submarine cable systems. Rated as one of the clients in the submarine cable sector, please contact: world’s leading telecoms lawyers, he has delivered a legal “masterclass” to all of the (triennial) SubOptic conferences since 2004, most recently on due Mike Conradi diligence in submarine cable systems”.
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