Economic Impact of Submarine Cable Disruptions
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Economic Impact of Submarine Cable Disruptions APEC Policy Support Unit December 2012 Prepared by: Detecon Asia-Pacific Ltd Christof Gerlach, Richard Seitz and company 25 Alma Link Building, 10th Floor Soi Chidlom, Ploenchit Road Bangkok 10330 Thailand Tel: (66) 2250 9770; Fax (66) 2655 6272 Email: [email protected]; [email protected] Website: www.detecon.com Produced for: Asia-Pacific Economic Cooperation Policy Support Unit Asia-Pacific Economic Cooperation Secretariat 35 Heng Mui Keng Terrace Singapore Tel: (65) 6891-9500 Fax: (65) 6891-9690 Email: [email protected] Website: www.apec.org APEC#213-SE-01.2 Published February 2013 This work is licensed under the Creative Commons Attribution-NonCommercial- ShareAlike 3.0 Singapore License. To view a copy of this license, visit http://creativecommons.org/licenses/by-nc-sa/3.0/sg/. The views expressed in this paper are those of the authors and do not necessarily represent those of APEC Member Economies. DISCLAIMER This study has been prepared by Detecon. It contains assumptions and opinions of its authors which may not be those of APEC economies or the APEC PSU. Detecon carried out its obligations with all due diligence, efficiency and economy in accordance with internationally accepted techniques, practices and with professional consulting standards and particular expertise regarding telecommunication. However, this study only aims to give support and is not intended to be a sole source for policy decisions. No representation or warranty either express or implied is provided in relation to the accuracy, completeness or reliability of the information contained in this study, nor is it intended to be a complete statement or summary of the markets and development it refers to. Neither Detecon nor any of its affiliates, nor any of Detecon’s or its affiliates’ directors, employees or agents accept any liability for any loss or damage arising from the use of all or parts of this study. Any opinions expressed in this study are subject to change without further notice. Detecon is under no obligation to update or keep current the information contained herein. Table of contents i TABLE OF CONTENTS EXECUTIVE SUMMARY .................................................................................................. III 1. DEVELOPMENT OF SUBMARINE CABLE SYSTEMS IN THE APEC REGION 1 INCREASING NEED FOR INTERNATIONAL BANDWIDTH................................................ 1 INCREASING DEPLOYMENT OF SUBMARINE CABLE SYSTEMS ................................... 5 ECONOMIC, SOCIAL AND DOMESTIC SECURITY IMPORTANCE OF SUBMARINE CABLE SYSTEMS ........................................................................................................................... 8 ACTIVE SUBMARINE CABLE SYSTEMS IN THE APEC REGION ................................... 10 PLANNED SUBMARINE CABLE SYSTEMS IN THE APEC REGION ............................... 14 2. DANGERS TO AND DISRUPTIONS OF SUBMARINE CABLE SYTEMS IN THE APEC REGION .......................................................................................................... 21 REASONS FOR CABLE DISRUPTIONS ................................................................................... 21 POSSIBLE SCARCITY OF REPAIR VESSELS ....................................................................... 25 POSSIBLE EFFECTS AND PARTIES AFFECTED BY CABLE DISRUPTIONS ................ 26 PAST DISRUPTIONS IN THE APEC REGION ........................................................................ 26 REGIONS SUBJECT TO SPECIAL HAZARDS (CHOKE POINTS) ..................................... 30 3. ANALYSIS OF THE ECONOMIC IMPACT OF SUBMARINE CABLE DISRUPTIONS .................................................................................................................... 33 MODELLING APPROACH ......................................................................................................... 33 MODEL RESULTS ........................................................................................................................ 41 HYPOTHETICAL CASES ............................................................................................................ 45 4. ANALYSIS OF CURRENT PROTECTION AND IMPACT MITIGATION MEASURES ......................................................................................................................... 46 DEALING WITH GLOBAL PRIVATE PROPERTY THAT HAS DOMESTIC PUBLIC INTEREST ...................................................................................................................................... 46 DIFFICULTIES OF APPLYING DOMESTIC POLICIES TO GLOBALIZED INFRASTRUCTURES ................................................................................................................... 50 DIFFERENT LEVEL OF AWARENESS AND REGULATORY FRAMEWORK ................ 52 STATUS OF INTERNATIONAL LAW ...................................................................................... 55 EXAMINATION OF CURRENT MEASURES .......................................................................... 58 ASSESSMENT OF CURRENT MEASURES ............................................................................. 66 5. RECOMMENDATIONS FOR FUTURE PROTECTION AND IMPACT MITIGATION MEASURES .............................................................................................. 70 TRADE-OFF BETWEEN INVESTMENTS IN PROTECTION AND POTENTIAL LOSSES .......................................................................................................................................................... 70 RECOMMENDED PROTECTION MEASURES ...................................................................... 71 RECOMMENDED IMPACT MITIGATION MEASURES ...................................................... 74 OVERALL OBJECTIVE .............................................................................................................. 77 GLOSSARY AND ABBREVIATIONS ............................................................................... 78 REFERENCES ....................................................................................................................... 80 APPENDIX I .......................................................................................................................... 82 DETAILED EXPLANATION OF PROTECTION MEASURES TAKEN BY CABLE OPERATORS ................................................................................................................................. 82 APPENDIX II ......................................................................................................................... 84 List of figures ii LIST OF FIGURES Figure 1: Global total used bandwidth (in Gbps)....................................................................... 1 Figure 2: Global number of internet users total and per 100 inhabitants................................... 2 Figure 3: Internet Usage............................................................................................................. 2 Figure 4: International bandwidth usage of top 14 markets in Asia-Pacific region .................. 3 Figure 5: Broadband connections in Asia .................................................................................. 3 Figure 6: Worldwide usage of different ICT technologies ........................................................ 4 Figure 7: Worldwide coverage of 2G and 3G mobile-cellular coverage ................................... 5 Figure 8: Comparison of investments in SLTE/ON ................................................................ 12 Figure 9: Active submarine cables in scope of the study......................................................... 13 Figure 10: Planned submarine cables in APEC region ............................................................ 15 Figure 11: Consequences of earthquake for China .................................................................. 27 Figure 12: Table of submarine cable disruptions (as far as publicly known) .......................... 30 Figure 13: Model Dynamics .................................................................................................... 33 Figure 14: Proportion of international traffic transported via submarine cables ..................... 34 Figure 15: Direct costs ............................................................................................................. 37 Figure 16: Contribution of the internet economy to GDP 2012 / 2018 ................................... 38 Figure 17: Proportion of internet traffic originating within economy ..................................... 39 Figure 18: Damage to loss in traffic ........................................................................................ 39 Figure 19: Value added by data connectivity in trade to GDP ................................................ 40 Figure 20: Cross section of a submarine fibre optical cable .................................................... 82 Executive summary iii EXECUTIVE SUMMARY The present study and the economic impact model were prepared for the Policy Support Unit of the Asian-Pacific Economic Cooperation (APEC). They serve to fulfil the goals of the APEC Supply Chain Connectivity Framework Action Plan (SCFAP), resolved by the APEC member economies, which contains under its Chokepoint 7 the protection of submarine cables. The objective is to enhance the security and quality of cross-border communications. The amount of data and information generated, sent and received through the global submarine