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04 Jan 2019

Investment trends in the submarine cable industry: looking ahead to 2019

Data Centre Afrika

Next year is set to be a fascinating year for the subsea cable industry, particularly in the Global South. Currently, developing countries in this area suffer from a lack of legacy infrastructure, internet connectivity and problems with poor latency. Altogether, these hinder the creation of economic growth and new business; an issue that the northern hemisphere, conversely, does not face.

Despite the significant challenges that come with connecting the developing world, many opportunities exist for countries within Africa and Asia to embrace submarine cable networks and begin to establish themselves as digital leaders.

As 2019 approaches, we can expect developing countries to take a more central role, becoming digital hubs within the southern hemisphere. So, what are the upcoming trends in the submarine cables industry which would make this a reality?


Investment from the cloud

In the coming year, successful business models will need to adapt to the growth in global submarine cable networks to ensure that increased connectivity is being used to its full potential. Two prevalent trends in the current market are an immense growth in consumer content, primarily enabled by mobile viewing and the rapid rise of cloud computing in enterprise.

Submarine cable companies are poised to capitalise on this opportunity by investing vertically into data centres, colocation provision and cloud services. They are best placed to offer affordable rates and can provide some of the best connectivity options, as they control the cables which IP travels through. Considering the growing importance of securing their services, many cloud providers have been investing vertically. For instance, IT giant, Microsoft has recently been making inroads into South America and South Africa, Facebook is increasing its investments in providing internet services and Alibaba has invested in the Reliance Communications project. With some of the biggest tech names investing in this, other giants will undoubtedly continue this trend into the new year and beyond.


Data Analytics and the Internet of Things

We like to describe data as being akin to “digital oil”, a comparison we think is apt as data analytics continues to grow in importance. Where and how data flows across the world will be the pertinent question of the next decade. The current regulatory climate concerning data capture and analytics is steadily becoming less and less amiable towards the concept of moving data abroad. On a regional basis, the EU and China have taken proactive measures to retain data within their borders. China has also forced Apple to bring the China-based iCloud accounts to its new Chinese data centre. This seems to be the trend for larger countries in general, which are hesitant to allow data to be shared worldwide, at least not in such a laissez-faire manner. For countries with a more relaxed perspective, large amounts of data will be transferred to regions where companies feel most comfortable processing that data – and which have the capabilities to handle the data.

It goes without saying that the as technologies such as 5G, VR/AR and IoT become more prominent, and as video quality continuously improves, the demand for data, supported by submarine cables, will only continue on its upwards trajectory. Once live, 5G connectivity will expand to new regions, and from there it is only natural that an explosion in data production and consumption will occur, as more and more devices become able to communicate with each other. These new technologies and new sources of data will inevitably lead to an increase in demand to construct new networks that have the requisite speed and greater capacity to grow. To respond to this market, the cable industry needs to ensure it is always innovating so that submarine cables can match the increased consumer demand for bandwidth. With this in mind, and looking to the future, the cable market can be expected to increasingly factor in developing countries as more and more of them achieve greater digital capabilities and start to match the data demand seen within developed economies.


Digital progression in the global south

In terms of digital progression, 2018 was a terrific year for the global south and we expect to see those positive aspects continue into next year. Throughout 2018, many successful attempts to modernise the global south occurred. In September, Angola Cables opened the South Atlantic Cable System, the first subsea cable directly connecting South America and Africa. Additionally, in November this year Huawei started surveying work on a new subsea cable route linking Pakistan and Kenya (dubbed the PEACE cable).

Naturally, it’s likely that construction in the global south will attract investment from both the private and public sectors in these previously ‘forgotten’ areas. Countries from within the developing world will also view this as a superb investment, with many emerging nations pressing for increased participation in the market and looking to their neighbouring countries which are already excelling here. Emerging nations should see submarine cables as the first step towards achieving digital autonomy and efficiency, with the mindset that improving digital services would empower both businesses and consumers.

For the most part, the future looks very bright for submarine cables. With tech giants already leading the way by investing in cable systems from unexpected locations, there is a real opportunity for counties within the developing world to invest in their own modernisation and become new digital hubs within the southern hemisphere.

Source: https://data-economy.com/investment-trends-in-the-submarine-cable-industry-looking-ahead-to-2019/


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