Standing at the outset of a new decade, it’s tempting to indulge in far-reaching predictions and flights of fancy as we imagine what could happen over the next ten years. But, looking at the international network industry, it’s clear we are in a time of steady evolution rather than a radical revolution.
So how will connectivity continue to evolve beyond 2020, and what are the challenges and opportunities for infrastructure providers and operators, Over The Top (OTTs) over an IP network and carriers?
Changing consumption drivers
Firstly, it is critical to explore how and why consumption is changing.
Recent research by TeleGeography has found that demand for international bandwidth is more than doubling every two years, a trend consistent with what Telstra is seeing on its leading APAC subsea network.
Data use from gaming is less than video streaming (for now) – as Kotaku notes, “data use from gaming is much lower than streaming video: on average, games will only use around a third of the data of streaming Netflix in SD, let alone HD or 4K streaming.”
Yet, whether it’s FIFA, Fortnite, or League of Legends, online gaming is a big business that requires significant capacity, global connectivity, and reliable availability and latency.
To meet this demand, companies are investing in existing networks and in new infrastructure.
The centre of gravity for connectivity-driven growth is shifting toward Asia, which comprises both developed and fast-growing economies.
That emphasis is acting as a catalyst for both consumption and investment. At the regional level, the pace of international bandwidth demand growth will be the most rapid in Asia where demand is expected to increase 45% compounded annually between 2018 and 2025.
Underpinning that demand are a range of new and improved routes for data to travel across the globe. Cables with a combined construction cost of USD$7.9 billion entered service between 2016 and 2018. Based on publicly announced planned cables, an additional $7.4 billion worth of new cables will be launched between 2019 and 2021.
The impact of SDM submarine cables
The introduction of coherent optical technology has improved total optical power (TOP) and the Optical Signal to Noise Ratio (OSNR), enabling more data to be transmitted through a fibre optic cable. Maximising capacity per fibre pair has become the driver in submarine cable development. In the last 18 months, however, this has changed with the advent of Space Division Multiplex (SDM) cables. While such cables offer lower capacity and OSNR per fibre pair, in some instances they almost carry double the number of fibre pairs at the same cost point.
Reducing the power per fibre pair also allows for a larger number of repeaters and fibre pairs in a system. While it was rare to see cables of more than six fibre pairs a few years ago, SDM cables are now designed with up to 16 fibre pairs or more.
The increasing adoption of SDM increases the overall cost-efficiency of international networking – enabling lower unit and capacity costs on high volume routes or traffic between data centres. Yet that also increasingly commoditises that connectivity, particularly on major, high volume routes.
The challenge for carriers will be underlining the value inherent in additional service layers to customers.
Investment in unique routes as a differentiator
OTTs and cable providers are increasingly differentiating by investing in diversity and uniqueness across their infrastructure. For example, we have invested heavily in the uniqueness of our routes in areas often affected by natural disasters.
Our investment in the HKA route, coupled with our unique Taiwan overland route, allow us to bypass the disaster-prone Luzon Strait in connecting to Hong Kong. This offers significant benefits to customers looking for the reassurance and reliability such diversity offers.
With many of our customers building their own overlay networks, data centre to data centre connectivity is becoming increasingly critical, requiring unique and diverse pathing beyond cables alone to drive end-to-end connectivity.
While there is an increasing trend toward such investment, it remains costly and time-consuming. Realising those benefits requires investment in licensing costs, backhaul networks, and regulatory approvals and compliance.
That’s why access to existing infrastructure is still critical – and ownership of multiple cable segments landing across key Asian markets like Singapore, Hong Kong, Japan, Philippines, Taiwan and Korea enables improved management and control.
These developments in networking infrastructure underline the importance of partnership between stakeholders, relying on expertise and experience in the planning, creation, and management of global networks.
We are one of the leaders in transporting the data that enables millions of consumers and businesses to connect to the Internet and with each other around the world.
Our subsea network is a key part of our international growth strategy, enabling the services we provide to large and emerging cloud and content companies, global and regional mobile and service providers, as well as multinational corporations requiring connectivity across APAC.
Telstra will continue to invest to maintain our network leadership. This includes a commitment to investing in additional capacity on the Australia to US route, as well as investing in terrestrial networks in Korea, mainland China, Taiwan, Japan and the Philippines, to expand on our already unique positions there.