Adopting the right business model in the subsea communications industry is a challenge that Hengtong Group and PCCW Global were capable of identifying and are working on overcoming with the PEACE undersea cable project. In an exclusive interview with Telecom Review, Sun Xiaohua, COO of PEACE Cable, Hengtong Group and Sameh Sobhy, Vice President, Middle East and North Africa, PCCW Global emphasized how PEACE has created a new business model in the submarine cable industry that PCCW Global is leveraging to further achieve its goals.
As the major investor, Hengtong provides infrastructure and operates the system while PCCW Global acts as the commercial armof the high-speed PEACE cable system. The PEACE system will offer the shortest routes from China to Europe and Africa, interconnecting three of the world’s most populous continents whilst at the same time dramatically reducing latency, delivering a superior connectivity experience which will be ideal for a vast array of commercial and consumer applications.
The backbone of the project will connect Pakistan, Djibouti, Egypt, Kenya and France, providing critical interconnections to key Asia, Europe, and Africa economic corridors, while other routes and connection agreements will stretch to South Africa, with planned landing points on route.
Mr. Sameh Sobhy, how do you describe the state of the subsea communications industry today?
The subsea communications industry promising. Demand is growing, new data centers are launched and demand for OTTs is constantly increasing. Finding the right business case to reach common ground with the OTTs might be a challenge for carriers, however, some carriers like PCCW Global were able to find creative co-existing and partnering models in order to establish successful subsea systems.
Mr. Sun Xiaohua, if you had to identify one key challenge that the industry is facing, what would it be?
The key challenge we see in the industry is adopting the right business model, especially with the OTTs building their own infrastructure and the carriers becoming rather reluctant to invest.
We have noticed the challenge and identified the opportunity and this is how we came up with PEACE. PEACE is privately owned 12,000 km long cable system that provides an open, flexible and carrier-neutral service for its customers. It is targeted for completion in Q1, 2020.
The system’s design will adopt the latest 200G technology and WSS technology, which provide the capability to transmit over 16 Tbit/s per fiber pair, servicing growing regional capacity needs.
PEACE Cable which is investing the trunk from Pakistan to Marseille and Kenya, has created a new business model in the submarine cable industry. However, this has also posed a challenge for us. Thanks to the WSS technology in Branching Units, we will be able to provide modifications in the future as the demand might change with time. PEACE is positioned as an open system, so it could be upgraded to be adapted with any supplier and with the new technologies introduced to the market. The upgrade would be defined by the market demand and need with more flexible process compared to the consortium cable systems.
Mr. Sameh Sobhy, what are the opportunities and benefits that PEACE brings to other carriers and markets?
PEACE is a private investment deploying system within a system configuration which gives each party the required flexibility to design its own subsystem. That being said, PEACE can connect to any country along the route.
Once completed, PEACE will connect the three largest continents having more than 80% of the population: Asia, Africa and Europe. PEACE Cable will be the carrier’s carrier to serve incumbent telcos and OTTs.
Mr. Sun Xiaohua, what are your thoughts on the increasing number of cable projects forgoing the cable landing station and connecting directly into the data center? Do you see this trend continuing?
As a cable developer, we’d like as much networks, carriers and users to connect to our cable, which requires the presence in open access facility. By experience cable landing stations tend to have restrictions on connectivity to different networks and also commercial challenges. Being in a carrier neutral data center overcomes such commercial challenges to certain limit. However, we need to emphasize that data centers don’t replace the cable landing station, we still need to have cable landing station to host certain equipment like the power feeding and optical switches, for technical limitations and depending on the proximity of data center from the landing point, the data center will not be always a replacement for the cable station, but at least the terminal equipment shall be hosted in the data center. Having said that, it worth mentioning that the concept of carrier neutral data center is not mature in many territories, and it has no meaning in some countries to search for a data center to terminate the system capacity, and there is no value of doing so in those countries. The trend will continue for sure, and with more carrier neutral data centers expansions in new countries, we will see more cables terminating there.
Mr. Sameh Sobhy, how do you see the industry evolving over the next 5 years? How can PEACE be a model for other submarine cables?
The industry is evolving into a partnership model of co-building, fiber and spectrum ownership. A small group of harmonized parties is rather more effective than a big consortium of parties which is difficult to manage and has a longer decision making, notably in terms of upgrades, modifications, decommissioning, or some critical decisions.
We believe that PEACE model is ideal for this era of development. The model gives each party the autonomy and freedom, and allows it to invest according to its actual requirements, flexibility in upgrades, open access, and agile decision-making process.