The lords of undersea cables

NEW DELHI: While one half of the world will read the first couple of years of this century as the era of bulk infrastructure selloff, the East will view it as the turning point in the history of technology when the undersea cable business shifts continents to Asia.

Among the new bandwidth barons are Reliance Communications (which bought out Flag Telecom) and Tata-owned Videsh Sanchar Nigam, which now owns Tyco. The result: A significant chunk of the world’s undersea cable today belongs to these two Indian long-distance carriers.

Call it the power of execution — buying up billions of dollars worth of undersea infrastructure for a tenth of the actual value and even using the cheap capacity to launch fresh bandwidth wars in the global arena.

Reliance and VSNL are not finished yet. The former is now building a new cable system called Falcon, which, when operational, will connect Africa and the Persian Gulf to Asia and the rest of the world, while VSNL is a part of the Se-Me-We-3 and ‘Safe’ consortiums.

The former is a 38,000-km cable connecting South East Asia, the Middle East and Western Europe, while ‘Safe’ is 28,800 km long with landing stations in Malaysia, Mauritius and South Africa.

The icing on the bandwidth cake is VSNL’s acquisition of the leading wholesale international voice player Teleglobe for Rs 1,075 crore. With revenues of over $1bn, Teleglobe carried over 13bn minutes of traffic globally last year and is the largest voice over Internet protocol provider in the world, according to a VSNL executive. Little wonder then that VSNL today is the third largest undersea cable operator in the world.

The party only gets bigger. Bharti too is part of the Se-Me-We-3 consortium, and the group, along with Singapore Telecom, owns the i2i cable between Chennai and Singapore, while VSNL owns Singapore’s first wholly-owned Indian cable, the Tata Indicom Cable.

Mahanagar Telephone Nigam and Bharat Sanchar Nigam are also set to join in as they jointly plan submarine lines to Singapore, Dubai and Hong Kong.

Analysts point out that more than just making up the numbers, in capacity terms too, Indian carriers have the world under their feet. Flag and Tyco continue to be the world’s largest submarine cable systems.

The Falcon cable has been in news recently with Reliance Communications chairman Anil Ambani signing bandwidth deals in Oman, Kuwait and Saudi Arabia among other countries.

Tyco has about 33% of the capacity between the US, Asia and Australia, and its full capacity is equivalent to six of the other largest cables combined in this sector. Bharti’s i2i cable has the highest capacity in the world.

A year ago, Kazuhiro Nishihata, a senior executive with Japan’s NTT, has been quoted by the media of having told a submarine cable conference that VSNL-owned Tyco was too dominant in the Trans-Pacific route and he wanted the industry to build another cable for diversity reasons.

Mr Nishihata can justify his demand based on the fact that the mere activation of Tyco has reduced utilisation on the transpacific route from 24% to 14%.

“With Se-Me-We-4 and i2i, there is sufficient bandwidth capacity available with us for providing seamless international connectivity to our customers.

We keep evaluating various options for expanding this international network, as per the requirements,” N Arjun, executive director (enterprise services-Carrier), Bharti Airtel, told ET.

Amid this entire chest-thumping, Kobita Desai, principal analyst (Telecom), Gartner, adds a note of caution: “Indian carriers have aspirations to become global players and are rightly placed to do so. But they have a long way to go before that can be compared to players such as Cable and Wireless, MCI or even British Telecom.”