Lords of undersea cables

While one half of the world will read the first couple of years of this century as the era of bulk infrastructure sell-off , the East will view it as the turning point in the history of technology when the undersea cable business shifted continents to Asia.

Among the new bandwidth barons are Reliance Communications (which bought out Flag Telecom) and the Tatas-owned Videsh Sanchar Nigam (VSNL), 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. VSNL, on the other hand, is 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 $1 billion, Teleglobe carried over 13 billion minutes of traffic globally last year. It is the largest voice over Internet protocol provider in the world, according to a VSNL executive. Small wonder then that VSNL is today the third largest undersea cable operator in the world.

The party only gets bigger from here on. 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 also owns Singapore’s first wholly-owned Indian cable, the Tata Indicom Cable. MTNL and BSNL are also set to join in as they jointly plan submarine lines to Singapore, Dubai and Hong Kong. Analysts also say 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 was in the news recently when Reliance Communications chairman Anil Ambani signed 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 along this sector. Bharti’s i2i cable has the highest capacity in the world.

Incidentally, 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 therefore 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 the utilisation on the transpacific route from 24% to 14%.