Juha Saarinen: The rapid growth of subsea cables

Amazon Web Services has bought capacity on the Hawaiki Cable. Photo / NZME

Internet and private network infrastructure construction is a huge growth area, to feed the ever-growing need for connectivity between data centres around the world.

Whereas just some years ago, data cables would be funded, built and owned through consortia set up by telcos - like the Southern Cross Cable was with Telecom, Verizon and Optus - the large internet companies have begun sinking money into subsea connections linking their operations on different continents.

Google has invested in eight cables around the world, and three more are expected to be built over the next two years.

Its competitors, Microsoft and Facebook, are also spending big on cables that will criss-cross the Atlantic and the Pacific.

On a smaller scale, this trend is mirrored in New Zealand, where Amazon Web Services has bought capacity on the Hawaiki Cable which is under construction currently.

Why are there so many subsea cables, which are notoriously difficult to fund and get off the ground, sorry, into the sea I mean, being built currently?

The online giants are looking to add not just capacity between their data centre regions, but also network resilience and route optimisation.

In today's internet-borne economy, network outages are no longer acceptable, nor is degraded performance when data traffic has to be redirected and travel longer distances.

For instance, the Perth to Singapore leg of the existing South-East Asia, Middle East and Western Europe 3 (SEA-ME-WE 3) cable is very accident prone thanks to the busy seas in the area, and gets cut frequently.

This causes headaches for Microsoft's cloud customers in Australia and New Zealand, which find it slower to use the company's services hosted in Singapore.

There will be more cables on that route, like Indigo that Google and Telstra are investing in, to ensure that the cloud is reachable at any given time even when boats drag their anchors and snap subsea links. Resilience and low latency are essential competitive advantages for cloud providers.

Most importantly, the business model is different for online services and cloud providers.

Whereas a telco can sell only a certain amount of capacity on cables, online companies sell services from data centres in multiple countries. instead.

This makes their businesses more scalable with growth opportunities not being limited by geography, like telcos are.

Expect to see more money being spent on infrastructure by the big online companies for that reason. For them, another cable is simply a few hundred million dollars worth of sunken cost.

New Zealand will get more cables going to Australia and the United States (Southern Cross is working on funding a supplemental link), and with them, we should see data centres being built in the country instead of everything being clustered in New South Wales and Victoria, which are much hotter, don't have renewable energy and are further away from America.