International governments are being asked to play a more prominent role in the raising of finance for subsea connectivity projects

Operators in the subsea sector must be prepared to evolve their business models if they are to capitalise on an upswing in demand for capacity, according to a panel of industry experts.

During an interactive panel session at the Submarine Networks EMEA 2019 event in London this week, experts agreed that the industry players needed to focus on collaboration and adapt their working practices to boost profitability in the industry.

“We are all using more and more services. End users are using more and more video which is fuelling global demand for capacity.

“That demand is unbalanced though, hence subsea cables are necessary and will continue to play a huge role in facilitating connectivity in the future,” said Luis Alvarez Satorre, chairman at Islalink.

With a flurry of projects coming online in 2018 and more to come in 2019, the industry is improving levels of connectivity in some remote locations around the world. However, more needs to be done to increase the levels of diversity in the routing of cables, to better serve hard to reach locations.

“Subsea networks are absolutely crucial, but we need to see more diversity in the routing of the networks… Also, I would say that the days when you could expect the carrier to pay for the subsea cable networks on their own are over,” said Mattias Fridstrom, VP and chief evangelist at Telia Carrier.

The panel argued that the industry could be set for a period of sustained demand, as capacity requirements surge in already underserved markets.  

“Africa, the Middle East and China are all massively underserved markets and we will expect to see new cables picking up the demand for increased capacity in these locations,” said Brad Kneller, senior global VP for operation and engineering at Aqua Comms.

The panellists warned that the industry must evolve its business models, warning that existing methods of raising finance will not be viable in the future.

“I see a role for OTT’s but I also see a roll for governments. The government’s can make a far better business case for investment than we can [as carriers] or than the OTT players can. They need to think along the lines that if they invest in building a cable that they will be creating between 1000 and 2000 jobs for their citizens. We are seeing this a lot in the Nordic countries at the moment. There are cables being built there by governments where we [carriers] could never get a sufficient return on our investment. But the government see it as an investment opportunity, whereby they are going to get 5 new data centres and 2,000 people are going to get jobs,” said Fridstrom.