Shoring up LatAm’s submarine cable industry – the tasks that lie ahead

Driven by the increase in global traffic and content exchanges, the submarine cable segment in Latin America continues to thrive, with various projects under development and capacity upgrades underway for older systems.

However, there are still some important bottlenecks holding back faster progress.

These include the need for a greater diversity of routes and landing points, industrial policies to develop local suppliers and launchers, and coastal cable protection programs, key industry players highlighted at an industry event last week.

Rogério Mariano, head of Edge Network Planning at Azion, is among those advocating for the creation of submarine cable protection programs in the various countries in the region, along the lines of what is already happening in Europe and other markets.

Azion is one of the leading edge computing and interconnectivity companies in the Americas, and Mariano is a longstanding expert on submarine cables.

“Protection and resilience of cables is essential. We've been working on this for a year and a half. Last year we had three incidents considered important: the cutting of the SACS cable by a vessel in September, the cutting of the WACS [cable off the coast of Africa, owned by Angola Cables], and the third was the desalination plant [conflict] in Fortaleza, which is now pacified, but it took a long time,” the executive said at the event.  

Currently, there are around 400 submarine internet cables worldwide, together stretching over more than 1.2 million kilometers. Over 95% of all data that circulates around the world passes through these structures. 

Around 70% of damage to submarine cables is caused by boat/ship anchors and fishing boats, according to Mariano. Other risks include mining, dredging and even underwater landslides.

“Cable maintenance is one of the major challenges for the industry, although it has clearly evolved over the years. Vessel monitoring needs to be strengthened. Anchors and fishing equipment are the main causes of cable breakage,” said Romualdo Rocha, director of infrastructure and operations at Telxius in Latin America. 

Telxius, the telecom infrastructure unit of the Telefónica group, operates more than 100,000km of cables and around 100 points-of-presence in 17 countries. 

The company has both its own cables and cables operated in consortium with other companies. 

GEOPOLITICS

Although Latin America is considered a relatively stable region, geopolitical issues have emerged as a growing focus of attention, as suspicions of deliberate sabotage of submarine systems by rival countries have increased in recent years.

The issue is especially critical for routes that lack redundancy or do not have traffic routing agreements in place with other systems.

Mariano and Rocha support the creation of protection zones off coasts near cable landing points and landing stations. 

“We're working with Brazilian agencies to develop a policy to protect these networks: the navy, the GSI [institutional security cabinet], Anatel and Ibama. And this applies to Latin America as a whole. Maldonado in Uruguay, Las Toninas in Argentina, Valparaíso in Chile, also in Peru, Colombia and throughout the Caribbean Sea, as an industry, we need to take a series of measures to protect ourselves and preserve the networks,” said Mariano.

Another point raised by executives is the diversification of landing points to avoid the centralization of cables in a single location.

Rafael Lozano, Brazil country manager at EllaLink cable, states that there are countries with specific regulations to avoid this concentration.

“If someone goes to war with us, blows up Praia do Futuro in Fortaleza, all of Latin America will go off,” said Lozano. 

Fortaleza, in Brazil’s Ceará state, is a landing point for 17 submarine cables from eight different companies. The city is the main hub for submarine cables in Latin America. 

INDUSTRIAL POLICIES

The development of local companies specialized in equipment for submarine cables or at least in the deployment of submarine cables, is seen as essential to reduce project costs.

This could happen, according to some executives, including through long-term, government-led industrial policies aimed at the sector.

“Submarine cables are essential, but very expensive. The investment needs to pay for itself. Consortiums are often formed to dilute the costs,” said João Januário, V.tal’s subsea engineering manager. 

As reported by BNamericas, V.tal is planning new cables in Latin America.

Rodrigo Carvalho, subsea network specialist at Angola Cables, agrees on the financial challenges involved in the projects. 

Angola Cables has no plans to invest in new cables, although it is considering entering into projected third-party cables, he said. The company is mostly betting on points in the Brazilian northeast.

Manufacture and deployment

Globally speaking, the submarine cable ecosystem is highly concentrated.

The main cable manufacturers are SubCom (based in the US), NEC (Japan), HMN (China) and ASN (France). 

The topic is considered so strategic that the French government bought ASN, formerly private sector firm Alcatel Submarine Networks, from Nokia.

In addition, OTTs and big techs, which were previously just customers, have started investing in the construction of submarine cables themselves.

Latin America does not have a submarine cable manufacturer at present. Telxius executive Rocha said that the company does not hire NEC because "it is expensive" and does not hire the Chinese "for other reasons." 

In the past, Brazilian optical equipment company Padtec had a unit focused on submarine systems, but it was sold. Both Rocha and Mariano cited Padtec as a regional option for the sector.

BNamericas has learned from sources close to Padtec that the company is indeed looking at returning to the niche of submarine cable equipment.

Encouraging the naval industry to develop submarine cable laying vessels is another important point, according to the executives.

The global fleet of specialized vessels for this activity is small and, as demand is high, freight prices have surged and deadlines are now being pushed back.

“We have a company [Blue Marine Telecom] that developed the Petrobras cable and is mobilizing to have vessels and structures for deploying submarine cables in Brazil,” said Rocha, suggesting that it could become this local specialist.