EllaLink Cable: Bridging the gap between Latin America, Europe and Asia

Two years after starting operations, EllaLink is reaping the rewards of having been the first direct route between South America and Europe, running via Fortaleza in Brazil to its anchor point in Sines, Portugal, and continuing onward through land routes.

Due to the shorter, direct path between the continents, the system offers lower latencies to enterprises for data exchange and avoids detours to North America. But there are challenges, such as increasingly fierce competition in data transport and the arrival of new subsea systems in the region.

In this interview, EllaLink country manager for Brazil, Rafael Lozano, talks about traffic demand, pricing issues, competition, new routes and more.

BNamericas: The EllaLink cable is completing two years of operations. What's your view of the project and how is demand for the system looking?

Lozano: Demand is high. We're very happy about that. Obviously, this is a premium, disruptive product and not everyone is willing to pay the price for the quality it offers.

The Brazilian market is very competitive. The pandemic has led many companies to invest a lot of money in infrastructure, which now has to be monetized. The competition is fierce and there are several players who look more at the price than the value offered.

BNamericas: From the beginning, EllaLink had a more particular profile, a focus on traffic of scientific and academic data between continents, although not just that. The goal was never to have a large mass of customers was it? 

Lozano: Exactly. We're a niche company. We know that most demand with Europe is covered by the United States route through several cables and systems that are older than ours and that have a more competitive cost. However, our bet has always been on quality, latency and diversity because, at the end of the day, anyone who sees value in low latency, in halving system latency, is willing to pay the premium.

In addition there is the war in Ukraine and all the impacts on critical infrastructure ... You remember the attack in Norway [the sabotage of the Nord Stream 1 and 2 pipelines]. This raised the alarm about the importance of having redundancy and diversity in supply and connectivity systems. 

Several companies are looking for independence from the United States to connect with Europe and Latin America.

BNamericas: Because a route through the United States could be a target for attacks and sabotage?

Lozano: Depending on a single country for the communications of an entire continent, such as South America, ends up becoming a risk. In addition, the competition between China and the United States, this technological and geopolitical war, has also been impacting this ecosystem.

Many Chinese companies have been prevented from operating in the United States. At the same time, China is Brazil's biggest trading partner and one of the biggest partners for South America.

As a result, since they can't operate in the United States, lots of Chinese companies are focused on developing their networks and operations in Latin America.

BNamericas: And that ends up benefiting EllaLink?

Lozano: Yes. Evidently, we're the fastest alternative to connect Asia with Latin America. We connect directly with Marseille and Marseille anchors with several systems that connect with Asia.

BNamericas: The cable SACS, by Angola Cables, also offers a route from South America to Asia, going south of Africa through the connection with the WACS system. And now the Humboldt project in Chile is coming, which will connect South America and Asia via the Pacific. Are these systems competitors to EllaLink?

Lozano: SACS is an interesting cable, but in our view its focus is more on connecting Africa, which is also an interesting market, with Latin America. WACS is great, it does a great job and has a good shelf life, but it's a system from the 2000s.

The path that this combined route has to take to reach Hong Kong, Beijing, etc., is long. You have to go right around Africa from the south or north. Now, if you draw a line from Fortaleza to Marseille, Marseille-Hong Kong, through the SEA-ME-WE [South East Asia–Middle East–Western Europe] system, it's a shorter route.

BNamericas: How about Humboldt?

Lozano: Humboldt is a competitor, yes, but it's still a project. It will be very good for the region, especially for the countries on the west coast of Latin America, Chile, Peru, Colombia, etc.

But to connect São Paulo, for example, which is the largest generator of data traffic in the region, you will have to use a land route, crossing the Andes to Santiago, or the submarine systems that bypass Latin America. That's where the questions of quality, latency, price come in.

We know how difficult it is to open a new route. EllaLink started as an idea in 2013 and only got off the ground to start construction in 2019. Humboldt, as far as we know, has been looking for funding for three or four years. There are several expressions of interest from the Argentine and Brazilian governments, but nothing concrete, as far as we know.

At the end of the day, it's all about usability. But that kind of competition is great because it means there's demand to decentralize Latin America from North America.

So the more cables that are built means that there's demand for traffic, for diversity, that's growing. A growing distribution of content consumption outside of North America.

At EllaLink our responsibility is not to sell a lot, but to sell well and at a fair price – to add value to our investment and to add value to the route.

BNamericas: What are are the latencies like on the system's routes?

Lozano: We're doing Fortaleza-Sines in less than 60ms, Fortaleza-Lisbon in less than 63ms, Fortaleza-Madrid 67ms, and end-to-end, São Paulo-Madrid, 120ms.

They're the smallest on the market. There is no lower latency than a straight, direct cable.

BNamericas: Can you mention some clients that are using the system?

Lozano: Customers that we've already disclosed include Equinix, Embratel and BSO, which is a European financial market operator ...

BNamericas: In addition to the academic networks.

Lozano: That's it. The Géant network, RedClara, the Bella consortium.

BNamericas: Are you considering expansions?

Lozano: Well, we're now concluding a project that will connect our CLS [cable landing station] in Sines to Lisbon, a project called Olisipo. And we're also connecting the rest of the CLS in that region. There are several new submarine cables arriving in Portugal.

BNamericas: And in South America?

Lozano: In Brazil, we're working normally with our current structure. Our plan to expand our infrastructure from the branch [Fortaleza] is frozen. The market has idle capacity between Fortaleza and São Paulo – the price is very aggressive. And with projects like Firmina, which arrives with 12 pairs of fiber, there's huge capacity. It makes no sense, at the moment, to make a direct investment.

Obviously, if a player arrives wanting us to build a direct route between São Paulo and Europe, we will if it makes sense. And we're thinking of building to French Guyana. It was always our initial plan to connect French Guyana but we don't have a defined date.

BNamericas: Through a branch already available in the system, right?

Lozano: Yes. The system is already ready, I have a branch already prepared off the coast of Fortaleza for this connection to French Guyana. 

By extending a cable we can connect Guyana to Europe.

BNamericas: And when would this project be carried out?

Lozano: It's hard to say. It's always been ready to go ahead, but in the end, it depends a lot on the French government. We hope it doesn't take too long to get off the ground.

Today, French Guyana is one of the few overseas territories of France that isn't directly connected with Europe. They have to connect via North America to reach Europe, and it's French territory. 

Europe made funds available last year to connect European territories that aren't on the mainland.

BNamericas: But the Caribbean also has other French overseas territories not directly connected to Europe.

Lozano: Yes, but that's not a project for EllaLink. It wasn't included in our design. What we did embrace was French Guyana. Maybe in the future ...