Comms day sydney 2013 anz international capacity perspectives
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Ross Pfeffer, Director Sales and Marketing, Southern Cross CommsDay Summit, Sydney, April 2013
Transcript of Comms day sydney 2013 anz international capacity perspectives
Ross Pfeffer, Director Sales and Marketing, Southern Cross
CommsDay Summit, Sydney, April 2013
o Total Design Capacity of .050 Tbps
o Voice, Fax and TV
o Internet Growth from the early 90’s,
o Internet Content centred in the US
o By 1998-2000
o ANZ-US Bottleneck of 0.012 Tbps
o Second Generation of Fibre Cables
Tbps
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TASMAN 2 0.001
PACRIM EAST 0.001
PACRIM WEST 0.001
JASURAUS 0.005
SE-ME-WE 3 0.040
Protected Ring of 30,500k
Engineered to 2025
> 99.999% availability
Build Cost: US$1.2B Total Design Capacity: 0.25 Tbps or 5
Times Bigger than Gen-1 Cables
Lit Capacity: 0.080Tbps
Bottleneck eradicated!!!!
Pre Sales: US$1.1B, (4 yrs of demand)
o Dot coms and cables crash
o 6 new Trans-Atlantic cables between 2000 and 2003
o Each cable bigger than all that preceded it
o Soon 1 Million kilometres of submarine cable
o Overestimated Demand Growth
o Virtuous Circle became Vicious
o Prices collapsed to less than Operational Cost
o Chapter 11 & Bankruptcies
o Financial Restructuring
o What has been the ANZ Experience?
New Cables Announcements Refinances / Failures
2000 SX1 to USA NAVA-1 to Singapore
SX2 to USA SX Banks Walked, Sponsor Guarantees
AJC to Guam
2002
2003 AJC Bank Rescue
2004 NAVA-1 Initiative Fails
2005
2006
2007
2008 Endeavour to Haw
PPC1 to Guam
AAG SEA-Guam-USA
2010 Pacific Fibre to USA Pipe Incl PPC-1 Sold
AXIN Trans Tasman
ASC to Singapore
ASSC-1 to Singapore
Hawaiiki to USA Pacific Fibre Inititative Fails
APX West to Singapore ASSC-1 and AXIN Gone Quiet
APX East to USA
Tasman Global Access
Freedom extension to Perth
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2011
2009
2001
o ANZ International Capacity CAGR
50% since 2002
o Now totals about 2.5 Tbps
o Traffic Capacity + Protection Capacity
o 80% Fully Protected
o 70–80% terminates in the US
o Actual Demand is now 10 times the
initial Design Capability of SX
o So how did the industry do it?
o SX upgraded 8 times
o SX capability increased by 35
o CAGR Price Decline > -23%
o Reflecting:
o Cable Competition
o Resale Competition
o Low MC of Capacity Upgrades
o Retail Broadband Competition
o Price is now < 5c per GB o SX Published 10G-2D/R
o 10 Year Repayment
o 45% Utilisation
o excluding volume discounts and O&M
o Demand Sources
o Applications Changes
o Technology Changes for Access and Transport
o The Dial and DSL waves
drove international capacity
demand
o Entitlement is greater than use
o Unlimited / TB Plans
o More can be consumed for no increase
in retail revenue
o The faster retail demand increases the
faster international capacity price must
fall
o Applications are the real key to future
growth.
o Market Capacity grown at 45% since 2008
o ABS Download Volumes grown at 65%
o Reflects growth of Cache
o Cache accounts for > 30% of D/L today
o Likely to exceed 50% by 2015
o Cache will increasingly subdue demand
o Mobile devices are adding to Fixed Volumes via Wi-Fi
o US evidence suggests the 4G Impact will be strong
o provided mobile quotas expand and mobile data prices fall
o Mobile Substitution of Fixed Line may become much more significant
o 4G Likely to Impact Fibre uptake depending on Pricing
o Will substitute ADSL fixed Line
o The FTTH Wave will take a DECADE
o NBN subs may currently consume twice the volume of ADSL2+
o But DSL Subs are oversubscribed to Data Entitlement
o FTTH has not enabled new applications in other markets
o Most Subscribers unlikely to pay more for more data?
o If FTTH lifts demand Cache will strengthen further
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o We expect international capacity
demand to continue to grow at
around 40% for the next 5-7 years
o After that a reduction in growth is
likely
o Demand can only grow if capacity
prices continue to fall
o 5 existing cables from ANZ can all
expand supply at low cost
o Assumes SX1/2 cannot or does not
use 1 Tbps Channels from 2020
o Have not included the construction
of a new SX Cable
o Supply is assuredo International capacity demand likely to remain strong o The impact of Fibre and Mobile remains in doubto Cache Impact will strengthen
o Most Fixed Users have high data entitlements and unlikely to pay moreo so Retail Revenue generation opportunities from more Data have diminished greatly.
o But ISP’s will need to acquire a lot more capacity
o Existing Cables will continue to expand, at low MC and to aggressively compete to meet the evolving needs of ISPs.
o A plethora of new cable proposals will continue to add to price decline pressures
o No imminent need :
o Technical cable performance indicates reliability until at least 2030
o Likely upgrade efficiencies will allow us to easily meet the expected demand
o An early overbuild may have considerable merit i.e Build Cost/Benefit may be more
attractive than Upgrade Economics
o Large installed customer base increasingly looking at LT supply options
o Opportunity to expand route and mesh network options
o Our potential Capacity increases dramatically
o using current100Gbps channels the balanced cable limit of 7 Tbps increases to 24 Tbps!
o The case for an early SX overbuild is under review
o Capacity will continue to be expanded well ahead of demand
o The term of our IRU’s will be extended (again) to 2030
o Construction of more POPS (LA, Sydney No. 2, Auckland)
o Further Price reductions associated with capacity expansions
o Major innovations to de-risk and reward long term customer purchase commitments
