Including Google and Facebook .. Why do major technology companies invest in submarine cables?

A number of experts believe that the investments of the four major technology companies in the submarine cable sector to transmit Internet data enhance their dominance and profits, and undermine any ability to compete in the field of web infrastructure.

In a report published by newspaper The American Wall Street Journal, author Christopher Mims says that the Internet, which has become a pivotal role in our lives, needs a giant network of fiber-optic cables, which transmits 95% of global Internet traffic.

The data transmission networks linking countries mostly consist of underwater cables, with a length of about 1.3 million kilometres. Until recently, the vast majority of submerged optical fiber cables were under the control of telecommunications companies and government agencies, but the situation has completely changed today.

control of submarine cables

Before 2012, the four tech giants: Microsoft, Alphabit, Meta (formerly Facebook) and Amazon had a monopoly on less than 10% of submerged optical fibres, but now that percentage has risen to about 66%.

In the next three years, the Quartet is expected to control the financing and ownership of the undersea cable network between the richest and poorest countries on the shores of the Atlantic and Pacific oceans, according to Tele Geography.

By 2024, the four companies are expected to have stakes in more than 30 submarine cables, each thousands of kilometers long, connecting every continent except Antarctica.

In 2010, these companies had a stake in a single long submarine cable, the Unity cable connecting Japan and the United States, in which Google owned a stake.

lower costs

The writer stresses that despite the fears of the dominance of technology giants on submarine cables, it is evident that their involvement in this field has reduced the cost of data transmission across oceans. According to Telegeography’s annual report on submarine cable infrastructure, the contribution of major technology companies helped increase the volume of international data transmission by 41% in 2020 alone.

The cost of laying a single submarine cable is estimated at hundreds of millions of dollars, and its installation and maintenance, with a depth of more than 6 kilometers, requires a fleet of ships.

Laying cables requires a great deal of caution with seamounts, oil and gas pipelines, wind farms, and even shipwrecks, explains Howard Kedorf, managing partner at Pioneer Consulting, a company that specializes in engineering and building undersea fiber optic cable systems.

The total capital expenditures placed by the four companies in 2020 in this industry amounted to more than 90 billion dollars. The technology giants say they are working to enhance these cables with the aim of increasing network bandwidth and improving internet connectivity services in regions such as Africa and Southeast Asia.

“The high cost of purchasing other companies’ owned cable capacity has been a major driver of the technology giants’ involvement in undersea cable investments,” says Timothy Strong, vice president of research at Telegeography.

The data transmission networks linking countries mostly consist of underwater cables (Shutterstock)

Why do major companies cooperate?

Most of the cables are financed by cooperation between major companies. For example, Microsoft, Meta and Telxius, a subsidiary of the Spanish telecom company Telefónica, funded the Maria cable, which was completed in 2017, and extends over a distance of approximately 6,500 km, connecting Virginia Beach in the United States and Bilbao in Spain.

In 2019, Telxios announced that Amazon had signed an agreement with the company to use 1 of 8 pairs of optical fibers in its Maria cable, which in theory represents one-eighth of its 200 terabits per second capacity, enough to stream millions of HD movies. at same time.

Kevin Salvadori, vice president of network infrastructure at Meta, says the company cooperates with global and local partners in submarine cables, and with other major technology companies such as Microsoft.

According to the author, the cooperation between major companies ensures the continuation of the Internet data flow smoothly in the event of any damage to the cables. According to the International Cable Protection Committee (a non-profit organization), such faults occur about 200 times a year, and repairing damaged cables requires a great effort that may take weeks.

Sharing cables with competitors – such as the company’s own Maria cable – is key to making sure its cloud services are available at all times, says Frank Ray, director of Microsoft’s Azure Network Infrastructure.

Strong believes that these deals serve another purpose, as the involvement of telecommunications companies such as “Telexius” in the exploitation of cables is a “camouflage method” used by American technology companies to distract attention from being telecommunications companies themselves, as he put it.

In contrast, Salvadori says, “We’re not a carrier, we don’t sell bandwidth to make money. We’ve been – and still are – a major buyer of submarine cable capacity wherever we have it, but where cables aren’t available, we’re very practical, and we could invest if We needed that.”

According to the author, there are exceptions in the field of technology giants’ partnership with competitors in the ownership of submarine cables, as Google owns 3 cables alone, and the number is expected to reach 6 by 2023.

Vijay Vosirikala, in charge of Google’s submarine and terrestrial fiber infrastructure, says the company built these owned and operated cables for two reasons: the first is to make its own services – such as search on different engines and sites – faster and more quality, and the second is to win the battle for cloud services.

Joshua Meltzer, a researcher specializing in digital commerce and data flow at the Brookings Institution, says that all these transformations in the Internet infrastructure are an extension of the dominance of major technology companies on various Internet platforms.

“Ultimately, this investment will make them (companies) more dominant in the Internet, because they can provide services at lower costs,” Meltzer adds.

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