Tech majors team up to build the 12,800-kilometer Pacific Light Cable Network
Social media giant Facebook Inc. (NASDAQ: FB) and technology major Alphabet Inc.’s (NASDAQ: GOOG) Google are co-investing in a project to build a 120 terabits per second (Tbps) submarine cable that will connect Los Angeles, California, and Tseung Kwan O, Hong Kong, as reported by The Wall Street Journal on October 12th, 2016. The two tech majors are working with Hong Kong-based Pacific Light Data Communication Company, a wholly owned subsidiary of China Soft Power Technology, and a newcomer to the industry with no previous experience building networks.
The 12,800-kilometer Pacific Light Cable Network would use fiber-optic technology to support the region’s highest-capacity route, according to TE Subcom, the U.S. subsidiary of Swiss technology supplier TE Connectivity Ltd, which has been roped in to build the link. The new cable, which is expected to be launched in 2018, will be the highest capacity trans-Pacific cable, a record that is now held by the FASTER cable.
The construction cost of the new Pacific Light Cable Network would be about $400 million. The cable will feature five fiber pairs; a single one of those pairs will be able to provide 24 Tbps of bandwidth. Google and Facebook will have their own fiber pair to keep their respective traffic private.
The new cable will become the sixth submarine cable that Google has a stake in, the others being Unity, SJC, FASTER, MONET and Tannat. The setting up of the cable assumes significance since both Facebook and Google have struggled to make inroads into China, where both companies’ websites are blocked by the country’s national firewall. However, with Hong Kong being a major regional network hub outside that firewall, both tech firms could potentially serve the lucrative Southeast Asian markets with the laying of the new cable.
For both Google and Facebook, the new cable is expected to enable faster internet connections with less lag and greater bandwidth to its users in the Asia/Pacific region, especially with rising demand for data-heavy video streaming. Separately, in its blog post, Google stated that it will use the capacity from Pacific Light Cable Network to serve its Google Cloud Platform customers. The new bandwidth could accommodate 80 million simultaneous high-definition video calls between the two regions.
Pacific witnesses boom in undersea cables
In recent years, the Pacific is witnessing a boom in submarine-cable construction, with nearly $1.5 billion being committed to submarine routes between 2016 and 2018. This in turn has made the Pacific among the world’s most heavily invested regions for new fiber-optic bandwidth, according to telecommunications research firm TeleGeography. Most importantly, the recent data points to a wider trend of internet infrastructure investment in Asia outpacing other regions. Experts believe that the vast amount of data traffic flowing through these pathways has altered the structure of the internet itself, in a phenomenon known as internet “flattening”.
Tech companies outdo telecoms in bandwidth appetite
Tech companies are outdoing telecom companies in building bandwidth to expand their enormous computer networks and accommodate their data-rich services offerings. For instance, Google offers Gmail, Google Docs, Google Maps, and so many more. Microsoft Corp. (NASDAQ: MSFT) offers Bing, Office365, and its Azure cloud services. Facebook has its social network along with Facebook Messenger, WhatsApp, and Instagram. Hence, Google, Facebook and Microsoft are investing billions of dollars in the underwater cables to ensure that they have enough network capacity to cheaply shuttle information between their data centers. The data moved by just a few online giants now dwarfs that of most others; according to Telegeography, more than two thirds of the digital data moving across undersea cables in the Atlantic is through the networks operated by the likes of Google, Microsoft, and Facebook.
In addition to building its own undersea cable, Facebook is also investing in buying “dark fiber”, a term used for unused terrestrial cables, to move data more efficiently.
Facebook, Microsoft team up for trans-Atlantic cable
In May 2016, Facebook and Microsoft teamed up to build a new trans-Atlantic cable with Spanish telecom provider Telefonica S.A. that connects Bilbao in Spain to Virginia in the U.S. Dubbed Marea, the 6,600-kilometer-long cable has a capacity of 160 Tbps, which is even faster than the Pacific Light cable. This enormous bandwidth would allow the two tech majors to efficiently move enormous amounts of data between data centers and network hubs that support their popular online services. Joining these tech majors, Amazon.com Inc. (NASDAQ: AMZN) is also looking to invest in its own submarine cables in the near future.
Alphabet’s stock stood at $795.26, gaining 1.96%, at the close on Tuesday, October 18th, 2016, having vacillated between an intraday high of $801.61 and a low of $785.57 during the session. The stock’s trading volume was at 2,045,613 for the day. The Company’s market cap was at $541.50 billion as of Tuesday’s close.
Facebook’s stock stood at $128.57, gaining 0.81%, at the close on Tuesday, October 18th, 2016, having vacillated between an intraday high of $129.39 and a low of $128.01 during the session. The stock’s trading volume was at 13,486,315 for the day. The Company’s market cap was at $369.04 billion as of Tuesday’s close.