Here's why Facebook, Google build submarine cables

Facebook and Google plan to build two new submarine cables connecting Asia to North America.

The Echo cable is due to be in operation by 2023. It links Indonesia to the US and will take a new route through the Java Sea. Bifrost should switch on a year later. It runs between America and Singapore. Both have stations on Guam.

The cables replace three earlier planned projects that ran to Asia via Hong Kong. With China cracking down, there are US concerns about spying on cable traffic through Hong Kong.

Capacity increase

Facebook vice president of network investments, Kevin Salvadori says the new cables will increase trans-Pacific capacity by 70 percent. It’s not clear what other cables Salvadori is counting here.

There are other projects. Facebook’s 37,000km 2Africa cable connects 23 countries in Africa, the Middle East and Europe.

When complete is will be the longest submarine cable yet built.

In the past submarine cables have been built by consortia of carriers or outfits like New Zealand-based Hawaiki. Spark, Telstra, Singtel and Verizon own the Southern Cross Cable network.

Private submarine cables

Now Facebook, Google and to a lesser extent Microsoft and Amazon are the biggest builders of submarine cables these days. That’s private submarine cables.

Google has a stake in more than 100,000km of submarine cable. That’s around 8.5 percent of the world’s cable. The company owns almost 17,000km of cable.

Last month it announced its 250Tbps Dunant link across the Atlantic is ready for service.

Facebook is not far behind with around 92,000km of cable. Amazon has 30,000km, Microsoft has 6,600km.

The tech giants own substantial stakes in cables operated by carriers and companies like Hawaiki. They are important customers on other cables.

In 2018 a report at the Motley Fool investment site says:

“Google already has the world’s largest privately owned fibre optic network, which currently handles a massive 25 percent of the world’s internet traffic for its search and YouTube offerings, according to the VP of engineering for Google’s cloud business, Ben Treynor.”

Needs, control

One reason they build private cables or take large stakes in consortia is the networks built for carriers don’t always meet their needs. At the same time they prefer to have control over where a cable goes and how it is run.

It makes sense because they are the biggest customers of submarine cable services. And they have the resources to finance the projects.

Submarine cables need a lot of finance.

Hundreds of millions

For perspective, the 15,000km Hawaiki cable cost in the region of US$300 million. The investment is not considered risky if there’s a proven demand, but banks and other traditional sources are rarely involved.

Hawaiki got over the line when founder Remi Galasso involved entrepreneurs like Malcolm Dick, Eion Edgar and Greg Tomlinson.

Big tech firms need submarine capacity for cloud computing and their content operations. With Amazon and Microsoft, the AWS and Azure cloud services are the main users.

Google is playing catch-up in cloud services. It is spending more than its rivals at the moment as it builds capacity.  Google also has a substantial content business including YouTube. For Facebook the content business is the main driver.

Datacentre traffic

All four tech giants are forever moving vast amounts of data between their data centres.

Alan Mauldin at TeleGeography writes:

“The growth in the amount of capacity deployed by content providers like Google, Facebook, and Microsoft has outstripped that of all other customers of international bandwidth in recent years. Content providers experience high volumes of demand between their proprietary data centres.

The requirements for inter-data centre demand vary by company but are related to database mirroring, search index synchronisation, and cloud computing services and applications.”

In simple language, data such as photos, videos and documents stored on Facebook by one country, say, New Zealand, is backed up elsewhere a few times every day.

Bigger markets

Another reason, tech giants invest in submarine cables is that many countries with large populations have poor connections to rest of the the world.

By giving them better access to the internet and, perhaps, cutting costs, it grows the potential market for Google search or Facebook accounts. More users means more revenue.

One oddity. Google and Facebook don’t sell capacity on their cables. If they did, that would make them telecommunications carriers. Telecommunications companies need licences to operate and are regulated.

In the case of Facebook, that might mean the company would have to take legal responsibility for the content it distributes. Facebook spends a lot of money with lobbyists to make sure this doesn’t happen.

What about streaming companies like Netflix?

You might think that streaming giants like Netflix, Disney or Amazon Prime would take an interest in submarine cables. After all, they distribute large amounts of streaming video data around the world.

They do, but they distribute in a different way. Google, YouTube and Facebook use a lot of dynamic data. People interact with it and it changes all the time.

Streaming companies sell large libraries of movies and TV shows. These are sent to the various countries where they are stored on local servers call Content Delivery Networks or CDNs¹.

This is a form of edge computing. That is, the important action all happens close to the point where it is used. This speeds everything up.

When you select a show on Netflix, it is served locally, either from your city or one nearby.

While the Netflix or Disney library looks large from a user point of view, it’s small compared with the huge stores of content used by the other tech companies.

In round numbers there’s about as much data as you would find on 200 or so laptop hard drives.

Even if everything was updated daily — it isn’t — this wouldn’t use a large slice of a submarine cable’s capacity.

Is there a negative angle to this?

Probably not. If there is any downside for users, it would be at the margins.

Let’s say you are contemplating a new submarine cable between two cities. When that happens, the owner looks for customers before it lays any cable. It knows so much capacity can be sold to X and this much to Y. At some point there is enough potential business to give the project a green light.

Five years ago, tech giants like Google and Facebook would be on the customer list. They might be the difference between the project getting over the line, or not. A private link between the two point owned by one of these companies could change the viability.

Perhaps. It’s not something to worry about.

1. In case you were wondering, the tech giants also use CDNs. ↩︎