Four tech giants are increasingly dominating the Internet’s critical cable infrastructure
fiber optic cable, who carries 95% Much of the world’s international Internet traffic connects pretty much all of the world’s data centers, those huge server warehouses where the computing happens that turns all those 1s and 0s into our experience of the Internet.
Where those fiber-optic connections connect countries across the oceans, they consist almost entirely of cables running underwater – about 1.3 million kilometers (or more than 800,000 miles) of bundled glass threads that connect to real, physical make up the international Internet. And until recently, the overwhelming majority of underwater fiber-optic cables being installed were controlled and used by telecommunications companies and governments. Today, that is no longer the case.
In less than a decade, four tech giants – Microsoft,
Google parents Alphabet, Meta (formerly Facebook) and Amazon — have become major users of the undersea-cable capability. Before 2012, the share of the world’s underwater fiber-optic capacity being used by those companies was less than 10%. Today this figure is around 66 percent.
Analysts, submarine cable engineers and the companies themselves say all four are just getting started. According to subsea cable analysis firm TeleGeography, over the next three years, they are on track to become the primary financier and owner of the web of undersea Internet cable connecting the richest and most bandwidth-hungry countries on both the Atlantic and Pacific coasts. ,
By 2024, the four are projected to collectively have an ownership stake in more than 30 long-distance underwater cables, each thousands of miles long, that connect every continent in the world to save Antarctica. In 2010, these companies had an ownership stake in only one such cable – Unity Cable, partly owned by Google, connecting Japan and the US.
Traditional telecommunications companies have reacted with skepticism and even hostility to the rapidly growing demand from tech companies for the world’s bandwidth. industry analyst have expressed concern About whether we want the world’s most powerful Internet service providers and marketplaces to also own the infrastructure on which they are all distributed. This concern is understandable. imagine if Amazon owned the streets on which he delivers the package.
But the involvement of these companies in the cable-laying industry has also reduced the cost of transmitting data across the oceans for all, even those of their competitors, and allows the world to transmit data internationally in 2020 alone. has helped increase its capacity by 41%, according to TeleGeography annual statement On submarine cable infrastructure.
Underwater cables can cost hundreds of millions of dollars each. They require a small fleet of ships to install and maintain, from surveying ships to specialized cabling vessels that deploy all manner of rugged underwater technology To bury cables under the seabed. Sometimes they have to lay relatively delicate cables—at some points as thin as a garden hose—at depths of up to 4 miles.
All this should be done while maintaining the right amount of tension in the cables, and avoiding miscellaneous hazards such as mountains under the sea, oil and gas pipelineHigh-voltage transmission lines for offshore wind farms, and even shipwrecks and unexploded bombs, are what help companies engineer and build undersea fiber optic cable systems, says Howard Kidorf, managing partner at Pioneer Consulting. help.
In the past, trans-oceanic cable-laying often required the resources of governments and their national telecommunications companies. That’s all except pocket change for today’s tech titans. Combined, Microsoft, Alphabet, Meta and Amazon committed more than $90 billion in capital expenditure in 2020 alone.
All four say they are laying all this cabling to increase bandwidth in the most developed parts of the world and bring better connectivity to under-served areas such as Africa and Southeast Asia.
That’s not the whole story. Their entry into the undersea fiber-laying business was driven by the rising cost of purchasing capacity over cables owned by others, but now driven by their insatiable demand for more terabytes of bandwidth, says Timothy Strong, vice president of research at telegeography. , He said this has reduced profits for traditional players in the cabling industry such as NEC, ASN and Subcom. (It has done the same for the profits of capacity wholesalers on submarine cables such as Tata and Lumen.)
By making their own cables, the tech giant is saving themselves money over time that they have to pay other cable operators. That means tech companies don’t need to operate their cables at a profit for the investment to make financial sense.
Indeed, most of these are collaborations between Big Tech-funded cable rivals. For example, Maria Cable, which spans about 4,100 miles between Virginia Beach in the US and Bilbao in Spain, was completed in 2017 and is partially owned by Microsoft, Meta and Telxius, a subsidiary of Telefónica .,
Spanish Telecom. In 2019, Telxius announced that Amazon has signed an agreement with the company to use one of eight pairs of fiber optic strands in that cable. In theory, this represents one-eighth of its 200 terabits-per-second capacity—enough to stream millions of HD movies simultaneously.
META works with global and local partners on all of its submarine cables, as well as other large tech companies such as Microsoft, says Kevin Salvadori, vice president of network infrastructure at the company.
Bandwidth sharing among competitors helps ensure that each company has more cable capacity, the redundancy that is needed to keep the world’s Internet humming when a cable breaks or is damaged. According to the International Cable Protection Committee, a non-profit group, this happens about 200 times a year. (Repairing damaged cables can be a huge effort that requires the same ships that lay cables, and can take weeks.)
Cable sharing with visible competitors—as Microsoft does with its Maria Cable—is the key to ensuring that its cloud services are available almost at all times, something Microsoft and other cloud providers do. explicitly promise In its agreements with customers, says Frank Ray, senior director of Azure Network Infrastructure at Microsoft.
But the structure of these deals also serves another purpose. Reserving some capacity for telecom carriers such as Telxius is also a way to keep regulators away from the idea that these US tech companies are telcos themselves, Mr. Strong says. Tech companies have spent decades arguing in the press and in court that they are not a “common carrier” like telecommunications—if they were, it would expose them to thousands of pages of regulations specifically for that position.
“We are not a carrier – we do not sell any of our bandwidth to make money,” says Mr. Salvadori. “We are and will remain a major buyer of submarine capacity where it is available, but in places where it is not available and we need it, we are very pragmatic, and we will do so if we have to make the investment to do so.” , ” he adds.
One exception is for large tech companies collaborating with rivals on the Internet’s underwater infrastructure. Google, alone among the big tech companies, is already the sole owner of three different undersea cables, and the total is projected by Telegeography to reach six by 2023.
Google declined to disclose whether it has capacity for any of these cables with any other company.
Google designed and built these fully owned and operated cables for two reasons, says Vijay Vusirikala, a senior director at Google who is responsible for all of the company’s submarine and terrestrial fiber infrastructure. The first is that the company needs them to make its services like Google Search and YouTube streaming fast and responsive. The second is to gain an edge in the customer battle for its cloud services.
All these proprietary changes to the Internet infrastructure are what we already know about the dominance of Internet platforms by big tech, says Joshua Meltzer, a senior fellow at the Brookings Institution specializing in digital business and data flows.
These companies’ ability to integrate vertically all the way down to the level of the Internet’s physical infrastructure would only reduce their cost of delivering everything from the social networking services of Google Search and Facebook to the cloud services of Amazon and Microsoft. Is. It also widens the gap between itself and any potential competitors.
“You have to imagine that this investment will eventually make them more influential in their industries, because they can always provide services at a lower cost,” says Mr. Meltzer.
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Write Christopher Mims at [email protected]