Gloomy Financial Indicators… Scary Future for the Subsea Cable Trade?

Some fairly ominous headlines have been circulating all over the world these days relating to the chance of a world recession and the continuing risk of inflation.

At TeleGeography, we have acquired a number of questions on how these financial indicators might affect the submarine cable business. Particularly, persons are curious to know:

1. Will slowing financial progress impair worldwide bandwidth demand progress on subsea cables?
2. Will inflation result in rising worldwide bandwidth costs?

Final month on the Submarine Networks World convention in Singapore, I gave a presentation that sought to shed some gentle on each of those questions.

After wanting again at almost twenty years of knowledge, I found there was no historic proof that financial progress had a direct affect on worldwide bandwidth progress charges.

Many components drive demand for worldwide bandwidth, and bandwidth demand will not be extremely correlated with financial progress.

So what influences the demand for worldwide bandwidth? Glorious query—I coated this in final 12 months’s presentation.

Subsequent, I checked out whether or not inflation is resulting in a rise in worldwide bandwidth costs.

Primarily based on our most up-to-date information, costs should not rising; nevertheless, the tempo of value erosion is slowing.

Why is value erosion slowing? There are various components at play right here.

• Much less aggressive strain: Delays in capability upgrades and new cable activation are resulting in fewer cables with stock at one time.
• Rising gear costs (inflation!): Carriers search to recoup rising gear costs with much less aggressive capability pricing.
• Slowing tempo of demand: Decelerating demand progress is slowing the discount in unit value of capability.

Demand progress could also be slowing, but it surely’s nonetheless sturdy.

Demand progress could also be slowing, but it surely’s nonetheless sturdy. In truth, demand progress seems to be outpacing value erosion on main routes. This means income progress—which is good in the event you’re a vendor of bandwidth.

Able to dive into the complete presentation?
You may obtain my slides right here.