Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Tuesday, September 29, 2020

Carriers Map in Latin America 2020

New routes and business models designed for submarine cables

Covid-19 pandemic generated an average increase of 25% to 30% in Latin America traffic and promoted the upload from the end user, especially through online education, telemedicine, remote work and gaming, which left asymmetric services as a reality of the past. This situation - which in many cases forced operators to advance 2021 investments to this year, to deliver capacity inventories - accelerated the reformulations of submarine laying designs and business and association models. The guaranteed connectivity and low latency are prioritized over capacity, the prevailing exchange value of the “old” normality. New shorter routes, such as the one traced by the EllaLink between Portugal and Brazil, aim to reduce latency compared to the designs of traditional laying since the beginning of the millennium.

This transoceanic route of only 6,000 kilometers, scheduled to begin operations in early 2021, promises to reduce latency by up to 50%, under a “PoP to PoP” connectivity model, compared to the “Beach to Beach” schemes. Regarding reprofiled business models, FP Telecommunications Aurora will link the United States, Panama and Colombia in 2022. Its “maintenance consortium” scheme implies that FPT will face the construction of 2,750 km, then an operator will be selected for the cable, and the partners that acquire capacity will take charge of the maintenance of their fiber pairs and mooring stations.

These new proposals emerge as the end of the useful life of the large consortium cable systems approaches, around twenty years after their deployment, such as the Maya and the Arcos. And facing a radically different scenario: today between 60 and 65% of traffic remains in Latin America, compared to 15% or 20% in 2000. The acquisition of fiber pairs from traditional players in new submarine cables of OTTs is other of the market reactions. Sparkle restructures its presence in the region with its foray into Google's Curie cable: the purchase of a fiber pair in the laying that connects Chile with Los Angeles in the United States adds to the acquisition of three pairs in Seabras-1 in 2017 and spectra in sections of the PCCS in Central America and the Caribbean.

Among the main news of the wholesale segment in 2020, the Globenet and Facebook “Malbec” laying will begin commercial operations. Under a “joint construction agreement” model, it will link Buenos Aires, Las Toninas, São Paulo and Rio de Janeiro (with a branch to eventually lead to Porto Alegre).

This variant of association between a traditional actor like Globenet and an entrant like Facebook sought an intermediate point between the models of both firms: quality of service on the one hand, and content expansion, on the other. Finally, one of the central projects for the region takes shape in the coming years: Chilean regulator Subtel decided the route for the Chile-Asia cable, which will exceed 13,000 km and an investment of US $ 388 million to reach New Zealand and Australia. The idea of the Chilean authorities is that clients from Brazil, Argentina and other South American countries deliver traffic, taking into account that in Sydney there are five mooring stations and five submarine cables.

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