Convergencia Research, Consultoría especializada en Latinoamérica y Caribe
Wednesday, May 18, 2022

Humboldt cable aims to capture 18% of the traffic between South America and Asia-Pacific

Subtel's estimates after the feasibility study for the laying calculate that traffic between the two regions will grow at an annual rate of 28% over the next 25 years. In a virtual event organized by CAF yesterday, Natalia López, manager of Digital Projects for Country Development, detailed the project's roadmap, which will culminate in early 2026 with the start of commercial services.

The online event "The role of regional connectivity", organized by CAF yesterday, brought to the table the main results of feasibility studies for the Humboldt submarine cable, which will link Valparaíso with Sydney. Claudio Araya, Undersecretary of Telecommunications of Chile, said that the laying of 14.810 km will require a US$ 394 million (a value that has yet to be finalized) investment and US$ 18 million in annual expenses.

“Among the effects that this cable will bring to Latin America, the country that will benefit the most will be Bolivia. Followed by Paraguay, in third place, Chile, and then other South American countries”, pointed out the official. According to the Study of Synergies of Digital Projects in South America, awarded to the Faculty of Physical and Mathematical Sciences of the University of Chile, Argentina, Brazil and Chile account for 95% of the IXP traffic in South America. The report called for promoting the use of South American terrestrial networks, since the Humboldt must concentrate regional traffic destined for Asia-Pacific. As a solution, proposed the creation of mirror ports in main concentration points in South America, in order to encourage the conclusion of commercial agreements between network operators. As a complement, Araya recalled that Subtel is promoting a border crossing project to improve interconnection with neighboring countries through deploying fiber in 12 steps, currently disconnected.

Shareholders. Desarrollo País, as the promoting entity of the Humboldt cable project, faced in 2021 the selection process of the telecommunications operator that will own the infrastructure and be in charge of operating it: H2 Cable. Natalia López, manager of Digital Projects of Desarrollo País, said that Desarrollo País and H2 Cable will be joined as shareholders by two other actors: South American countries, with whom Subtel has been talking with and multilateral banks. “With these 4 actors we have our shareholders. Now we are going out to find clients with H2 Cable. There is interest from Red Clara and we are already talking with networks in Oceania and Asia to connect data centers and research centers. We also started talking with builders and will do an RFP, which will be released and announced in the coming months. We want to close the financing during the first semester of 2023”, she commented.

Currently, the Humboldt cable initiative is going through its initial stage, of technical analysis and details of the system design to achieve the most optimal route between Valparaíso and Sidney. “We want to deliver this information to builders and have updated costs. It is important to have updated information this year, due to the impact of the pandemic and logistics costs,” he explained. In parallel, progress was made with the pre-sales process, to detect interest from potential clients, among which content providers stood out in particular.

López estimated that by the end of the year they could have the updated financial model, and then move on to the construction of a new company that owns the project. And at the beginning of 2026, commercial services would begin.

Analysis. Eduardo Chomali, Principal Executive of the Digital Infrastructure Department at CAF, outlined the "important lag in digital infrastructure" throughout Latin America. The region has 68 submarine cables and multiplied its capacity by 5 times in the last 20 years. Out of the 68 lines, 22 go directly to the United States, 23 are more than 15 years old and 18 are over 20 years old. “There is an opportunity to review investment schemes and to rethink if it is being planned as it should. It is necessary to review cable degradation and address the situation of low regional interconnectivity”, he warned.

 

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