 bedroom for tech and telecom professionals, and JSA Radio, your voice for tech and telecom on iHeart Radio. I'm Jamie Scato-Cataya, and on behalf of my team here at JSA, welcome to our monthly virtual roundtable. We are bringing together top thought leaders talking about topics important to our industry in our monthly virtual roundtable series. Available right here on JSA TV, our YouTube channel, as well as on JSA Radio, the only tech and telecom podcast currently available on iHeart Radio. These monthly roundtables lead us up to our on-site CEO roundtables at our industry networking event, the Telecom Exchange. Next one up, November 14th through the 15th, 2016, at the montage Beverly Hills in Los Angeles. More info at thetelecomexchange.com. Well, today's topic, the state of subsea cables, has garnered a lot of support and social media buzz, so welcome to our live audience here today, and thank you also for viewers who are tuning in on demand. The roundtable is brought to you on our JSA video platform, which allows our panelists to log in virtually from anywhere, and today we're spanning the world from Helsinki and Dublin to Maristown and Summit, New Jersey and out here to LA, in streaming live video feeds, care of our partners, Pinnacle. So thank you, Pinnacle, and let's get started. Today's roundtable will discuss the latest trends and growth in transatlantic subsea cable builds, and we'll hear from our all-star experts on where they see the future of subsea going. Joining us, we have Mr. Tom McMahon, he's the CTO of Aquacoms, Juka Pekka, Jonzu, or JP, Executive Vice President of CINIA Group, David Ross, the CEO and owner of the David Ross Group, and Eric Kachaw, founder and global head of Asset and Capacity Sales at United Cable Company, or UCC. Thank you gentlemen for joining us. I'm going to go ahead and ask a question and we can go around the horn to hear from each of you. So first question, please go ahead and quickly introduce your company to our viewers who may not already know, and briefly describe the new or existing subsea cable assets that you may represent. David, I'll start with you. Thank you. Well, the David Ross Group is a consulting firm, so we don't really own or represent any specific assets, but we've been involved over the years with a great many undersea system constructions and aided a lot of those businesses. At last count, over 500,000 kilometers of cable worldwide, including those who are represented by our panelists here. And here from CINIA, from Helsinki, we are a private public partnership from Northern Europe with headquarters in Helsinki. And we have just completed a system which I believe to be one of the biggest systems in the whole world, 144 terabit system between Helsinki, Finland and rest of Germany. So what we have done is to connect Northern Europe with continental Europe and serving services for these Asian European and US companies. Tom Ackman from Aquacombs based in Dublin, Ireland. Aquacombs specializes in the design, build and operation of strategic subsea cables, providing capacity services to the tech companies and carriers. Aquacombs constructed its first cable system, a small system between Ireland and the UK five years ago and it's recently completed its transatlantic cable system, the AE Connect system from Shirley Long Island in the US into the northwest coast of Ireland. And we then link those systems with diverse terrestrial backhaul in the US across Ireland, diverse connectivity across the IRC and diverse backhaul across the UK to provide direct pop-to-pop services to the US to UK and US to Ireland. United Cable Company, Eric Gottschall, founder and CEO. I exclusively represent our team exclusively represents a growing list of subsea and terrestrial assets, about 13 plus now for both dark fiber and mint services and sales. We also have a cloud strategy group headed up by John Marcus, managing member and our backhaul network specialist and engineer Dave Ellis, who has joined me for many years, both of them many years experienced in the industry. But we call ourselves links with distinction because we represent a free and post-sales cable links, both again terrestrial and subsea around the globe, spanning north and south America, Europe and Asia. Can the market, it seems like there's a lot more headlines lately about new subsea cable bills. They're popping up daily, I feel like. How would you describe the current market trends? Dave? Well, I'd say the market is certainly very busy, but it's in a very healthy way. It's a sustainable market, I believe. One of the questions I sometimes get is whether this current flurry of activity is either a boom or a bubble, we don't see evidence of either one. I think this is a market that will keep all of us busy for the foreseeable future, and we look forward to it. I think what we have experienced so far, it's just the tip of the iceberg because this world, as we see today, it's heading to its next industrialization and this brings a wonderful opportunity for many players to start new global activities. Also, not only traditional telecom players, but also OTTs which are investing more and more. We also see some very important trends, like content providers, media, but also Internet of Things, which is actually consuming more and more data, and not only on a national or continental level, but also international level, and that's why I believe that there are more cables and new routes needed. Yeah, I would agree with both statements. I think the market is very active and it's a very interesting market at present. I think that there are very significant capacity demands and forecasts. I think there's also very significant diversity demands for cable systems. Obviously there's a huge shift, market shift from carrier demand to tech company OTT demand, but I do sound a slight caution that there are significant challenges still and there are significant downward pressure on pricing. The market demands more for less and systems have to be very carefully designed and engineered and procured. I think a close eye has to be kept that we don't arrive at an oversupply situation. We've all been through 2001 and that was a desirable place to be, so I think very, very interesting, but all of this slight degree of caution as well. I agree with all my friends on the video here today as well. What we're seeing is 40% demand growth from a lot of the tops, especially a few that we know very well. The larger players are also seeing 20% growth of just basic Internet web-centric providers. I look at the market is still 85% wholesale, but we also have people that come and are buying in the high-frequency market. J-Piece Cable is perfect for high-frequency traders. It shaves off two milliseconds from Helsinki to Finland or Helsinki to Brantford. I look at Tom's Cables being a totally diverse play, but a play that has a linear system in the water but protects itself at the 100G level terrestrially, which is brand new to the industry. It's earth-shattering. Actually, no one offers it. So, when I look at who the providers are, I say, wow, we know who the big, big players are, the over-the-tops, but who are the next set of people that we're going to run into? I call it the next, is it the next three A's? Is it Apple, Amazon, Alibaba? I think that all of those players, and Amazon's proven, in fact, in the press that they actually have the wherewithal to invest in summary cables, so you're going to see a whole new subset of players emerging, which is healthy for our industry. Well, that leads us directly into our next question. So, can the market support all this influx in subsea assets, or are we just finally playing catch-up in the sense that there hasn't been any significant transatlantic, specifically, construction in the previous 10 years prior to a hibernic express? So, is it that we're finally catching up and providing that much-needed capacity, or is this sort of more of the same? Dave? Well, I think there's a little bit of catch-up, as you mentioned, in the Atlantic and probably a couple of other places in the world, but for the most part, it's looking toward the future. I think the market can more than support all the new assets. We review the business plans for quite a few new table constructions, and they're all healthy, I can tell you. And, you know, one of the evidences of it, and Eric can attest, is that in many of the new builds, large fractions of the system are pre-sold before construction. So, this is an indication that the need is urgent. This is not something that is being built on speculation. If I may add to this, I think that business models need to be very well-designed, and I would also say that sometimes you have to make the market. Sometimes there does not exist a market. And if you don't build an infrastructure, there will be no market. Once you build the infrastructure and you prove that there is enough capacity, then you see also new services emerging. So, I think it's sort of a chicken and egg. Without the infrastructure, you won't get any new services. And, of course, you have to be very careful in funding. You have to be careful when designing the business plan, but also you have to believe in the future. So, I think that this is not only catch-up. So, I think that we need to build our own future, and that will be more digital. I can't argue with any of that. I think there is a degree of both catch-up and support for the new systems. Obviously, the OTT uptake is hugely significant. Some of the carrier demand has probably suffered with OTTs coming off their systems, but, again, they have growth, hopefully, that will fill that space. I think developers like Aquacons were no longer building dual systems. We're building, I believe, the highly reliable single systems. The diversity issue, I think, is very important, and that's what can support new systems. People are absolutely looking for diversity. And I think we will see some of the older systems go out of service as well as these newer systems come on board. So, I think there is plenty of demand. You're right, Tom, and the rest of you as well. I mean, you have 265 cables that are in service today. Some of those will obviously be replaced. That's where our group comes into play, which will be pre-sales, as David spoke of, pre-selling cables so that the business plan is in place, both from the web centrics to the over-the-tops to, again, financial players to a whole host of them. Even folks just want to invest in cables. I think that money now is more readily accessible in this marketplace in the last few years, which you really didn't see five or six years ago, and it's a game changer, and it's going to continue to bloom and blossom. Great. So having each of you been involved in subsea cable deployments, can you provide us some insight on the challenges of funding, planning, building subsea cables? And what are your predictions for future projects in terms of their timelines and scope? As in, does it get easier, faster, and more affordable, or is crossing the ocean and physically rolling out cable just a manual gut-wrenching process from start to finish? David? Well, I think that for today's private builders, the largest amount of time spent is on financing. I'm sure my colleagues would agree. And this has become somewhat easier, as Eric said, because new sources of funds are entering the market. Private equity is much more active than has been true in recent past, and there's some stimulus by governments and multilateral institutions to provide new connectivity. All of that helps. But still, developing a new system will take years, and any developer needs to be prepared for that. I think we have a very, let's say, recent experience of this funding and planning and implementing the infrastructure building. And in our case, it was from start to finish, I think less than three years, with the deployment itself taking 16 months. And I would say that planning for the financing took some time. So, designing the business plan was very, very critical. Our current funding is based on a private public consortium, which is, I think, a very interesting way of building new infrastructure. Also, the current exchange rates and rates itself, they pursue that there is need and possibility for infrastructure funding. But as I said, I think that there has to be enough equity, and also what I would remind everyone, and this is not a sprint, this is more of a marathon. So you have to plan the funding also accordingly. Yes, I again agree with this. There are lots of announcements of cable systems and some of these fall away and some amalgamate and some proceed more quickly than others. But I think it's very true that there's a big gap between a line on the map and a cable in the sea. And I don't think it's actually getting any easier. I think the guys summed it up by saying, financially it's very difficult, and if more systems go in, it can become very difficult because everyone still has an eye back to 2001 with over capacity. Technically, things are getting very, very difficult as well. If anything, I think the permits authorizations and licenses and the costs of those licenses are getting actually more difficult as time goes on. And trying to find niche or unique aspects to your system but at the forefront is a tricky business. So it's not easy and it's not for the faint hearted and I think it's very important that people get it right. Absolutely correct. I agree with JP as well. It's a marathon. It does take time having been through it a few times. It's mind-blowing the amount of effort that goes into the planning, the capital, the fundraising, and then even the sales. Previously, five years out on some sales to get a cable in the water. So it does take time. That's what the premise of UCC is now that we are taking the time to help both pre and post sales. So it is a bit of that. And again, it is a marathon. Once this cable is up and running, then it's actually a sprint as JP and Tom know. It's a sprint to the finish line every month. And looking at our friends over at Telegeography, there was a recent quote that they published that over two-thirds of all traffic on undersea Atlantic cables is from private networks or networks run by companies from their own data transmissions, not telecom companies, notably. That's up from 20% in 2010. So the question is, who are you guys seeing as the major networks utilizing the cables today? And again, we'll start with Dave. Well, as you said, the data center networks of the major content providers and the cloud service providers are taking a large share of the network on the major routes worldwide, including transatlantic. You're going to see the same effect, nerd in the Pacific and intra-Asia and so forth. But you really shouldn't rule out the major carriers and internet service providers. They're still very active in the world. They still have a very large and growing need to satisfy all of their clients. And they just don't build all the systems anymore like they used it. That does not mean that they're not active. And if you look particularly in Asia on the trans-Pacific routes and the intra-Asia routes, the Europe Asia routes and so forth, you'll see major carriers active in all parts. And even in the Atlantic, you'll see major carriers partnering with heavily supporting new builds by private operators. So those parties still should not be written out of the script. But I think that in the foreseeable future, you're going to see more and more content providers and cloud service providers taking the lead in systems. I agree totally with this aspect. But I would also like to bring another view into this. And that's the end users. The consumers today, they are served mostly by OTTs and of course, traditional telecom operators. But what do you see more and more? You see a business-to-business going into cloud and that will create a very big need for new services. Also what I'd like to find out is the need of financial services that will bring more and more not only bandwidth but also routes, which is very, very critical. And the other thing which will be in the future is autonomous driving and other applications of IoT. And they will be made generators for traffic and they may have special needs, which needs to be addressed in building also subsea cables. From an AEC Aquacons, Ireland perspective is quite an easy answer. Ireland has been hugely successful in attracting very significant data center growth and obviously Apple, Amazon, Facebook, Microsoft and Google. So our cable system has received a lot of support because of that market. But I would agree also that the carrier market certainly has not disappeared and surprisingly even some of the smaller carriers, their demands are actually quite surprising and I think that backs up what JP said in relation to private cloud traffic as well. So my next challenge for us and for JP then is to start linking these data centers either via the UK or bypassing the UK with the recent Brexit. So we might be doing a little bit more integration between us. And I agree with all of you, but David I think said it best as well. You can't rule out anyone. And I just made a few notes. I think we're thinking about the over the tops and a few of the big players. Of course, you can fund these networks. You got research and university networks, government, business to business, again, financial communities, carriers over the top, web-centric. Again, who are going to be the next big players and even the web-centric? Amazon, Apple, Alibaba, Tencent. I mean, the list goes on and on. We're seeing many new players emerge daily that have the ability now to buy at the 100G level. And at some point they're talking spectrum, dark fiber. So we're seeing a whole host of new people coming out of the woodwork that are talking at levels that they've never talked about before. And speaking of the tech sector, a few weeks ago we had the announcement of Mireya, the Facebook and Microsoft cable that they're deploying from Virginia to Spain. This is the first time tech companies are building directly. Do you see this as the beginning of a new trend? Is it an exception? Or has this been happening to some degree for some time, but without the media attention? And why now? Dave? Well, I think it has been building for years. It's just now that there are enough players with enough of an immediate need to warrant building their own systems. And this is really just an example of exponential growth. It always appears that nothing is happening until suddenly it breaks through into a clear view. And then it can become dominant from there. And I think that's exactly what's going to happen. As Eric said, you're going to see more and more of these players emerging from under the surface. I think this is not a revolution. I think it's more evolution of networks and evolution of services. I remember back in year 2000 when there was this concept of application service providers, ASPs, which actually became hosting providers and then those became data centers. And what do you see? It's more and more growth of data. And then you need to have reliable infrastructure and it's very natural. And those ones which already have a huge amount of capacity and capabilities of building a cable, why wouldn't they build? And I think we will be seeing more and more to this. Yeah, I would just make a comment there that Maria is obviously the cable system with Facebook and Microsoft, but Telefonica is the party that will build and operate this. And I think that's very important because as JP says, it is an evolution from just carrier cables, consortia cables, capacity models, and now into part ownership models. But personally, my belief is I don't think that the OTTs have the desire to operate systems into the future. I certainly think they would have the capacity to build them, but I think that they will rely on experienced operators because again, it's a vital part of any system and it's a very demanding part. And getting more so, cable hits can be less and less tolerated as we go forward. Exactly right, Tom. I think you're looking at it again. The tops, even the web centrics are not going to run cables. They're going to need traditional carrier operators who run knocks and take care of the ship deployment who actually can protect the cables and get involved in incidents. So again, 265 cables. Last year, I think we had 150 incidents. So I doubt that Facebook and Microsoft and others are going to send out their own ship to repair it. So there's going to be an operator that needs to be involved. And again, as demand grows and as bandwidth grows, we're watching an evolution of 10 Gs going to 100 Gs. It's been happening for quite some time. 40 Gs got stuck somewhere in between there, unfortunately. But years ago, 2001, we saw the same evolution at the 2.5 G growing to a 10 G, which was phenomenal growth then. Finally, our equipment providers and the makers have caught up with the race and the infrastructure race. They're able now to provide at the 100 G level soon to be 400 plus. But for right now, it's perfect at the 100 G level and people are buying in bulk at the 100 G level. Sure. It's not a revolution, it's an evolution. And that leads us to the great last question of this roundtable, my favorite one. What do you predict, gentlemen, as the future of the subsea cable industry if we look out three to five years from now? David? Well, I think from all I've said, you can deduce that my view is that the future will be more of the same. As consultants, we tend to get involved with projects at the very earliest stages when they're just ideas, and we're working with a number of parties now who are planning new systems for deployment in the next few years. We don't see any signs of abatement in the market as it is. What I see, actually, there's a need for more connectivity between Northern Europe and North America. So that's one thing I would see some new cables coming, hopefully. Also, what I'm now starting to do and work on is a very interesting project putting together Europe and Asia. And of course, there's Eurasia in between. So that's a very challenging and interesting proposition which I will see hopefully coming in the next three to five years. I agree with that. I think there will be a significant number of new cables built over the next few years. I think we will see some of the older systems go out of service. I think if the new systems are well planned and well implemented, I think that they will be successful. And I think that the OTTs who are a huge driver behind this will act responsibly because I don't think anybody wants a disruptive market. A little disruption is okay. But no, I agree with everyone. It will be more of the same. I think you will see more, as JP said, underserved markets being served. I look at a new cable in LLINK going from Brazil to Portugal. Very much an underserved market and cutting 40 milliseconds off the current read today going to North America and then across the North Atlantic. So it's going to be more of the same. And UCC is not a cable very happy to service. The needs of that excess capacity for everyone both on this call and elsewhere. So we love it. We love it here, too. It's definitely an exciting time. Time of much growth. Thank you, gentlemen. Our esteemed panelists, Mr. Tom McMann of Aquacoms, Jucapeca, JP of Jones Zoo of Sinia Group, David Ross, of course, David Ross Group, and Eric Guchel of United Cable Company. For your thoughtful insights on the current and future state of the subsea cable industry, we thank you. Much appreciated. And thank you, audience, for joining us. If you want to see this and other monthly virtual roundtables on demand plus the calendar for upcoming roundtables, go ahead and check us out at jamiescato.com. And if you want to see actual CEO roundtables live, go ahead and visit us at thetelecomexchange.com. And if you'd like your C-level to be featured here, go ahead and email us pr at jamiescato.com. Thanks, everyone, for tuning in to JSA TV, the newsroom for attack on telecom professionals, and JSA radio, your voice for attack on telecom on IHOT radio. Until next time, happy networking.