<> The Importance of the Hawaiki and Tui Samoa Cables– Narrowing the Digital Divide (Hawaiki Part 3) | Tautalatala.com

The Importance of the Hawaiki and Tui Samoa Cables– Narrowing the Digital Divide (Hawaiki Part 3)

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    TE Subcom Reliance Class Fleet Image
  • Hawaiki overview schematic.
    Hawaiki overview schematic.
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TE Subcom and Hawaiki informational materials.

As a telecommunications consultant and professional, there is a marked difference in the quality of Internet access between “mobile” and “fixed” access points and devices, especially when it comes to “wealth” indicators and influencers. In a paper authored by Martin Hilbert (Universtiy of Southern California, “Mapping the dimensions and characteristics of the world’s technological communication capacity during the period of digitization”, he identified several metrics on how we currently try to measure technological communication capacity.

1.     The number of subscriptions and devices,

2.     the installed capacity base in kbps,

3.     and the effective usage of the available capacity.

Hilbert went on to say that the first metric, which is still used prominently by marketers as a sign of progress, is increasingly meaningless as it is more population based than any real indicator of how effectively that capacity was being used. The "effectiveness" of the capacity being the measurement he considered more meaningful.

Hilbert’s key findings on “effective use” of capacity shows that while mobile subscriptions may constitute up to 70% or more of the total voice and data subscriptions, they account for less than 30% of the effectively used capacity; and likewise the fixed location subscriptions only accounted for 30% of the total subscriptions but made up more than 70% of the effective capacity. Hilbert’s study covered the time period between 1986 and 2010, and included data covering 31 telecommunications technologies and 12 broadcasting technologies.

Hilbert applied his work to a study of the countries around the world and he found that while the numbers of total subscriptions would seem to indicate a narrowing of the digital divide between the most developed and industrialized nations and developing nations, the concentration of effective capacity was still firmly within the bounds of those same traditionally industrialized and developed economies.

I bring this up because it is pertinent to understanding why the Hawaiki and Tui Samoa cables are so important for American Samoa and Independent Samoa collectively. Prior to 2018 American Samoa had a Kbps per capita of 13.2 kbps per person, and Samoa had a Kbps per capita of 2.7 kbps. Compare that to an estimated 650 kbps per capita for Australia, 300 kbps per capita for New Zealand, and, while it is difficult to quantify or measure the USA’s kbps per capita, in 2010 Hilbert calculated that the average person in one of the Organization for Economic Cooperation and Development nations, of which the USA is a member, was about 3,200 kbps per capita of effective capacity, which implies that the total kbps per capita was higher than that as well, and since it is an average and the USA nearly tops Hilbert’s chart, it implies that the measurements for the USA are quite a bit higher still. In terms of global rankings this would put American Samoa and Samoa near the bottom of the global rankings for kbps per capita, and thus hugely limiting their ‘economic potentials’, because when you apply Hilbert’s theories to such limited total capacities, the effective capacities of American Samoa and Samoa are likewise miniscule, and effective capacity is like an investment, the more you have the easier it is build more.

Effective capacity generates wealth, creates employment, and contributes to GDP. Hilbert’s findings on mobile subscriptions and data usage found that mobile subscriptions and data usage contributed a much smaller share to effective capacity than fixed subscriptions, which in turn means that the economic benefit to a country per mobile subscriber is lower than the economic benefit gained per fixed subscriber. Now clearly Hilbert’s study was conducted on data that ended in 2010, and obviously advances in the mobile space have allowed many business and “effective capacity” applications to migrate from the desktop to mobile platforms, but this migration of “effective apps” is more likely in countries with an already high concentration of effective capacity, because that is where the demand and capacity to effectively use such applications is most likely to occur, and therefore investment in such applications is more likely. This is why it is incumbent on technologists and evangelists to focus on increasing the effective capacity in developing countries like Samoa and American Samoa, and this is why the Hawaiki and Tui Samoa submarine cable projects are so important for the Samoan islands and why the Samoan islands stand on the cusp of leap frogging over the Digital Divide. It may be an accident of the competitive nature of the two Samoan entities, but the end result is that having two cables in such close proximity raises the potential of the islands significantly. However the Samoan islands happened to this situation, using New Zealand as a benchmark at 300 Kbps per capita (2017), to achieve similar benchmark measurements American Samoa and Samoa would need to reach accessible active capacities of 17 Gbps and 59 Gbps respectively, and also invest in the necessary access technologies and infrastructure to enable subscriber access. American Samoa has already completed a Fiber to the Premises build out, which gives them an advantage in that regard.

The conventional wisdom in the industry is that a site must have at least a dual redundant broadband link to the Internet in order to be considered for a satellite office, and triple redundancy for a mission critical site. This is the reason why “effective capacity” generating facilities gravitate toward highly industrialized and well connected centers, or if you look at a submarine cable map – such activities gravitate toward the hubs. With the Tui Samoa and Hawaiki cables landing in Samoa and American Samoa respectively, and the existence of a submarine fiber link between the two, both Samoa and American Samoa will start to meet the redundancy requirements. Both Samoa and American Samoa have access to excellent universities via their respective relationships with New Zealand and the United States, and both have low wages and cost of living indices. American Samoa stands to benefit the due to its relationship with the United States and that their location makes it a desirable location for time zone sensitive business activities and operations. Samoa stands to benefit from the dual path redundancy opportunity in respect to its stability and centralized location to the rest of the Pacific to become a center for Non-Governmental Organizations (NGOs) monitoring projects in the Pacific region. The additional and recent upgrades to their airport and the upcoming upgrades to their sea port facilities would position them as a potential location for transshipping, high value manufacturing, and pre-processing agricultural and food industries.

American Samoa and Samoa stand to reap other cable related benefits from having both Tui Samoa and Hawaiki cables landing in near proximity to one another. On 22nd of January of this year (2018) the final piece of the strategy was put in place when the Samoa-American Samoa (SAS) cable operator announced that they just completed an upgrade to the inter-island cable, increasing capacity by one hundred times, from 1 Gbps to 100 Gbps, with a next potential upgrade to 800 Gbps should demand materialize for the expansion. The next step will be for all three cable operators to meet and discuss interoperability logistics and planning, possibly engaging and joining with Tui Samoa cable’s planned Manatua project, turning the Samoan islands into an Eastern Pacific Hub, just as Fiji is the Eastern Pacific Hub; except that Samoa and American Samoa will have the distinct advantage of two source cables.

The stated potential capacity of the Tui Samoa cable is 8 Tbps, and the potential capacity of the Hawaiki cable is 42 Tbps. In the case of the Tui Samoa cable, the full 8 Tbps is dedicated to the link connecting Samoa. For American Samoa, the majority of the capacity on the Hawaiki will likely be purchased and used by other customers on the cable since it also has end points in Australia and New Zealand, so at the outset Hawaiki is planning to reserve two 100G wavelengths to American Samoa’s exclusive use. On paper, however, it is remarkable that prior to 2018 their total maximum and potential capacity was 3.4 Gbps, of which only 1.2 Gbps was subscribed and active, and by the end of 2018, the max potential capacity of the Samoan islands will increase to 53.4 Tbps, an increase of over 15,000 times.

 

Samoa & American Samoa Capacities

Source

Max Capacity

Description

Active Capacity

AS-Hawaii (ASH)

1 Gbps

Repurposed Pacrim East cable.

0.4 Gbps

O3b Networks

2.4 Gbps

Two beams covering Samoa and American Samoa.

0.8 Gbps

Total

3.4 Gbps

 

1.2 Gbps

Table 1 Pre-2018 Samoan Island capacities

These are on paper values because economically neither island entity will be able to support or purchase all of that capacity, and the price per Mbps will initially still be at least one order of magnitude higher than areas with more cables and routes, so it is highly unlikely that there will be a business case to use more than a small fraction of that capacity.

The projected initial capacity subscription on the cable is more likely to resemble the following table, where both landing cable operators will activate a single 10 Gbps wavelength each and break that up to sell to their carrier customers, and American Samoa and Samoa will retain a small amount of capacity on their O3b Networks satellite facilities as backup. It is also unlikely that the entirety of either 10 Gbps block will be sold in 2018 and may take several years before price drops will enable carriers to purchase significantly more capacity, enough to merit the cable operator to activate another 10 Gbps block of active capacity.

For those unfamiliar with capacity sales on this scale and the business cases for small islands with low per capita GDP and low average and median incomes, the introduction of the cable fed capacities and lower pricing will drive consumption but lower retail rates designed to drive consumption will also erode the already small margins due to the carriers needing to invest immediately in network upgrades to handle the increase in traffic. The first year of operation following the introduction of the new cable fed capacity will be accompanied by a series of upgrade related capital expenses on the part of the network operators which will have a typical five to ten year ROI period attached.

It is also important to note that the submarine cable operators also have costs associated with activating each successive 10 Gbps block of capacity. Effectively this means that there will be a build up cycle as the carriers buy capacity, lower prices, and spend money on building their network delivery capacities to match the cable’s ability to supply capacity. During that time the subscribers will begin to invest in using that capacity – either consuming it or using it for business to drive wealth creation, and doing so in increasing amounts, driving demand growth.

Eventually this will drive the cycle to the next capacity upgrade for the cable operator and supply prices will drop significantly as the supply doubles and the process begins again with the operators and subscriber driving access and demand requirements upward. The critical piece in this cycle is the carrier upgrade cycle because high quality delivery and access of the capacity to the subscribers is what drives the wealth creation process that sustainably grows demand. For carriers this will often mean reducing prices slowly to shrink the recovery cycles on their capital investments in upgrading their networks.

Samoa & American Samoa Capacities 2018

Source

Max Capacity

Description

Estimated Active Capacity

Hawaiki Cable

42000 Gbps

Trans-Pacific cable between AUS/NZ and USA.

10 Gbps

Tui Samoa Cable

8000 Gbps

Regional cable between Samoa and Fiji.

10 Gbps

AS-Hawaii (ASH)

1 Gbps

Repurposed Pacrim East cable.

0 Gbps

O3b Networks

2.4 Gbps

Two beams covering Samoa and American Samoa.

0.4 Gbps

Total

53400 Gbps

 

20.4 Gbps

 

Table 2 - Projected capacity for Samoan Islands, 2018.

 

The introduction of two cables to the Samoan islands has repercussions well beyond the price per Mbps at the retail shop, and there will be many false high expectations that these changes will be instantaneous with the introduction of the cable capacity to the local networks. There will be a lead time for the carriers to adapt and upgrade, and their initial pricing strategies will be a determinant on how long the ROI periods will extend, which will determine how quickly they’ll be able deploy new technologies, continue upgrades, and offer lower prices. All of this will have an effect on what Hilbert calls the “effective capacity” of Samoa and American Samoa, how fast that effective capacity will grow, and if those growth rates will be sustainable through each capacity growth cycle. I certainly hope Mr. Hilbert decides to do a study on the Samoan islands in order to update his research. In the meantime, policy makers and industry leaders should consider how best to increase the effective capacity of their communications sectors.