There are many factors driving demand for higher capacity connectivity between North and South America, not least of which are the World Cup and the Olympics that Brazil is hosting in the coming years.
Another major factor driving demand is the burgeoning middle class, particularly in Brazil where around 50% of the population is now deemed to be in this demographic. In addition to this, South America boasts a huge, recently-discovered oil reserve that is ready to be tapped.
Most significant is the government of Brazil’s PNBL broadband plan, which aims to increase broadband penetration in the country. The plan also aims to reduce social and regional inequalities and to promote digital inclusion. The government is injecting around 6 billion Reals into this plan across the next three to four years.
Together with a booming economy, all of these factors combine to create a significant increase in demand for bandwidth.
“Within Brazil, there really was no overbuild during the telecom boom era of the late nineties compared with the US, Europe or Asia – both terrestrially and in terms of overseas connections”, says Larry Schwartz, CEO of Seaborn Networks. “What is happening in Brazil is long overdue - foreign direct investment in telecoms infrastructure has been incredibly strong across the past five years”, he adds.
The Brazilian government is firmly committed to encouraging all manner of infrastructure projects, particularly within the telecoms sector. In terms of capital flow within the industry, there has been tremendous growth within Brazil, and international routes are required to address this.
Only three or four cable systems currently connect Latin America to the US, and these were originally equipped with limited 10G and 40G landers. Satellite is also available but there are significant restrictions, and delays and latency severely hamper the quality of the traffic that is transmitted.
“There is a lot of infrastructure investment going on in Brazil,” notes Fabio Medina of network specialist Ciena. “The need for high capacity transport and low latency transmission are very high, while optical transport networks and traffic optimisation technologies are in high demand.”
Indeed, Ciena is currently upgrading the Sam-1 cable, one of the incumbent cable systems owned by Telefonica’s wholesale arm Telefonica Global Solutions, to 100G. This is massively increasing the capacity available on the cable, allowing TGS to be very flexible with the way traffic is managed in terms of protection and capacity growth.
This upgrade not only provides significantly more capacity but it also allows for additional improvements with very simple steps. The system is being installed based on 100G channels; it has not yet reached maximum capacity but this will come later.
While it’s currently possible to achieve 200G/400G capacities per channel, there is definitely a lot more growth on the network to be explored – and this is increasingly possible without the requirement for extra equipment in the stations.
“With submarine cable, power is space, and it’s essential to save both” says Medina. In terms of both future growth and network simplicity, reducing the need for equipment saves a lot of Capex and Opex on an ongoing basis. One technique for controlling traffic without using much equipment is Optical Bypass, which essentially creates optical ‘tunnels’. If traffic doesn’t need to be dropped or stopped in a specific place, then that specific location doesn’t require equipment as it’s possible to direct it via these optical bypass tunnels.
The amount of capacity going to South America has been significantly lower than the submarine activity in other regions such as Asia-Pacific. Because there are far more deployments in these areas, the cost of capacity tends to be somewhat lower than it typically is in Latin America.
As more cables and capacity are installed, this should drive better cost points for the users. One of the major advantages of DWDM technology – especially when combined with OTN – is the optimal utilisation of bandwidth. It allows every byte transmitted on the cable to be utilised to its fullest, which should translate into better prices for capacity.
Schwartz notes that pricing of capacity on the Brazil-US route tends to be disproportionately high compared to other global routes. However, he anticipates that increased competition will drive this down in the future. “Historically, this particular subsea route has been controlled by incumbent carriers owned by significant players within Brazil. There is a lot of pent-up demand for this route – there is a significant interest in the ability of customers to buy spectrum on the system rather than a specific amount of lit capacity.”
In an effort to meet this demand, Schwartz’s firm Seaborn are now operating the Seabras-1 cable along the route, which is the first direct cable link from Brazil to the US without interim stops along the way. Seaborn has successfully sold a significant amount of unlit capacity as a percentage of the system. This is not a product that’s otherwise available on the route, and it offers a very effective price point for the larger carriers in the market.
Carriers that are only now looking to come into Brazil to compete for enterprise customers are looking for the most cost-effective way of getting into the market. This route is a key enabler for this, as it relates not just to traffic between Brazil and the US, but between the majority of South American traffic and the western world.
Incumbent carriers are also looking for different routes between the two regions. As technology improves over a five to ten year period, the maximum upgradeable capacity of the system will increase to a multiple of 40 terabits.
As a spectrum customer, owning a percentage of the system provides an obvious benefit: as the adaptable system size increases, so too does the percentage owned – by a corresponding multiple, and with no additional cost incurred.
The terrestrial and subsea markets are both heading towards adopting 100G as standard; indeed, subsea operators are having to keep the pace with what their customers are used to in terms of terrestrial deployments. 100G technology enables much greater capacity upgrades as multiples of the system’s original size. Upgrading from 32 to 40 terabits per second allows the route to cope with greater demand, and leverages the currently available technology for optimum performance.
Whether this new capacity will be enough to meet the demand peaks expected during the 2014 World Cup and 2016 Olympic Games remains to be seen. The Brazillian government is keen to put aside its reputation for taking a laid back approach to infrastructure projects. A report in Time magazine in 2012 characterised public projects in Brazil as being “routinely late, over budget and subpar”.
The government’s current priority is to ensure high profile issues including venue construction, transportation and security are under control and on time. International bandwidth and connectivity is an issue which risks being overshadowed by these more pressing concerns.
But any short comings will become only too apparent when spectators find they are unable to upload that mobile phone film clip of their favourite winning team or athelete on to YouTube or Facebook. If they can, they will have companies like Ciena and Seaborn to thank for it.