Wednesday, 14 November 2018

Subsea sector needs new business model

By Chris Kelly, Total Telecom
Tuesday 20 February 18

The sector must find ways to accommodate OTT players and build a sustainable business model

The global subsea sector needs to radically redefine its working business model, if it is to remain profitable in increasingly challenging market conditions.   "It is clear that the 'build it and they will come' model is no longer viable…

The global subsea sector needs to radically redefine its working business model, if it is to remain profitable in increasingly challenging market conditions.
 
"It is clear that the 'build it and they will come' model is no longer viable. Today, subsea cables are viewed as critical infrastructure, and rightly so," Andy Bax, COO at Seaborn Networks, told attendees at the Submarine Networks Europe event.
 
The industry is now seeing a big uptick in the number of new projects being greenlighted, as the industry tries to mould a new sustainable, profitable business model.
 
"We have had nothing for fifteen years and now we are looking at probably one or two major new projects per year for the next two or three years, as the industry tries to readjust to the new market conditions of the trans-Atlantic subsea market," said Nigel Bayliff, CEO at Aqua Comms.
 
Later in the morning session, Gil Santaliz, CEO at the New Jersey Fibre Exchange, said that it was inevitable that OTT players would have a huge role to play in the financing of future subsea projects and that the industry must learn to work with them.
 
"Companies like Facebook, Google and the rest represent stable tenants for operators," he said.
 
However, not everyone was singing from the same hymn sheet regarding the roll of OTT players. Sunil Tagare, CEO of Opencables described the presence of OTT players as an "existential threat to the business model of carriers", saying that doing "one off cable deals would only compound the problem".   

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