After a break of more than 10 years since the last transatlantic submarine cable was built, two new cable systems have gone live in the last five months. Hibernia Atlantic’s Hibernia Express and Aqua Comms’ AEConnect are competing to secure valuable revenue streams through a combination of low-latency and high-capacity services.
Competition intensifies for the lowest latency crown
Latency is the time taken by a signal to pass from source to destination. In a communications network latency is related to distance, congestion, and the efficiency of the network equipment – for instance, how far the signal can be transmitted without repeaters. Transatlantic low-latency services are in great demand from financial institutions that want to use them for high-frequency trading and other time-critical applications. International carriers, global data center operators, and providers of content and cloud services also demand low latency for their traffic.
Hibernia and Aqua Comms are competing head-to-head for this valuable business by using the newest technologies, minimizing the lengths of their cable systems, and dedicating fibers or waves to particular services or customers.
The Hibernia Express system, launched in September 2015, takes a 4,600km route between Halifax, Nova Scotia in Canada and Brean in England, with terrestrial backhaul to New York and London respectively. The six fiber-pair cable has a total capacity of 53Tbps and offers a variety of latency options as low as 58.9ms between Equinix data centers in Secaucus near New York and Slough near London. This is a significant improvement on previously available transatlantic cable systems.
On January 14, 2016 Aqua Comms announced that its America Europe Connect (AEConnect) cable had gone live. Although, at 5,522km between Shirley in New York state and Killala in Ireland, the submarine section is longer than that of Hibernia Express, the backhaul routes used by Aqua Comms are shorter, resulting in a projected latency of 53.9ms.
Not to be outdone by the new arrival, five days after Aqua’s announcement Hibernia responded with plans to reduce the Hibernia Express latency to 44.9ms with more direct terrestrial backhaul routes. These seemingly tiny reductions really do make a significant difference to certain customer verticals, so Ovum expects that this is far from the end of the story. Opportunities exist for both players to reduce the latency of their backhaul still further. The financial benefit of providing the lowest latency route far exceeds that of being second-best.
2016 Trends to Watch: Wholesale Telecoms, TE0012-000567 (January 2016)
“Tata Communications adds to global low-latency choices,” TE007-000625 (August 2012)
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David James, Practice Leader, Wholesale Telecoms