HUAWEI's "sea journey"
[Huawei Ocean Network does not directly belong to any of the three BG platforms, but carries the important mission of expanding the maritime business space. In an exclusive interview recently, Xu Jiantao, Asia-Pacific Regional Director of Huawei Ocean Network Co., Ltd, told First Financial Reporter that in the past decade, Huawei's new submarine cables have exceeded 50,000 kilometers in length, with a global market share of more than 15%, and have become the world's top four industry players.
A submarine fiber optic cable named Malbec, Argentina's famous wine, will be put into operation in the near future. This is the first new international submarine fiber optic cable system to connect Argentina since 2001.
But this is not the first submarine cable project for Facebook investment.
By the end of September last year, Facebook and Microsoft's transatlantic communications cable, Marea, was completed, 6,600 kilometers long, with data transmission speeds of 160 Tbps, equivalent to more than 5,000 HD movies in a second. Microsoft said it could upgrade its capacity in future to support higher bandwidth.
With the increasing demand for Internet traffic from technology giants, especially cloud computing based on data centers, more and more attention has been focused on the undersea fiber optic cable, known as the "central nervous system" of international communications, used to interconnect global data centers. Facebook also recently announced that it would invest $1 billion in Singapore to build its first Asian data center, which now operates in the United States, Sweden and Iceland.
According to TeleGeography, the market space for submarine cables will remain around $1.9 billion over the next two years, and the space for new submarine cable systems will be around $1.7 billion.
"The submarine cable industry will usher in a golden age of development, the Internet giants involved in investment in the construction of the international submarine cable has more than 15. "In addition to the booming technologies such as regional data centers, cloud computing, 4K/8K video, 5G and the Internet of Things, the support of national policies and the participation of Internet giants have brought the cable business into a new period of explosion," Huawei Ocean (HMN) COO Mao Shengjiang said at a recent Asia-Pacific Cable Summit.
Huawei Ocean Network has always been a "special and mysterious" department in Central China. It does not belong to any of the three BG platforms, but carries the important mission of expanding the maritime business space and serving the global international network interconnection. In an exclusive interview recently, Xu Jiantao, Asia-Pacific Regional Director of Huawei Ocean Network Co., Ltd., told First Financial Reporter that in the past decade, Huawei's new submarine cables have exceeded 50,000 kilometers in length, with a global market share of more than 15%, and have become the world's top four industry players.
Breaking the monopoly of enterprises in Europe, America and Japan
The submarine fiber optic cable, with a diameter of more than 35,000 kilometers and the thumb of an adult, can transmit 100 terabits or more per second. It is like a dense vessel in the ocean, even deep in the cold ocean.
According to the TeleGeography survey, there are now more than 448 submarine optical cables, more than 1.2 million kilometers in length, carrying more than 95% of international data traffic.
"At present and in the future, the submarine cable is still the most important means of international interconnection." Hu Jianbo, director of the Institute of Industry and Planning, China Information and Communication Research Institute, said at the Asia-Pacific Submarine Cable Summit that most of the 200 countries, except more than 40 landlocked countries, could be reached by submarine cable. Although satellite costs are declining, capacity is relatively limited, mainly for relatively remote islands and landlocked countries, and cross-border land cables have not yet found such a successful and mature business model as the submarine cable.
"China International Submarine Cable Interconnection White Paper" mentioned that the entire international Submarine Cable market is facing very fierce competition, from the traditional Submarine Cable construction and operation of the main point of view, the Submarine Cable Club is mainly Telecom operators, private Submarine Cable owners have basic telecommunications enterprises, there are also financial consortia formed project companies . Regionally, such as the United States, Singapore, Japan, France, China and Hong Kong are very important nodes in the global submarine cable network, the United States based on the support of Internet giants have the most abundant content, become the center of global content.
If fiber optic cables are the "central nervous system" of the Internet, the United States is almost the "brain" of the Internet.
For Huawei Ocean to develop its own business, in the submarine cable industry to break through, we need to break the monopoly of European, American and Japanese enterprises.
"Before 2008, the global submarine cable industry was a highly closed and monopolistic market with a blank domestic industry chain. Over the past few decades, all the global submarine cable systems, including those connected to China, were basically occupied by three submarine cable contractors, namely TESubCom (USA), ASN (Alcatel) of France. Lucent, Japan's NEC (Nippon electric). Xu Jiantao told reporters.
For Huawei, there were three main sources of market disruption difficulties, the biggest of which was customer trust.
"Huawei and Chinese brand related industry chain before this blank, product industry access and recognition is very difficult, during this period, Huawei self-developed cable products need to do a lot of verification and testing, and to be fully open to customer review. At the same time, because the submarine cable system must be able to commit to 25 years of seabed stabilization, sometimes even if Huawei Ocean has done tests that meet international standards or even higher, customers still refuse on the grounds that there are no 25 years of actual verification cases. Xu Jiantao told reporters.
The second difficulty comes from project management capabilities.
Huawei Ocean's role is equivalent to that of a "general contractor" involved in marine surveying, design, production, integration, procurement, installation and final delivery, taking into account the particularities of submarine cable delivery, including offshore clearance of submarine cables, submarine cable maritime routing licensing applications, multinational cross-border commercial law tax compliance, and marine construction risks Control and so on need the extremely strong project management and the risk control ability, otherwise not only oneself will face the huge fine and the cost loss, but also will bring the project deferred commercial income loss risk to the customer, therefore the customer chooses the new contractor very carefully. Especially the project of submarine cable project has a large amount of money, usually up to tens of millions of dollars. Once a manufacturer is selected, it is difficult to terminate the replacement of the manufacturer in the face of some problems. This is also one of the important reasons why the players in the industry are few and difficult to access.
In the past, the submarine cable industry was dominated by Western industries, including standard setting, industry exhibitions, consultants and so on. These manufacturers have a natural psychological line for Chinese manufacturers, especially in the field of submarine cables.
But in the second years since the establishment of HUAWEI ocean, the opportunity to enter the market has arrived.
In 2009, after a rigorous and fierce electronic bidding, Huawei Ocean won the bid and formally signed a contract with Indonesia Telecom for the MKCS submarine cable project, which Huawei Ocean used Turnkey mode to build Indonesia's Mataram-Kupang relay-free submarine optical cable communication system, linking five islands in eastern Indonesia, including Mataram and Kupang. It is about 1318km long.
A Huawei marine insider involved in the project told reporters that many manufacturers were not confident that Huawei would complete the project on time because of the challenges of delivering the environment in remote areas of Indonesia, the difficulty of obtaining maritime licences, the need for ultra-long-distance transmission, and the need to avoid submarine seismic zones and submarine geological parks. It is a challenge, but it is also an opportunity. "Huawei Marine Integration invested the best team and resources of the company at the time, starting with the establishment of a test environment for simulating ultra-long-distance transmission, rigorous submarine cable performance plant testing, and then continued to track and promote the approval of various Indonesian maritime authority departments and the final repeated deduction of maritime construction risk control plans and sites. Engineers stayed on the mosquito-infested island for months, and the project team fulfilled their contract commitments to customers and maintained Huawei Ocean's reputation as the first battle in the industry. Xu Jiantao said.
At present, HUAWEI ocean ranks first in the non relay submarine cable market.
But after 2009, Huawei has had a hard time breaking through the more sophisticated "long-distance submarine relay systems" in the cable industry, which require high-quality underwater repeaters and branching products. Six years later, a submarine cable project invested by Malaysia Telecom has become a breakthrough for HUAWEI in the high-end market.
Xu Jiantao told reporters that the submarine cable business alliance mode, the product requirements are high. What impressed us most was that after we won the bid with many rounds of competitive bidding with European and American manufacturers and obtained the winning letters with excellent technical and business plans, our customers still insisted on hiring independent third-party Western consultants to conduct comprehensive technical and quality audits on the R&D, design, production and manufacture of Huawei submarine cable products. This is the signing of the contract and the birth of the contract. The premise of effectiveness. "And these consultants are from Europe and the United States, and even before the competitor manufacturers have a long working experience, Huawei's requirements are exceptionally strict. In the end, we successfully passed several weeks of rigorous audit by Western consultants, won the approval of Western consultants and final customers, signed contracts and completed the successful delivery of commercial acceptance.
According to the Technology Systems Corporation report, according to the total number of contracts signed in the last four years, the United States, Tyco, Alcatel Lucent, France, and Japan's NEC ranked in the top three, while Huawei ranked fourth. But we can see that since 2015, Huawei's marine business has gradually exceeded Japan's, becoming the industry's third largest.
It took Huawei a decade to move from the industry's Nobody to its competitors in Europe and the United States.
Future opportunities and challenges
Since the birth of the first submarine cable system in 1989 to 2018, the submarine cable market has experienced several development cycles.
"From 1988 to 1989, the first transoceanic submarine cable (TAT-8) system between the United States, Britain and France was built. The submarine cable is 6,700 kilometers long and the transmission rate of each pair is 280 megabits per second. The Internet since the 1990s has brought the number and mileage of submarine cable laying into a stable development period, but the outbreak period benefited from the opening of the European telecommunications market from 1999 to 2002, and major operators flocked to invest in submarine cable business. Then, after the Internet bubble, submarine cable business entered a five year slump. According to a submarine cable report released earlier by Changjiang Securities Communications, from 2008 to 2017, the global 3G, 4G construction and the rapid development of mobile Internet have brought the submarine optical cable into a steady development period, but the real prosperity will start this year.
According to Changjiang Securities Communications, on the one hand, the lifetime of submarine optical cables is 25 years. TeleGeography data show that 1998-2002 was the first outbreak of submarine cable construction in history, with a total of 500,000-600,000 kilometers of submarine cables laid in five years. And this wave of laying peak is expected to usher in a wave of replacement peak in 2018~2022. On the other hand, the trend of traffic outburst persists for a long time. Middle East and Africa have the fastest growth rates, and Asia-Pacific traffic will account for 39% of global mobile data traffic in 2019. No
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