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World Observer

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Big Tech’s Battle For Data Is Fought Under The Sea

BySam Brad

Aug 23, 2021

Rather than talking about the cloud, perhaps we should refer to the ocean as a metaphor for the vast space in which information is stored in today’s world. “Many people think that data transmission is done via satellite. However, 99% of the data we consume travels through submarine cables. They are the true arteries of the Internet,” reads an article on BlogThinkBig , the blog of innovation of Telef√≥nica.

“Submarine cables directly connect the continents in a fast way. The satellite is geopositioned at 36,000 kilometers high, so it has a higher latency for communication, it takes longer. A submarine cable would have the capacity of 2 to 3 thousand satellites, so it is much more prepared for a high data flow “, explains Rafael Sgrott Martins, Country Manager Brazil of Telxius Cable, in BlogThinkBig .

“But when it is possible to reach the sea – he adds -, the safest thing is that the traffic goes by submarine cables, since it is the most direct and fastest way thanks to the optical fiber”.

There were an estimated 426 submarine cables in service worldwide at the beginning of this year, according to data from TeleGeography, a research company specializing in the telecommunications market. From the firm they forecast an investment of 8,000 million dollars in new cables for the next three years, which they describe as a new boom .

“After representing less than 10% before 2012, the share of content providers in total bandwidth capacity increased to 66% in 2020,” they point out from TeleGeography. “Unlike previous booms , content providers such as Amazon, Google, Facebook and Microsoft are playing a more active role in the submarine cable market,” they note.

“Only these companies have such an incredible demand for data center traffic that they are driving projects and prioritization of routes for submarine cable systems. Google alone has invested in more than 15 submarine cables around the world,” they emphasize.

This is the case of Unity and Faster , which link Japan with the United States; the Monet, which links Florida with Brazil, or the Echo , designed to bring California closer to Singapore after passing through Indonesia (it will come into effect in 2023).

Google cables also reach Europe: the Grace Hopper connects the 6,300 kilometers that separate New York from Bilbao; Dunant connects Virginia Beach with Saint-Hilaire-de-Riez, in France. The latter is an example of how the new players in the telecommunications sector coexist with the traditional ones.

Google cedes to Orange a part of the ownership of the Dunant , which benefits the French firm’s clients, in exchange for using the Orange station in Saint-Hilaire-de-Riez (Brittany) as an arrival base for the cable.

But not all cables are owned by Google; many are co-financed with other companies. For example, the Apricot , which links Japan, Taiwan, Guam, the Philippines, Indonesia and Singapore, and in which Google, Facebook, NTT, Chunghwa Telecom and the Philippine PLDT participate; or the Havfrue / AEC-2 , with which Google and Facebook connect the United States with the United Kingdom and Scandinavia.

Although citing them all would be a daunting task, the Marea cable , which links the United States and Spain and is financed by Telxius together with Microsoft and Facebook, cannot be left out of the question ; the Hawaiki , owned by Amazon, which connects the United States with Australia and New Zealand, or the megaproject of Facebook, China Mobile, MTN GlobalConnect, Orange and Vodafone to go around Africa with the 37,000 kilometer 2Africa cable .

Pure financial muscle
All of these multi-billion dollar infrastructure projects could not be funded without the financial muscle of Facebook, Alphabet, Amazon and Microsoft, all of whom receive a buy recommendation for their shares from the consensus of FactSet analysts.

A look at the sales of these four companies shows that they broke a record in 2020, even with the pandemic. Facebook’s revenues are the ones that will increase the most between 2020 and 2023, specifically, by 92%. This year it is expected to reach 118,000 million dollars, 38% more than the previous year, but in 2022 it will exceed 142,000 million.

Along these lines, Alphabet will sell 82% more in the same period, and will close to 250,000 million dollars this year, 36% more than in 2020. What to say about Amazon: turnover will grow 70% between 2020 and 2023; Revenues in 2021 are expected to be 476,000 million, 23% more than the previous year, and by 2022 it is estimated that it will exceed the figure of half a trillion dollars.

As regards Microsoft, it is not far behind, with a 50% increase in sales in the period. This year it will enter 168,000 million dollars, 17% more than in 2020; and in 2022 it will approach 200,000 million, according to the market consensus.

But that is not their only source of financing, since we are talking about the companies with the highest market value in the world, all four of which are over a trillion dollars. In addition, shares of Facebook and Amazon set new all-time highs in July and those of Alphabet and Microsoft, in recent days.

Sam Brad

The Great Writer and The Passionate Poet As Well, He Graduated from University Of Florida in Journalism and Brad have around 12 years of experience in news and media section.

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