Caribbean Express: Driving economies

Caribbean Express: Driving economies

26 February 2021 | Natalie Bannerman

Cover

All eyes are on Caribbean Ocean.

With the likes of FB Submarine Partners confirming its plans to build subsea system connecting Florida and Cancun, it joins another hotly anticipated subsea project from Ocean Networks and the development of its Caribbean Express (CX) cable.

Capacity spoke to its senior management team to discuss the details of this project and how it fits into the wider roadmap of subsea assets for the company.

Connecting West Palm Beach in Florida, Balboa in Panama, Cancun in Mexico and Cartagena in Colombia, the $300 million, 18-fibre pair, low latency system will leverage Space Division Multiplexing (SDM) technology and is designed for future connectivity options to other countries along the route.

As for the driver behind this system, Scott J. Schwertfager, president & CEO of Ocean Networks says it’s all started with a need.

“The driver behind Caribbean Express was basically the need for this route, with a couple of the existing systems like Maya-1 and ARCOS nearing the end of life leaving some economies actually in panic mode right now. The feedback from the market has been great.”

In fact, according to John R. Runningen, co-founder and principal at Commenda, “The consumer demand for a new submarine cable system between Central America and the US is enormous. Traffic is nearly doubling every two years.”

Compounding this need for the Caribbean Express cable, though not driving it is the Covid-19 pandemic which has significantly increased the demand.

“We’re seeing about a 30% increase in demand for this system, how much of that continue, we don’t know. But everything we're hearing from a lot of corporations is that a lot of folks are going to continue to telecommute and using zoom calls and so forth to that demand will stay for the foreseeable future,” adds Schwertfager.

Unlike the likes of Aqua Comms and its North Atlantic Loop and Telxius linking its MAREA and Dunant cables, Schwertfager has no plans to interconnect Caribbean Express to create a loop-based system. It has however, exploring creating branch units Key West, Florida and in the Cuba area which, Schwertfager says can “come around and connect into Naples and it would create a ring. That way, US part terrestrial, we would close that ring.”

The ultimate goal with Caribbean Express, like most cables venturing into new areas is to create a thriving digital ecosystem as a result of its landing.

“Submarine cable systems drive economies,” says Schwertfager. “Countries have to have them and they welcome them because it typically brings data centres. A couple of the landing points we’re looking at is bringing data centres and growing their economy in that way.”

Ocean Networks has positioned branch units in strategic locations along the route to easily enable future connectivity. This includes Honduras, Nicaragua, Jamaica, Costa Rica, Grand Cayman, Cuba and Guatemala.

Given the different concentrations of data centre access as well as existing coastal infrastructure, Caribbean Express will use a combination of cable landing stations and data centre connectivity.

We will go into somebody else's facility,” adds Schwertfager. “If we need to build our own, we'll build our own. Right now, we've nailed down our facility in West Palm Beach and in Panama, the others we're still negotiating.”

As per the cable announcement, the company is working with Commenda, an Atlanta-based merchant bank, to help it secure the necessary funding for this project.

Speaking to CFO, Robert Hildebrecht about it, we were curious to know why ONI opted for this approach over say a consortium-based model or even partnering with an OTT.

“We are excited about launching this new submarine cable digital superhighway across the Caribbean. Our first priority was to keep a carrier neutral cable system, so we tended to stay away from the consortium model,” explains Hildebrecht.

“Therefore, we selected Commenda capital, based on their team's success in being able to raise this size of funding, and the tentative structure that we were projecting for start-up early growth stage companies, as well as specifically in the telecom industry.”

“Commenda is actually exceeding our expectations as far as reaching out to the investment community, raising capital etc so, so we’re feeling really good about everything,” adds Schwertfager.

Overall it is Commenda experience in the industry and its “very good track record in this space” that won out for ONI and according to Hildebrecht “we feel very confident in their ability to get us funded within our timeline timelines”.

The benefits of this new system can’t be understated in a region that is often overshadowed by its Trans-Atlantic counterparts. In addition to being hailed as the soon to be lowest latency route, Schwertfager adds that it will also be the “lowest price per bit system in the Caribbean”.

“The feedback we've gotten and the responses for sales so far has been great,” he says. “We're having several capacity sales calls a day.”

With ONI having already invested in progressing the route development of the system through market analysis, permit and environmental studies as well as securing landing party agreements, it’s the next stages of evolution for this project that promise to be even more exciting.

“We're putting together our request for quotations which will go out, by mid-March at the latest to each of the large suppliers,” says David A. Blau, ONI’s chief operating officer.

“Then we'll go through our adjudication process and select a vendor with anticipation of going to contract and force sometime in the summer, hopefully around July or August. Then that's when the real fun work starts and we start to put together a network.”

What’s most interesting about Caribbean Express is that its forms part of a much larger three-phase system called South American Pacific Wave.

“Caribbean Express is really phase one,” explains Schwertfager. Phase two will go from Panama down to Chile and connect into Ecuador and Peru along the way, and then phase three connects Panama to Hawaii.”

At Hawaii, it will cross connect with other systems that will provide connectivity to all through Asia, Australia, New Zealand, and “open up a completely diverse Trans-Pacific route”, adds Schwertfager.

Due to go live in 2024,  we will continue to watch this system evolve and even more so the wider South American Pacific Wave initiative, but it’s clear that Ocean Networks are among those championing the Caribbean region ensuring its never left behind.