Inside iiNet's subsea cable strategy

ISP iiNet is hedging its future international capacity bets on two prospective subsea cable projects, believing there's a 75 percent chance of at least one of them being built.

Chief technology officer John Lindsay told iTnews iiNet was negotiating for a half a fibre pair on trans-Pacific project Hawaiki. A full pair on the route, using today's terminal equipment, is good for "about 60 wavelengths worth of service", at 100 Gbps per wavelength, he said.

At the same time, iiNet is negotiating a quarter of a fibre pair on SubPartners' APX-West cable system, one of three operators attempting to bring competition to the Perth-Singapore route.

"Because the APX-West cable is a lot shorter, one pair is good for 80 wavelengths, so that makes a quarter of a pair have roughly 2 Terabits of capacity," Lindsay said. "Again, that's with 2013 off-the-shelf [terminal] equipment."

Together, the capacity iiNet hopes to take on both international cable routes amounts to about 5 Terabits per second (5 Tbps) based on terminal equipment that is available today.

However, with both cables not due to be in the water until 2015, advances in terminal equipment and the standardisation of gigabit capacities could see iiNet with multiples of international bandwidth to play with.

"By the time these cables go into water, 100 Gbps will be the minimum capacity unit that anybody will really be using. People building terrestrial networks will probably be routinely deploying 100 Gigabits circuits between data centres," he said.

"Terminal equipment these days only costs a few million dollars, and can extract from the full pair on the trans Pacific route about 60 wavelengths worth of service, and on the current path they're 100 Gigabits per wavelength.

"I have seen two of the three main vendors in this space demonstrate to me 200 Gbps in the same spectral window using equipment that isn't quite ready for primetime, and I reckon that by the time the [Hawaiki] system is going in the water, the leading edge will probably be as much as 400 Gbps.

"So 3 Tbps of capacity on Hawaiki using today's [terminal] technology might end up being potential for 12 Tbps by the time the cable's in the water."

Envelope reaches 105 Gbps

iiNet presently has no burning need for such international capacity, though its August acquisition of Adam Internet has changed usage projections somewhat.

Last year, iTnews reported that iiNet had 300 Gbps of international capacity to work with via the Southern Cross, PPC-1 and SeaMeWe3 cable systems.

"We've been slowly growing into our trousers on that," Lindsay said.

"We bought ahead of the curve to hit price points and to cover us out to where we thought we'd need to be.

"The acquisition of Adam has shifted the endpoint on that capacity forward somewhat because we will have to be servicing the demand from those customers quite soon. We're already servicing some of it today."

Whereas the 300 Gbps capacity window was expected to last until the end of 2016, Lindsay now believed the endpoint would shift to earlier that same year.

"Our total international traffic envelope today is about 105 Gigabits," he said.

"By about the end of [this] month it will be running at about 125 Gigabits, [and] by the end of the year it will be running at about 145 Gigabits and we'll still have over 100 Gbps in inventory for next year.

"It's not like we have a crisis or anything here. We're just burning our way through it at a faster rate than when we struck the agreement [with Southern Cross]. However we struck the agreement with a fair bit of latitude in it, so that we could use it earlier if we needed to, which is what we're doing."

Infrastructure owners

iiNet's decision to look to acquire Terabit-capacity dark fibre paths in and out of Australia represents the gradual change in the company's business model.

Whereas in the past the company, in Lindsay's own words to iTnews last year, had been a "reluctant owner of infrastructure", buyouts of Internode, TransACT and now Adam Internet have left it with significant network and data centre infrastructure assets.

According to Lindsay, yesterday's announcement that iiNet intended to add terminal equipment and subsea real estate to the mix is simply a public acknowledgement of its status as an infrastructure owner.

"It's kind of dawned on us that gee we kind of became an infrastructure company," he said. "If we own this stuff, we better take it seriously."

Lindsay expects capacity prices on the Perth-Singapore route to fall significantly if APX-West — or any of the other prospective cable operators for that matter — can get their systems laid.

"Once there are other operators of circuit capacity on the route, prices will plummet," he said.

"We pay tens of dollars a megabit to utilise the route at the moment [with SeaMeWe3]. Our internal cost on that route on APX-West is a fraction of that.

"I expect that we'll see a number of service providers and carriers offering Perth-Singapore and Sydney-Singapore circuits at quite modest pricing."