AT&T announced a major Asia Pacific capacity expansion early December courtesy of its participation in the Asia America Gateway consortium. The 20,000km undersea fibre link stretches from the mainland US to several Southeast Asian markets via Hawaii and Guam, boosting transpacific capacity by 2Tbps. CommsDay spoke with subsea cable network engineering executive director Pete Barrasso and capacity management director of engineering Bob Aulenbach to find out how AAG fits into its existing submarine patchwork and what the capacity boost means for its Asia Pacific strategy.

“The cable is predominately a route from the United States to Southeast Asia. It passes through both Hawaii and Guam on its way to Southeast Asia, where it then lands in the Philippines, Hong Kong, Vietnam, Brunei, Singapore, Malaysia and Thailand,” Aulenbach explained.

“The system is very flexible in terms of how you can use your capacity as you need it. You can actually invest in units called MIU points – MIU stands for minimum investment unit. There were price points that were established by the consortium in terms of how much it cost per MIU point depending on your level of investment. And then when it comes to actual activation of capacity, you’re free to use those MIU points any place you want on the system. So in terms of quantifying the total amount of capacity that any particular party has, it’s kind of difficult, because it actually depends on how you deploy that capacity.”

Barrasso said AT&T was keen on backing AAG for several reasons, including “overall growth into the region between Southeast Asia and the US – the major markets, which are Hong Kong, Singapore and Malaysia. This provided added capacity on the transpacific for us – direct capacity to those markets. The second reason was the cable had some additional landing points in emerging markets that we participate in – a good example is Vietnam. The third was that it provided another diverse route from the northerly cable crossings of the Pacific, which include the TPE system and Japan-US and Tata’s Pacific system. So it adds a southern diverse route as well.”

Barrasso characterised Southeast Asian markets as having “trajectories that can be variable. We have service in these locations. We certainly see a huge amount of growth in someplace like the Philippines for some of our customers. We’ve seen some emerging growth in some of those other markets. So AAG gives us a new diverse route into those countries, with is an additional benefit to our customers as they go there.”

The ability to bypass Japan was also alluring, Aulenbach added. “There’s actually one more reason that made this an attractive investment, which is that it provides a more direct route from the US to Southeast Asia. Most of the routes today are going to places like Singapore and Malaysia all have to go through Japan. This avoids Japan so we have a more direct route providing lower-latency capacity into the market.”

AT&T plans to keep expanding and upgrading its Asia Pacific capacity in the near term. “We’re in the process of enhancing our mesh network between the US mainland and all parts of Asia. In order to have the most robust network possible, the more routes that you have, the better. You have options in the event of any potential cable failure. So AAG, in conjunction with our existing routes that we have in place, plus TPE, which we recently participated in, will give us multiple options in terms of transpacific capacity,” Aulenbach said.

“In the Asia Pacific region, there’s a fair amount of growth,” Barrasso echoed. “We’re growing on all the existing routes, the traditional routes where we seen upgrades such as US-Japan, ACPN2 – which is a ring system touching a number of these same countries – and we’re adding the new cables on top of that. So it’s new routes, and it’s increasing capacity on the existing ones.”

Barrasso declined to be drawn on how much of AT&T’s claimed 18 petabytes of daily traffic comes from Asia Pacific. “All I can say is that the global growth that we’re seeing is significant, and the Asia Pacific region continues to be one of our biggest regions globally. The growth has been consistent over the last couple of years, even through the downturn.”

SHRUGGING OFF THE RECESSION
Barrasso said the wealth destruction caused by the 2000s capacity bubble had tempered carriers’ plans well before the global recession found its teeth, positioning AT&T to ride out the turmoil with little fallout.

“When we look at these undersea investments, we obviously look at historical trends, and we look at our inventory, and we look at what are the critical routes that we need to be participating in,” he elaborated.

“These are pretty long lead time projects. One thing I could say is that there’s probably a fair amount of caution – not just within AT&T but across the industry back a year or two ago, when these cables were being planned. In the early 2000s, there was a significant amount of overbuild that resulted in a significant amount of overcapacity in the industry. I think there was a little more rational investment this time around. That’s helped create a steady investment flow.”

Barrasso acknowledged carriers had clamped down on their capital spending but insisted this had yet to impact capacity planning. “There has been enough focus on what carriers really need that it hasn’t been reactive. It’s been very proactive. We’ve been continuing to look out and say if we think we need it based on trends, we’ll go get it.”

Those trends include the inexorable growth of Internet traffic. Barrasso characterised this expansion as a concern for “both AT&T and the industry in general” and said it was likely to be the undersea capacity segment’s most pressing challenge in the near term.

“We’re seeing a more demanding customer in terms of reliability, and ensuring that we can deliver diversity and reliability. A concern a number of carriers have, including ourselves, is making sure that we can participate in as many activities that will make a more robust undersea network. We’re seeing that in some of the cases where we’ve had major failures in the region that have impacted multiple cables. That will continue to play a major planning role in the years to come.”