The data-driven world has created a niche for submarine cables, owing to the strengthening demand for ultrafast communications and power transmissions. Moreover, a steep rise in the global bandwidth demand is driving growth in the deployment rate of the subsea cables significantly.
Notably, Alphabet (NASDAQ:GOOGL)’s GOOGL division Google is continuously ramping up its initiatives to bolster its subsea cable network in a bid to strengthen Internet connection capacity, which, in turn, will ensure greater access to its services.
This is evident from the latest announcement regarding the construction of an open subsea cable called Firmina, which will connect the United States with South America, especially Brazil, Uruguay and Argentina. Firmina will run from the East Coast to Las Toninas, Argentina, with additional landings in Praia Grande, Brazil, and Punta del Este, Uruguay.
We believe that the latest move will boost the search giant’s stake in the booming submarine cable market.
Moreover, this will provide Google with a competitive prowess against other tech giants like Facebook (NASDAQ:FB) FB, Amazon AMZN and Microsoft MSFT, which are making every effort to strengthen their submarine cable networks.
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Promising Submarine Cable Market
The global submarine cable system market has been constantly gaining steam on the back of the rising demand for strong network capabilities in order to handlethe growing number of telecom subscriptions and increasing Internet as well as data traffic.
Further, growing power generation from offshore plants, leveraging renewable energy, and the increasing proliferation of cloud-computing services and connected devices, generating enormous data, have bolstered the demand for the cables.
Per a MarketsandMarkets report, the global submarine cable system market is expected to witnessa CAGR of 11.1% between 2020 and 2025, and hit $22 billion by 2025.
Further, a report from Grand View Research states that the market is likely to witness a CAGR of 7.1%between 2020 and2027.
Per a Coherrent Market Insights report, the underlined market is anticipated to hit $34.6 billion by 2027, witnessing a CAGR of 9.1% between 2020 and 2027.
Is Google Placed Well to Reap Benefits?
Google’s growing efforts to bolster its footprint in the submarine cable space remain noteworthy.
Its latest initiative, Firmina, is supposed to be the longest cable in the world, which holds the potential to run on a single power source, in case its other power sources become non-functional.
With Firmina, which is designed for carrying traffic seamlessly from North America to South America, the company strives to provide improvised access to Search, Gmail, YouTube, and Google Cloud to the users in South America.
Apart from Firmina, Google’s Dunant submarine cable system, which has a capacity of 250 terabits per second, is ready for service. It connects the United States with mainland Europe, running from Virginia Beach to Saint-Hilaire-de-Riez on the French Atlantic coast.
In addition to this, the company is gearing up for Grace Hopper — a new undersea fiber optic cable, which will connect the United States, the U.K. and Spain.
We believe that all the endeavors will aid Google to capitalise on the growth prospects present in the submarine cable market.
Currently, the company’s parent Alphabet carries a Zacks Rank #2 (Buy).
Should Facebook Worry?
In the battle of subsea cable, it is hard to ignore Facebook’s growing efforts.
Recently, the social media giant revealed its plans to connect Southeast Asia, especially Singapore and Indonesia, with North America via two undersea cables — Echo and Bifrost.
Notably, both cables will be the first to cross the Java Sea, which, in turn, will boost their capacities by 70% in the Trans-Pacific. Echo and Bifrost are expected to be completed by 2023 and 2024, respectively.
Apart from this, the Zacks Rank #1 (Strong Buy) company is progressing well with its Pacific Light Cable Network plans. You can see the complete list of today’s Zacks #1 Rank stocks here.
In addition to this, it is building a 37,000-kmundersea cable around Africa, which will connect 23 countries in Africa, the Middle East and Europe. This remains a noteworthy move.
How are Amazon & Microsoft Placed?
The cloud bigwigs — Amazon and Microsoft —have also invested well in the subsea cable network to bolster connectivity across their respective cloud regions and availability zones.
Amazon’s agreement with Telxius to use a fiber pair on the MAREA subsea cable remains a major positive. Further, the Zacks Rank #3 (Hold) company’s huge investment in Hawaiki Submarine Cable to deliver low latency to AWS users in the United States, Australia and New Zealand remains one of its noteworthy steps in the submarine cable space.
Meanwhile, Microsoft’s huge investments in subsea cables to connect its data centers globally remain positives. Further, the Zacks Rank #3 company’s strong contributions in the completion of Marea— a high-capacity subsea cable crossing the Atlantic Ocean—are noteworthy.
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