NEC’s Submarine Cable System December 5, 2008 NEC Corporation Broadband Network Operations Unit Executive General Manager Masamichi Imai 1. Outline of Submarine Cable Systems 2 © NEC Corporation 2008 1-1. The History of Submarine Cables 1850:First Telegraph cable at Dover Strait 1858:First Trans-Atlantic Telegraph Cable (1876：Graham Bell invents the Telephone) 1906: Submarine Cable Tokyo-Guam 1956:First Trans-Atlantic Coaxial Cable （1963： Satellite Communications between Japan and US begins) 1964:First Trans-Pacific Coaxial Cable 1988:First Trans-Oceanic Optical Cable(1 Gb/s) 1999:Trans-Oceanic Optical Cable (640 Gb/s) 2001:Trans-Oceanic Optical Cable (1.28~Tb/s) 3 1-2. Summary of Submarine Cable Systems Station A Station B ・Burial up to sea depth of 1500m Max. Sea Depth 8,000m ・Avg 1m-3m burial (Max.15m) (at 8000m below sea level, water pressure is equivalent to holding a car on one’s thumb.) = Repeater Placed at 40Km～100km intervals ←Cables are laid in deep trenches Max. Transmission Distance 12,000~13,000km Japan to US West Coast is approx. 8,000km At least 80~100 repeaters are required. 4 1-3. Components of a Submarine Cable System Wet Side Dry Side Submarine Repeater Line Terminal Equipment Submarine Cables (inc.. fiber.) Power Feeding Equipment Supervisory System Overall System Monitoring Repeater Performance Monitoring 5 Network Protection Equipment (SDH system) Installation Cableship 1-4. Technical Trends Coaxial Fiber Optics 40G DWDM Optical Amplifier 10G DWDM System 2.5G DWDM 5G Single Optical Regenerator System 1.3 / 1.55 μm Coaxial Repeater System 1970 6 1980 1990 2000 Now 1-5. Transmission Capability 2.56T Coaxial Repeaters Optical Amplifier Optical Regenerator 40G x 96 5th Gen. WDM 10G x 192 40Gb/s WDM System Based 1.28T 960G 10G x 128 640G Bit Rate (Bit/s) / Fiber Pair 320G 160G 20G 10G x 96 10Gb/s WDM System Based 4th Generation WDM 10G x 64 10G x 32 10G x 16 System 2.5Gb/s WDM System Based Planned 2.5G x 8 Ongoing 10G 5G 3rd Generation Single Wavelength 2.5G x 4 Installed 5G 1.44G 2.5G 2nd Generation 1.55μm 560M / 622M 1G 420M 500M 1st Generation 1.3μm 140M/280M（TPC3) 100M 7 '82 '84 '86 '88 '90 '92 Year '94 '96 '98 ‘00 ‘02 ‘04 ‘06 ‘08 ‘10 1-6. Latest Transmission Capacity The Maximum Transmission Capacity for the latest Submarine Cable System, using the latest Optical Transmission technologies, is 10.24 Terabits/sec. ◆So, how fast is 10.24Tbps ? １Cable can carry Approx. 160Mil. Telephone Circuits simultaneously or １Cable can send Approx. 272 DVD Disks between continents within 1 second. 10.24 Tbps 10.24Tbps = 10Gbps x 128WDM x 8fiber pairs a) 10Gbps： b) 128WDM： c) 8fiber pairs： 8 1 wavelength (color) can carry 10Gbps worth of data 1 fiber can carry wavelengths (colors) up to 128 colors 1 Submarine Cable can accommodate up to 8 fiber pairs. 1-7. Comparison between Submarine Cable and Satellite Communications 1. Enables Highly Reliable and Affordable Broadband Communications 1) Suitable for Communications 2) Adaptable to various Applications －HD Digital －High Speed －High Speed －High Speed Television Internet Connection Mobile Communications Data Transmission, etc. Satellite Communications ・Latency ：250ms ・Design Life：10～15years ・Capacity ：48,000ch 2. Easily Upgradable plus Long Lifespan 1) Upgrade only when necessary －Upgradable with minimum investment 2) 25 year Design Life Optical Submarine Cable 9 Optical Subsea Communication ・Latency ：50ms 8,500km ・Design Life ：25years ・Capacity ：80,000,000ch (10Gbits,128WDM,4fp) 2. Features of Submarine Cable Systems 10 © NEC Corporation 2008 2-1. Submarine Cable Projects Features ¾ Infrastructure for Int’l Traffic (Construction Period 10~18 Months） ¾ Large Capacity Transmission ¾ System Design Life 25 years Project Formation NEC System Design Subsea Repeaters Line Terminals Power Feed Integration Project Management 11 Cable Marine OCC NTT・WEM KCS KTS ACPL others 2-2. Flow of a Typical Project → End of Warranty Provisional → Acceptance (Commercial) Down Payment → PJ Commence Contract Sign Project Duration：６～８ years (from RFP to System Completion: １～３years Warranty Period Implementation Of Project Contract Negotiations Clarification Meetings ( ~ times) Create Proposal 3 → Select Vendor → Submit Proposal → RFP Release 12 2 2yr~5yrs 1yr-2yr 2wks~ 1Mo~6Mo 2wks~ 4wks 4wks 2-3. Construction of New Cable vs. Upgrade Construction of a New Cable ≒ Like building a 10 lane expressway (but use only 1 lane) Capacity Upgrade ≒ Like opening one lane at a time. No New Construction. ・ Constructing a New Cable is like constructing a 10 lane expressway but using only 1 lane at the beginning. If traffic increases, more lanes will be opened. ・ A 10 lane expressway costs more to build than a 1 lane expressway, but is less than building ten 1 lane expressways. Initial investment works out to be high, but are being build to cope with future demands. 13 © NEC Corporation 2008 3. Submarine Cable Systems Market 14 © NEC Corporation 2008 3-1. Global Trends (US$ Million) 10,000 ■Demands were high during 1999-2001, but a 20 year trend seems stable at US$2,100M～2,500M 9,800 Order Basis Market Size 9,000 Upgrades 8,000 Average 7,000 Average (Upgrades) 6,000 5,000 4,000 7,182 3,000 2,642 2,190 2,085 2,000 1,976 2,6362,570 2,871 3,032 2,952 2,500 2,500 ■CAGR of Upgrades is approx. 100.2% 2,578 2,170 1,477 1,000 612 854 1,161 1,921 1,225 107 257 508 711 420 0 （a/t NEC） Optical 3R Optical Amplifier 2.5G （5G） WDM 15 10G WDM ■2007 saw demands coming back to mid 90’s level. Expect moderate growth for coming years ■Expect high demands in Asia-Pacific, Indian Ocean, Middle East and Africa 4. NEC’s Strategy towards Submarine Cable Systems 16 © NEC Corporation 2008 4-1. NEC’s Strategy for Submarine Cable Systems １． Focus on the Asia-Pacific region（Maintain regional strength） • Produce High Quality products from Ohtsuki plant（２５ year warranty) • Focus marketing resources to Asia-Pacific ２． Maintain Stable Growth • Total Supply from Terminal Equipments to Repeaters & Cable Stable Supply made possible with acquisition of OCC • Maintaining Profitability while Minimizing Risk • Avoid High-risk / High-return projects, and maintain stable growth ３． Spin-Off ～ Ocean Bottom Seismograph Systems ・Sole supplier of Ocean Bottom Seismograph Systems in Japan ・Detect “P-wave” from earthquakes for the Meteorological Agency’s “Earthquake Early Warning System” 17 4-2. Status of the Submarine Industry（Top 3 suppliers） Tyco Alcatel NEC System Integration Manufacture of Submarine Line Terminal Equipment Manufacture of Submarine Repeaters Manufacture of Submarine Cables Marine Work & Maintenance Cable Install Company Cable Install Company Cable Install Company ・ Top 2 Suppliers can manufacture, integrate and implement, and provide Maintenance Services with own resources within. ・ By acquiring OCC, NEC is now able to provide services nearly equal to the top 2 suppliers. 18 4-3. Structure of OCC Aquisition Acquired interest of OCC Holdings （Before） Longreach Group （After July 15, 2008） Sumitomo Electric Industries NEC Approx.７５% （100%） OCC Holdings OCC Holdings （100%） （100%） OCC Approx.２５% OCC NEC Corporation and Sumitomo Electric Industries acquired OCC Holdings from the Longreach Group. 19 4-4. Company Overview for OCC 20 Operations Subsea Cable：Design, Manufacture and Sales of Communication purpose Submarine Cable and Surveillance cables. Terrestrial Cable：Manufacture and Sales of Communication purpose Terrestrial Cables. Offices Head Office ：Yokohama, Japan Plants： Submarine Cable (City of Kita-Kyushu) Terrestrial Cable (Kaminokawa Township） Founded June 1935 Capital 2.255 Billion Yen （as of March 2008） Sales 17.46 Billion Yen (for year ending March 2008） Director Yoshihisa Okada, President and CEO Employees Approx. 221 pax. （not including directors and temp.staff) Shareholders OCC Holdings （100%） 4-5. Ocean Bottom Seismograph System ・Constantly transmits data gathered from the Seismograph through Optical Fiber Cable to the Terrestrial Station. ・Technology base: NEC’s Submarine Cable System and Subsea Equipment （Features）・Enables real-time monitoring of seismic activities 24/7 ・Enables Tsunami readings off the coast before reaching the shores. ・Enables Reliable and Stable Monitoring Line Terminal Equipment Ocean Bottom Seismograph Optical Fiber Cable Tsunami 21 Earthquake 4-6. Seismograph System of Omaezaki Seismograph System around Japan Features JMA： Japan Meteorological Agency －Installed as part of strengthening the observation system of Tokai area ERI： Earthquake Research Institute, University of Tokyo NIED： National Research Institute for Earth science and Disaster Prevention (JAMSTEC, 1999) JAMSTEC： Japan Agency for Marine-Earth Science and Technology ５ Sanriku ７ Kushiro (ERI, 1996) Note: Optical Fiber Coaxial ２ Katsuura (JMA, 1986) ４ Hiratsuka (NIED, 1996) ６ Muroto (JAMSTEC, 1997) １ Omaezaki (JMA, 1979) ３ Itoh (ERI, 1993) ８ Omaezaki －NEC was selected as supplier for this project on the followed account; 1. In 1976, NEC supplied the first Ocean Bottom Seismograph System to JMA 2. NEC is the only supplier of Ocean Bottom Seismograph System and has a supply record of 7 systems around Japan (JMA, 2008) Installation Completed Project Outline z Customer: JMA z Installation completed for the first 2 year phase (Project Duration : total 4 years) z Scope of work: Supplying Ocean Bottom Seismograph/ Tsunami gauge 22 Future outlook ◆Upgrade project of Hiratsuka, and New projects in Sanriku and Kii Peninsula 23