Funding
And the
Business Plan
Types of Cost
• Technology Development Costs
– Functional requirements
– Equipment Qualification
• Incremental Project Build Costs
– Scale of deployment (all repeaters?) as well as
incremental manufacture costs
• Incremental System Operation and
Maintenance Costs
Typical Estimates?
• Construction costs have been estimated
to increase transoceanic system project
costs between 5% and 10 %, excluding
amortization of development costs
• 80% attributed to repeaters; 20% to
terminal equipment and other facilities.
Business Case Factors
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Project Purpose – Primarily for Telecommunications
Strategic Fit with the interests of the cable owner
Business environment considerations – customer perceptions
Costs
Funding
Benefits – Financial and non-financial
Risks:
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to the benefits,
to the recoupment of costs
from the sensor technology to the operation of the cable,
from the sensor partners to the reputation of the project,
•
from the regulators of each jurisdiction to the permitting of the cable
What would secure adequate funding
or in-kind support?
No negative impact on the cable operator’s build
costs, project timeline and operational costs.
• All incremental build costs are paid by sensor
customer.
• Project timeline is the same as if no sensors had
been applied.
• All incremental operational costs (e.g. Power) are
paid by sensor customer.
What would secure adequate funding
or in-kind support?
No negative regulatory impact on the cable
operators’ securing of permits in a timely
manner.
• No sensors in EEZ or territorial waters?
• No UN NGO or coastal state regulatory
impact due to change in status of cable
under UNCLOS.
What would secure adequate funding
or in-kind support?
• No negative operational (maintenance)
impacts.
• No maintenance obligations due to sensor
failure(s)
• No operational delays in repairing cables
• No additional permitting for repair
operations due to change in status of cable
under UNCLOS.
What would secure adequate funding
or in-kind support?
Positive financial return on facility
• A net profit to the cable operator from
revenues obtained from sensor users,
regardless of the actual utility of the sensors.
Positive social return
• Positive public relations due to presence of
sensors and public reporting of results.
• Any Risk?
Perspectives / Questions / Issues 1
• Normal technology development is for profit in
deployment. Who is funding this development? A
supplier gamble?
– Internal development (IRAD) is usually invested based on an
anticipated ROI - is it the same for all system vendors?
• More complex systems imply more complex issues with
deployment, maintenance and repair.
How will this factor into the operator/vendor business
models?
• Life cycles for cable systems are expected to exceed 20
years with upgrades for transmission performance.
Will sensors change this model?
Perspectives / Questions / Issues 2
• Sensor density may be a factor of the failure rate
over 20+ year life, with no anticipated repair effort.
– If no traditional cable recovery and repair of sensor
elements what density will be critical?
– Can sensor development support a 20+ year life span?
– If repeater spacing is increasing in response to cable
operators’ demands for cost optimization, how will
that mitigate the minimum critical density? Who will
pay for closer spacing and higher power for higher
density?
CASE STUDY
• SubPartners has been developing a business model for the application of environmental and
other scientific sensors to its proposed APX East cable extending between Australia and USA
• Apart from basic sensor applications, such as seismic activity, salinity, etc., consideration has
also been given to the possibility of applying specific customer technologies, however the
primary emphasis remains with the basic sensor technologies, which are regarded as more
durable, in a situation where repeaters will not be recovered because of sensor failures
• Sensors “blistered” to the repeaters have been preferred over tethered arrangements
• It is not intended to apply sensors to all repeaters, rather to make a more strategic
placement on a small proportion of repeaters, with specific placements determined in
consultation with the customers
• Prospective customers are government agencies and educational institutions, which will
procure access to sensor data as well as support the significant upfront funding of the sensors,
so there will be an upfront fee and recurring charges.
• No decision has yet been made on data exclusivity, however if/when APX East connects with
some of the Pacific Island states, SubPartners intends for the data to be shared with these
nations, particularly the data regarding temperature, pressure and seismic activity, further
enhancing their Tsunami detection capabilities and also developing their R&E communities.
• The business model under development is examining securing a net return on investment
within a 36-60 months period