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1、 THE IMPACT OF FACEBOOKS CONNECTIVITY INITIATIVES IN THE ASEAN REGIONDECEMBER 2022 ECONOMIC IMPACT OF GOOGLES SUBMARINE CABLE NETWORK IN LATIN AMERICA AND THE CARIBBEAN David Abecassis,Carmen Ferreiro,Tom Wicken,Andrea Betteto,Dr.Michael Kende,Prof.Neil GandalREPORT FOR GOOGLE Ref:8871797799-472.Con

2、tents Executive summary 1 1 Introduction 5 2 Network infrastructure investment in LAC by Google and others is driven by sustained growth in Internet usage 6 2.1 End users rely on the interconnected network infrastructure over which Internet services are provided 6 2.2 Latin American Internet network

3、 infrastructure relies heavily on submarine cables 8 2.3 Google is investing in submarine cable infrastructure in Latin America 14 3 Googles submarine cables are improving connectivity in LAC,driving an estimated USD178 billion in additional GDP by 2027 18 3.1 Increased levels of connectivity can br

4、ing a wide range of benefits to countries,both to businesses and society as a whole 19 3.2 Googles submarine cable infrastructure investments are helping to improve connectivity in Latin America,bringing a series of benefits to the digital environment 21 4 Straightforward,transparent,and supportive

5、regulatory regimes in Latin America are important for encouraging submarine cable infrastructure investments 29 4.1 A transparent,consistent licensing regime would facilitate the deployment and maintenance of cables in Latin America 29 4.2 Cable-protection laws and cabotage laws need to be designed

6、carefully to avoid causing unnecessary regulatory burden 31 4.3 Foreign ownership and investment appear to be generally welcomed in Latin America,which is a state of affairs that should be encouraged 33 Annex A Economic impact assessment methodology Annex B Methodology Q&A Annex C Cables deployed in

7、 countries of interest Economic impact of Googles submarine cable network in LAC Ref:8871797799-472.Confidentiality Notice:This document and the information contained herein are strictly private and confidential,and are solely for the use of Google.Copyright 2022.The information contained herein is

8、the property of Analysys Mason and is provided on condition that it will not be reproduced,copied,lent or disclosed,directly or indirectly,nor used for any purpose other than that for which it was specifically furnished.Analysys Mason Limited North West Wing,Bush House Aldwych London WC2B 4PJ UK Tel

9、:+44(0)20 7395 9000 Registered in England and Wales No.5177472 This report was commissioned and sponsored by Google,and prepared independently by Analysys Mason,a global consultancy specializing in telecoms,media,and technology.The analysis contained in this document is the sole responsibility of An

10、alysys Mason and does not necessarily reflect the views of Google or other contributors to the research.We would like to thank the many industry experts whom we interviewed for the purposes of writing this report.Economic impact of Googles submarine cable network in LAC Ref:8871797799-472.AcronymAcr

11、onym MeaningMeaning CAP Content and application provider CDN Content delivery network EB Exabyte Enacom Ente Nacional de Telecomunicaciones(Argentinian telecoms regulator)GDP Gross domestic product GGC Google Global Cache GSMA Global System for Mobile communications Association GVA Gross value added

12、 IaaS Infrastructure-as-a-service IP Internet Protocol ISP Internet service provider IT Information technology ITU International Telecommunication Union IXP Internet exchange point LAC Latin America and the Caribbean PaaS Platform-as-a-service PB Petabyte PoP Point of presence Q&A Questions and answ

13、ers RFS Ready for service SaaS Software-as-a-service SME Small and medium-sized enterprise Economic impact of Googles submarine cable network in LAC|1 Ref:8871797799-472.Executive summary Ongoing growth in Internet usage in Latin America is supported by network infrastructure investments made by Goo

14、gle and other providers Internet services are vital in Latin America and the Caribbean(LAC),as well as in other regions around the world.The number of services and products available on the Internet is growing rapidly,resulting in a very large demand that needs to be supplied on an international bas

15、is.Following a global trend,Internet traffic within LAC and from LAC to the rest of the world is predicted to continue growing in the coming years.In this context,the internationally connected network infrastructure over which Internet services are provided is an important asset.Operators and Intern

16、et companies,together with some infrastructure investors,are investing in LAC in order to support the traffic growth expected in the region.Intercontinental traffic from Latin America to North America and beyond requires scalable subsea connectivity.In addition,although geographically difficult terr

17、ain such as the Andes mountain range and the Amazon River makes it costly and challenging to construct terrestrial inter-country networks,many countries in LAC have ample coastlines to support submarine cables,providing favorable conditions for investments in such cables for international connectivi

18、ty.These international links complement domestic network infrastructure to offer consumers and businesses effective access to the Internet.Google is an important stakeholder in the Internet ecosystem,which handles rapidly growing traffic for its users and cloud customers.To manage these growing capa

19、city requirements,Google invests in submarine cable infrastructure in LAC and globally.Googles main objective in deploying these cables is to enable transport capacity between international locations,which contributes to its aim of organizing the worlds information and making it universally accessib

20、le and useful.New cables can also offer increased redundancy for Google and other submarine cable providers,through mechanisms such as swaps of fiber pairs with other providers.1 So far in LAC,Google has spearheaded the launch of three international submarine cables:Monet(linking Brazil and the US),

21、Tannat(connecting Argentina,Uruguay,and Brazil)and Curie(connecting Chile,Panama,and the US).Google has also launched a domestic cable in Brazil,Junior,which connects the states of Rio de Janeiro and So Paulo.In 2021 it announced a fifth system,Firmina,which should be ready for service in 2023,linki

22、ng the eastern US to Brazil,Uruguay,and Argentina.Beyond submarine cables,Google has also invested in other types of infrastructure,to which the cables provide increased connectivity.These include its data center near Santiago(Chile),as well as cloud regions in So Paulo(Brazil)and Santiago(Chile).Pl

23、ans for a third cloud region in LAC,in Mexico,were announced in July 2022.It is also important to note that Google offers various caching solutions,such as Google Global Cache(GGC),which allows ISPs to serve certain Google 1 A fibre pair swap is when a submarine cable provider exchanges a fibre pair

24、 on its cable with a fibre pair on a cable operated by another provider,giving both providers more route diversity and redundancy Economic impact of Googles submarine cable network in LAC|2 Ref:8871797799-472.content from within their own networks.In addition,Google works actively with other partici

25、pants in the connectivity ecosystem,including through Internet exchange points(IXPs)which play a key role in ensuring that connectivity and interconnection can be facilitated for all stakeholders across the ecosystem,not just the large ones.Google submarine cable investments are benefiting the conne

26、ctivity and digital environment in LAC,leading to cumulative incremental gross domestic product(GDP)of USD178 billion between 2017 and 2027,supporting around 740,000 jobs by 2027 Internet services require an established network that can support the amounts of traffic generated by end users,but,at th

27、e same time,network investments also create a better environment for digital services to be served.In other words,these investments increase the level of connectivity within the region,bringing a wide range of benefits to countries,both to their businesses and to society as a whole.The Inter-America

28、n Development Bank has highlighted that many of these benefits are linked to education,health and supply/production development;2 three areas that have a growing dependency on connectivity.Businesses in LAC are forecast to invest heavily in cloud infrastructure in the coming years,taking advantage o

29、f improved connectivity in the region.Together with progressive improvements to domestic networks in the region,including through terrestrial fiber-optic networks and IXPs,Googles submarine cable infrastructure investments are contributing to better,cheaper connectivity in Latin America.For example,

30、Google is currently complementing its Argentinian and Chilean subsea investments by also investing in a cross-Andes fiber connectivity project to link Argentina and Chile.Benefits from subsea and terrestrial fiber projects include a reduction in latency and Internet Protocol(IP)transit prices,and an

31、 increase in bandwidth per Internet user.These improvements to the connectivity environment have led to an increase in Internet users in the region,and an increase in data consumption.The positive impacts on Internet penetration and data usage are estimated to support economic growth in terms of bot

32、h GDP and job creation.Based on econometric modeling developed for this study in partnership with Professor Neil Gandal,we estimate that Googles submarine cable deployments in the region will lead to a cumulative increase in GDP of USD178 billion3 between 2017 and 2027,compared to a counterfactual s

33、cenario in which these cables would not have been deployed.This additional economic output will support the creation of around 740,000 jobs by 2027.In that year,the annual GDP increase will represent 1.08%of projected total GDP in that year in the five countries where Googles cables land.2 https:/pu

34、blications.iadb.org/publications/spanish/document/Informe-anual-del-Indice-de-Desarrollo-de-la-Banda-Ancha-IDBA-2020-Brecha-digital-en-America-Latina-y-el-Caribe.pdf 3 Value in real 2021 USD,based on World Bank constant 2015 USD GDP series;this converts prices based on official 2015 exchange rates b

35、etween local currency and USD,then strips out the effect of inflation to obtain values that are comparable over time Economic impact of Googles submarine cable network in LAC|3 Ref:8871797799-472.Submarine cable infrastructure investments should be encouraged by straightforward,transparent,and suppo

36、rtive regulatory regimes in LAC The regulatory and policy environment for the deployment of submarine cables is not always clearly defined or easily accessible in LAC countries,although there are differences among the various markets.Industry players have stated that a transparent,consistent licensi

37、ng regime would facilitate the deployment and maintenance of cables in the region.An action that could improve the licensing regime would be to document the process for acquiring all the necessary permits,and make this easily accessible.In addition,the regulatory burden involved in securing permits

38、should be limited,and require interaction with one central point of contact rather than various agencies.Furthermore,agencies that grant licenses and permits should have the necessary institutional knowledge of the processes involved.In addition,cable-protection laws4 need to be well designed to avo

39、id unintended consequences and to provide added reassurance to those launching cables.Finally,cabotage laws,that is to say laws related to the right to operate ships in particular territories,need to be designed carefully in order to avoid causing additional regulatory burden,ensuring that maintenan

40、ce and repairs can be carried out as quickly as possible to ensure the ongoing benefits of the cables.With these improvements put in place,the foreign investments that appear to be generally welcomed in LAC should continue to be made in the region,and as a result both businesses and end users will b

41、enefit from better connectivity systems.4 For example,such laws exist in Colombia and Uruguay(see https:/www.dimar.mil.co/sites/default/files/normatividad/res_02042012.pdf and https:/ Googles MilestonesGoogle has invested in submarine cables landing in Argentina,Brazil,Chile,Panama and UruguayThis w

42、as followed by Tannat(2018),Curie(2020)and Firmina(which should be ready for service in 2023).Junior,a domestic cable in Brazil,was ready for service in 2018Monet,the first international submarine cable in LAC in which Google invested,was ready for service in 2017Economic Impactfor internet access a

43、nd data consumption,which help increase annual GDP in 2027 by(at 2021 prices)1.08%orUSD30.9 billion(at 2021prices)in GDP,supporting the creation of aroundby 2027Between 2017 and 2027,Curie,Monet,Tannat and Firmina will cumulatively unlock USD178 billion740 000 jobsBetter connectivity supply unlocks

44、greater demandGoogles submarine cable investments in LACSubmarine cables deployedThe cables in which Google has invested often cover new direct routes between countries,or are the first new cable to cover a particular route in 15-20 yearsAcross the five countries in which these cables land,they have

45、 increased international submarine cable capacity potentially accessible by over 40%40%CurieFirminaTannatMonetEconomic impact of Googles submarine cable network in LAC|5 Ref:8871797799-472.1 Introduction This report discusses the economic impact of Googles submarine cable infrastructure investments

46、in Latin America and the Caribbean(LAC),and was sponsored by Google,although the analysis contained in this document is the sole responsibility of Analysys Mason.The research that underpins this report was conducted between June 2022 and July 2022.We acknowledge the dynamic situation surrounding the

47、 world economy and have used the most up-to-date information and database available as of July 2022.This report focuses on the economic impact of Googles existing and announced submarine cables in the region,on the countries in which they land(Argentina,Brazil,Chile,Panama,and Uruguay).It presents t

48、he findings of work carried out by the Analysys Mason team,combining qualitative research on connectivity markets and the regulatory environment in LAC,an econometric model developed to estimate the economic impact of submarine cables in the region,and a series of interviews with industry stakeholde

49、rs and Google employees.The report also looks at five additional countries which we regard as important hypothetical submarine cable destinations in the region(Colombia,the Dominican Republic,Guatemala,Mexico,and Peru).In the report,we explain the network infrastructure underpinning the Internet and

50、 the investments that Google has made in submarine infrastructure across LAC(Section 2).We then explore the economic impact of these investments(Section 3),in terms of GDP and job creation,as well as other connectivity improvements.Finally,we provide an overview of regulatory best practice(Section 4

51、).The report includes annexes containing supplementary material:Annex A provides provide further detail on the economic impact assessment used to estimate the job and GDP impact of Googles submarine cable investments Annex B summarizes the methodology described on Annex A in a question-and-answer(Q&

52、A)format Annex C includes a list of submarine cables deployed in the countries of interest.Economic impact of Googles submarine cable network in LAC|6 Ref:8871797799-472.2 Network infrastructure investment in LAC by Google and others is driven by sustained growth in Internet usage Submarine cables a

53、re an important part of the large,interconnected infrastructure which underpins the Internet around the world.This is certainly the case in the LAC region:the enormous size of some countries and the nature of the terrain make the deployment of terrestrial networks challenging in certain areas,and ma

54、ny large population and economic centers are located in coastal areas.Internet companies such as Google,which provide content,services,and applications over the Internet,are increasingly deploying infrastructure to support their needs globally and regionally,including in LAC.The sustained growth in

55、data usage in the region,including through cloud,feeds the need for more submarine cables,including Firmina,which Google announced in 2021.Other infrastructure plays a part in the overall connectivity,for example microwave and satellite,but these technologies alone do not provide a holistic solution

56、 with sufficient scalability to handle traffic requirements.2.1 End users rely on the interconnected network infrastructure over which Internet services are provided Access to the Internet has become a key part of the everyday life of consumers and businesses around the world,as it facilitates commu

57、nication,learning,work,socializing,and entertainment.The Internet itself has continued to evolve rapidly from a technical perspective in recent years,for example with the launch of 5G services and fiber-optic networks.This evolution has been accompanied by the development of new data-heavy and real-

58、time applications and use cases,such as high-definition video services,gaming,and online commerce.Online content and applications are usually hosted in various data centers around the world.When an end user wants to access this content,or use a particular online service,the necessary data travels fr

59、om the data center(s)in which it is stored to the end users device.This will often involve the data being transported across multiple interconnected networks,and through transport links(including both terrestrial and submarine cables)that connect numerous locations around the world.International lin

60、ks are used alongside peering and caching to increase the efficiency of traffic delivery and improve quality of service Data from Internet companies such as Google is delivered through international terrestrial and submarine links to points of presence(PoPs)around the world.These PoPs are located in

61、 places where multiple Internet companies/content providers and Internet service providers(ISPs)can exchange traffic(typically through a process called peering)via public Internet exchange points(IXPs)or direct connections.The ISP then takes the traffic and delivers it to the end user,across its own

62、 network(including its core,backhaul,and access networks as required).Whilst international links can be carried over terrestrial networks,submarine cables are often preferred where possible,Economic impact of Googles submarine cable network in LAC|7 Ref:8871797799-472.as they allow easier point-to-p

63、oint connectivity between two countries that might not share a land border(e.g.,the US and Brazil),involving much less complexity than with a terrestrial link across multiple countries.Submarine cables enable the Internet to be truly global,with traffic able to be transported around the world with a

64、s little delay as possible.In order to deliver these services across the Internet,many stakeholders are investing in a complex chain of infrastructure assets,deployed on a massive scale globally and across the value chain,as shown in Figure 2.1.Figure 2.1:Infrastructure assets that enable content,se

65、rvices,and applications on the Internet Source:Analysys Mason,2020 Good international connectivity is essential to allow Internet companies like Google to bring traffic closer to ISPs domestic networks and peer domestically with them.In many cases,content or data does not need to be delivered around

66、 the world each time an end user requests it;it can instead be stored locally in a cache.Caching is used to store popular content such as video closer to the end user in anticipation of demand,thereby reducing the need to constantly transport it from core data centers.This leads to a reduction in co

67、st for both ISPs and Internet companies/content providers,and a reduction in latency(a key measure of the time it takes for content to be requested and served)for end users.Value chain Value chain elementelementDescriptionDescriptionEnd usersEnd users access the Internet using applications on device

68、s and initiate data requests across the connectivity value chainAccessAccess,backhaul,and core networks provide Internet connectivity to end users via mobile or fixed-line networksEdge networkEdge networkelements serve to bring content closer to end users by serving as efficient points of interconne

69、ction(PoPs)and storage of static content(cache nodes)Submarine and Submarine and terrestrialterrestrial fiber cables facilitate the transmission of data between data centers and PoPs,which are typically across different geographiesData Data centerscenters are facilities that store content and proces

70、s data on a large scaleContent application provider Content application provider networknetworkISP networkISP networkSubmarine and terrestrial linksAccess,backhaul,and core networkData centersEnd userEndEnduseruserAccess Access networksnetworksEdge Edge networknetworkSubmarine&Submarine&terrestrial

71、linksterrestrial linksDataDatacenterscentersPoPPoPEdge networkEdge networkCache nodesEconomic impact of Googles submarine cable network in LAC|8 Ref:8871797799-472.Internet traffic in Latin America will continue growing in the coming years Internet traffic in Latin America has grown in recent years,

72、as a result of higher levels of penetration of Internet connections and connected devices,including smartphones,as well as increased data usage per user.This growth in data usage is itself the product of several factors,including better network infrastructure,and the development and growing populari

73、ty of data-heavy applications.The Covid-19 pandemic has also had a particular impact here,with the rise in home working leading to a major increase in data-heavy activities such as videoconferencing.The impact also stretches beyond the professional sphere,as lockdowns and other pandemic restrictions

74、(e.g.limits on travel and other leisure activities such as shopping,going to the cinema,eating out)meant that people spent more time at home,with much of this time likely to have been filled by online activities such as video streaming.This trend of increasing data traffic is forecast to continue in

75、 the region during the coming years.As an example,Figure 2.2 shows Ericssons forecast of monthly mobile data traffic in Latin America from 2021 until 2027.This grows from 3.7EB per month in 2021 to 19.0EB per month in 2027,representing a compound annual growth rate(CAGR)of 31.4%.Figure 2.2:Monthly m

76、obile data consumption forecast in LAC Source:Ericsson Mobility Report,November 2021 2.2 Latin American Internet network infrastructure relies heavily on submarine cables Submarine cables play an important role in Latin America due to the enormous size of some of the countries,and the fact that some

77、 types of terrain can be challenging for terrestrial deployment.There are major mountain ranges in the region,as well as significant areas of jungle and rainforest.For example,the Andes are the worlds longest mountain range at 8850km,with hundreds of peaks over 4500 meters high,many of which are vol

78、canic.Alongside these mountains,the continent is also home to the Amazon River basin,which has an area of 7 million km,and contains the worlds Forecast3.7 5.1 6.9 9.2 12.0 15.3 19.0 20252023EB20212026202220242027Economic impact of Googles submarine cable network in LAC|9 Ref:8871797799-472.largest r

79、ainforest.South America is also where what is generally considered to be the driest place in the world can be found:the Atacama Desert.As a result of this varied and often challenging terrain,and the presence of large population centers in coastal areas,it can be more attractive to deploy subsea inf

80、rastructure than to establish certain terrestrial routes.5 Other technological solutions have their own limitations,including limited capacity and physical constraints.6 Submarine cables provide connectivity between countries in Latin America,as well as links to other continents,particularly North A

81、merica In Latin America,69 submarine cable systems are currently in service(as illustrated in Figure 2.3 below).A total of 25 international submarine cable systems are currently in operation across the ten countries of focus for this study,7 with a total design capacity of around 1300Tbit/s and a le

82、ngth of more than 200,000km.These range from smaller,lower-capacity cables deployed in the early 2000s which will now be approaching end of life,to much larger,more-modern systems deployed in recent years.Since 2017,ten new cables have been deployed in the countries of interest,four of these by Inte

83、rnet companies(Google or Meta),directly or through partnerships.5 For interior connectivity(inland,rather than coastal),fibre will be required,as well as perhaps satellite and microwave connections 6 For example,microwave transmission generally has limited reach and requires line of sight,necessitat

84、ing the deployment of a relay network.It can also be impacted by environmental constraints,and may have limited penetration through certain obstacles 7 The five countries where cables in which Google has invested land(Argentina,Brazil,Chile,Panama and Uruguay),plus five countries we see as important

85、 potential submarine cable destinations in the region(Colombia,the Dominican Republic,Guatemala,Mexico and Peru)Economic impact of Googles submarine cable network in LAC|10 Ref:8871797799-472.Figure 2.3:Map of submarine cables in Latin America Source:TeleGeography,Simplemaps,2022 International cable

86、 systems in LAC can broadly be divided into three main routes:LAC to US(Atlantic coast)LAC to US(Pacific coast)intra-LAC.A small number of cables follow other intercontinental routes:LAC to Europe LAC to Africa.There is currently no direct route linking Latin America to Asia,but a project is under c

87、onsideration to link Chile to Oceania(Humboldt see below for more detail).Population city size1,500,0005,000,00010,000,00015,000,00020,000,00025,000,000Economic impact of Googles submarine cable network in LAC|11 Ref:8871797799-472.With 13 cables currently deployed,Brazil is the country in Latin Ame

88、rica with the largest number of international submarine cables and associated submarine capacity Among the countries of interest for this study,Brazil has the largest number of international submarine cable deployments(13,with Firmina currently being deployed in addition to these),as well as the hig

89、hest design capacity from existing cables(901Tbit/s).At the other end of the scale,Mexico has the lowest level of existing design capacity in international submarine cables(76Tbit/s),but this is likely due to its terrestrial links with the US,and it has two further cables under deployment.In July 20

90、22,Google also announced the deployment of a new cloud region in Mexico(its third in Latin America).According to Google,this will allow local users to“maintain low latency and the highest security,data residency,and compliance standards,including specific data storage requirements”.8 Uruguays total

91、international submarine capacity is also on the low side compared to other countries in the study(96Tbit/s),but as well as having a smaller population than many countries in the region,meaning less traffic is likely to be generated,it will also benefit from the future deployment of Firmina adding a

92、further 240Tbit/s(see Section 2.3).Figure 2.4 sets out a summary of the cables landing in each country of interest,according to TeleGeography.Cables in which Google has invested are shown in bold.Figure 2.4:Summary of existing international submarine cable connectivity by country of interest Source:

93、TeleGeography,operator websites,2022 CountryCountry Number Number of cablesof cables Existing cables(Existing cables(ready for service(ready for service(RFSRFS)date)date)T Total otal design design capacitycapacity9 Argentina 6 Bicentenario(2011),Malbec(2021),South America-1(SAm-1)(2001),South Americ

94、an Crossing(SAC)(2000),Tannat(2020)Tannat(2020),10 Unisur(1995)296Tbit/s Brazil 13 America Movil Submarine Cable System-1(AMX-1)(2014),Americas-II(2000),Brusa(2018),Ellalink(2021),Globenet(2000),Malbec (2021),Monet(2017)Monet(2017),SAC(2000),SAm-1(2001),Seabras-1(2017),South Atlantic Cable System(SA

95、CS)(2018),South American Inter Link(SAIL)(2020),Tannat(2018)Tannat(2018)901Tbit/s Chile 4 Curie(2020)Curie(2020),SAC(2000),SAm-1(2001),South Pacific Cable System(SPSC)/Mistral(2021)296Tbit/s 8 https:/ 9 This is calculated as the sum of the maximum potential capacity reported on each cable landing in

96、 each country.In practice,the design capacity of an individual cable will be shared among users in all countries that it serves 10 Tannat was ready for service in Argentina in December 2020;for the purpose of the impact assessment in this report,we have considered its impact from the start of 2021 E

97、conomic impact of Googles submarine cable network in LAC|12 Ref:8871797799-472.CountryCountry Number Number of cablesof cables Existing cables(Existing cables(ready for service(ready for service(RFSRFS)date)date)T Total otal design design capacitycapacity9 Colombia 8 AMX-1(2014),ARCOS(2001),Colombia

98、Florida Subsea Fiber(CFX-1)(2008),Globenet(2000),Maya-1(2000),Pacific Caribbean Cable System(PCCS)(2015),SAC(2000),SAm-1(2001)401Tbit/s Dominican Republic 6 AMX-1(2014),Antillas 1(1997),ARCOS(2001),EastWest(2011),Fibralink(2006),SAm-1(2001)128Tbit/s Guatemala 4 AMX-1(2014),ARCOS(2001),SAm-1(2001),SP

99、SC/Mistral(2021)248Tbit/s Mexico 4 AMX-1(2014),ARCOS(2001),Maya-1(2000),Pan-American Crossing(PAC)(2000)76Tbit/s Panama 6 ARCOS(2001),Curie(2020)Curie(2020),Maya-1(2000),PAC(2000),PCCS(2015),SAC(2000)300Tbit/s Peru 3 SAC(2000),SAm-1(2001),SPSC/Mistral(2021)224Tbit/s Uruguay 3 Bicentenario(2011),Tann

100、at(2018)Tannat(2018),Unisur(1995)96Tbit/s Five further international submarine cables are set to be ready for service in Latin America by 2025 In addition to the cable systems that are already in service,the deployment of a further five international cables has been announced in the region(as shown

101、in Figure 2.5).These will total a further length of approximately 24,000km,and at least 588Tbit/s in additional design capacity.11 Figure 2.5:List of confirmed future cables in countries of interest Source:TeleGeography,operator websites,2022 CableCable ProviderProvider RouteRoute LengthLength RFSRF

102、S datedate Design Design capacitycapacity Landing Landing pointspoints GigNet-112 GigNet LACUS(Atlantic)1104km 2022 24Tbit/s Mexico,US FirminaFirmina Google LACUS(Atlantic)14,517km 2023 240Tbit/s(approx.)13 Argentina,Brazil,Uruguay,US Boriken Submarine Cable System(BSCS)Blackburn Technologies Intra-

103、LAC 670km 2024 Not announced Dominican Republic,Puerto Rico,US Virgin Islands Caribbean Express(CX)14 Ocean Networks LACUS(Atlantic)3472km 2025 324Tbit/s Colombia,Mexico,Panama,US 11 Only two of the five cables have had capacity announced in Tbit/s,so the actual value should ultimately be much highe

104、r than this 12 https:/gignet.mx/company/marine-survey-completed-for-the-gignet-1-subsea-cable-system/13 https:/docs.fcc.gov/public/attachments/DOC-384367A1.pdf 14 https:/ Economic impact of Googles submarine cable network in LAC|13 Ref:8871797799-472.CableCable ProviderProvider RouteRoute LengthLeng

105、th RFSRFS datedate Design Design capacitycapacity Landing Landing pointspoints Carnival Submarine Network-1(CSN-1)15 Telconet LACUS(Atlantic)16 4500km 2025 Not announced Colombia,Ecuador,Panama,US As well as the cables listed above,several new cables are reportedly under consideration or in the earl

106、y stages of planning:The Argentine,Chilean,and Brazilian subsidiaries of Silica Networks have announced a joint project to commence a feasibility study of a submarine fiber-optic cable network to the Antarctic continent.17 The Brazilian and Guyanese governments signed a memorandum of understanding i

107、n 2020 on studying the technical feasibility of a fiber-optic link between the two countries,as part of their shared aim of improving connectivity in the Amazon region.18 In late 2018,Hemisphere Cable Company(HCC)announced its plans to deploy the WASACE 1 submarine cable,to connect Fortaleza(Brazil)

108、,the Canary Islands,and Seixal(Portugal),with additional branches to Cape Verde,Madeira(Portugal),and Casablanca(Morocco).19 The cable was supposed to be ready for service in 2021,but no recent updates have been provided.Chile is exploring the possibility of deploying the Humboldt Cable System,which

109、 would connect the country with Australia,becoming the first cable to connect Latin America with AsiaPacific and Oceania.The initial design of the cable includes between four and eight fiber pairs,with a transmission capacity of 10Tbit/s to 20Tbit/s,and the system could be ready for service in early

110、 2025.20 15 https:/ 16 CSN-1 will also have a Pacific branch between Panama and Ecuador,but connects to the US in Florida and so has been classed as Atlantic 17 https:/ 18 https:/ 19 https:/ 20 https:/ and https:/ Economic impact of Googles submarine cable network in LAC|14 Ref:8871797799-472.2.3 Go

111、ogle is investing in submarine cable infrastructure in Latin America The key driver for Google in deciding when and where to invest in a new cable is its projected capacity requirements for future years,covering all types of traffic(such as cloud as well as Google content),supported by its needs for

112、 increased redundancy and reduced latency.As Googles capacity requirements are driven in part by demand from Google Cloud customers,other factors are key to the impact that new connectivity projects can have,such as the readiness of businesses in the region to take advantage of cloud and online serv

113、ices.Recent events and publications have underlined Googles commitment to LAC and the importance of digital technology to the growth of the LAC economy.21 Google has been at the forefront of a fresh wave of submarine cable infrastructure investments in the region Google initiated new investments in

114、international submarine infrastructure in Latin America and therefore increased connectivity in some countries,after a period during which very limited investments had been made.With the exception of Bicentenario(a small cable crossing Rio de la Plata to link Argentina and Uruguay,ready for service

115、in 2013),in three of the five Latin American countries where Google spearheaded a submarine cable landing(Argentina,Chile,and Uruguay),Googles was the first major international cable to be deployed in over 15 years.In the remaining two countries(Brazil and Panama)it was the second.In all these count

116、ries,with the exception of Uruguay,investment from Google has been followed by new deployments from other providers.Closer lookCloser look:Google is part of a recent drive to upgrade and enhance submarine cables landing in:Google is part of a recent drive to upgrade and enhance submarine cables land

117、ing in ArgentinaArgentina Currently there are six international submarine cables serving Argentina.Unisur was launched back in 1995,followed by South American Crossing(SAC)in 2000 and South America-1(Sam-1)in 2001.The only deployment in the following 17 years was Bicentenario,a small cable crossing

118、the Rio de la Plata to link Argentina and Uruguay.22 The first submarine cable in Argentina in which Google invested was launched in 2020,with the deployment of Tannat,linking the country to Uruguay and Brazil.With a design capacity of 90Tbit/s,23 Tannat almost doubled the total submarine cable desi

119、gn capacity serving Argentina at that point in time.24 Following this first deployment of a major cable in many years,Meta and GlobeNet launched Malbec in 2021,providing a further 108Tbit/s between Argentina and Brazil.Google has subsequently announced the deployment of Firmina,which is expected to

120、be ready for service in 2023,and will link Argentina to Uruguay,Brazil,and the US.21 See,for example,https:/blog.google/around-the-globe/google-latin-america/our-commitment-latam-digital-future/and https:/blog.google/outreach-initiatives/public-policy/a-100-billion-opportunity-to-boost-digital-expor

121、ts-in-latin-america/22 https:/ 23 https:/ 24 https:/ Economic impact of Googles submarine cable network in LAC|15 Ref:8871797799-472.Googles infrastructure investments help to bring services to end users(Gmail,YouTube,Android)and Google Cloud customers around the world Googles network infrastructure

122、 investments help with the transport of traffic between different Google data centers,as well as content delivery to ISPs and Internet users(for example,Google content such as YouTube,Google Cloud,Google Docs,Gmail,Google Meet,Google Maps,etc.).There is a large degree of data replication between dat

123、a centers,and then regional cloud infrastructure is used to serve customers locally.Specifically in LAC,Google currently has two cloud regions.The first was launched in So Paulo(Brazil)in 2017,and the second in Santiago(Chile)in 2021.As described earlier,in July 2022 Google announced plans for a thi

124、rd cloud region in Latin America,in Mexico.It is also important to note that Google offers various caching solutions,such as Google Global Cache(GGC),which allows ISPs to serve certain Google content from within their own networks.25 This brings the content closer to users,thereby reducing latency a

125、nd increasing quality of service.Due to the timelines involved for deployment,new submarine cables have to be planned,designed,and approved well ahead of when the capacity they will offer is required.In general,these projects usually take between three and five years,depending on complexity.Google h

126、as redundancy in its network through investment in multiple cable systems landing in LAC.Some of these are owned by Google,while others are owned by partner operators.26 Googles investments allow other companies with whom it partners to benefit from the use of its cables.The exchange(or swap)of fibe

127、r pairs provides more geographical diversity for both parties routes.Therefore,if there were to be a problem on one particular cable/route,traffic could be rerouted via an alternative route(ideally one of several options),and so the impact on quality of service should be limited.Traditional submarin

128、e cable operators tend to see Google as a potential partner on submarine cable projects.Some of these players welcome the opportunity to co-invest in new cables with Google,which is seen as bringing both significant financial capacity as well as recognized engineering and operational expertise.This

129、can be particularly relevant for routes that would not be commercially viable for traditional providers if they were deploying them alone,as in these cases deployment in 25 https:/ 26 https:/ essential to have a good relationship/partnership with the Internet companies that are investing in Latin Am

130、erica we have found a way to manage the relationship to be beneficial for our company”“You develop a certain relationship on one side,on the other a business model confidence”“Internet companies are not competitors,so the matching of the joint force tends to be smoother than with a competitor,when y

131、ou can do similar things but at the end you are competing head-to-head.Here that dimension is not exactly there,which somehow helps”Global submarine cable operatorGlobal submarine cable operator Economic impact of Googles submarine cable network in LAC|16 Ref:8871797799-472.partnership with Internet

132、 companies could provide an alternative to requiring the use of public funds,or simply not deploying at all and making use of less direct routes.Three international submarine cables in which Google has invested have been deployed in Latin America,as well as a domestic one in Brazil,and Firmina was a

133、nnounced in 2021 The first international submarine cable in Latin America in which Google invested,Monet,was ready for service in 2017.Since then,three more cables in which Google has invested have been launched,and in 2021 a fifth system,Firmina,was announced,which should be ready for service in 20

134、23,linking the eastern US to Brazil,Uruguay,and Argentina.Existing systems include:Monet,ready for service in December 2017,which connects the state of So Paulo and Fortaleza in Brazil with Florida in the US.It spans a distance of 10,556km and has a design capacity of 64Tbit/s.It was launched as par

135、t of a consortium alongside Algar Telecom,Angola Cables,and Antel Uruguay.Tannat,ready for service in the first quarter of 2018,again alongside Antel Uruguay.It connects the state of So Paulo with Maldonado in Uruguay and Las Toninas in Argentina.It covers a distance of 2000km and has a design capac

136、ity of 90Tbit/s.Curie connects Valparaso in Chile with California in the US,and also includes a branch providing a connection to Panama.The Curie system has a total length of 10,476km and a design capacity of 72Tbit/s.It was deployed by Google as the sole investor,and provides significant connectivi

137、ty to Googles data center near Santiago(Chile).In addition to international submarine cables,Junior,a domestic submarine cable in Brazil linking the states of So Paulo and Rio de Janeiro,was deployed in 2018.Junior serves as an extension of international connectivity arriving in So Paulo,which hosts

138、 the landing stations of both Monet and Tannat.Firmina,with a design capacity of 240Tbit/s,will be the longest cable in existence that can run entirely from a single power source at one end of the cable,if its other power source becomes temporarily unavailable,which should increase its resilience an

139、d reliability.27 Firmina will increase the capacity available to Google on its own infrastructure along the Atlantic coast,and reinforce 27 https:/ Closer lookCloser look:the role of data cente:the role of data center rs s Data centers play a key role in the deployment of both terrestrial and submar

140、ine telecoms infrastructure.While there is something of a“chicken and egg”situation in terms of whether submarine cables or data centers are deployed first,submarine cables are often ultimately used to provide connectivity between data centers.For example,this is the case in Chile,where Curie connec

141、ts Googles data center near Santiago with its fleet of data centers in North America(e.g.,in Nevada).Because Google also has terrestrial paths across Chile and Argentina,traffic can also take the Atlantic route to the US if required.Economic impact of Googles submarine cable network in LAC|17 Ref:88

142、71797799-472.existing routes through the continent,including to Googles data center in Chile.Brazil will then be connected by a branch north to South Carolina,providing it with direct connectivity to another of Googles major data centers in the area.Case study:Case study:the the benefits of a new la

143、nding stationbenefits of a new landing station Submarine cable landing stations are an important building block in wider digital connectivity structures.Firmina will be the first submarine cable to have a landing station in South Carolina.Often the deployment of the first submarine cable,and associa

144、ted infrastructure,will then lead to the deployment of further cables,thereby significantly increasing connectivity for the region/country.This already appears to be the case in South Carolina,as the landing station that will house Firmina will have space for additional cables.When multiple cables u

145、se the same landing station this benefits each provider,as it allows costs to be shared,enables traffic to be exchanged across cables,and offers the opportunity to exchange fiber pairs in different cables,thus providing greater redundancy.Furthermore,Google often leases or licenses the necessary inf

146、rastructure and services to operate submarine cables,which directly contributes to local economic development by creating opportunities for local companies to act as operator partners.While this report focuses on the benefits to Latin America,which are large as it is currently under-connected,commun

147、ities in which a cable lands(including South Carolina in this case)benefit from broader clustering dynamics associated with digital infrastructure.The development of strong,resilient networks between countries can promote integration and cohesion between markets.Increased digital connectivity can he

148、lp to reduce barriers and impediments to digital trade,which can lead to an increase in cross-border commerce.The deployment of cable landing stations can also lead to the establishment of digital clusters,as landing stations with multiple cables are natural places for the deployment of IXPs and dat

149、a centers etc.,which may in turn help to encourage other digital companies to set up operations in the area,bringing associated economic benefits for the region.Outside Latin America,Marseille(France)provides a good illustration of how many cables can follow a first one.The first of Marseilles cable

150、s was launched in 2005,followed by five more before the end of 2011.Another cable was deployed in 2017,and now a further wave of six cables is being deployed between 2022 and 2025.Once all have been launched,total design capacity serving Marseille will exceed 1120Tbit/s,and it will have cables linki

151、ng it to landing stations in countries as diverse as South Africa,India,China,Singapore,and Malaysia.The presence of all of these cables has helped Marseille to become a European interconnection hub.Beyond submarine cables,it now has three IXPs(plus another nearby in Aix-en-Provence),as well as 13 d

152、ata centers(operated by a range of providers including Interxion,Colt,and Lumen).28 Google has not announced any investments in further cables in the LAC region,though with traffic growth anticipated to continue it is likely that additional subsea infrastructure deployment could be required in the f

153、uture at some point.With the extra capacity that Firmina will bring to the east side of Latin America,more data centers could also be deployed.28 https:/www.I and https:/ Economic impact of Googles submarine cable network in LAC|18 Ref:8871797799-472.3 Googles submarine cables are improving connecti

154、vity in LAC,driving an estimated USD178 billion in additional GDP by 2027 Googles investments in submarine infrastructure support the delivery of its content to end users,by improving service performance and reliability.More broadly,Googles investments in LAC aim to improve the overall performance,r

155、esilience,and cost-effectiveness of Internet infrastructure.Although it tends to only use its self-deployed capacity for itself,this frees up capacity on other cables for others,which increases the overall supply in the market and leads to better connectivity outcomes in the region.These include an

156、increase in the number of Internet users,greater data usage per user,and facilitation of new,richer applications for both consumers and businesses.Increased numbers of users and greater data usage contribute to economic growth and the creation of jobs,a relationship that has been confirmed in numero

157、us studies.29 For example,the World Bank highlighted in 2009 that broadband has“considerable economic impact at all levels of individuals,firms,and communities”,with“individuals increasingly using broadband to acquire knowledge and skills to increase their employment opportunities”.Our analysis as p

158、art of this study validates these findings for LAC.In order to demonstrate this,and to reflect the specificities of the Latin America region,we carried out our own econometric modeling in partnership with Professor Neil Gandal at Tel Aviv University.Google is continuing to invest in Latin America,wi

159、th Firmina expected to be ready for service in 2023.Between 2017 and 2027,we estimate that Googles network investments will have supported the creation of up to 740,000 jobs throughout the region and generated up to USD178 billion30 in additional GDP(USD31 billion in 2027 alone,which represents 1.08

160、%of projected GDP in that year,including Googles cables,in the five countries in which Google cables land).This section details how Googles investments in submarine cables have a positive impact on the connectivity ecosystem and digital environment in Latin America,and how this translates into econo

161、mic benefits in the form of jobs and GDP growth.It starts by providing qualitative examples of how increased levels of connectivity can bring benefits to countries,before presenting the estimated positive impact of Googles submarine cable infrastructure on the digital environment in 29 Qiang/Rossott

162、o,Economic impacts of broadband,2009,see:https:/documents1.worldbank.org/curated/en/645821468337815208/pdf/487910PUB0EPI1101Official0Use0Only1.pdf Katz/Jung,Collaborative digital regulation:a much needed approach to achieving growth of the digital economy,2022,see:https:/www.itu.int/dms_pub/itu-s/op

163、b/jnl/S-JNL-VOL3.ISSUE1-2022-A01-PDF-E.pdf Deloitte/GSMA,What is the Impact of Mobile Telephony on Economic Growth,2012;see:https:/ 30 All GDP values are provided in real 2021 USD,based on World Bank constant 2015 USD GDP series;this converts prices based on official 2015 exchange rates between loca

164、l currency and USD,then strips out the effect of inflation to obtain values that are comparable over time Economic impact of Googles submarine cable network in LAC|19 Ref:8871797799-472.Latin America.It concludes by explaining the estimated economic impact of Googles submarine cable infrastructure i

165、n the region.3.1 Increased levels of connectivity can bring a wide range of benefits to countries,both to businesses and society as a whole Businesses in Latin America are forecast to invest heavily in cloud infrastructure in coming years,taking advantage of improved connectivity in the region As co

166、nnectivity in a region improves,business and governments are able to advance further through the process of“digitalization”.More and more,they are able to adopt new digital services and integrate digital technology in their day-to-day processes,allowing them to collect,store,and analyze increasingly

167、 large amounts of data.Traditional information technology(IT)infrastructure deployed by businesses and governments generally uses servers located on the premises,and systems that do not usually provide the scalability and cost efficiency that is now required.As a consequence,businesses and governmen

168、ts have started to move their data and applications to the cloud.This can either be private cloud infrastructure,where the organization operates the cloud infrastructure itself for its own dedicated use,or public cloud infrastructure,where third-party cloud service providers(e.g.Google)deploy and op

169、erate the infrastructure,and deliver the services to their customers over the Internet.It is also possible to have hybrid cloud infrastructure,combining both public and private cloud.The deployment of cloud infrastructure,and the realization of the associated benefits,is contingent on having suffici

170、ent connectivity in a region.Take-up of cloud services is expected to increase significantly in Latin America in the coming years.As an example of the current level of adoption,Analysys Mason Research reports over 25 million software-as-a-service(SaaS)users in Latin America at the end of 2021.Figure

171、 3.1 shows the forecast total spend on public cloud infrastructure in Latin America from 2020 to 2026.The increase from USD6.8 billion in 2020 to USD17.8 billion in 2026 represents a CAGR of 17%.“Businesses in Latin America are still in the early stages of cloud adoption.Concerns remain around cyber

172、security,which are holding back take-up”LACLAC-focused operator group focused operator group Economic impact of Googles submarine cable network in LAC|20 Ref:8871797799-472.Figure 3.1:Forecast public cloud spend in Latin America Source:Analysys Mason Research,202231 The adoption of cloud infrastruct

173、ure offers numerous benefits for businesses and governments,as highlighted by Google in its Digital Sprinters report.32 Users of public cloud infrastructure can pay for resources as part of a pay-as-you-go model,rather than having to make capital-intensive up-front investments in infrastructure.As a

174、 result of improving the accessibility,affordability,and capacity of computing resources,barriers to entry are reduced for new businesses.This is particularly the case for small-and medium-sized enterprises(SMEs),as it enables them to use resources that they were previously unlikely to have been abl

175、e to afford,due to the up-front investments required.A positive consequence of this is increased innovation,as it supports the deployment of new products and services.Increased broadband take-up and usage brings a range of benefits to societies as a whole Increased connectivity in a region generally

176、 leads to higher broadband penetration,and growth in data consumption among existing users(see Section 3.2 for detailed analysis of the impact of Googles submarine cables on these metrics in Latin America).The Inter-American Development Bank has published a report on the development of broadband in

177、Latin America,which highlights a series of benefits that greater broadband penetration can bring to a region.33 31 “Cloud spend”refers to the sum of SaaS,infrastructure-as-a-service(IaaS)and platform-as-a-service(PaaS)retail revenue accrued to cloud service providers and telecoms operators.Data publ

178、ished in June 2022,based on historical data up to Q2 2021 32 https:/blog.google/documents/94/The_Digital_Sprinters_FINAL.pdf 33 https:/publications.iadb.org/publications/spanish/document/Informe-anual-del-Indice-de-Desarrollo-de-la-Banda-Ancha-IDBA-2020-Brecha-digital-en-America-Latina-y-el-Caribe.p

179、df Forecast2023USD billion20202026202120259.2202220246.87.911.113.315.517.8Economic impact of Googles submarine cable network in LAC|21 Ref:8871797799-472.At a high level,according to the report,education,health,and supply/production development are three areas that have a growing dependency on conn

180、ectivity:With respect to education,increased broadband take-up helps families to use the Internet to communicate with educational centers,and makes schools and training centers more locally accessible for the entire educational community.In health,use of the Internet is a key element in improving ma

181、nagement,optimizing efficiency in the use of resources,and improving control over health expenditure,and therefore it allows better services to be offered to society.In the industrial sector,particularly among SMEs,the use of broadband services leads to growth and improved management/dealings in nat

182、ional and international markets.More generally,businesses are able to increase their productivity,as Internet use allows them to promote innovation and entrepreneurship,as well as to expand their existing lines of business.The working day can also be reduced,due to the increased efficiency in carryi

183、ng out tasks offered by improved connectivity,and the number of journeys made by employees will be reduced if they are able to work from home.The report also highlights a series of intangible socioeconomic benefits of increased broadband penetration.These include greater transparency in government p

184、rocesses,increased sharing of cultural knowledge,a reduction in crime and violence as a result of the reduction of poverty and improved security systems,increased competition as a result of access to global markets,and increased tax revenue from the creation of new businesses.3.2 Googles submarine c

185、able infrastructure investments are helping to improve connectivity in Latin America,bringing a series of benefits to the digital environment As described in Section 2.3,Googles investments in new submarine cables have increased the supply of international bandwidth to five countries in Latin Americ

186、a:Argentina,Brazil,Chile,Panama,and Uruguay.In this subsection we show how this increased supply leads to reduced latency,as well as lower prices for buyers of international bandwidth,which in turn leads to higher Internet bandwidth per user.These connectivity enhancements to the digital environment

187、 improve the quality of the experience enjoyed by Internet users,and stimulate use cases which can be more data-heavy or require lower levels of latency,such as cloud services,videoconferencing,high-definition video services,and certain types of transaction services.These benefits then lead to posit

188、ive connectivity outcomes such as an increase in Internet users and growth in data traffic.This is supported by the econometric modeling that we have undertaken for this report,which demonstrates a strong statistical link between the deployment of submarine cables and an increase in both Internet pe

189、netration and data traffic in the countries where the cables have landing stations.Further details on the modeling methodology and econometric equations can be found in Annex A.Economic impact of Googles submarine cable network in LAC|22 Ref:8871797799-472.Googles submarine cable investments have le

190、d to a reduction in latency and IP transit prices,and an increase in bandwidth per Internet user Our modeling demonstrates that submarine cables have a measurable,statistically significant impact on connectivity metrics including latency,IP transit prices,and bandwidth.In this section we show the ma

191、gnitude of these impacts as estimated by our model.They are significant and in line with work we have carried out in other regions globally.Googles cables have the greatest impact in countries like Uruguay,where they represent a larger proportion of installed capacity,and the lowest impact(in relati

192、ve terms)in countries like Brazil or Panama that have many other cables.Submarine cables in Latin America are having a measurable impact on the latency experienced by end users.For the countries where cables in which Google has invested land,the impact of these cables in 2022 is already material;by

193、2027,once existing cables and Firmina are well established,the impact on latency will be even greater,ranging from a 2.7%reduction in Panama to a 9.7%reduction in Uruguay.This is shown in Figure 3.2.Figure 3.2:Estimated impact of Google submarine cables on average latency in 2022 and 2027 Source:Ana

194、lysys Mason,2022 This impact on latency is a combination of direct and indirect effects.By using their own submarine cables,Internet companies such as Google can provide the most direct or optimal links between their own data centers and ISPs networks.They also take their own traffic away from cable

195、s operated by other providers,thereby reducing the potential for congestion on these other cables.Furthermore,better international connectivity in a given country helps to stimulate the deployment of regional content delivery networks(CDNs)or cloud regions,which means that more content is stored dir

196、ectly in the country itself.This permits a more dynamic onshore peering market between Google,other Internet companies,and ISPs,and so leads to a higher-quality experience for Internet users in the country.These cloud services and CDNs are supported by submarine cables,as the cables are required-1.7

197、%-3.6%-3.8%-2.6%-5.6%-5.6%-4.7%-4.4%-2.7%-9.7%ChileArgentinaUruguayBrazilPanama20222027Economic impact of Googles submarine cable network in LAC|23 Ref:8871797799-472.to keep the content/data refreshed and up to date.Without sufficient connectivity,it would not make sense to launch a cloud region or

198、 CDN in a country,as the content could not be refreshed easily.Submarine cables also have a statistically significant impact on prices,in the form of lower IP transit prices.Even though Google generally uses its own cables exclusively for serving its own traffic,deployment of these cables has an ind

199、irect impact on the wider international connectivity market.If Google had not deployed the cables,it would be relying more on the capacity of other submarine cables,operated by traditional submarine cable providers,hypothetically constraining supply,and therefore leading to degraded quality or highe

200、r prices.Because Google moved much of its own demand to its own cables,this has released capacity on commercial cables for others to use.This puts downward pressure on prices,because the traditional commercial cable operators want to sell this capacity and have very low marginal costs,since nearly a

201、ll of their own costs are sunk.These reduced costs ultimately benefit end users,including small businesses and consumers in the LAC region whose connectivity depends in part on IP transit costs.As shown in Figure 3.3,which compares Google cables(including Firmina)to a hypothetical situation in which

202、 Google had not deployed any submarine infrastructure,the impact on IP transit prices ranges from a decrease of 10.4%in Panama to 33.4%in Uruguay in 2027.Figure 3.3:Estimated impact of Googles submarine cables on IP transit prices in 2022 and 2027 Source:Analysys Mason,2022 -6.7%-13.5%-14.3%-10.1%-2

203、0.5%-20.5%-17.5%-16.3%-10.4%-33.4%ChileArgentinaPanamaBrazilUruguay20272022“Latency can be a differentiating factor for ISPs when they are looking to contract a wholesale internet service”LACLAC-focused operator focused operator Economic impact of Googles submarine cable network in LAC|24 Ref:887179

204、7799-472.As is the case with all technical costs in telecoms,when fulfilling their international bandwidth requirements,ISPs have a revenue constraint on the costs that they can incur.This spend is used for purchasing IP transit,as well as route-specific bandwidth leases.The decrease in IP transit p

205、rices described above,as a result of an increase in supply,means that ISPs can provision higher capacity,in order to carry more traffic with the same budget.As service prices fall,larger or even unlimited buckets of data can be sold.ISPs can also use a wider variety of routes to increase the resilie

206、nce,redundancy,and reliability of their services.Overall,this leads to more users and higher usage.This ability to transport more traffic through a greater variety of routes means that levels of bandwidth per Internet user are higher than they would have been without the deployment of Googles submar

207、ine cables.As a result,Internet users are enjoying faster download speeds and a better quality of experience than they would otherwise have done.Figure 3.4 illustrates the country-by-country impact of Googles submarine infrastructure investments on bandwidth per user,in 2022 and 2027.The impact in 2

208、027 ranges from an increase in bandwidth per user of 19.6%in Panama to a near doubling(+93.8%)in Uruguay.Figure 3.4:Estimated impact of Googles submarine cable on bandwidth per user in 2022 and 2027 Source:Analysys Mason,2022 These improvements to the connectivity environment have led to an increase

209、 in Internet users in the region,as well as growth in data consumption The improvements to the connectivity ecosystem described above show how more submarine cables lead to a more plentiful,cheaper,and higher-quality supply of connectivity.In turn,this means that end users(both individuals and busin

210、esses)are enjoying better value from their Internet usage.Quality of experience for users from existing services is improved,and new use cases that need lower latency and/or greater international bandwidth can emerge and flourish.This can then support a virtuous circle in which more consumers are wi

211、lling to pay for(better)Internet access,leading to higher Internet penetration and more Internet traffic per user.11.9%26.6%28.6%18.9%45.2%45.2%36.7%33.5%19.6%93.8%ChileArgentinaBrazilPanamaUruguay20222027Economic impact of Googles submarine cable network in LAC|25 Ref:8871797799-472.The link betwee

212、n better connectivity from submarine cables and an increase in Internet penetration is supported by our econometric modeling:there is a positive association between lower IP transit prices,low levels of latency,and high availability of bandwidth on the one hand,and an increase in Internet penetratio

213、n on the other.These effects are primarily indirect,as of course Google does not connect people directly to the Internet at scale.They are significant,however:Figure 3.5 shows that,by 2027,an estimated additional 18.2 million people will be online as a result of Googles submarine cable investments,i

214、ncluding 13.4 million in Brazil.Figure 3.5:Number of mobile Internet users per country in 2027,with and without Googles submarine cable deployments Source:Analysys Mason,2022 In addition to an increase in the number of Internet users,our analysis and econometric modeling also shows a strong relation

215、ship between high availability of bandwidth and mobile data usage.34 This is in line with what would be expected:an increase in available bandwidth enables and incentivizes increases in demand.As shown in Figure 3.6,the impact of Googles submarine cable investments on total mobile data traffic acros

216、s the five countries reaches over 27,000PB in 2027,including over 15,000PB in Brazil.The cumulative impact of Googles investments on total mobile data traffic from 2017(when Googles first cable was deployed)until 2027 is forecast to be an increase of over 107,000PB.34 Defined here as mobile traffic

217、per subscriber identity module(SIM)many Internet users in the LAC region are mobile-first or indeed only access the Internet through mobile networks,despite gradual progress in fiber network deployment,as highlighted in a 2020 article by the Mobile Growth Association:https:/ 18.43.13.4+8%+8%+7%+7%+6

218、%+6%+4%+4%+9%+9%Scenario without Google cablesScenario with Google cablesEconomic impact of Googles submarine cable network in LAC|26 Ref:8871797799-472.Figure 3.6:Mobile data traffic per country in 2027,with and without Googles submarine cable deployments Source:Analysys Mason,2022 3.2.2 Greater de

219、mand for connectivity driven by Googles submarine cables will create over USD177 billion in cumulative GDP impact by 2027,supporting 740,000 jobs Increased usage of the Internet by both individuals and businesses across various sectors is generally understood to be associated with an increase in eco

220、nomic activity.Using an endogenous growth model,we found a strong association between an increase in mobile data usage and higher GDP per capita:that is,a doubling of mobile data usage could result in a 0.75%increase in real GDP growth per capita(see Annex A),an effect that compounds over time throu

221、gh sustained higher annual growth rates.On this basis,we estimate that the increase in Internet usage linked to Googles submarine cable investments in Latin America,as detailed above,will have contributed to a cumulative increase in GDP of approximately USD178 billion between 2017 and 2027 in the fi

222、ve countries where the cables land,as shown in Figure 3.7,which provides a breakdown by country.668PanamaPBUruguayArgentinaBrazilChile4 5539 08219 7456 65135 22911 3642 2782 7793 871+99%+99%+78%+78%+71%+71%+39%+39%+241%+241%Without Google cablesWith Google cablesEconomic impact of Googles submarine

223、cable network in LAC|27 Ref:8871797799-472.Figure 3.7:Cumulative GDP impact of Googles submarine cable deployments,2017 to 2027(real 2021 USD billion)Source:Analysys Mason,2022 Just in 2027,the increase in annual GDP is around USD31 billion(which represents 1.08%of projected GDP in that year,includi

224、ng Googles cables).Figure 3.8 shows the GDP impact in 2027,split by country.Figure 3.8:GDP impact in 2027 of Googles submarine cable deployments(real 2021 USD billion)Source:Analysys Mason,2022 The economic benefits from submarine cable investments also translate into jobs.These include direct jobs

225、in the construction and telecoms sectors,as well as indirect jobs resulting from increased broadband connectivity across the wider economy.For example,this could include jobs in industries such as IT,manufacturing,and financial services.19.223.77.7124.03.0ArgentinaUruguayPanamaBrazilChile177.6177.66

226、.418.73.60.61.5ArgentinaUruguayChileBrazilPanama30.930.9Economic impact of Googles submarine cable network in LAC|28 Ref:8871797799-472.Based on an assessment of the gross value added(GVA)created by an average full-time worker in these industries in each of the relevant Latin America economies,we es

227、timate that the GDP impact of Googles submarine cable investment will translate into around 740,000 jobs by 2027,as shown in Figure 3.9 and Figure 3.10.35 Figure 3.9:New jobs created as a result of Googles submarine cable deployments by 2027(thousand)Source:Analysys Mason,2022 Figure 3.10:New jobs c

228、reated as a result of Googles submarine cable deployments by 2027,compared to a hypothetical scenario in which no Google cables have been deployed(%increase in jobs)Source:Analysys Mason,2022 35 The calculation accounts for the entire GDP impact,but apportions it to jobs based on the productivity of

229、 jobs in a few,higher value-added sectors on which digital technologies have been shown to have an impact 6.1155.6492.067.918.3ArgentinaBrazilChilePanamaUruguay739.8739.830.930.90.7%0.5%0.8%0.3%1.2%ChileArgentinaBrazilPanamaUruguayEconomic impact of Googles submarine cable network in LAC|29 Ref:8871

230、797799-472.4 Straightforward,transparent,and supportive regulatory regimes in Latin America are important for encouraging submarine cable infrastructure investments Due to the major investments required to launch a submarine cable,it is important that the processes involved are as efficient and stre

231、amlined as possible,with minimal regulatory uncertainty.Lower risk and less complexity from a regulatory perspective are essential in encouraging the deployment of submarine cables in a country,as this helps to generate a business-friendly environment.A series of measures would be helpful in this co

232、ntext,as explored in this section:straightforward,transparent,clearly laid out and consistent procedures for obtaining the licenses and permits needed to lay and land submarine cables a single agency providing a sole point of contact for license and permit applications implementation and enforcement

233、 of effective cable-protection laws a quick and straightforward application process for inspection,maintenance,and repair of submarine cables once they have been deployed,with cable works(both deployment and maintenance)exempt from cabotage restrictions an open investment policy welcoming foreign in

234、vestment in the country,allowing foreign investors to finance the deployment of submarine cables.4.1 A transparent,consistent licensing regime would facilitate the deployment and maintenance of cables in Latin America The process for acquiring all the necessary permits should be clearly documented a

235、nd easily accessible In most cases,long stretches of submarine cable are deployed through international waters.However,branches leading to landing points in particular countries can require numerous permits and licenses from the country in question.The more straightforward the process is for acquiri

236、ng such permits,the more business-friendly the environment,which in turn facilitates the major investment decisions required.The points covered in this subsection refer to the deployment of submarine cables,as well as to their maintenance and repair.These activities involve different challenges;for

237、example,in the case of maintenance/repair,an agile and quick process is particularly important,to minimize any impact on quality of service.Economic impact of Googles submarine cable network in LAC|30 Ref:8871797799-472.In terms of the process for acquiring permits,the first key point is for all pro

238、cesses to be well documented,with all the necessary steps clearly set out and all information easily accessible.This represents an immediate issue in many countries in the Latin America region,due to the scarce levels of information that is easily available.Countries with examples of good practice i

239、n this area include:Argentina the steps required to secure a permit from the regulator are set out clearly on Enacoms website,36 although this is just one of various permits required Colombia all the various pieces of documentation/licenses required are set out in a resolution on the website of Dire

240、ccin General Martima(DIMAR),the national maritime authority.37 The regulatory burden involved in securing permits should be limited,and require interaction with one central point of contact rather than various agencies Beyond the documentation of the required steps,the processes themselves should pr

241、eferably be straightforward,requiring interaction with a limited number of different agencies and/or government bodies,or ideally just one central point of contact.If multiple agencies are involved,their objectives should be aligned,and good communication should be maintained among them all.This is

242、generally not yet the case in Latin America:while the steps for securing a license from the regulator in Argentina are clearly set out,this is only one of multiple pieces of documentation that are required,with others being complex to manage(for example,processes related to the importation of equipm

243、ent);similarly,the process in Colombia requires interaction with numerous different government agencies/bodies.We understand from our discussions with industry participants that many of the permitting processes with the different agencies,particularly at a local level,can be very bureaucratic,requir

244、ing a significant investment of both time and effort from the party interested in deploying a cable.In certain countries in the region,Google has experienced challenges with the administrative burden associated with importation,permitting,and licensing.Obtaining customs clearances can be very slow,a

245、nd bringing in foreign vessels is not particularly straightforward.On one occasion,a vessel had to be left sitting idle for one month before it could start work on a marine survey,as the process of temporary admission and customs clearance took weeks).Furthermore,in some cases,laws and regulations a

246、re also somewhat ambiguous,which means that interpretation of the relevant legislation can depend on the understanding of an individual official.In general,in order to create the most 36 https:/www.enacom.gob.ar/tramites/autorizacion-solicitud-permiso-instalacion-cables-submarinos-mar-argentino_t87

247、37 https:/www.dimar.mil.co/sites/default/files/res06022015.pdf“In Brazil,three agencies are involved in the submarine cable licensing process(environmental,navy and telecoms).This can be difficult as these three parts are separate,so the process for licensing can be very slow”International CDNIntern

248、ational CDN Economic impact of Googles submarine cable network in LAC|31 Ref:8871797799-472.welcoming environment for submarine cable investments,it is essential to have a streamlined process which minimizes bureaucracy and is clearly defined in order to avoid any ambiguity.We also understand that t

249、he complexities at local/regional level can extend beyond bureaucratic burdens.Even if the processes are relatively straightforward at a national level,there is no guarantee that this will be the case in local municipalities,for example.One problem that can arise is if a municipality that has been c

250、hosen as the location for a landing station believes it deserves specific benefits,beyond the general improvements to connectivity that will be enjoyed by the region as a whole.As a result,the municipality might request specific additional network deployments or services to bring direct benefits,and

251、 discussions on this can significantly delay the granting of a permit,and therefore the deployment of a cable.However,issues like this cannot arise in countries such as Brazil,where a municipality is not permitted to ask for additional services(e.g.free Internet services for its inhabitants)from a c

252、ompany making a telecoms infrastructure investment.Ensuring uniformity and consistency between local municipalities is another important way to facilitate a business-and investment-friendly environment.It is important for agencies granting licenses and permits to have sufficient institutional knowle

253、dge of the processes involved Linked to the need for clearly defined processes is the fact that submarine cable deployment can be a relatively rare event,and it is possible that long periods pass without a single cable being deployed in a region/country.As a result,in some cases only a limited numbe

254、r of individuals in the relevant national government and local government agencies may have the knowledge needed to manage the permit application process efficiently.Issues related to institutional knowledge/understanding are thus another possible challenge and cause of delays.It is important for ea

255、ch agency involved to maintain an up-to-date and thorough understanding of the processes and issues at hand.In addition,this knowledge should be shared among various individuals in order to prevent bottlenecks,and avoid the risk of loss of knowledge should one particular person leave the agency or m

256、ove to a different role.4.2 Cable-protection laws and cabotage laws need to be designed carefully to avoid causing unnecessary regulatory burden Cable-protection laws provide added reassurance,but they need to be well designed to avoid unintended consequences Submarine cable-protection laws provide

257、an important added layer of reassurance for parties which are considering whether to deploy a cable,as they reduce the risk of future problems and increased maintenance/replacement needs.The aim of these laws is to provide a corridor which extends a set“The real barrier for securing permits can be t

258、he municipalities where the cables land.Some feel that they have a geographic advantage and want to take advantage of this”Global Global tech companytech company Economic impact of Googles submarine cable network in LAC|32 Ref:8871797799-472.distance either side of a cable where certain activities t

259、hat could damage it,such as fishing,are not permitted.Examples of countries with such rules include:Colombia,which has banned a range of marine activities(such as trawl fishing)within 500m on either side of a submarine cable.38 Uruguay,which has banned all fishing activities within a nautical mile(a

260、round 1.9km)either side of submarine cables.39 While cable-protection laws are mainly beneficial for submarine cable operators,and should be encouraged,it is important to ensure that they do not have unintended negative consequences.Legislation which bans fishing within certain areas naturally tends

261、 to be unpopular in the fishing industry,and can lead to lobbying to limit the number of areas where such bans apply.A possible consequence of this is that the relevant government agencies may then try to limit the areas where cables are deployed,to minimize the impact on fishing.There are several r

262、easons why it can be problematic to establish an effective protected corridor where all submarine cables must be deployed:It reduces geographical diversity on cable routes,which can have an impact on redundancy,since all cables are deployed in the same area.The geographical clustering of cables incr

263、eases the risk of multiple cables being damaged,leading to network outages from a single natural disaster or man-made event.It can force submarine cable operators to deploy routes which are not the optimal design and in locations which they would not select if they had a greater degree of freedom to

264、 choose.This lack of efficiency can deter operators from making the ultimate decision to invest in a deployment.It can put strain on landing-station availability.If limited space is available at the landing station(s)deployed in the protected corridor,this can be another impediment to cable deployme

265、nt,either because there is simply no space for a new cable,or because the limited space allows the landing station operator to charge high prices.Cable corridors may be narrow and so may provide insufficient spatial separation from other submarine cables to support efficient installation and mainten

266、ance processes.Therefore,while the effective protection of cables is important,it should not be at the expense of restricting possible routes and optimal deployment practices,geographical variation,and economic efficiency of landing-station use.Careful stakeholder consultation and engagement with al

267、l seabed users should be undertaken before any such scheme is established.38 https:/www.dimar.mil.co/sites/default/files/normatividad/res_02042012.pdf 39 https:/ Economic impact of Googles submarine cable network in LAC|33 Ref:8871797799-472.Exemption from cabotage laws and certain importation laws/

268、processes would help to ensure that maintenance and repairs can be carried out as quickly as possible Cabotage laws are generally applied to the shipping industry as a way of preserving domestically owned shipping infrastructure and ensuring safety in territorial waters.Examples of this type of law

269、include limits on the number of days that a foreign ship can be in territorial waters carrying out works.This is not solely an issue in Latin America,but is a global phenomenon,and these types of laws are in place across most of the countries of interest for this study.In general,while we understand

270、 from conversations with industry participants that these laws need to be managed,and the associated processes negotiated,they do not generally represent a major inconvenience in the region.There are exceptions to this,however:one example was cited of a vessel sitting idle for a month in Brazil befo

271、re it could start work on a marine survey,as the temporary admission of the vessel and customs clearance took several weeks(instead of just the couple of days it would take in most countries).In Argentina,local ship operators have the opportunity to claim that they could do the work,and should be gi

272、ven the opportunity ahead of a foreign ship.The additional administrative burden and time involved in these processes can extend the time needed for both maintenance/repair work(when time is of the essence,particularly if an incident is affecting the quality of service provided,or limiting connectiv

273、ity)as well as initial cable deployment.Beyond cabotage laws,maintenance/repair can also be somewhat hindered by complicated importation and customs processes in certain countries.The example of Brazil was given,where if a broken piece of equipment needs to be taken out of the country for repair wor

274、k and then brought back,it may be necessary to declare which component has been repaired when bringing it back into the country,in order to avoid paying full duties on the piece of equipment for a second time.This level of scrutiny and detail is a further example of a process that can add time to ma

275、intenance/repair works.4.3 Foreign ownership and investment appear to be generally welcomed in Latin America,which is a state of affairs that should be encouraged Another important feature of a positive environment for submarine cable investment is that foreign investment in cable ownership is welco

276、med.From our discussions with industry participants,we understand that this is generally the case in the countries of interest in Latin America.At a national level,authorities are generally seen to be open to foreign parties investing in telecoms infrastructure,particularly in markets with“developin

277、g”infrastructure.This provides a contrast to other regions,such as AsiaPacific,where there is not necessarily such an inviting vision in all countries.Despite the fact that foreign investment in LAC is generally welcomed and viewed in a positive light,there can still be complications for foreign inf

278、rastructure investors in certain countries in the region.An example of this is Brazil,where it can be necessary to set up separate entities within the country,as well as dedicated bank accounts.While this clearly does not mean that investors will not deploy submarine infrastructure in the country,it

279、 represents another bureaucratic hurdle that needs to be negotiated as part of the planning/deployment process.Economic impact of Googles submarine cable network in LAC|A1 Ref:8871797799-472.Annex A Economic impact assessment methodology This annex details the quantitative,econometric approach that

280、Analysys Mason used to estimate the GDP and job impact resulting from Googles submarine cables in LAC.This work was conducted by Professor Neil Gandal(see biographical details below)with support from Dr Michael Kende(Senior Adviser to Analysys Mason,Senior Fellow,and Visiting Lecturer at the Graduat

281、e Institute in Geneva,Digital Development Specialist at World Bank/IFC).Professor Neil Gandal is the“Henry Kaufman Professor in International Capital Markets”at the Berglas School of Economics at Tel Aviv University.He received his BA and BS degrees from Miami University(Ohio)in 1979,his MS degree f

282、rom the University of Wisconsin in 1981,and his PhD from the University of California-Berkeley in 1989.He is also a research fellow at the Centre for Economic Policy Research(CEPR).Professor Gandal has published numerous empirical papers using econometrics in industrial organization,the economics of

283、 information technology,the economics of the software and Internet industries,and the economics of cyber security and cryptocurrencies.His papers have received more than 7000 citations at Google Scholar.In his capacity as managing editor at the International Journal of Industrial Organization(IJIO)f

284、rom 2005 to 2012,he edited many empirical papers using a wide range of econometric techniques.Following his editorship at the IJIO,he was named“Honorary Editor”of the journal.He is the only honorary editor in the history of the IJIO.A.1 Background and objectives Our methodology uses a model that ena

285、bles us to assess the impact of individual submarine cables in individual countries.This model rests on a set of equations,derived from statistical analysis of data on submarine cables,Internet connectivity statistics,and economic output,across the entire LAC region.Formally,these equations are base

286、d on statistical regressions that analyze the association between the number of submarine cables and connectivity supply,then between connectivity supply and demand.A second module,based on a different type of econometric model,called an endogenous growth model,isolates the impact of demand for conn

287、ectivity on economic growth.Ultimately,this model enables us to simulate the connectivity environment,and its impact on economic growth,in two main scenarios:Economic impact of Googles submarine cable network in LAC|A2 Ref:8871797799-472.A scenario that includes Googles investments in submarine cabl

288、es,including Google-invested cables already present in the region(Tannat,Curie,Monet,and Junior)40 as well as Firmina,which is scheduled to be ready for service in 2023;this scenario also reflects the presence of all other submarine cables in the region,and takes into account planned and announced c

289、ables by parties other than Google.A scenario that excludes Google-invested cables,which simulates a situation where these cables would not be present;in this scenario,all other submarine cables are left unchanged,as per the first scenario.By simulating the difference between these two scenarios,we

290、arrive at an estimate for the total impact of Googles submarine cable investments in LAC.Removing a Google cable leads to worse connectivity supply variables,which in turns leads to lower demand for connectivity.This lower demand for connectivity translates into lower economic growth,and a GDP outpu

291、t that is lower than in the scenario where the cable is present.The difference in GDP calculated in both scenarios represents the economic impact of Google-invested cables.There is no job creation benefit in this negative scenario(for details of job creation see Section A.4.2).A.1.1 Statistical mode

292、l:variables and approach Before we delve into each part of the estimation process,we first provide a brief background on why we modelled the process in the way we did and then briefly discuss the data employed in the analysis.Consumer demand for connectivity is the product of several factors.Intuiti

293、vely,we made the hypothesis that this demand is driven by low prices and high-quality connectivity.This is borne out by interviews with technical expects and market participants,and illustrated in a few quotes:“While bandwidth plays a big role in how fast webpages load,the journey from one machine t

294、o another takes time to traverse.No matter how much data you can send and receive at once,it can only travel as fast as latency allows.”41“True Internet speeds comes down to a combination of bandwidth and latency.”42 Quality itself depends on a range of factors,but from a technical perspective it is

295、 a product of high bandwidth,low latency,and high reliability.Through our analysis in previous studies,43 we 40 Junior is a domestic system within Brazil,but in the analysis we treat it as an extension of international cable systems linking Brazil to other countries 41 Cody Arsenault,Understanding N

296、etwork Bandwidth vs Latency,see: 42 Plug Things In What is Latency How is Latency Different from Bandwidth,see:http:/ 43 Economic impact of Googles APAC network infrastructure,see:https:/ Economic impact of Googles submarine cable network in LAC|A3 Ref:8871797799-472.established that bandwidth,laten

297、cy,and prices could have a statistically significant impact on Internet penetration and the intensity of use of the Internet.In addition,since demand also depends on retail prices to consumers and businesses,on the supply side,we estimate how investments in submarine cables affect IP transit prices.

298、Despite the growing importance of direct peering relationships between ISPs and content and application providers(CAPs),IP transit remains an important component of retail Internet service,for which some price information is available,and where prices respond rapidly to the prevailing international

299、connectivity environment.As a result,the price of IP transit is expected to have an impact on retail prices to consumers and business.That is,a fall in IP transit prices typically leads to a fall in retail prices.We therefore set out to build a model that tests the relationship between the number of

300、 submarine cables landing in each country in each year with the supply-side variables(price,bandwidth,and latency),as shown in Figure A.1.Figure A.1:Impact of the number of submarine cables on price and quality of connectivity Source:Analysys Mason,2022 Economic and social impact of Metas submarine

301、cable investments in APAC,see:https:/ A Single Digital Market for East Africa,see:https:/ Number of submarine cablesLatency(end user)InternetbandwidthIP transit pricing(10Gbit/s)Positive correlationNegative correlationSupply sideSupply sideSubmarine cablesSubmarine cablesEconomic impact of Googles s

302、ubmarine cable network in LAC|A4 Ref:8871797799-472.The analysis then assesses the impact of supply variables on connectivity demand,in the form of data usage and Internet penetration,as shown in Figure A.2.Figure A.2:Impact of price and quality of connectivity(bandwidth and latency)on Internet pene

303、tration and mobile data usage Source:Analysys Mason,2022 In the context of this study,we define these variables as follows:Price is represented by IP transit prices44 Bandwidth is represented by the International Telecommunication Unions(ITUs)measure of the availability of Internet bandwidth Latency

304、 is measured as the average latency in mLabs data,where the test is conducted from a country in the region45 Internet penetration is measured by the ITU as number of Internet users per 100 inhabitants Data usage reflects reported mobile data usage per user,and the resulting overall traffic,based on

305、publicly available data and additional input we were able to obtain from individual regulators46 GDP data(introduced in Figure A.3)is provided by the World Bank,and we use additional data on GVA per job for different sectors to estimate the job impact of higher GDP.The economic impact reflects the b

306、roader effects of better connectivity on productivity and output.More submarine cables lead to better connectivity supply,in the form of higher quality and lower prices.This drives demand for Internet connectivity,which stimulates broader economic growth.44 For 1Gbit/s and 10Gbit/s committed capacit

307、y,measured on a per-month,per-Mbit/s basis 45 This includes tests that are domestic and remote,which reflect both international connectivity and the presence of in-country content,both of which affect quality and demand;see https:/ 46 We do not have enough data observations to estimate fixed data tr

308、affic.This is not a problem,however,because(i)mobile data traffic is increasing much faster than fixed data traffic and(ii)there is a high positive correlation between these variables Latency(end user)InternetbandwidthIP transit pricing(10Gbit/s)Positive correlationNegative correlationSupply sideSup

309、ply sideDemand sideDemand sideMobile datausageInternet penetrationEconomic impact of Googles submarine cable network in LAC|A5 Ref:8871797799-472.Our modeling therefore captures the direct and indirect economic impact of submarine cables,including spillover effects in the rest of the economy that ca

310、n be observed in historical data.Figure A.3:Overall flow for modeling the submarine-cable impact Source:Analysys Mason,2022 A.1.2 Data used in the analysis and calibration of the statistical models The data for this analysis consists of panel data from countries in the LAC region over the 20102020 p

311、eriod.Panel data involves repeated observations over time for the countries in the analysis.For some countries,we do not have complete observations on all of the variables.Hence,we have what is referred to as an“unbalanced panel”.Fortunately,we have a fairly large dataset,which enables relatively pr

312、ecise estimates of the key effects.Having a panel rather than cross-sectional data is advantageous,since a cross-section cannot control for time-invariant country effects;they are included in the error term in cross-sectional analysis.47 If these unobserved effects are correlated with the right-hand

313、-side variables,the estimates from the cross-sectional analysis will be biased;however,we eliminate this problem by using“fixed-effect models”.47 Cross-sectional data is the result of a data collection,carried out at a single point in time on a statistical unit,see:https:/ PositivecorrelationNegativ

314、ecorrelationNumber of submarine cablesLatency(end user)Internet bandwidthIP transit pricing(10Gbit/s)Internet penetrationGDP per capitaMobile data usageGVASupplySupplysidesideDemandDemandsidesideEndogenous Endogenous growth modelgrowth modelGVAGVAper per jobjobSubmarine Submarine cablescablesJobsEco

315、nomic impact of Googles submarine cable network in LAC|A6 Ref:8871797799-472.A.1.3 Estimation and fixed effects models Our estimation covers three parts of the model.In Section A.2,we estimate the supply-side impacts that an increase in submarine cable supply from investments in submarine cables has

316、 on(I)latency,(II)Internet bandwidth per user,and(III)IP transit prices.In Section A.3,we then estimate the demand-side impact that latency,Internet bandwidth,and IP transit prices have on(IV)mobile data traffic and(V)the penetration rate.In Section A.4,we estimate equation(VI and VII)which measures

317、 the GDP-per-capita impact from(VI)an increase in mobile data traffic and(VII)the penetration rate using an endogenous growth model.We illustrate the importance of using a fixed-effect model by using as an example the demand model we employ for Internet data traffic:(*)Rit=i+Xit+it.The variable Rit

318、is annual Internet data traffic in country i in year t i.e.,the total mobile Internet usage of an entire countrys population per capita in a given year.The vector i is such that is a constant and Ai is a vector of unobserved time-invariant country factors.Given these unobserved time-invariant projec

319、t factors,equation(*)should be estimated using a fixed-effect model in which i are parameters to be estimated.48 The parameters are typically not of interest,but rather are controls.The variables in Xit are observable time-varying country factors(like bandwidth per capita and latency)and are paramet

320、ers to be estimated.These parameters indicate the impact of the factors on Internet data traffic.Hence,the parameters are the ones we are the interested in.Finally,it is an error term.We employ these fixed-effect models for equations I to V.In Section A.4,we discuss the endogenous growth equations e

321、mployed in equation(VI and VII).48 As Angrist and Pischke note,treating i as parameters to be estimated is equivalent to estimating in deviations from the mean;see Angrist,J.and Pischke,J.,2009,Mostly Harmless Econometrics,Princeton University Press,Princeton,New Jersey+Ai+AiEconomic impact of Googl

322、es submarine cable network in LAC|A7 Ref:8871797799-472.A.2 Supply-side estimation:how submarine cable supply affects(I)latency,(II)Internet bandwidth,and(III)IP transit prices The goal in this section is to examine how submarine cable supply affect latency,Internet bandwidth,and IP transit prices.W

323、e have three supply equations:(I)latency(II)Internet bandwidth(III)IP transit prices.The results of the analysis are coefficients that enable us to calculate latency,bandwidth,and IP transit prices as a function of the number of submarine cables,as shown in Figure A.4 below.These are explained furth

324、er in the following subsections.Figure A.4:Fixed effects supply-side regressions explaining latency,Internet bandwidth,and IP transit prices49 Source:Analysys Mason,2022 Regression I:Regression I:l latency(log/log)atency(log/log)E Estimatesstimates (std(std.error)error)Regression II:Regression II:In

325、ternetInternet bandwidth bandwidth per user(log/log)per user(log/log)E Estimatesstimates (std.error)(std.error)Regression III:Regression III:IP transit prices IP transit prices(log/log)(log/log)E Estimatesstimates (std(std.error)error)Submarine cables -0.20*(0.02)1.30*(0.11)-0.80*(0.069)Observations

326、 360 394 172 Note:*p 0.10,*p 0.05,*p 0.01 A.2.1 Supply side:latency We begin with equation(I)latency.We use a log/log functional form which is typically employed in empirical work.50 (I)Lit=i+*Cit+it.Where:Lit is the natural logarithm of latency in milliseconds for round-trip time as of December of

327、each year.49 All variables are in natural logarithms 50 The coefficients(,etc.)in all of our equations are,of course,different.We use the same notation for simplification and clarity Economic impact of Googles submarine cable network in LAC|A8 Ref:8871797799-472.Cit represents the natural logarithm

328、of the number of submarine cables(plus one).The way we do this is,for each new cable we assume that it takes four years to be fully operational and efficient from when it is ready for service.Hence,in year one,it is 0.25,in year two 0.50,etc.As mentioned earlier,the“it”subscript means“in country i,i

329、n year t”.The results of estimating equation(I)are shown in the first regression in Figure A.4.The negative coefficient on the number of open submarine cables makes sense.Latency(time)falls when the number of submarine cables increases.The estimated coefficient in Regression I in Figure A.4 is stati

330、stically significant at the 99%level of confidence.Since the variables are in natural logarithms,the coefficient is an elasticity and can easily be interpreted.For example,a coefficient of-0.20 means that a 1%increase in the number of open submarine cables reduces latency by-0.20%.A.2.2 Supply side:

331、Internet bandwidth We now estimate equation(II),the Internet bandwidth per user equation.(II)IBW_perit=i+*Cit+it.Where:IBW_perit is the natural logarithm of the total used capacity of international Internet bandwidth per user(measured as the sum of capacity of all Internet exchanges offering interna

332、tional bandwidth divided by the number of users).Cit is the same explanatory variable we used in equation(I).The results of estimating equation(II)are shown in the second regression in Figure A.4.The positive coefficient on the number of submarine cables makes sense,as Internet bandwidth per user in

333、creases when the number of open submarine cables increases.Since the variables are in natural logarithms,the coefficient is an elasticity and can easily be interpreted.For example,a coefficient of 1.30 means that a 1%increase in the number of open submarine cables increases Internet bandwidth per user by 1.30%.The estimated coefficient is statistically significant at the 99%level of confidence.Eco