WEBVTT - Air Traffic Control, Undersea Cables, International Students 0:00:02.520 --> 0:00:07.040 Bloomberg Audio Studios, podcasts, radio news. 0:00:19.079 --> 0:00:21.759 This is Wall Street Week. I'm David Weston, bringing you 0:00:21.880 --> 0:00:25.400 stories of capitalism. This week we travel to the depths 0:00:25.400 --> 0:00:28.280 of the world's oceans to explore the world of undersea 0:00:28.360 --> 0:00:31.960 cables carrying ninety nine percent of the world's communications and 0:00:32.240 --> 0:00:35.280 where there may be investment opportunities to address the ever 0:00:35.440 --> 0:00:39.240 increasing demand. And in the wake of the Trump administration's 0:00:39.280 --> 0:00:42.760 telling Harvard it could no longer have international students, we 0:00:42.800 --> 0:00:45.680 look at the costs and benefits of the government going 0:00:45.720 --> 0:00:49.320 to war with its universities. But we start with the 0:00:49.360 --> 0:00:53.080 continuing focus on the nation's air traffic control systems. With 0:00:53.159 --> 0:00:56.880 the Trump administration committing to fixing it. What does fixing 0:00:56.920 --> 0:01:00.880 it mean? How long will it take? A safe in 0:01:00.920 --> 0:01:02.000 the meantime. 0:01:06.800 --> 0:01:10.000 There's always a challenge that has to come with whatever 0:01:10.080 --> 0:01:12.560 system they choose to do. But you're right in saying 0:01:13.000 --> 0:01:15.800 the FA's air traffic control system is by far the busiest, 0:01:16.200 --> 0:01:18.640 most complex, but at the same time the safest in 0:01:18.680 --> 0:01:21.960 the world. So as we approach this, it's got to 0:01:22.000 --> 0:01:25.920 be a unified approach, a collaborative approach with support of 0:01:26.160 --> 0:01:27.160 all the stakeholders. 0:01:27.240 --> 0:01:28.600 Could just put vector. 0:01:28.400 --> 0:01:31.479 Out Mike McCormick went to teach air traffic management at 0:01:31.480 --> 0:01:35.840 every Riddle Aeronautical University after a career at the FAA 0:01:35.880 --> 0:01:39.440 as a control tower operator. He says that addressing the 0:01:39.480 --> 0:01:42.600 outages and making the necessary changes are going to take 0:01:42.720 --> 0:01:44.160 longer than we would like. 0:01:44.720 --> 0:01:48.840 It's like changing to tire on a bus while the 0:01:48.880 --> 0:01:51.560 bus is rolling down the road. You can't shut down 0:01:51.640 --> 0:01:55.240 the air traffic control system to upgrade it or to 0:01:55.320 --> 0:01:57.840 fix it. You need to be able to keep the 0:01:57.880 --> 0:02:03.280 system up and running while you deploy new technology and 0:02:03.360 --> 0:02:10.560 you upgrade old equipment. Fixing the FAA's air traffic control 0:02:10.600 --> 0:02:17.360 system requires a very structured, very formalized approach to what 0:02:17.840 --> 0:02:20.040 is going to be done, When is it going to 0:02:20.080 --> 0:02:22.519 be done, how is it going to be integrated into 0:02:22.639 --> 0:02:25.400 the current system, and then how is it going to 0:02:25.440 --> 0:02:28.480 be waterfalled or to the rest of the air traffic 0:02:28.520 --> 0:02:32.320 control facilities across the country. So it's not going to 0:02:32.360 --> 0:02:35.600 be an overnight and it's not going to be simple. 0:02:36.800 --> 0:02:39.960 We hear various stories about the system now using floppy 0:02:40.000 --> 0:02:43.360 disks and using copper wires and things. At the same time, 0:02:43.400 --> 0:02:47.840 I also understand there's been some modernization going on over time. 0:02:48.440 --> 0:02:51.520 Are we going in the right direction right now or 0:02:51.600 --> 0:02:52.840 do we need to change direction? 0:02:53.800 --> 0:02:57.480 Absolutely, the Federal evased miministration is going in the right direction. 0:02:58.160 --> 0:03:02.080 They have been engaged in a multi tie decade improvement 0:03:02.120 --> 0:03:06.120 program of the air traffic control system and they have 0:03:06.639 --> 0:03:11.360 updated all the controller facing technology on the displays for 0:03:11.400 --> 0:03:14.360 the controllers to state of the art to be able 0:03:14.360 --> 0:03:17.920 to handle not just today's air traffic, but tomorrow's air traffic. 0:03:18.919 --> 0:03:22.240 What needs to happen now is to support systems. A 0:03:22.280 --> 0:03:27.480 lot of the backroom equipment that supports the larger system 0:03:27.960 --> 0:03:31.320 has a definite need for an upgrade, and that's where 0:03:31.320 --> 0:03:35.360 you hear things like still using floppy disks, still using 0:03:35.440 --> 0:03:39.720 CDs because that equipment over time has not been able 0:03:39.760 --> 0:03:43.640 to be upgraded due to lack of funding. So, with 0:03:43.760 --> 0:03:46.800 improvement to the system a critical component of it, there 0:03:46.840 --> 0:03:51.600 has to be reliable multi year funding available in order 0:03:51.640 --> 0:03:55.520 to strategically plan and implement any improvement to the air 0:03:55.520 --> 0:03:56.480 traffic control system. 0:03:57.240 --> 0:04:01.040 Reliable multi year funding you talk about. That's one of 0:04:01.080 --> 0:04:04.840 the issues that we've heard about. Congress doesn't necessarily do 0:04:05.000 --> 0:04:07.760 things in a regular way over a long period of time. 0:04:08.320 --> 0:04:11.320 Is that a fundamental problem the way we funded. 0:04:12.040 --> 0:04:16.280 The Federal Evation Administration is generally funded on an annual basis. 0:04:16.600 --> 0:04:19.359 They have an operations budget, then they have a facility's 0:04:19.400 --> 0:04:23.080 equipment budget, and that budget is generally only good for 0:04:23.200 --> 0:04:27.279 one fiscal year, so from October first to September thirtieth. 0:04:28.080 --> 0:04:30.159 After that the money disappears. 0:04:32.960 --> 0:04:35.840 The need to reform air traffic control is becoming more 0:04:36.000 --> 0:04:39.440 urgent as outages in the system and the resulting delays 0:04:39.520 --> 0:04:43.599 become more frequent. The government agency responsible for reporting on 0:04:43.680 --> 0:04:47.120 government programs and policies has taken a hard look at 0:04:47.120 --> 0:04:50.200 the existing air traffic control system and found it to 0:04:50.240 --> 0:04:51.840 be unsustainable. 0:04:52.279 --> 0:04:55.279 I FADE did this risk assessment to understand of the 0:04:55.360 --> 0:04:58.880 existing systems, which ones are unsustainable, which ones might be 0:04:58.880 --> 0:05:04.279 potentially unsustainab and need investments to modernize them. Many of 0:05:04.279 --> 0:05:07.159 these systems are aging in face long standing challenges. 0:05:07.720 --> 0:05:11.120 Heather Kraus is the managing director of Physical Infrastructure at 0:05:11.160 --> 0:05:14.440 the GAO, which produced a report on the overall state 0:05:14.520 --> 0:05:16.840 of the air traffic control system in the United States 0:05:17.800 --> 0:05:21.320 in March. She testified before Congress about its findings. 0:05:22.240 --> 0:05:25.680 So around seventeen, we found to be somewhat concerning in 0:05:25.760 --> 0:05:27.960 terms of the timelines that they have as well as 0:05:28.320 --> 0:05:31.040 four of those systems not having baselines, so not knowing 0:05:31.080 --> 0:05:35.080 when those systems will be delivered, so important that FA 0:05:35.160 --> 0:05:38.680 focuses on what are the most critical systems? How are 0:05:38.680 --> 0:05:41.640 they going to mitigate risks in the meantime as they 0:05:41.800 --> 0:05:45.560 are working through the modernization efforts and then delivering on 0:05:45.640 --> 0:05:47.200 those modernization plans. 0:05:48.400 --> 0:05:51.440 Modernization is part of the problem, but far from the 0:05:51.480 --> 0:05:54.599 only part. What about the controllers who run the system? 0:05:55.040 --> 0:05:58.720 There's general consensus about their being outstanding professionals. 0:06:00.040 --> 0:06:04.560 States Federal Aviation Administration is short over three thousand air 0:06:04.560 --> 0:06:08.839 traffic controllers across the entire system, and that came about 0:06:09.640 --> 0:06:13.479 not just overnight, but it took decades to reach that 0:06:14.240 --> 0:06:17.960 level of shortfall. And essentially what happens whenever there is 0:06:18.000 --> 0:06:21.159 a government shut down, the FA cannot hire or train 0:06:21.240 --> 0:06:25.760 air traffic controllers. This was disacerbated by the pandemic when 0:06:25.839 --> 0:06:28.680 over year the FA could not hire a single controller 0:06:29.279 --> 0:06:32.520 and could not train new controllers. That has led to 0:06:32.560 --> 0:06:36.080 where the system is today with over three thousand controllers 0:06:36.080 --> 0:06:38.960 short across the country. The only way out of that 0:06:39.480 --> 0:06:42.640 is to hire and train new controllers and every Reddal 0:06:42.680 --> 0:06:45.839 Aeronouk University is proud to be a part of that initiative. 0:06:46.160 --> 0:06:49.599 As we enter into agreement with the FAA, we are 0:06:49.800 --> 0:06:54.760 authorized and certified by the FAA to test our students 0:06:54.880 --> 0:06:58.400 to the same level that the FA Academy does, enabling 0:06:58.440 --> 0:07:01.840 them to be hired directly to fair traffic control facilities 0:07:02.040 --> 0:07:05.400 upon graduation. Previously, it would take one to two years 0:07:05.440 --> 0:07:09.000 post graduation for one of our students entered the controller workforce. 0:07:09.800 --> 0:07:11.480 Now can happen within days. 0:07:15.000 --> 0:07:17.240 By the time that the air traffic controllers can get 0:07:17.280 --> 0:07:20.040 a new piece of equipment, it's about seven or eight 0:07:20.120 --> 0:07:22.360 years old. It's not as modern as there should be. 0:07:22.720 --> 0:07:26.160 It took forever for the air traffic control system to 0:07:26.200 --> 0:07:27.680 have a GPS system. 0:07:27.920 --> 0:07:32.000 Elaine Chow was the Transportation Secretary under President Trump during 0:07:32.040 --> 0:07:33.480 his first term. 0:07:33.720 --> 0:07:35.640 It's a tribute to the men and women of the 0:07:35.640 --> 0:07:39.000 air traffic control that they can keep the system kind 0:07:39.040 --> 0:07:43.560 of safe and maintained with their expertise. 0:07:44.360 --> 0:07:47.800 Secretary Chow agrees that the path to overhauling air traffic 0:07:47.800 --> 0:07:50.720 control in the United States is long, but the problem 0:07:50.800 --> 0:07:53.360 may be in the very structure of the system. 0:07:53.760 --> 0:07:56.680 In twenty seventeen, there was an effort under the first 0:07:56.720 --> 0:08:02.920 Trump administration to reorganize the structure of the air traffic 0:08:02.960 --> 0:08:06.120 control and basically it would take the air traffic control. 0:08:06.680 --> 0:08:09.360 It's not privatizing yet because it's being put into a 0:08:09.360 --> 0:08:15.240 nonprofit organization, but rather I call it liberating the FAA 0:08:15.280 --> 0:08:19.040 and the air traffic control. Basically liberating the air traffic 0:08:19.080 --> 0:08:24.320 control from FA and even more succinctly, the federal government, 0:08:24.840 --> 0:08:29.240 so that air traffic Control, like many others structured like 0:08:29.280 --> 0:08:33.000 this around the world, would be their own entity. They 0:08:33.040 --> 0:08:36.760 would have their own nonprofit status, they would have their 0:08:36.760 --> 0:08:41.000 own board of directors, but more importantly, they would use 0:08:41.160 --> 0:08:45.000 their own funding of resources and be able to use 0:08:45.040 --> 0:08:46.760 it for long term planning. 0:08:47.760 --> 0:08:50.280 As you look around the world, has anyone done this? 0:08:50.360 --> 0:08:52.400 Can we go to school in any other country in 0:08:52.440 --> 0:08:54.240 the way they've handled this well. 0:08:54.280 --> 0:08:58.679 Canada is a primary example, Great Britain, Australia. There are 0:08:58.679 --> 0:09:02.840 many other countries who have taken air traffic control out 0:09:02.880 --> 0:09:07.080 of the government process and put it separately in its 0:09:07.120 --> 0:09:12.520 own nonprofit organization. And by doing that it allows this 0:09:12.640 --> 0:09:17.800 nonprofit air traffic control system to plan ahead have control 0:09:17.840 --> 0:09:21.839 over one hundred percent of its budget and be able 0:09:21.880 --> 0:09:25.880 to purchase equipment at a very timely rate and very 0:09:25.920 --> 0:09:27.000 efficiently as well. 0:09:27.520 --> 0:09:30.840 There's been discussion for over twenty years now on what 0:09:30.920 --> 0:09:34.120 to do about the United States air traffic control system. 0:09:34.720 --> 0:09:39.640 The US is the only Western nation that still has 0:09:39.880 --> 0:09:45.360 air traffic control system fully operated by the central government. 0:09:45.720 --> 0:09:47.959 All the other Western nations, including our neighbors to the 0:09:48.040 --> 0:09:51.560 north and south and across the Pacific and Atlantic, have 0:09:51.679 --> 0:09:56.560 transitioned to either a privatized or corporatized air traffic control system. 0:09:56.920 --> 0:09:59.400 In general, that has worked out very well for those 0:10:00.280 --> 0:10:01.839 They ran into a bit of a problem during the 0:10:01.920 --> 0:10:05.800 pandemic because it's based upon user fees and that is 0:10:05.880 --> 0:10:08.920 apportion generally of a ticket tax that would fund it. 0:10:09.120 --> 0:10:11.880 The FA's air traffic control system is by far the busiest, 0:10:12.320 --> 0:10:14.720 most complex, but at the same time the safest in 0:10:14.800 --> 0:10:18.360 the world. So as we approach this, it's got to 0:10:18.400 --> 0:10:22.360 be a unified approach, a collaborative approach, with support of 0:10:22.600 --> 0:10:25.800 all the stakeholders. So you have to have support a passengers, 0:10:26.080 --> 0:10:31.560 support of aircraft manufacturers, supporting airlines, support a generally vasue community, 0:10:31.840 --> 0:10:35.040 and of course support of the whole government. In order 0:10:35.040 --> 0:10:37.840 to make a decision on which we had to go. Unfortunately, 0:10:37.840 --> 0:10:39.640 to this point that has not. 0:10:39.640 --> 0:10:46.800 Existed coming up connecting the world from Rio to Tuvalu. 0:10:56.200 --> 0:10:59.720 This is a story about connection, no matter what the distance, 0:11:00.000 --> 0:11:03.319 no matter what the conditions, whether it's air traffic controllers 0:11:03.360 --> 0:11:06.319 connecting with airplanes landing at Newark Airport. 0:11:06.760 --> 0:11:08.000 We lost our radar, or. 0:11:08.000 --> 0:11:11.440 President Trump connecting with British Prime Minister Cure Starmer for 0:11:11.520 --> 0:11:13.800 a joint transatlantic news conference. 0:11:14.440 --> 0:11:16.160 This looks like the kind of a hookup that's not 0:11:16.200 --> 0:11:19.240 going to be causing any problems, and your voice comes 0:11:19.240 --> 0:11:22.280 through beautifully gear. So I just want. 0:11:22.120 --> 0:11:22.800 To do it. 0:11:31.120 --> 0:11:34.080 When it comes to connecting, there is no substitute for 0:11:34.280 --> 0:11:40.360 undersea cables. Thousands of satellites may orbit the Earth, but 0:11:40.480 --> 0:11:43.760 more than ninety nine percent of global Internet traffic still 0:11:43.800 --> 0:11:47.440 flows through fiber optic cables laying on the ocean floor. 0:11:48.800 --> 0:11:52.680 A single high capacity cable installed today can transmit half 0:11:52.720 --> 0:11:56.800 a peti bit over a million home high speed internet connections. 0:11:57.280 --> 0:12:00.839 Private networks for the largest of the companies, rely upon 0:12:01.080 --> 0:12:05.680 subse cables for their logistical planning, their transport, their just 0:12:05.800 --> 0:12:15.520 in time deliveries, logistics, finance, health, education, science, technology, sharing, 0:12:16.000 --> 0:12:20.120 It all goes over subsea cables, the loss of which 0:12:20.720 --> 0:12:24.960 would mean life as we know it would be gone. 0:12:26.679 --> 0:12:29.640 If you think about that, you will start to understand 0:12:29.679 --> 0:12:33.520 how incredibly important undersea cables are, both in terms of 0:12:33.559 --> 0:12:37.640 our connectivity, our ability to communicate across the world, our 0:12:37.679 --> 0:12:41.760 ability to run digital technology, but also essentially the national 0:12:41.800 --> 0:12:42.680 security risk. 0:12:43.640 --> 0:12:47.600 Some one point three million kilometers of those cables snak 0:12:47.640 --> 0:12:52.200 across the world's ocean floor. Eduardo Matteo is head of 0:12:52.200 --> 0:12:55.080 strategy for NEC's Submarine division. 0:12:55.640 --> 0:13:00.200 The basic anatomy of subse cables are very long, these 0:13:00.200 --> 0:13:04.200 stunts pipes that have optical fibers inside a certain amount 0:13:04.200 --> 0:13:09.280 of optical fibers and every certain amount of kilometers ninety 0:13:09.400 --> 0:13:13.360 one hundred kilometers, these signals that travel along the fibers 0:13:13.400 --> 0:13:18.080 need to be re energized, amplified, energized from the sea 0:13:18.360 --> 0:13:21.760 from the landing stations. So it's a very unique network. 0:13:21.960 --> 0:13:24.400 That amplifier that sits in the middle of the ocean 0:13:24.440 --> 0:13:27.920 receives power from thousands of kilometers away. 0:13:29.440 --> 0:13:33.120 As important as undersea cables are to all global communications, 0:13:33.559 --> 0:13:36.440 most of us don't hear about them until there's an interruption, 0:13:36.960 --> 0:13:40.560 which happens about two hundred times a year, sometimes because 0:13:40.600 --> 0:13:45.120 of wear and tear, but sometimes in suspicious circumstances. That's 0:13:45.120 --> 0:13:50.800 why experts like NJFX CEO Gill Sentilles and Norwegian infrastructure 0:13:50.800 --> 0:13:54.640 builder Petter Narbo have a system to reroute traffic and 0:13:54.760 --> 0:13:55.760 keep the data moving. 0:13:57.200 --> 0:13:59.800 So while we get to shallow water, we bury it on. 0:13:59.880 --> 0:14:02.560 The need the sea bed to protect the cable so 0:14:02.600 --> 0:14:05.959 it's not hit by some troller vessel or an anchor 0:14:06.520 --> 0:14:09.600 by a chance. But you can wonder, like northern parts 0:14:09.600 --> 0:14:13.120 of Norway, in Slowbart we had an incident like two 0:14:13.160 --> 0:14:16.880 and a half years ago where one vessel had traveled 0:14:16.880 --> 0:14:20.680 across the cable one hundred and thirty times and then 0:14:20.680 --> 0:14:23.520 it was able to ram the cable and make. 0:14:23.320 --> 0:14:25.280 A power outage on the cables. 0:14:25.480 --> 0:14:28.360 And you can question whether that was intentional or not, 0:14:28.560 --> 0:14:32.640 but it was a Russian vessel. If there's an outage, 0:14:32.800 --> 0:14:35.040 that's why we come to places like the New Jersey 0:14:35.040 --> 0:14:38.920 Fiber Saints that interconnects with you know, six or seven 0:14:38.960 --> 0:14:41.680 of these different Subsey cables, so. 0:14:41.720 --> 0:14:45.120 Our facility is prepared to support subse cables and these 0:14:45.160 --> 0:14:48.400 cables need redundancy on land as well. It's no longer 0:14:48.440 --> 0:14:51.240 possible at a single point of failure. We've got twenty 0:14:51.360 --> 0:14:55.280 six terrestrial cables that lead the NJFX in four directions 0:14:55.560 --> 0:15:00.840 aerial underground, which allow diversity for these subse cables have options. 0:15:01.120 --> 0:15:04.080 Something happens on land, whether it's a highway or railroad, 0:15:04.200 --> 0:15:07.040 we could reavert that traffic in a different bath. 0:15:08.760 --> 0:15:11.920 The first undersea cable was laid in the eighteen fifties, 0:15:12.200 --> 0:15:16.600 stretching from Ireland to Newfoundland, with Queen Victoria christening it 0:15:16.680 --> 0:15:21.160 by sending a telegram to President Buchanan. In the twentieth century, 0:15:21.280 --> 0:15:25.400 telegrams gave way to telephone calls, and then the US 0:15:25.480 --> 0:15:29.280 deregulated the telephone companies just as the Internet arrived on 0:15:29.320 --> 0:15:32.920 the scene, opening up the market to new players and 0:15:33.000 --> 0:15:36.920 fueling a boom in competitive investment in submarine cables. 0:15:37.400 --> 0:15:39.800 We have always been focused on being the best in 0:15:39.840 --> 0:15:42.040 the world at moving optical bits. 0:15:42.360 --> 0:15:47.080 Gary Smith runs CNM, whose technology powers the modern global Internet, 0:15:47.440 --> 0:15:51.600 providing the networking systems and software that increase each cable's 0:15:51.600 --> 0:15:54.800 capacity even as more and more are installed. 0:15:55.200 --> 0:15:59.440 Basically, down each end of a piece of fiber, you 0:15:59.600 --> 0:16:03.600 put different colors of light and pull them out at 0:16:03.600 --> 0:16:07.560 the ends into you know, virtual fibers, and the first 0:16:07.560 --> 0:16:10.200 technology we had in this space, we think we can 0:16:10.280 --> 0:16:14.240 make you know, four fibers out of the single fiber, 0:16:15.040 --> 0:16:18.160 and they said, that's fantastic. We don't think we'll ever 0:16:18.240 --> 0:16:20.480 need four. By the time we got to deploy it, 0:16:20.480 --> 0:16:22.960 it was eight and they said, we're never going to 0:16:23.080 --> 0:16:26.280 use eight fibers. And now we're putting literally, you know, 0:16:26.520 --> 0:16:29.640 thousands of virtual fibers down a single fiber. 0:16:30.160 --> 0:16:32.560 In the boom years of the nineteen nineties and early 0:16:32.600 --> 0:16:37.400 two thousands, building transoceanic cables seemed like a great business 0:16:37.440 --> 0:16:37.920 to be in. 0:16:38.320 --> 0:16:40.160 I was like, where do we build the next one? 0:16:40.400 --> 0:16:42.840 How do we leverage the debt and equity markets to 0:16:42.840 --> 0:16:46.240 get the capital? And then this deploy it very very quickly. 0:16:46.360 --> 0:16:49.800 Mike Constable was a global crossing during that time, a 0:16:49.840 --> 0:16:53.600 company that pre sold capacity to telecom carriers before cables 0:16:53.680 --> 0:16:57.320 even hit the water. But then the music stopped, and. 0:16:57.320 --> 0:17:01.760 At that stage, the all the sculation about how much 0:17:01.840 --> 0:17:05.200 data the world was going to need was not being 0:17:05.320 --> 0:17:12.240 accurately analyzed and forecast. So suddenly the debt levels were 0:17:12.320 --> 0:17:15.320 super high and they couldn't pay off that debt. So 0:17:15.440 --> 0:17:19.720 ultimately there was a collapse. Investment pretty much stopped. Around 0:17:19.760 --> 0:17:24.160 two thousand and two, investment in subse cables effectively stopped, 0:17:24.480 --> 0:17:28.440 and it took a long time to see investment come back. 0:17:28.520 --> 0:17:32.040 Everybody built so much capacity with this kind of technology 0:17:32.440 --> 0:17:35.640 because all of a sudden we could scale up the fibers. 0:17:36.000 --> 0:17:38.560 The challenge was no one knew what to do with 0:17:38.600 --> 0:17:41.400 that capacity, right, and no one would pay for it. 0:17:41.640 --> 0:17:44.840 For years, nothing new was built. But the twenty first 0:17:44.880 --> 0:17:48.959 century brought new demands, this time for financial transactions measured 0:17:49.200 --> 0:17:53.560 not in milliseconds but in microseconds. Michael Lewis captured it 0:17:53.640 --> 0:17:58.760 in Flashboys a World War. Speed meant profit. Joe hilt Now, 0:17:58.800 --> 0:18:01.840 with a Nova Financial new Works, led the commercial team 0:18:01.920 --> 0:18:06.720 behind a bold new cable called the Hibernia Express. You 0:18:06.760 --> 0:18:09.920 were particularly involved, as you say, in the financial part 0:18:09.920 --> 0:18:12.840 of the business, and obviously people really want to be 0:18:12.880 --> 0:18:14.240 able to trade fast. 0:18:15.040 --> 0:18:16.320 Yeah, And I think we saw that there was a 0:18:16.359 --> 0:18:18.159 cable system that was built between New Jersey and the 0:18:18.240 --> 0:18:22.600 Chicago Mercantyle Exchange that was built as a straight line, right, 0:18:22.640 --> 0:18:25.040 and we said, wow, we're a cable system provided in 0:18:25.040 --> 0:18:28.240 the Atlantic. Somebody must need between the two financial pillows 0:18:28.240 --> 0:18:30.760 of the world in New York and London. Twenty eleven, 0:18:31.280 --> 0:18:35.440 we'd started begun signing clients that would become financial customers 0:18:35.440 --> 0:18:37.639 on the system, and when we did that, we started 0:18:37.640 --> 0:18:39.080 to do subse surveys. 0:18:39.680 --> 0:18:44.040 Wall Street helped finance it alongside Chinese partner Huawei, but 0:18:44.200 --> 0:18:47.240 that set off alarm bells in Washington, and as the 0:18:47.240 --> 0:18:51.120 pressure mounted, the message was clear the project wouldn't get 0:18:51.160 --> 0:18:54.040 approved if it relied on Chinese technology. 0:18:54.560 --> 0:19:00.239 We originally had started out with Huawei. Global Marine had 0:19:00.280 --> 0:19:03.439 decided to move away from wahweih Global Marine about mid 0:19:03.520 --> 0:19:07.080 project right, and most of that was based on the 0:19:07.200 --> 0:19:12.280 United States and feelings towards companies like Huawei and H 0:19:12.359 --> 0:19:12.600 three C. 0:19:12.800 --> 0:19:16.520 At that time, Huawei was out along with its technology, 0:19:17.000 --> 0:19:19.920 and in came te SubCom and Sienna. 0:19:20.880 --> 0:19:23.200 So we did need to make a change in our equipment, 0:19:23.600 --> 0:19:26.360 and we chose to have a bigger relationship with Siena, 0:19:26.480 --> 0:19:28.800 you know, so much like we laid the cable systems 0:19:28.840 --> 0:19:32.159 with t SubCom. We decided to make Sienna at that 0:19:32.200 --> 0:19:36.000 point in time our the facto standard for wavelength services. 0:19:36.200 --> 0:19:39.640 Frankly, the whole Huawei piece was really a wake up 0:19:39.680 --> 0:19:42.800 call for the West you know, in general around the 0:19:42.840 --> 0:19:48.080 criticality of this infrastructure. By deploying this infrastructure, letting someone 0:19:48.200 --> 0:19:52.359 you know else have that infrastructure was you know, was 0:19:52.400 --> 0:19:53.800 a real challenge. 0:19:53.920 --> 0:19:58.160 Unlike others, Sienna hadn't partnered with Chinese firms for years. 0:19:58.320 --> 0:20:01.760 That was seen as a mistake until it wasn't. 0:20:01.880 --> 0:20:04.560 And we decided really to be sort of in some 0:20:04.600 --> 0:20:07.800 ways the sort of our main competitor around the world 0:20:07.880 --> 0:20:11.359 was Huawei, so we decided to be, you know, the 0:20:11.400 --> 0:20:14.800 antithesis of that. We had no manufacturing in China. We 0:20:14.800 --> 0:20:16.919 were very unusual in that regard, but that was a 0:20:16.920 --> 0:20:19.360 strategic decision on our part. Now you look at the 0:20:19.400 --> 0:20:23.040 marketplace now and you see a very bifurcated market between 0:20:23.760 --> 0:20:26.879 those that utilize Huahweh and those that don't want to, 0:20:27.080 --> 0:20:31.120 which is really a proxy for geopolitical divide that you're 0:20:31.119 --> 0:20:34.720 seeing in the world. Governments are very conscious of it now. 0:20:35.280 --> 0:20:40.000 It's not just left to normal commercial decision making, for sure. 0:20:40.480 --> 0:20:43.800 Mike Constable was tapped to lead Huawei Marine as the 0:20:43.880 --> 0:20:47.360 Chinese giants sought to push past US resistance. But as 0:20:47.400 --> 0:20:52.640 geopolitical tensions continued to rise, the US stood firm. 0:20:53.080 --> 0:20:56.800 So that was really quite damaging at that time. Slowly 0:20:57.080 --> 0:21:02.240 the our access to vietitions to bid on a number 0:21:02.280 --> 0:21:05.280 of projects started to dry up. Way while our marine 0:21:05.320 --> 0:21:08.040 weren't able to build cables into the US, we were 0:21:08.040 --> 0:21:10.600 not able to build cables into Europe and to other 0:21:10.720 --> 0:21:13.760 nations such as Australia. In fact, at the time we 0:21:13.960 --> 0:21:16.760 had won a contract to build a cable from Solomon 0:21:16.800 --> 0:21:20.520 Islands to Australia and that was subsequently terminated. 0:21:20.760 --> 0:21:24.960 The US intervened in several planned Transpacific cables, including the 0:21:25.000 --> 0:21:29.640 Pacific Light Cable Network linking Hong Kong and California. According 0:21:29.640 --> 0:21:33.159 to Jennifer Bacchus, acting head of the State Department's Bureau 0:21:33.240 --> 0:21:36.760 of Cyberspace and Digital Policy, it came down to one 0:21:36.800 --> 0:21:38.440 word trust. 0:21:38.880 --> 0:21:41.480 What started to become apparent to us is that we 0:21:41.520 --> 0:21:43.879 do not see the world in the same way that 0:21:44.080 --> 0:21:47.080 China sees the world, and that ultimately, while we view 0:21:47.119 --> 0:21:50.440 this as a positive way to work together, to bring 0:21:50.480 --> 0:21:53.240 people together, I think the Chinese view it as a 0:21:53.280 --> 0:21:57.200 way to control, surveil and steal, and so as a result, 0:21:57.520 --> 0:22:01.280 I think it's been a gradual realization that we don't 0:22:01.280 --> 0:22:03.880 have the same worldview. We don't share the same values. 0:22:03.960 --> 0:22:06.240 Specific light cable was one that was going to go 0:22:06.240 --> 0:22:09.040 to Hong Kong got shut down. Is that why you 0:22:09.200 --> 0:22:11.440 decide not to allow them to have a land station 0:22:11.800 --> 0:22:12.440 in Hong Kong? 0:22:12.760 --> 0:22:15.960 So on the Pacific like cable, Yes, What it would 0:22:15.960 --> 0:22:19.320 do is if it landed in Hong Kong, the Chinese 0:22:19.400 --> 0:22:24.359 government could very easily access that landing station and both 0:22:24.560 --> 0:22:28.080 take any information they wanted to exfiltratee it, steal it, 0:22:28.480 --> 0:22:31.600 call it what you want. They also could potentially use 0:22:31.640 --> 0:22:35.720 that access to interrupt the data flows, to reroute the 0:22:35.800 --> 0:22:40.560 data flows. There's no way to tear apart espionage from 0:22:40.680 --> 0:22:45.560 intellectual property, theft from essentially having the dagger poised at 0:22:45.600 --> 0:22:48.560 your neck that you're going to cut off somebody's communications network. 0:22:49.000 --> 0:22:51.560 Is there a cost here in protecting so the data 0:22:51.600 --> 0:22:55.920 that you suggest to potentially US businesses competing with their 0:22:56.000 --> 0:22:58.679 Chinese counterparts in third parts of the world. 0:22:59.520 --> 0:23:02.240 What we found in going around the world is that 0:23:02.320 --> 0:23:08.080 there's enthusiasm for trusted connectivity, especially when you're talking about 0:23:08.160 --> 0:23:11.480 subse cables and when you talk about how do you 0:23:11.520 --> 0:23:15.560 attract investment into a country, whether you are a small 0:23:15.600 --> 0:23:20.640 island state or a large country. They want advanced Western technology, 0:23:20.840 --> 0:23:24.439 they want AI, they want data centers, they want hyperscale cloud. 0:23:24.680 --> 0:23:27.040 You look at sort of the share of the market 0:23:27.320 --> 0:23:30.600 that HMN Tech, which is the Huawei company, is had 0:23:30.640 --> 0:23:33.879 worldwide where they were five years ago versus where they 0:23:33.880 --> 0:23:38.680 are today. They're on a downward trajectory as countries, economies, 0:23:38.760 --> 0:23:41.920 and people embrace the idea that they want to have 0:23:42.320 --> 0:23:46.720 sovereignty and control over their information and over their future 0:23:46.960 --> 0:23:48.280 success and prosperity. 0:23:50.280 --> 0:23:53.440 And that's where we turn next to the investment prospects 0:23:53.480 --> 0:23:57.159 for the boom and bust business of undersea cable. Who's 0:23:57.200 --> 0:24:00.880 doing the investing, what are the economics, and what are 0:24:00.920 --> 0:24:14.480 the opportunities. Undersea cables may be ubiquitous, they may be 0:24:14.560 --> 0:24:17.520 something all of us use every day without even knowing 0:24:17.560 --> 0:24:21.159 about it. But are they a good investment and who's 0:24:21.240 --> 0:24:26.000 doing the investing? Enter the hyperscalers, led by Google with 0:24:26.119 --> 0:24:28.840 its investment in the trans specific Unity cable. 0:24:29.080 --> 0:24:37.640 In twenty ten, Google invested in a single fiber pair, 0:24:38.280 --> 0:24:42.120 which we thought initially was going to be enough capacity. 0:24:42.680 --> 0:24:46.040 But the one thing Google and all of the hyperscalers 0:24:46.359 --> 0:24:52.160 always get wrong is forecasting and demand models. Demand has 0:24:52.359 --> 0:24:58.840 always outstripped actual need. So shortly after completing Unity, we 0:24:58.960 --> 0:25:04.080 started on a second transpact cable called Faster, because that's 0:25:04.080 --> 0:25:08.680 what we kept getting told, build it faster, we need 0:25:08.720 --> 0:25:10.600 it now. 0:25:11.359 --> 0:25:15.160