Arctic Circle is a Next Big Thing

Posted on January 25th, 2014 by admin in Geo-Politics, Scenarios, Technology

When a friend mentioned to me this month that he had been approached to invest in a new project to lay fiber optic communications cable along a route under the Arctic sea, and not through the US, I was interested to know more. Then, a few days later, a front page article in the Wall St. Journal appeared discussing the military and strategic importance to U.S. interests of the region. Then only this week another friend independently of the first one told me about an investment opportunity he just received to invest in manufacturing fiber optic cable. The arctic region now had our attention. What’s going on?

The first major fact to understand is that 99% of global telecom traffic travels over undersea fiber optic cables.

[Ref: ; 4-1-13].

Note: the link above has been recently blocked by Google as malicious.

This means that operator control of transmission capacity, costs, performance and continuity of service are necessary (but hardly sufficient) to keeping the world economy going. So it’s a very big deal when multiple organizations decide in the same time period to embark on construction of new submarine cables in one of the world’s most inhospitable regions, the Arctic. Before describing some of those projects, let’s consider the really big picture.

The world has come to realize the arctic region has not only enormous natural resources ripe for commercial development, but it’s location alone facilitates major routes of ships and communications that are substantially shorter (and thus less costly) than routes taken closer to the equator. The front page article in the Wall St. Journal on 1-12-14 expands upon these major components of interest now in the Arctic. See Table 1 below.

Table 1: U.S. Military Challenges in Arctic Region

Arctic Passage Opens Challenges for U.S. Military1-12-14


  • Thinning Polar Ice Expected to Give Way to New Commercial Waterways and Resource-Rich Frontier
  • Navy officials say the Arctic will give the U.S. its first new ocean to police since the annexation of the Pacific Northwest in 1846.
  • As the ice surrounding the North Pole retreats, officials say, commercial shippers will be able to eventually move goods faster between Asia and Europe.
  • More open seas will also give energy companies greater access to offshore oil and gas in regions controlled by the U.S. and estimated by military officials to be worth $1 trillion.

Not only that, Arctic routes can avoid going through various regions near the equator that are very susceptible to hostile acts. In fact, while it’s hard to find public quotes from responsible parties, one of the prime motives for new Arctic routes for cable is to avoid:

  • Mediterranean region and its associated terrorism
  • South China sea and increasing surveillance and control by China
  • U.S.A. routes and the likelihood of large-scale surveillance by the NSA.

The two major projects now operating to lay cable through Arctic routes are Arctic Fibre Submarine Cable System and Russian Optical Trans-Arctic Cable System (ROTACS). We have summarized key ideas about these projects taken from the sources provided below. Table 2 describes the Arctic Fibre Submarine Cable System, and Table 3 describes the Russian Optical Trans-Arctic Cable System.

You may not appreciate how important short time delays of communications packets becomes to stock market traders until yu read the ideas given in Table 4 about the value of shaving milliseconds of the total signal transmission time. Short times support high frequency trading as well as time arbitrage. Time arbitrage can occur when different markets offer the same stock at different prices at same time, and a high frequency trader sometimes can buy the cheaper version and sell to the higher priced version, making a no-risk profit.

Table 2: Arctic Fibre Submarine Cable System

  • Arctic Fibre Inc. is the Canadian-based developer
  • 15,137 km submarine cable
  • lowest latency route from Tokyo, Japan, to London, England via Canada’s North West Passage,
  • Resiliency and latency are the key drivers
  • Final link construction starts in 2014
  • The plans are part of a $600-million proposal to stretch a 15,700- kilometre-long cable from Japan to Newfoundland,
  • It would connect to the northeastern United States
  • Three fiber pairs providing express service between Tokyo and London.
  • Each will carry 40 Gbit/s on up to 80 channels per fiber initially,
  • upgrades possible to 100 Gbit/s per channel.
  • Thus, capacity of Arctic Fibre System could be 24 Tbps


Table 3: Russian Optical Trans-Arctic Cable System (ROTACS) planned by the Polarnet Project (Moscow, Russia)

  • Six fiber pairs carrying through traffic.
  • Each fiber will be able to carry 100 Gbit/s on each of 100 channels. (10 Tbps/Fiber)
  • Cutting edge of current submarine systems, and it will give ROTACS more than twice the ultimate capacity of Arctic Fibre.
  • The cable will land in Murmansk, Anadyr, and Vladivostok in Russia, with some additional drop points in the Russian Arctic.


Table 4: Reducing Time Delay on London/Tokyo Route

$1.5 billion: The cost of cutting London-Tokyo latency by 60ms3-20-12

  • Now takes roughly 230 milliseconds for a packet to go from London to Tokyo
  • New cables will reduce this by 30% to 170ms.
  • This speed-up will be gained by virtue of a much shorter run:
  • Currently, packets from the UK to Japan either have to traverse Europe, the Middle East, and the Indian Ocean, or the Atlantic, US, and Pacific, both routes racking up around 15,000 miles in the process.
  • It’s only 10,000 miles (16,000km) across the Arctic Ocean, and you don’t have to mess around with any land crossings, either.
  • The massive drop in latency is expected to supercharge algorithmic stock market trading, where a difference of a few milliseconds can gain (or lose) millions of dollars.
  • It is for this reason that a new cable is currently being laid between the UK and US — it will cost $300 million and shave “just” six milliseconds off the fastest link currently available.



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