International bandwidth usage in India is expected to grow tenfold at a compounded annual rate of 38% between 2021 and 2028, with cloud regions from Google, Microsoft, and Amazon playing a key role in the sudden surge for new demand. The one thing missing is the capacity to handle it.
According to new projections from telecoms market research and consulting firm TeleGeography, India is experiencing an influx of investment in its data centers due to its significant market potential and relaxed policies and regulatory environment. India has 11 cloud regions as of Q2 2022. Google recently launched a region in Delhi in 2021 and both AWS and Microsoft Azure plan to launch regions in Hyderabad soon.
The problem, says Alan Mauldin, Research Director at TeleGeography, is that while there is clear growth in international bandwidth connected to India, there isn’t sufficient capacity available to match it.
“In fact, if new cables are not added, available capacity would likely be exhausted well before the end of the decade,” said Mauldin. “But this will change very soon. We expect to see multiple new submarine cables serving the Indian market by 2025.”
As for the potential impact that exponential growth will have on connectivity pricing in the region, it’s too early to say – Telegeography’s latest pricing research shows that prices for international wavelength capacity from both India to Europe and Southeast Asia are currently more expensive than other major global routes.
Those higher prices are a byproduct of concentrated cable ownership, control of cable landing stations, and fiber backhaul, and that’s unlikely to change without regulatory improvements and the introduction of new supply, says Brianna Boudreau, senior research manager at TeleGeography.
“We’ve seen prices to India decrease over time. But the recent pace of price erosion is much slower, especially for the Chennai-Singapore and Marseille-Mumbai routes,” Boudreau said. “A contributing factor to this is capacity availability; throughout the pandemic supply chain issues contributed to delayed upgrades.”
That said, she added, at least six new subsea systems serving India are slated to enter the market between now and 2025, with several more under discussion.
“Moving forward, there is an opportunity for newer, higher-fiber count submarine cables to meet current demand and a clear opportunity for providers to step up and serve future demand with elevated capabilities,” Boudreau said.