When discussing submarine cable bandwidth, it’s crucial to distinguish between lit capacity and potential capacity.
These terms are not interchangeable, and the difference between them explains a key aspect of the submarine cable market.
What Does Each Term Mean?
Lit capacity refers to the amount of bandwidth that is currently active or available for use. It’s the capacity that’s been “switched on” and is ready to carry traffic.
Lit capacity changes frequently, driven by market demand. As customer bandwidth needs increase, cable operators invest in “lighting” additional capacity on their systems.
Lighting new capacity requires time and capital. To do this, cable operators must install equipment at shore ends to enable data transmission. The involved procurement and installation process can take several months depending on supply chain factors.
Potential capacity represents the maximum bandwidth that a cable could theoretically provide. It’s calculated based on the assumption that every fiber pair is equipped with the maximum number of wavelengths at the highest possible bit rate.
In essence, potential capacity is a theoretical ceiling. You’ll find it cited when a new cable is announced or enters service, highlighting its future capabilities.
Technological advancements can increase a cable’s potential capacity. This was particularly evident in cables originally installed in the early 2000s, where improvements in equipment efficiency boosted potential capacity simply through changes to the terminal equipment on land.
Potential capacities also vary between cable systems. They are often higher on new builds, which can take advantage of advancements not only onshore but under the sea (for example, by including more fiber pairs within the cable itself).
Interpreting the Difference Between Lit and Potential Capacity
Another measure of capacity on a route or cable is the percentage of potential capacity that is lit. High, increasing percentages can indicate that new capacity supply is needed.
Still, “high” lit percentages of potential capacity can be lower than you’d expect. With international bandwidth demand doubling every two to three years, a cable that’s half lit can see the rest of its capacity filled within a few years. That’s one reason more cables are still needed—and lots are on the way.
What about comparatively low figures? Submarine cables are designed with significant future growth in mind.
A low percentage of lit capacity compared to potential capacity doesn’t necessarily suggest a supply-demand imbalance. Rather, it indicates that cables have been built to handle not only today’s needs but also anticipated future demand.
Consequently, a low percentage of lit capacity compared to potential capacity doesn’t necessarily suggest a supply-demand imbalance. Rather, it indicates that cables have been built to handle not only today’s needs but also anticipated future demand.
Finally, while this percentage can provide insight into market dynamics, it’s important to remember the absolute values at play. You can have a new cable that is 5% lit, yet provides 10x the lit bandwidth of an old cable that is 100% lit.
So remember: when assessing the current state of the capacity market, lit capacity is the key metric. For future capabilities, turn to potential capacity.
