inRoads Research: Subsea Cables - A New Kind of Port City
How valuable can subsea cables be for Hampton Roads? Taking clues from other successes, the answer is – potentially extremely valuable. Submarine fiberoptic cables represent one of the most valuable commodities in this increasingly data-driven world – information flow. As middle ground between the east coast’s submarine cable landing sites in New York and Florida, Hampton Roads holds a unique position as the Mid-Atlantic gate keeper of that flow.
For Hampton Roads, digital ports could provide a regional significance that parallels its sea ports in providing near-term stimulus, recognition and identity on a global scale, and a promising long-term scope of employment growth in related industry sectors. Managing a multitude of economic forces, Virginia Beach has chosen to invest in a technological future, which by validations of progression in other landing cities, is a promising choice. In turn, the region stands to reap the benefits on a wide scale.
Regional Trends of Other Landing Cities
"The Table: Landing City by Ready-for-Service (RFS) year" shown below, displays submarine cable landing sites in the United States by RFS year for cables who are ready to carry data traffic in 2008 and after. This chart highlights the change in the relative concentration (Location Quotient) of Information Industry Employment (NAICS 51) for community zip codes within a 45-minute drive radius of each landing city. A 45-minute drive radius is utilized to capture the regional effect of a submarine cable landing and reflect on the value that can be realized by Hampton Roads. Two change periods are viewed for a snapshot before and after the RFS: from three years pre-RFS to the RFS year and from the RFS year to three years post-RFS. The indicators show the trend of the change in Location Quotient (LQ), or relative concentration as it relates to the U.S.:
Several points can be surmised from this analysis of area LQs. By the dissipation of red indicators, moving from the left column to the right, areas surrounding landing cities display more resiliency in Information Industry Employment after a cable’s landing. Areas surrounding landing cities display greater harbor against Information Industry employment attrition, post-recession. Employment forecast indicate a general preservation, or in some cases a recovery, in the relative concentration of Information Industry employment for regions investing in submarine cables.
Change in Information Industry LQ - 45 min Drive Radius of Landing Cities
This is a positive indicator for Hampton Roads and supported by global sentiment. Gil Santaliz, CEO of the New Jersey Fiber Exchange, said “investment in the subsea cabling sector was critical to safeguard the security and prosperity of future generations.”1 At the Submarine Networks Europe event in London, Keith Schofield, the managing partner of the International Cable Protection Committee explained that the amount of trade and commerce facilitated by subsea cable systems for the UK have risen to exceed the total value of their annual trade deal with China.1 He continues by adding, “Subsea cables bring nations together, keep consumers happy and keep data safe. We are investing…for the betterment of humanity.”1
Table: Landing City by Ready-for-Service (RFS) Year
Significance for Hampton Roads
Near-term stimulus is driven by exciting possibilities for the subsea cables and perpetuated by observable activities surrounding industry progression. In his final State of the City address, former Virginia Beach Mayor William D. Sessoms, Jr. was pleased to announce that the region has laid claim to six more subsea cables in addition to Microsoft, Facebook, and Telxius’ partnership for Marea and Telxius’ Brusa cable.2 Sessoms declared that subsea cables would bring, “transformative growth” (Sessions, 2018) to the region.2 Three subsea cable agreements have been finalized. Marea was ready for service as of February 2018, and Brusa is marked as being ready Q4 2018. The third cable, dubbed the SAEx cable, is arriving via a partnership between South Atlantic Express International Ltd. and ACA International LLC. The direct input of their partnership is expected to generate an additional 200 jobs, which includes ACA International’s $52 million investment in Virginia Beach’s Corporate Landing Business Park. By Q4 2019, ACA International plans to relocate its corporate headquarters from Washington D.C. into the 10 acres purchased in the deal.
The introduction of submarine cables in the Mid-Atlantic is a driver of regional identity and a move of diversification from immediate competitors. Hampton Roads has been cultivating a conducive environment – an environment of security – for generations. As technology has progressed, the subject of cyber security has grown even more prevalent. In this respect, subsea cables map well to the region’s strong military presence with the world’s largest Naval base and forward progress in cyber security education, such as Regent University’s state-of-the-art Cyber Range Training Center. Regent’s partnership with Cyberbit Ltd. moves to fill the projected nationwide gap of 1.5 million cyber security job openings for 2019.3 The landing of submarine cables in Hampton Roads is in response to the ongoing massive bandwidth growth and supports the need for such educational programs.
As it relates to the long-term scope of employment growth in related technology sectors, the arriving submarine cables provide a gateway for high-tech, higher wage, employment opportunities through companies looking to take advantage of landing sites. For example, Virginia’s average earnings per job within the Data Processing, Hosting, and Related Services (NAICS 518) industry has grown by 27.4% over the past 5 years (2013-2017), with 2017’s average earning per job being $146,625, 150% senior to the local average earnings per job for the same industry secotor.4 These industry jobs require a highly skilled workforce, but this is the type of success Hampton Roads is courting. The key is leveraging the regional presence of submarine cables to maximize local impact and bring higher paying jobs to Hampton Roads. As more than throughput points for commerce to other regions, housing landing sites creates a touchpoint for highly visible companies, breeds a higher visibility for the region, and adds to the overall attractiveness and value proposition.
Part of the challenge of staying on the front end of growth is anticipating change and taking proper initiative to develop the infrastructure, talent, and policies needed to support a strong economic position for both the present and the future. For that reason, all healthy economies must periodically retool themselves to keep up with trends they may not have necessarily elected but, for progress’ sake, openly pursue. The prospects provided by subsea digital cables do just that – they stir Hampton Roads’ progression in the technology space and position the region for a more prosperous future.