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Chile: Digital doorway between South America and Asia-Pacific

InvestChile - June,27,2018

Studies will be carried out to define the best route for the submarine fiber optic cable, its technical conditions and the business model for its operation. This would transform the country into an important player in the region.  

shutterstock_348901997“Optical fiber has as much importance as the construction of railways in the nineteenth century. The capacity to move data quickly and efficiently so as to take decisions in real time is essential for a knowledge-based economy,” says Eduardo Vera, innovation manager at the Center of Mathematical Modeling and director of international affairs at the University of Chile.

In this way, he supports the remarks of President Sebastián Piñera in his recent state-of-the-nation message in which he indicated the need to build a submarine cable to “link not only Chile but also our continent efficiently with the world of Asia-Pacific”.

It is an idea that has been in the authorities’ minds for some time. In 2017, the then Undersecretary of Telecommunications, Pedro Ramírez, received a prefeasibility study carried out by Huawei, which traced three routes for this cable to Shanghai. The present Undersecretary, Pamela Gidi, also has a study that would connect Valparaíso with Tokyo.

“This is a long-term investment since the ‘life’ of these cables is close to 25 years,” explains Gidi. That is why it is important to carry out prior studies in order to determine the best route, which country is the most suitable destination and the business and financing model.

For Undersecretary Gidi, this digital link with Asia-Pacific has geopolitical as well as economic importance “It is the only cable that would connect the region with Asia and would give the Atlantic countries a digital outlet through the Pacific,” she says.

It would also give Chile an additional link with the rest of the world. According to Hugo Durney, Director of the Center for Linkage and Technology Transfer at Santiago’s Metropolitan Technological University, most of the information that flows from South America to the rest of the world currently does so through “data highways” that converge in nodes located in North America and belong to a quite small group of companies. “That implies commercial, technical and other limitations for our countries... Having competitive alternatives introduces balance in commercial ecosystems,” he points out.

In search of alliances

“We are at the analysis stage and two international organizations are interested in financing a technical and economic feasibility study.” They are the Development Bank of Latin America (CAF) and the Inter-American Development Bank (IDB).

So far, it has been suggested that a project of this type would cost between US$500 and US$600 million. “But this is only a simple calculation, taking the cost of the fiber per kilometer on each of the routes,” says Gidi, adding that it could be higher.

In order to determine the best route, a number of factors need to be evaluated. “It’s necessary to identify the markets and places - whether of economic or geopolitical interest - to be included and then proceed with the submarine study in order to define the best route from the technical standpoint,” says Ernesto Curci, Vice-President of Administration of Services and Eedes at CenturyLink, a company that currently connects the country from Valparaíso.

Chile is already in talks with neighboring countries. “Large-scale investments are undertaken by forming public-private partnerships. We want to involve the countries of the region so as to form a consortium,” says Undersecretary Gidi.

Although the construction of this “digital highway” will not occur under this government, one of its goals is for the consortium to have been formed before the end of its term.

For more information about optical fiber in Chile, see this article.

Source: El Mercurio

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