Fragile Yet Indispensable

Damaged fiber-optic cables along the Mediterranean seabed cut internet access for almost 100 million users, and the sudden absence highlighted the service’s importance in the modern world, explains Nayan Chanda, YaleGlobal editor, in his regular column for Businessworld. Modern business increasingly relies on exponential speed and volume of communications, and Chanda explains that “all aspects of life have become dependent on the rapid transmission of voice, data and images provided by hundreds of thousands of miles of fibre optic cables girdling the earth.” Chanda concludes that, despite global economic recession, digital technology remains key to business innovation and a subset of globalization that is taken for granted. – YaleGlobal

Fragile Yet Indispensable

The snapped cables under the Mediterranean and Arabian Seas have put all virtual aspects on hold
Nayan Chanda
Monday, January 5, 2009

The internet has become such an integral part of modern life that, like the air we breathe, we take it entirely for granted. Like oxygen, its importance to us is driven home only in its absence. The damaged fibre-optic cables running along the Mediterranean seafloor that recently put internet access on the blink for nearly 100 million users from the Middle-East to Asia were a fresh reminder of our interconnected fate.

For the second time in 10 months, a major communications breakdown was brought about by inadvertent damage to the thicket of fibre optic cables running under the Mediterranean and Arabian Seas, connecting the Atlantic with West and South Asia. With 95 per cent of the world’s internet connections piped through these undersea cables, the rupture near Alexandria and coast of France, perhaps caused by an earthquake or the dragging anchor of a ship, knocked out the flow of bits and bytes to Web servers — from the business hubs of Dubai and populous Egypt to India and Malaysia. Internet cafes in Cairo were empty for days while the Dubai-based Emirates airlines coped with a sharp drop in Web bookings, and Egyptian travel agencies had to improvise to accommodate passengers who could not print out their e-tickets. Banks and businesses resorted to the ‘old’ technologies of fax, while hospitals reverted to sending medical images and documents to counterparts by messengers. Workers in businesses reliant on the internet sat idle, unable even to watch YouTube clips, as their computers displayed a ‘no connection’ message. The financial cost to businesses and the public of days without the internet has not been estimated, but the inconvenience is evident.

Similar episodes at the beginning of 2008 and two years earlier causing massive dislocation serve as periodic reminders of the close integration of the world since the first undersea cables were laid in the late 19th century.

“Since the discovery of Columbus,” the Times of London wrote at the time, “nothing has been done in any degree comparable to the vast enlargement which has thus been given to the sphere of human activity [by the telegraph].” No single actor benefited as much as companies. The introduction of the trans-Atlantic cable in 1866 accelerated business deals and sharply drove down prices. Instead of taking 10 days to place order for a stock and another 10 days of travel by ship to execute buy and sell orders, the business by cable was done in a day and the result was nearly 70 per cent decline in mean absolute price differentials for identical assets between London and New York. Both the speed and the volume of communications have grown exponentially since then, and not just stockmarket and trade-in goods, but virtually all aspects of life have become dependent on the rapid transmission of voice, data and images provided by hundreds of thousands of miles of fibre optic cables girdling the earth.

Given the nature of the internet, which shoots data in small packages through every available node to reach the destination, an email sent to a colleague in the next office might circle the earth to reach its destination mere metres away. Routing technology is designed to find the fastest pathway to the destination, but if a core link is disrupted, as happened in late December, the fast moving bits and bytes are stopped in their tracks or diverted through various congested pathways around the globe. Initial fears that the cables were severed as a deliberate act of sabotage have been quelled but the danger of disruption due to natural disasters and accidents remains real. In order to ensure smoother and uninterrupted connections around the world, companies have to invest more in expanding cable networks and establishing redundancies. Given the massive costs of laying undersea fibre optic cables and maintaining them, this is not easy, especially as the world is confronting a deep recession. Yet, digital technology and the corollary of rapid communication remain the surest path to innovative business and economic growth.

As the breakdown in business and the disruption to normal life caused by the snapped cables in the Mediterranean show, more rather than less globalisation is the solution. Fortunately, this is one aspect of globalisation that has no critics. When one gasps for air, supplying more oxygen is a better bet than withdrawal into airless isolation.

Nayan Chanda is director of publications at the Yale Center for the Study of Globalization and editor of YaleGlobal Online.

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