Big tech and geopolitics are reshaping the internet’s plumbing

When the British, Estonian and Finnish navies held joint exercises in the Baltic Sea earlier this month, the objective was not to hone their combat skills. Instead, the troops were training to protect undersea gas and data pipelines from sabotage. The drill followed an incident in October that damaged undersea cables in the area. Finland’s President Sauli Niinistö wondered whether the Chinese ship responsible for the prank had dragged its anchor to the seabed “on purpose or as a result of extremely poor ship handling.”

Submarine cables were once considered the boring plumbing of the Internet. Now, data economy giants such as Amazon, Google, Meta and Microsoft are asserting more control over the flow of data, even as tensions between China and the US threaten to fragment the world’s digital infrastructure. are doing. As a result, submarine cables turn into valuable economic and strategic assets.

Undersea data pipes carry nearly 99% of internet traffic between continents. Research firm Telegeography estimates that there are 550 undersea cables currently in operation or planned, with a length of more than 1.4 meters kilometers. Each cable is typically a bundle of 12 to 16 fiber optic threads, about the width of a garden hose, strung beneath the ocean at an average depth of 3,600 meters. Nearly half have been added in the past 10 years. The new one can transfer 250 terabits of data per second, which is the equivalent of his 1.3 million cat videos. Your data may be stored in the cloud, but it’s floating beneath the ocean.

TeleGeography estimates that since 2019, international internet bandwidth demand has tripled to more than 3,800 terabits per second. The boom in data-hungry artificial intelligence is likely to further strengthen this trend. Data company Synergy Research Group predicts that data center capacity at major cloud providers will nearly triple over the next six years. To connect these data centers to the Internet, the data cable industry plans to lay 440,000 km of new submarine lines between 2020 and 2025.

Big changes have come from big tech. Until the early 2000s, submarine cables were primarily used to transport voice traffic around the world. Operators such as BT and Orange (formerly France Telecom) controlled much of the capacity. By 2010, the growth in data traffic led Internet and cloud computing giants (Amazon, Google, Meta, Microsoft) to begin leasing capacity on these lines.

As data needs skyrocketed, tech companies started investing in their own pipes. In 2012, the four companies used about one-tenth of international bandwidth. Today they claim almost three-quarters. The deep pockets of major tech companies will ensure the project’s completion. According to the Submarine Telecoms Forum, an industry group, only about half of all cable systems announced actually get built unless there’s help from tech companies, and in those cases, they almost always get built.

Of the $12 billion planned to be invested in new systems over the next four years, nearly one-fifth will come from big tech-backed cables. Amazon and Microsoft jointly own one and four networks, respectively. Meta owns one cable system outright and has investments in another 14 cable systems. Google is the most active, and the search giant directly owns 12 of the 26 cables. This year, the company completed Filmina, a $360 million project that spans more than 14,000 kilometers from the east coast of North America through Brazil and into Argentina.

By using dedicated cables, tech giants can avoid competing with other companies for third-party bandwidth and respond quickly to changes in user demand or issues (if a cable along the route is damaged, data can be transferred to another You can redirect to the company) ‘ line). TeleGeography’s Alan Mauldin points out that being an owner-operator for the tech giant also gives it the luxury of designing routes to meet its specific needs. Most carriers rely on public “landing stations” that connect ocean cables to customer data centers on land. Owning the cable allows businesses to connect the cable directly to their data centers, speeding up traffic.

Bandwidth and speed are further enhanced by smart technology, and ownership makes adoption easier. In 2019, Google introduced an innovation that increases the number of fiber threads in a cable from 16 to 24 (“space division multiplexing”). This year we went further and doubled the number of “cores” (clusters of fiber threads) in our new cables. A TPU cable system connecting Taiwan, the Philippines, and the United States increases capacity while reducing operating costs per bit.

All of this is transforming the data cable business. Big tech companies, which started out as big buyers of bandwidth from carriers, now lease some capacity on their cables to carriers. Traditional carriers are happy with this arrangement as they face constant pressure from consumers to expand capacity, but unlike big tech companies, they are desperately short of capital. There is. In terms of specialist companies supplying equipment and laying cables, things have been going well in recent years.

Like many other global industries, the data cable business is caught up in a technology race between the United States and China, and this is the second major shift. Take advantage of the Pacific Light Cable Network (PLCN). The 13,000km data pipeline was announced in 2016 with support from Google and Meta. The aim was to connect the West Coast of the United States and Hong Kong. By 2020, it had also reached the Philippines and Taiwan. But the U.S. government last year refused to approve the final leg to Hong Kong, fearing it would give Chinese authorities easy access to Americans’ data. Hundreds of kilometers of cables linking Hong Kong to the network lie unused on the ocean floor.

America is hindering China in other ways. Laying cables at depth is a complex task. Only a handful of contractors have the necessary skills. Three companies receive more than 80% of his cable construction spending: France’s Alcatel Submarine Networks, Japan’s NEC, and US SubCom. HMN Tech, the Chinese challenger spun out from China’s telecoms equipment champion Huawei, claims 9% of new annual construction spending. But amid tensions between China and the West, new cables with ties to the US, most of which are avoiding HMN Tech as a supplier. Telecom executives say they are refraining from using HMN. In 2022, a lucrative contract for SEA-ME-WE 6, a 19,000km line linking Southeast Asia and Europe owned by a group of carriers including India’s Bharti Airtel and Singapore’s SingTel, is expected to be awarded to HMN in its bid. Despite this, the bid was made by Subcom. It is reported that it was lower than that.

China is responding by charting its own course. The 21,500km PEACE submarine cable linking France through Kenya and Pakistan was built entirely by Chinese companies as part of China’s Digital Silk Road, a plan to increase its global influence. Reuters reports that this year, three Chinese carriers, China Telecom, China Telecom, China Unicom and China Mobile Limited, will invest 500 million yen in cable networks linking China and France via Singapore, Pakistan and Egypt. The project, built by HMN Tech, will be in direct competition with SEA-ME-WE 6.

Despite the escalating conflict between China and the US, bandwidth between the two countries increased by 20% annually from 2019 to 2023. Mobile phone operators in the United States and China also rely on cable and continue to strengthen network connections within each other’s territories. However, securing the necessary licenses is becoming increasingly difficult.

In March, the Federal Communications Commission announced a proposal that would require licensees to provide detailed information about their ownership. It also acknowledged concerns that the presence of China Telecom’s physical infrastructure in the United States “is significantly associated with national security and law enforcement risks.” All of this is making the incremental route more circuitous and therefore more costly. If inter-Pacific tensions continue to rise, those routes may one day disappear altogether.

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