The Federal Communications Commission has proposed new oversight rules for submarine communications cables, including a first-time licensing requirement for operators of submarine line terminal equipment. The rules would extend national security restrictions beyond specific named vendors to cover any equipment originating in China or other foreign adversaries.
Roughly 99% of international internet traffic travels through more than 400 subsea cables. The FCC wants to control who operates them and what hardware they use.
Who wins
Meta and Google are the clearest beneficiaries. Both companies have invested billions in private subsea cable networks that connect their data centres across continents. Google owns or co-owns more than 20 submarine cables. Meta has invested in cables spanning the Atlantic, Pacific and Indian oceans.
These companies already use US-origin or allied-nation equipment. They have the compliance infrastructure to meet enhanced security requirements. They have the legal teams to navigate a fast-track approval process. And they have the capital to absorb whatever additional costs the new rules impose.
A regulatory framework that raises the barrier to entry and excludes Chinese equipment is, in practical terms, a framework that consolidates the market around the companies that already dominate it.
Who loses
Chinese equipment manufacturers, including Huawei Marine, now known as HMN Technologies, are the obvious targets. The company has built or repaired a significant share of the world's submarine cables and competes on price. Broad restrictions on Chinese-origin equipment would shut it out of projects involving US-licensed operators.
Smaller cable operators and consortia that rely on Chinese hardware for cost reasons face a choice: replace their equipment at significant expense or accept exclusion from the fast-track approval stream. Either option is painful.
Developing nations that have contracted with Chinese firms for submarine cable projects may also find their connectivity plans complicated by US licensing requirements that extend beyond American waters.
The strategic context
Washington's concern is not abstract. Submarine cables are critical infrastructure that carries financial transactions, military communications and civilian internet traffic. A cable that is tapped, disrupted or controlled by a hostile actor represents a national security risk that is difficult to detect and expensive to remediate.
The FCC's proposal aligns with a broader pattern of US policy aimed at excluding Chinese technology from critical communications infrastructure, following similar restrictions on terrestrial 5G equipment.
The concentration risk nobody mentions
The irony is that regulations designed to protect national security may increase a different kind of vulnerability: market concentration. If the subsea cable network becomes dominated by two or three US technology companies, the resilience of the system depends on the operational decisions of those companies.
A network controlled by Meta and Google is not a public utility. It is private infrastructure operated by companies whose priorities are commercial, not strategic. Replacing one set of risks with another is not the same as eliminating risk.
The FCC is solving the China problem. Whether it is creating a concentration problem in the process is a question the proposal does not address.
