Submarine Cable Telecom and National Security Review 2018-2020: What’s on the Horizon?

Andrew Lipman, Ulises Pin and Deise Wood of Morgan Lewis.By Andrew Lipman, Ulises R. Pin and Denise S. Wood
March 19, 2018

As the global demand for data continues to grow at an extraordinary rate, a changing geopolitical climate and increased focus in on cybersecurity and national security concerns, including ownership of critical infrastructure, will continue to impact submarine cable development in the coming years. With more than three billion current Internet users, Internet traffic is anticipated to reach 30 gigabytes per capita by 2021. Given their capacity, speed and security, submarine cables, carrying over 99 percent of all international communications, remain the preferred medium for transporting Internet traffic. Some recent changes that are leading to greater unification in the regulatory environment, particularly in the European Union (“EU”), appear to point toward harmonization of regulatory requirements with respect to trans-Atlantic submarine cable routes. However, an increasingly politicized environment resulting in heightened economic nationalism also creates impediments to investment in, and deployment of, submarine cable networks, particularly in the United States and the EU. This article provides a high-level overview of some of the regulatory considerations on the horizon that may impact submarine cable licensing and operations in the coming years.

  1. Heightened Economic Nationalism in Europe and the United States

Certain countries, including the United States and several EU members, are becoming increasingly economically nationalistic, spurred by drivers such as trepidations about terrorism, foreign policy and, in some instances, sluggish economic recovery or promotion of local economy. For example, in the U.S., there was some recent debate about whether to extend the Jones Act to ships that lay and repair submarine cables, thereby requiring that ships be built in the U.S. and have a majority of the crew as U.S. citizens. However, parties in opposition have strongly argued that such measures would have a detrimental impact on the efficient protection of critical submarine cable infrastructure that spans the globe, and the proposal has been halted for the time being.

The emergence of China as a new counterbalance to American hegemony in the world and its well-publicized acquisitions of critical technologies in the West coupled with the highly politicized environment in the United States and Europe has resulted in economies less open to foreign investment, particularly with respect to China, the Middle East and Russia.

  1. Changes to the U.S. Regulatory Landscape

The marked increase in economic nationalism and protectionism in the United States has resulted in heightened national security review of transactions involving foreign investors and which involve critical infrastructure, such as submarine cables. Combined with the recent reversal on net neutrality rules in the United States and regulatory changes in the EU, international and intercontinental submarine cable owners and operators must navigate an increasingly complex legal and regulatory landscape.

 

To continue reading the rest of this article, please read it in Issue 99 of the SubTel Forum magazine here http://subtelforum.com/products/subtel-forum-magazine/ on page 18.

2018-04-11T09:53:51+00:00 April 11th, 2018|Categories: Magazine, State of the Industry|