TOO ‘CRITICAL’ FOR THE PUBLIC: Nationalizing Subsea Communications in the 21st Century BY KRISTIAN NIELSEN:

The Future of Subsea Communications: Nationalization, Privatization, and Public-Private Partnerships (PPPs)

Subsea communication cables form the backbone of the modern digital age, carrying over 95% of international data traffic. As global reliance on these cables grows, the debate over how best to manage this critical infrastructure has intensified. Should governments nationalize these assets to protect them, or should private investment drive innovation and efficiency? A middle-ground approach—Public-Private Partnerships (PPPs)—offers a balanced solution.

Nationalization: Security with Trade-offs

Stephen Korbin’s research highlights that nationalization often arises from economic motivations, aiming to secure critical industries and enhance national control. The ‘Domino Effect’ of Libya’s 1970s nationalization of oil assets inspired similar actions across the Middle East, showcasing the strategic benefits of state control. However, nationalization often leads to operational inefficiencies and reduced innovation. For example, Venezuela’s state-owned PDVSA suffered a decline in technological advancement due to bureaucratic constraints and underinvestment in R&D.

Privatization: Driving Efficiency and Innovation

In contrast, D’Souza & Megginson’s studies show that privatization boosts performance through competitive pressures and profit-focused strategies. Mexico’s telecommunications company, Telmex, saw significant improvements after privatization, including expanded network coverage, enhanced service quality, and modernization. Yet, privatization can raise concerns about accessibility and affordability, as private firms often prioritize profitability.

Public-Private Partnerships: A Balanced Approach

PPPs combine government oversight with private sector efficiency, providing an effective model for managing subsea cables. Case studies like the Hawaiki Submarine Cable (New Zealand) and the Coral Sea Cable System (Australia) highlight the benefits of PPPs:

• Risk Sharing: Governments and private entities share financial and operational risks.
• Access to Expertise: Private sector involvement accelerates innovation and efficiency.
• Alignment with National Goals: Public oversight ensures projects meet strategic and economic objectives.

These partnerships have proven effective in enhancing infrastructure development, improving connectivity, and supporting national security.

Conclusion: The Path Forward

The debate between nationalization and privatization reveals complex trade-offs. While nationalization secures control, it often stifles innovation. Privatization fosters efficiency but risks overlooking public interest. PPPs emerge as the optimal solution, blending the strengths of both models.

As global dependency on subsea cables intensifies, embracing a hybrid approach ensures both robust infrastructure and strategic oversight, shaping the future of global connectivity and security.

To read the complete article, check out Issue 139 of the Sub Tel Forum Magazine here