US FCC plans tighter rules that will help US firms in undersea internet cable market

• The FCC will require licenses for operators of submarine line terminal equipment connecting to U.S. terrestrial facilities, a first-time licensing requirement for this critical infrastructure
• Fast-track approvals for U.S. companies like Meta and Google require operators to guard against espionage, monitor security compliance, and avoid foreign equipment posing security risks
• The rules expand on existing bans against companies like Huawei, ZTE, China Telecom, and China Mobile, addressing growing national security concerns about the network of over 400 subsea cables

Summary

The U.S. Federal Communications Commission (FCC) announced plans on June 3 to strengthen oversight of submarine communications cables, which handle 99% of international internet traffic. The new regulations will require licenses for operators of submarine line terminal equipment for the first time, marking a significant tightening of security protocols.

Key Regulatory Changes:

• New licensing requirements for submarine cable terminal equipment operators
• Fast-track approval process for trusted U.S. technology firms, particularly benefiting Meta and Alphabet's Google
• Expanded ban on equipment from Chinese companies and other foreign adversaries
• Companies must demonstrate robust protections against espionage and security incidents

National Security Focus:

The rules target Chinese firms including Huawei, ZTE, China Telecom, and China Mobile, building on 2023 restrictions. The FCC cited ongoing concerns about the network of over 400 subsea cables and potential threats from China and Russia.

Market Implications:

U.S. tech giants like Meta and Google are positioned to benefit from streamlined approval processes for additional undersea cable systems to accommodate growing internet traffic demand. The regulations create competitive advantages for domestic firms while restricting Chinese participation in this critical infrastructure sector.

Background:

U.S. officials have expressed concerns about China's efforts to access sensitive personal data of American citizens. In 2021, the Justice Department implemented national security agreements with Google and Meta regarding submarine cable operations. Senate Foreign Relations Committee Chair Jim Risch emphasized in April the need for international cooperation to improve undersea infrastructure resilience and publicly identify sabotage perpetrators.