April 20, 2024

Big Tech and Geopolitics Are Reshaping the Internet’s Pipelines

Listen to this story.
Enjoy more audio and podcasts on iOS either Android.

Your browser does not support the element

W.hen the The navies of Britain, Estonia and Finland held a joint exercise in the Baltic Sea earlier this month, its goal not to hone their warfighting skills. Instead, forces were training to protect underwater gas pipelines and data pipelines from sabotage. The drills followed events in October when undersea cables were damaged in the region. Sauli Niinisto, the Finnish president, questioned whether the Chinese ship blamed for the disaster dragged its anchor on the ocean floor “intentionally or as a result of extremely poor nautical skill.”

Underwater cables used to be seen as the boring pipes of the Internet. Now data economy giants such as Amazon, Google, Meta and Microsoft are exerting greater control over the flow of data, even as tensions between China and the United States risk dividing the world’s digital infrastructure. The result is to turn submarine cables into precious economic and strategic assets.

Underwater data pipelines carry nearly 99% of intercontinental Internet traffic. TeleGeography, a research company, estimates that there are 550 active or planned undersea cables currently stretching more than 1.4 million kilometers. Each cable, which is usually a bundle of between 12 and 16 fiber optic strands and as wide as a garden hose, covers the seabed at an average depth of 3,600 meters. About half have been added in the last decade. The newest ones are capable of transferring 250 terabits of data per second, the equivalent of 1.3 million cat videos. Data may be stored in the cloud, but it flows under the ocean.

Since 2019, international internet bandwidth demand has tripled to more than 3,800 terabits per second, TeleGeography estimates. The rise of data-hungry artificial intelligence may strengthen this trend. Synergy Research Group, a data company, predicts that data center capacity at large cloud providers will nearly triple over the next six years. To connect these data centers to the Internet, between 2020 and 2025 the data cable industry will install 440,000 kilometers of new submarine lines.

A great change has come from the hand of big technologies. Until the early 2000s, undersea cables were primarily used to carry voice traffic around the world. Telecommunications operators such as B.T. and Orange (formerly France Telecom) controlled most of the capacity. In 2010, increased data traffic led Internet and cloud computing giants (Amazon, Google, Meta and Microsoft) to begin leasing capacity on these lines.

As their data needs increased, technology companies began investing in their own channels. In 2012, the four companies used about a tenth of international bandwidth; Today they claim almost three quarters. The deep pockets of Big Tech ensure that projects are completed. According to the Submarine Telecoms Forum, an industry body, only about half of all announced cable systems are actually built, unless they are backed by technology companies, in which case they almost always are.

Big Tech-backed cables account for nearly a fifth of the $12 billion in planned investments in new systems over the next four years. Amazon and Microsoft are partial owners of one and four networks, respectively. Meta owns one cable system and invests in 14 others. Google is the most aggressive: the search giant directly owns 12 of its 26 cables. This year it completed Firmina, a $360 million project stretching more than 14,000 kilometers from the east coast of North America through Brazil to Argentina.

Dedicated cables allow tech giants to avoid competing with others for third-party bandwidth and react quickly to changes in user demand and any problems (if a cable on one route is damaged, data can be rerouted to another of companies’ lines). TeleGeography’s Alan Mauldin points out that being owner-operators also gives tech giants the luxury of designing routes that meet their specific needs. Most telecom operators rely on public “landing stations,” which connect cables at sea to customer data centers on land. By owning their cables, companies can connect them more directly to their own data centers, speeding up traffic.

Your bandwidth and speed are further improved thanks to smart technology, the property of which makes it easy to implement. In 2019, Google introduced an innovation (“spatial division multiplexing”) that increased the number of fiber strands in a cable from 16 to 24. This year it went further, doubling the number of “cores” (groups of fiber strands). ) in his new TPU cable system linking Taiwan, the Philippines and America, increasing capacity and reducing operating cost per bit.

All this is transforming the data cable business. Having started out as large buyers of bandwidth from telcos, Big Tech is now leasing capacity on some of its cables to telecom operators. Traditional telcos are happy with this deal as they face constant pressure from consumers for more capacity but, unlike Big Tech, are desperately short of capital. As for the specialized companies that supply the equipment and lay the cables, these are years of success.

Like many other global industries, the data cable business is also becoming entangled in the technological competition between the United States and China – a second big change. Take the Pacific Light cable network (PLCN). The 13,000 kilometer data channel was announced in 2016, backed by Google and Meta. Its goal was to link the west coast of America with Hong Kong. By 2020 it had reached the Philippines and Taiwan. But last year the U.S. government denied approval for the final leg to Hong Kong, concerned that this would give Chinese authorities easy access to Americans’ data. Hundreds of kilometers of cable that would link Hong Kong to the grid languish unused at the bottom of the ocean.

The United States is hindering China in another way. Laying cables in depth is a complicated job. Only a handful of contractors have the necessary skills. Three: France’s Alcatel submarine networks, national executive committee of Japan and SubCom of the United States—receive more than 80% of the spending on cable construction. hmn Tech, a Chinese rival sprung from Huawei, China’s telecom equipment champion, claims 9% of new annual construction spending. But in the midst of Sino-Western tensions, new cables that have ties to the United States, that is, most of them, avoid hmn Technology as a provider. Telecommunications executives say they are discouraged from using hmn. In 2022, a lucrative contract for SEAMEUS 6, a 19,000 kilometer line owned by a group of telecom operators, including India’s Bharti Airtel and Singapore’s SingTel, linking Southeast Asia with Europe, was awarded to SubCom, even though hmnThe offer was reportedly lower.

China is responding by charting its own course. PEACE, a 21,500-kilometer undersea cable linking Kenya to France via Pakistan, was built entirely by Chinese companies as part of China’s “digital silk road,” a plan to increase its global influence. Reuters reported that this year three Chinese operators – China Telecom, China Unicom and China Mobile Limited – are investing $500 million in a cable network connecting China and France via Singapore, Pakistan and Egypt. The project, which will be built by hmn Tech, will compete directly with SEAMEUS 6.

Despite the growing Sino-American rivalry, from 2019 to 2023 the bandwidth between the two has grown by 20% annually. American and Chinese mobile operators, which also rely on cables, continue to increase network connectivity in each other’s territory. However, it is becoming increasingly difficult to obtain the necessary licenses.

In March, the US Federal Communications Commission issued a proposal that would require licensees to provide more information about who owns them. He also acknowledged concerns that the presence in the United States of China Telecom’s physical infrastructure is “highly relevant to national security and law enforcement risks.” All this makes the path followed by the bits and bytes more tortuous than before and, therefore, more expensive. If trans-Pacific tensions continue to rise, those routes may one day disappear entirely.

To stay on top of the biggest stories in business and technology, subscribe to Bottom Line, our subscriber-only weekly newsletter.

Leave a Reply

Your email address will not be published. Required fields are marked *