The US government is revising the rules governing undersea cables for the first major update in over two decades, aimed at strengthening regulation to protect the supply chain from the influence of companies associated with adversary countries like China and Russia.
The Federal Communications Commission (FCC) recently approved new proposed rules regarding companies involved with undersea cables, emphasizing cooperation with allies and streamlining approval processes. Following the end of the public comment period, the FCC will complete its first significant revision since 2001.
The new rules explicitly prohibit companies headquartered in adversary countries such as China, Russia, and Iran from participating in US undersea cable-related businesses, essentially excluding these countries from the construction and operation of US undersea cables. In principle, adversary countries will be barred from accessing US undersea cables.
The new rules aim to ensure the security of the entire undersea cable supply chain, including materials and transmission equipment by specifically excluding companies from adversary countries.
To encourage investment in the costly undersea cable industry by both public and private sectors, the US will simplify approval processes for companies from allies and partners such as Japan and Europe. The current average approval process time of two years is expected to be further shortened.
Companies that are approved must submit a cybersecurity plan and ensure that companies from hostile nations do not participate in the cable supply chain, including all supporting equipment and technology.
The new rules are expected to create more opportunities for companies like NEC from Japan to participate in US undersea cable orders, but these companies will also be required to strengthen examination of their own supply chain risks.
Under the latter stages of the Biden administration, the FCC initiated and promoted these new regulations. The rules require that participating companies undergo a review every 25 years.
Undersea cables have been in use since the late 19th century and carry over 95% of international data communications. According to FCC estimates, these cables facilitate around $100 trillion in financial transactions per day.
Approximately 90% of the world’s undersea cables are manufactured by NEC of Japan, SubCom of the US, and Alcatel Submarine Networks of France. The remaining portion is manufactured by HMN Technologies, a subsidiary of Huawei Marine Networks, which operates in Africa and Pacific island regions.
Tech giants Google, Meta Platforms, and Amazon Web Services (AWS) are the primary operators of undersea cables.
The importance of undersea cable security is self-evident. In April, a ship carrying Chinese crew members damaged a cable in the Taiwan Strait, highlighting potential risks.
Moreover, the risk of exploitation through network vulnerabilities is a key reason for the US banning Chinese companies from participating in cable construction. Previously, concerns were raised over data security when a company with ties to China was involved in the maintenance and repair of cables operated by Google and Meta.