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The latest casualty of the standoff between the U.S. and China could be a new, part built undersea cable connecting Hong Kong to Los Angeles. The project promises “high-speed, low latency and more secure bandwidth to all Internet users,” and is backed by U.S. tech giants Google and Facebook. It is the latest example of U.S. industry taking hits over the escalating trade and tech war.
It is hardly a surprise that a direct link between the two countries sparks questions of national security—given the parallel debate over Huawei and 5G and its own role in the transmission of internet data around the world. Now, according to a report in the Wall Street Journal, “U.S. officials are seeking to block” the project, “in a national-security review that could rewrite the rules of internet connectivity between the U.S. and China.”
Pacific Light Data Communication is $300 million and 8000 miles into its project, “to build the first subsea cable directly connecting Hong Kong and U.S.” The problem is one of timing. For the multiagency review panel led by the Justice Department, a direct link between the U.S. and China, backed by a Chinese investor (Beijing’s Dr. Peng Telecom & Media Group—one of China’s largest domestic telecoms players), could not come at a more sensitive moment.
For that U.S. review panel, known as Team Telecom, this would be an unprecedented step. Past projects that link the U.S. to China have been approved, with assurances that the “U.S. beachhead had taken steps to prevent foreign governments from blocking or tapping traffic.” But times have changed, and there is actually little surprise that the panel is rethinking its approach given that wider context.
That context also hasn’t been helped by the situation in Hong Kong, with pro-democracy protests being stamped out by the authorities, and the misuse and abuse of social media by government agencies.
The connectivity is intended to meet the growing bandwidth requirements between East and West, including the increased demands from fast-growth markets on China’s doorstep—Malaysia, Indonesia, Philippines and Thailand, for example. According to the WSJ, this has been the driver behind “companies like Google and Facebook spending the past decade funding similar cables to handle ever-growing network traffic between the U.S. and Asia.”
If Team Telecom does refuse to extend the temporary license that has enabled work to continue and which expires this month, the repercussions domestically and on international relations could be stark. It would come hot on the heels of the decision to deny China Mobile permission to operate a U.S. affiliate. And while the final decision falls to the FCC, it is unlikely to ignore the advice from government agencies and push forwards regardless.
And so for now, much depends on whether the Justice Department has the backing of other agencies or is pushing a harder line than the rest. Significant lobbying will be taking place behind the scenes. And that lobbying will be domestic, with much at stake for U.S. Big Tech as it struggles to come to terms with the new normal of the severed commercial relationships being mandated between U.S. entities and China.
Google (and to a lesser extent Facebook) already faces a loss of income from supplying Chinese tech giant Huawei under highly-publicised “blacklist” restrictions. And just last week, both companies (alongside Twitter) became embroiled in a political fight with China as the country’s abuse of social media to combat Hong Kong protesters came to light. Financial repercussions were threatened in the Chinese press.
Facebook and the Justice Department declined to comment on this latest news, but a Google spokesperson told the WSJ that the company has “we are currently engaged in active and productive conversations with U.S. government agencies about satisfying their requirements specifically for the PLCN cable.”
There will be much more of the same to come, whatever the eventual outcome here. The U.S. has set a hardline course in its discussions with China and seems willing to make material sacrifices—on its own part and that of its commercial sectors—in achieving its goals. And while all seems to be on the table as trade talks drag on, as with other parts of the tech sector, the timetable for projects and product development cannot be left on hold.
With the growing divide, there has been much talk of this leading to a so-called “splinternet,” with China forced to wean itself from U.S. tech and go its own way. This would mean introducing new alternatives to operating systems and networking protocols where now there are broadly global standards. Not all of those examples of the “splinternet” are quite as literal as a severed data cable under the sea.
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