From the bully pulpit: FCC’s Carr could strongarm allies over new subsea cable regulation

Feature Week

For a man never shy of speaking his mind, returning US President Donald Trump has been remarkably quiet on the topic of submarine cables, an area of increasing geopolitical tension. His new Federal Communications Commission (FCC) chairman, Brendan Carr, on the other hand, will likely have plenty to say as he leads a regulatory shift more than 20 years in the making.

Consolidating regulatory power

The end of 2024 saw the FCC propose the first changes to their submarine cable regulation rules since 2001. These new rules focus primarily on altering the compliance obligations related to International Section 214, which relates to providing telecoms services between the US and other countries.

There are three major changes at the core of this updated framework:

  1. Implementing a three-year reporting requirement: This would include detailed information on ownership, the use of foreign network technology, cybersecurity, etc.
  2. Shorter licence terms: Reducing the licence terms from the current 25-year terms, potentially as brief as 5 years.
  3. Expand the scope of licencing applications: Expanding the reach of regulations to cover more of the subsea cable ecosystem, including cable landing stations, entity zoning, submarine line terminating equipment, and potentially inland data centres and companies leasing capacity from submarine cables.

All of these factors are designed to give the FCC a closer grip on the country’s submarine cable infrastructure, which plays a crucial role in national security.

It should be noted here, however, that submarine cable regulation has not remained stagnant for the past two decades. As cable security and geopolitical tensions between East and West have been evermore thrown into the spotlight, subsea regulation has grown stricter, but this has been governed by the so-called ‘Team Telecom’, rather than the FCC itself.

Team Telecom is a regulatory supergroup made up of the Department of Justice, Federal Bureau of Investigation, Department of Defence, and Department of Homeland Security. All new cable projects are subject to a Team Telecom review and must be given the greenlight before they can receive a licence from the FCC.

This new regulatory shift, then, is more a matter of consolidating powers under the FCC itself alongside stricter licencing terms.

It is also worth noting that this shift has bipartisan support, with the process having begun under the previous Democratic administration.

So, what might these changes mean for the submarine cable industry itself?

 

Expensive delays

According to Dr Andrew Lipman, partner and head of TMT at law firm Morgan, Lewis & Bockius, the subsea industry’s primary concern is around delays of future projects.

“If these rules are more intrusive and restrictive, they could drive up costs and complicate and delay deployment,” he said. “Delay is a huge concern, particularly in a rising interest rate environment where financing can be heavily impacted.”

When asked if this regulatory shift will see some subsea projects becoming inviable, Lipton said that “only a small handful would be blocked”, but many more could be negatively impacted.

“I don’t think it will largely derail subsea projects, but it will require some surgery and tailoring – and that’s very expensive,” he said.

There is also still a political element at play, with Lipman suggesting the rules will likely be interpreted more proscriptively by the Republican-led Commission.

“It’s very likely that the Republicans and their incoming chairman Brendan Carr will interpret these new rules more conservatively and restrictively than the Democrats,” said Lipman. “National security issues [in the submarine cable industry] have been more bipartisan than many other telecom issues, but I think the Republicans are going to be tougher and stricter than the Democrats would be.”

 

Impact overseas

This tightening of the screws on the subsea cable industry, particularly how cables interact with US geopolitical rivals like China, could have ramifications far beyond the US itself.

Lipman suggests that Carr will push US allies to adopt a similarly strict regulatory approach. This could potentially lead more projects to cut out troublesome connections to China, instead opting for local intermediaries like Singapore.

“I think this is going to lead to a further separation between the US and its allies in relation to China. “I think Carr will use his bully pulpit as FCC chair to persuade US allies like the UK, Canada, Australia, New Zealand [the ‘Five Eyes’ alliance], as well as India and Japan, to push them to impose comparable and similar requirements,” said Lipman. “Over time, this will lead to more rerouting of data, which will have a significant impact on the industry.”

In addition to impacting routing decisions, these new regulations could also make working with Chinese partners within a consortium less appealing to cable operators.

Carr has notably praised the Clean Networks programme introduced by the first Trump administration, arguing in his Project 2025 chapter that he would like the FCC to create a Clean Standards initiative to further crack down on untrusted technology in US networks.

“The Clean Standards Initiative would address concerns about Chinese involvement, particularly around key technologies,” said Lipman, adding that it will make working with Chinese players more difficult.

The FCC has already revoked the International 214 licences of some Chinese carriers operating in the US, including China Mobile, China Unicom, and China Telecom, and the Commission is considering whether to revoke licences from submarine cables related to these companies, Lipman added.

 

Regulatory creep into data centres

Perhaps one of the most interesting considerations surrounding these new regulations could be their impact on data centres.

The data centre industry is currently largely unregulated in comparison to the subsea sector. Data centres are not overseen by the FCC or state public utility commissions, nor are they subject to Team Telecom reviews. The only regulatory hurdles these projects really have to face are potential reviews related to foreign ownership by the Committee on Foreign Investment in the United States, where appropriate.

But, with the FCC expanding the scope of their subsea regulations, data centres connected to these systems will likely fall under the new regulatory umbrella.

This, says Lipton, may offer the FCC a backdoor into more directly regulating the data centre industry – a fact that will cause potential headaches for hyperscalers like Google and Meta, who are key players in both sectors. In this AI-era, with billions being spent on new data centres around the world, such regulations would likely be unwelcome.

“The hyperscalers are the 600lbs gorillas in the room,” said Lipman. “This will give the FCC a way to glean more information and have a regulatory hook into the data centre industry.”

Lipman says he expects to see “measured pushback” from the tech giants against any form of regulatory overreach by the FCC.

 

A step towards a more fragmented global internet?

The FCC’s rule change is expected some time later this year, with rapid action viewed as critical by the Trump administration.

“This is a high priority for the incoming FCC chair and the Trump administration. This is not simply the FCC acting alone, but it’s building on concerns that are shared by the Defense Department, the Department of Commerce, and others,” said Lipton.

Ultimately, it remains to be seen exactly how the proposed changes would be implemented, but it seems inevitable that they would make the process of laying cables beneath the waves more difficult and even more geopolitically sensitive.

How is the new Trump administation going to change the US telecoms market? Join the industry in discussion at Connected America 2025 live in Dallas, Texas

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