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U.S. blocks underseas data cables to Hong Kong forcing tech firms to develop alternatives

Hong Kong is the key hub for American internet cables that connect to China and Southeast Asia

 

American tech giants such as Alphabet Inc.'s Google are considering alternatives to Hong Kong as a global data hub after U.S. national security officials upended plans for a Trans-Pacific internet link to the territory.

Google and Facebook Inc. last week asked U.S. authorities' permission to start using the internet conduit's branches to Taiwan and the Philippines while leaving its Chinese portion offline. The two firms helped fund the 8,000-mile Pacific Light Cable Network from Los Angeles to Hong Kong, and offered the compromise after a national security panel led by the Justice Department held up final approval to use the cable, which is already in place.

In light of regulators' refusal, other tech firms are, like Google, exploring destinations other than Hong Kong for future links, the people said. The U.S. concern reflects growing U.S. distrust of China's technology ambitions, a stance exemplified by Washington's fight against electronics giant Huawei Technologies Co., they said.

It also raises questions for U.S. companies trying to meet a growing need for bandwidth to handle customers' video chats, social-media posts and YouTube videos: Where should they route the cables, and who should they work with if Chinese partners are now potentially off the table?

A Google spokeswoman said the company is seeking approval for various undersea cables and will abide by the relevant agencies' decisions. A Facebook spokeswoman said the company is "navigating through all the appropriate channels on licensing and permitting."

Hong Kong has long been a top destination for American internet cables. While Chinese authorities have blocked U.S. firms like Facebook and Google from operating on the mainland, the semiautonomous Chinese territory has unfiltered access to the web and has served as a stopping-off point for global companies seeking connections around the region.

But Hong Kong's rule of law can no longer be counted on as Beijing uses a heavier hand, U.S. officials say. Hong Kong citizens have spent months resisting Beijing's efforts to integrate the territory more closely with mainland China. A string of public protests followed by violent police responses has altered daily life in the city of 7.5 million and stressed its economy.

"This is a harbinger of things to come," said Glenn Gerstell, a longtime telecom attorney who recently retired from his post as general counsel at the National Security Agency to advise the nonpartisan Center for Strategic and International Studies.

"Until recently, Hong Kong had been thought of in sort of separate terms from China," said Mr. Gerstell, who wasn't involved in the Pacific Light cable's review.

"The demonstrations over the past months and Beijing's reaction greatly eroded that confidence."

Some industry executives are now considering alternative landing spots around the region for underwater internet cables, such as Taiwan, Vietnam, the Philippines and Guam. There is no clear best path forward yet, and U.S. regulators have been loath to provide guidance, according to people involved in the discussions.

Another idea is routing more traffic through satellites instead of cables as the technology improves. Amazon.com Inc., for instance, is launching a constellation of low-earth-orbit satellites designed to connect far-flung locations.

In a filing proposing their compromise last week, lawyers for Google and Facebook told the Federal Communications Commission they were "not aware of any national security issues" with the Pacific Light cable's links to Taiwan and the Philippines. They emphasized their request excluded the portion of the cable that lands in Hong Kong and the participation of their Chinese partner.

The request from the U.S. firms to effectively hive off the China portion of the cable followed months of uncertainty after the Justice Department, which took the lead on the multiagency panel that reviews telecommunications matters, signaled opposition due to the China-related issues.

While the FCC makes final decisions on submarine cable licenses, it typically heeds the assessments of the panel, known as Team Telecom.

The panel's assessment of the Pacific Light cable could spell trouble for multiple outstanding projects. A planned Hong Kong-Americas cable follows a similar route between Los Angeles and the Chinese territory and includes investment from Facebook.

Another cable between Hong Kong and the U.S. territory of Guam known as HK-G faces an uncertain fate. Project backers, including Google, started building that system in 2017.

Both projects remain under the review of Team Telecom and project backers are waiting for announcements on their projects.

 

 

 

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