After causing disruptions across multiple sectors, the US-Iran war is now speculated to be on the brink of encroaching on the digital space. On May 9, Iranian military spokesperson Ebrahim Zolfaghari spoke about Iran’s plan to levy a charge for internet cables.
“We will impose fees on internet cables,” he said in a social media post.
Iranian media have elaborated on the plan and mentioned specific companies, such as Google, Meta, Microsoft, and Amazon, as targets for the imposition.
Undersea internet cables are fibre-optic lines laid on the ocean floor that carry around 95 to 99 per cent of all intercontinental data traffic and are a critical part of the global communication infrastructure.
Approximately seven major cables run under the Strait of Hormuz, prompting the West Asian nation to use it as a geopolitical asset.
Notable cables include Asia-Africa-Europe-1 (AAE-1), which connects Southeast Asia and Egypt to Europe; FALCON, which connects India and Sri Lanka to Gulf countries; and GBI (Gulf Bridge International), which links all Gulf countries, including Iran. Some of these cables terminate in Mumbai, and, according to reports, around 60 per cent of India's internet traffic is carried over these links.
A slight disruption to these cables can cause unstable connectivity, affecting businesses that depend on cloud services, stock exchanges, banking transactions, and server access, with broader implications for the economy.
Concerns around rising subscription fees for cloud services are also being raised. A typical undersea cable system is a large investment and can cost between $100 million and $500 million to build and install, depending on the area it covers. Around 150-200 cables are faulted each year due to accidental human activities, costing between $1 million and $3 million to repair. Since cable damage is a recurring issue, global technology firms are unlikely to agree to a new “protection payment” demand easily.
Even if payment is an option, the likelihood of higher subscription prices for cloud services such as Google Cloud, Amazon Web Services, and Microsoft Azure is lower, since these companies factor such risks into capital expenditure planning. The larger risk is slower speeds and unreliable connectivity.