Big Tech and the AI investment boom in underwater cables

Over 95% of international data and voice call traffic travels through nearly a million miles of underwater communication cables.

These cables carry government communications, financial transactions, email, video calls and streaming around the world.

The first commercial telecommunication subsea cable was used for telegraphs and was laid across the English Channel between Dover, England and Calais, France in 1850.

The technology then evolved to coaxial cables that carried telephone conversations, and most recently, fiber optics that ferry data and the internet as we know it.

“About ten years ago, we saw the advent of another big category, which is the webscale players and the likes of Meta, Google, Amazon, etc., who represent now probably 50% of the overall market,” said Paul Gabla, chief sales officer at Alcatel Submarine Networks.

Alcatel is the world’s largest subsea cable manufacturer and installer, according to industry trade magazine Submarine Telecoms Forum.

Demand for subsea cables is increasing as tech giants race to develop computation-intensive artificial intelligence models and connect their growing networks of data centers.

Investment into new subsea cable projects is expected to reach around $13 billion between 2025-2027, almost twice the amount that was invested between 2022 and 2024, according to telecommunications data provider firm TeleGeography.

“AI is increasing the need that we have for subsea infrastructure,” said Alex Aime, vice president of network investments at Meta. “Oftentimes when people think about AI, they think about data centers, they think about compute, they think about data. But the reality is, without the connectivity that connects those data centers, what you have are really expensive warehouses.”

In February, the company announced Project Waterworth, a 50,000km (31,000-mile) cable that will connect five continents, making it the world’s longest subsea cable project.

Meta will be the sole owner of Waterworth, which the company says will be a multi-year, multi-billion-dollar project.

Amazon also recently announced its first wholly-owned subsea cable project called Fastnet.

Fastnet will connect Maryland’s eastern shore to County Cork, Ireland, and capacity will exceed 320 terabits per second, which is equivalent to streaming 12.5 million HD movies simultaneously, according to Amazon.

“Subsea is really essential for AWS and for any connectivity internationally across oceans,” Matt Rehder, Amazon Web Services vice president of core networking, told CNBC in an interview about Amazon’s subsea cable investments. “Without subsea you’d have to rely on satellite connectivity, which can work. But satellite has higher latency, higher costs, and you just can’t get enough capacity or throughput to what our customers and the internet in general needs.”

Google is another large player, having invested in over 30 subsea cables.

One of the company’s latest projects is Sol, which will connect the U.S., Bermuda, the Azores and Spain.

Microsoft has also invested in the infrastructure.

“You’ve seen this huge growth in submarine cables over the past 20 years. And this is driven by just a voracious demand for data,” says Matthew Mooney, director of global issues at cybersecurity firm Recorded Future.

Disruptions due to cable damage can be quite significant, particularly in areas served by few internet connections.

“If you cut a cable, you can cut off multiple countries from internet access, and that includes financial transactions, banking, e-commerce and basic communications,” said Erin Murphy, a senior fellow at the Center for Strategic and International Studies, a nonprofit national security research organization.

That very thing happened to Tonga, an island nation east of Australia.

In 2022, debris from an underwater volcanic eruption severed the island’s only subsea communication cable, cutting the island off from the rest of the world.

In September, cuts to subsea cables in the Red Sea caused disruptions to Microsoft’s Azure cloud service. The company was able to re-route traffic, but users in Asia and the Middle East still faced increased latency problems and degraded performance.

Experts have said that the majority of subsea cable damage is accidental, usually due to fishing activity or a ship accidentally dropping its anchor on a cable. But lately, these cables are becoming the suspected targets of sabotage.

“When you have so many vessels in international waters that are highly trafficked…