In un nuovo report dello European Council on Foreign Relations (ECFR), Effetto rete: la sovranità digitale europea nel Mediterraneo, per cui ho avuto l'onore di essere intervistato, Arturo Varvelli, Matteo Colombo e Federico Solfrini spiegano perché i cavi internet siano al centro della crescente concorrenza geopolitica tra Stati Uniti e Cina, e cosa deve fare l’Unione Europea per costruire e proteggere le infrastrutture di rete nella regione mediterranea. Sulla base di interviste con dirigenti aziendali, esperti ed analisti, gli autori concludono come l’UE non stia facendo abbastanza per proteggere gli interessi europei in materia di infrastruttura digitale.
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The development of the internet is the defining technological transformation of the era, opening up a new information age in which global communication can happen in an instant. This unprecedented situation is underpinned by infrastructure in the form of physical cables that criss-cross the world, over land and under oceans. Those cables that lie at the bottom of the sea are a cornerstone of this network, and thus of modern life. Indeed, 97 per cent of internet traffic and $10 trillion in daily financial transactions pass through undersea cables, which collectively run for 1.2 million kilometres – more than three times the distance from the earth to the moon.
The infrastructure that makes the internet work is increasingly a focus of geopolitical competition. Who owns undersea cables and what routes they take are increasingly sensitive questions in this. These cables play a critical role in data protection, economic development, and diplomatic relationships between states. Currently, the United States and China are the main players – and rivals – in this market, in terms of both whose companies physically build the infrastructure and which countries are drawing infrastructure issues into wider geopolitical questions.
Unlike these two global powers, the European Union is yet to fully flesh out its own approach to the issue. This could weaken its efforts to become more sovereign in a world of increasing geopolitical competition. Instead of working together in pursuit of shared European interests, EU member states and EU-based companies still largely compete with each other in the roll-out and management of internet infrastructure. At the same time, EU-based companies have well-established relationships in numerous states; they have built and financed the construction of much internet infrastructure around the world; and they operate many existing undersea cables. Europeans should, therefore, capitalise on these strengths by devising and implementing a strategy to identify and support undersea cable projects and incentivise the creation of pan-European consortia, especially in their most immediate neighbourhood: non-EU Mediterranean states and adjacent countries.
This paper examines the relationship between the EU, its member states, countries in the wider Mediterranean region, and the internet infrastructure industry. It draws on interviews with policy experts, business representatives from the sector, and legal specialists. The first half of the paper outlines the main dynamics of this web of relationships, covering the EU’s current position and policy basis, its interactions with China and the US, and the role of individual companies and consortia. The second half of the paper examines the geographical theatres of competition in the EU’s wider Mediterranean neighbourhood: the Middle East, and North Africa and the Sahel. The paper concludes with policy recommendations for how the EU should take a new approach to building and protecting internet infrastructure in the Middle East, North Africa, and the Sahel – and thereby promote its own interests and strengthen the European economy.
The internet infrastructure sector in the wider Mediterranean
Four models predominate in the internet infrastructure market: the first is that of a telecommunications company that delegates construction to an external company, while it operates and maintains the infrastructure. The second is a big tech or telecommunications company that constructs, operates, and maintains the infrastructure. The third involves two or more companies (big tech or telecommunications companies, or both) allocating the infrastructure to a specialised group and operating and maintaining it as part of a consortium. The fourth is that of two or more big tech or telecommunications companies constructing, operating, and maintaining the infrastructure in consortia.
The current market in the wider Mediterranean is influenced by two main global political actors: the US and China. Generally, the US works to create the best conditions around the world for American companies to operate in the sector. The Chinese government actively engages with its companies to advance its interests; individuals linked with the Chinese government are often on the boards of these firms. Meanwhile, some regional players – telecommunications companies based in the Gulf, above all – also have a significant interest in the wider Mediterranean region. And European companies are also active in the region; these firms often have a global reach but their activities are also strongly shaped the decisions of EU member states.
Broadly speaking, three main types of company are active in the internet infrastructure sector.
- Telecommunications companies provide voice- or data-transmission services. Some of these firms also participate in the construction and operationalisation of undersea cables via subsidiaries such as Orange Marine, Telecom Italia Sparkle, and Huawei Marine.
- Big tech companies provide internet-based services. They include Amazon, Apple, Google, Facebook, and Microsoft. All these firms, aside from Apple, have recently invested in the construction of undersea cables.
- Companies that specialise in the installation and repair of undersea cables work in the internet infrastructure sector on behalf of telecommunications firms and other operators. One such company is Alcatel Submarine Networks.
The EU, internet infrastructure, and digital sovereignty
Since 2019, the European Commission has explicitly stated its aim to be a “geopolitical Commission”. In line with this, the concept of ‘digital sovereignty’ has become increasingly important as the Commission deals with the new challenges facing Europe. The EU is currently devising a broad European digital agenda whose external aspects include the idea that the EU should become a unified actor in the realm of technology, particularly as concerns computing power, data control, and securing connectivity. Achieving this will involve creating legal, regulatory, and financial instruments that can help the EU actively promote European values and principles in this domain. Without its own digital capacities and autonomy, Europe will not be able to fully contend with other actors in the tech space, and will find itself caught up in rising US-China competition for technological supremacy.
Undersea cables are critical infrastructure because they are essential for other parts of the economy. Broadly speaking, the greater the number of undersea cables and routes available, the better the lines of communication in the countries they connect – and the better the protection against interruptions that could lead to a digital network collapse.
However, the power to grant licences to build digital infrastructure lies solely with member states. The EU is not able to grant licences or agree on a common policy for the sector, despite the potential benefits to EU member states of developing a harmonised strategy. Italy, France, and Spain share a strong interest in the wider Mediterranean area for geographical and political reasons, but their domestic companies are each pursuing their own initiatives to connect Europe to Africa and the Middle East. These initiatives currently lack coordination, and often involve direct cooperation with companies from competitor powers such as China, including in consortia. It is not unusual for companies from different countries to form consortia to build and manage undersea cables; this is equally true of EU and non-EU countries in the wider Mediterranean neighbourhood, and of China and the US. But the overall lack of coordination hinders the EU’s pursuit of digital ‘strategic sovereignty’.
All states in the region have at least some nominal authority to grant and manage licences to companies operating in the digital sector in general, and the undersea cables sector in particular. Some governments decide to grant licences only to a state-owned company (monopoly). Other governments grant licences to both private and state-owned companies (partial liberalisation). There are also governments that grant licences only to private companies (full liberalisation). That said, all states (regardless of whether they are in the EU) have the power to prevent potentially hostile companies from entering the market or acquiring stakes in domestic companies. And tech companies that are active in the region – especially Chinese firms, but also numerous European ones – are often under state control or are at least partially owned by the state. States frequently grant licences on the condition that they, or companies from their country, participate in the consortium building the infrastructure.
From an operational point of view, the geopolitics of undersea cables resembles that of oil and natural-gas pipelines: the core issue is the vital importance of the entry points of the infrastructure, and of the areas and countries it passes through. Transit and landing states must both agree on the passage of cables through their territorial waters and in exclusive economic zones (EEZs), marine areas that are not under the territorial control of a state but where a government can grant licences for activities such as fishing and oil extraction. Despite their more limited jurisdiction in EEZs, states frequently use legal pretexts to slow or obstruct undersea cables’ construction if they are opposed to some aspect of the consortium or states that stand behind it.
Of course, there are potential advantages to international cooperation, so long as partners do not pose security concerns. European companies engaging in initiatives with states and firms outside the bloc can improve Europe’s internet infrastructure. They can do so by creating greater connectivity and generating further business opportunities in the wider neighbourhood. This activity can provide benefits to partner countries too, as increased broadband adoption contributes to GDP growth in countries with low connectivity.
However, European policymakers increasingly realise that states that dominate the sector – principally China and the US – have the power to foster the region’s digitalisation, impose regulatory standards, facilitate favourable conditions for their operators in digital markets, and promote partnerships among the countries of the region. And, geopolitically speaking, if the EU fails to build up its influence in the Mediterranean region, other global players will fill this space. They will do so by creating technological dependencies that are likely to prove detrimental to EU interests, such as standards determined by China.
There are also security risks associated with undersea cables. Companies and states can often access data transmitted by the digital cables they manage. Therefore, another growing concern for Europe is likely to be in ensuring that friendly powers (and private companies based in friendly states) build and maintain as much infrastructure as possible; physically protecting this sort of infrastructure is likely to become more important to the EU and all organisations involved in the sector.
The EU does have policies on some aspects of undersea digital infrastructure. But these policies are scattered across different policy locations held by different parts of the EU. Given the changing context, EU policymakers should make concerted efforts to draw together these issues and devise a strategy on building, managing, and protecting undersea cables.
The geopolitics of the undersea cables sector
The EU will need to improve its policy on – and capacity to address – these challenges in a context in which there is already a close relationship between geopolitics and the operation of the undersea cables industry.
Governments around the world currently use their prerogative to grant licences to strengthen their geopolitical alliances, favouring companies based in friendly countries for diplomatic reasons. In the EU, three companies are particularly active in the internet infrastructure sector in the wider Mediterranean region: Telecom Italia Sparkle, Orange, and Telxius. They are based in Italy, France, and Spain respectively – all countries that are key landing points for internet infrastructure. These firms cooperate with one another by, for example, creating consortia to build and operate new infrastructure. But competition between such European companies remains the dominant framework: member states’ strong diplomatic relations with countries in the region often helps these firms secure contracts. For example, the positive relationships between France and countries in the Sahel have helped Orange secure licences in that region. Italian diplomatic efforts to maintain positive ties with Libya and Israel helped Sparkle launch infrastructure projects in those countries.
There is a similar relationship with those multinational consortia that states allow to operate undersea cables. For example, the Africa-1 cableis due by 2023 to connect Europe to Pakistan and east Africa via Egypt. This internet infrastructure is operated by a consortium of companies based in Saudi Arabia, Egypt, and the United Arab Emirates against the backdrop of their cooperation to limit Iranian influence in their neighbourhood.
Similarly, political power can influence the routes of undersea cables and landing points’ locations. If a telecommunications company wishes to enter a new market, it needs to build cables and associated infrastructure to enable its activities. It has two options for doing so. The first is to acquire a stake in a consortium that already exists and that operates undersea cable infrastructure; the second is to sign an agreement with a government or governments to build a new undersea cable. Positive relations with the relevant national government (or governments) are essentially a prerequisite for receiving a licence and obtaining national security approvals, in both scenarios. A recent example of state intervention on a new route is the US government’s decision to stop Google and Facebook from constructing an undersea cable connecting the US to Hong Kong – a decision motivated by a Chinese broadband provider’s participation in the project.
States can also gain bilateral political benefits from constructing internet infrastructure in other countries. As noted, effective connectivity helps support economies, which can in turn incentivise governments to maintain their diplomatic relationships when their countries are linked through undersea cables. The well-established network of infrastructure running between Italy and Libya (comprising oil and gas pipelines, and undersea internet cables) is important to their strong political relationship.
The EU’s current approach
The EU’s approach to shaping the digital infrastructure market could enable it to build bridges to neighbouring countries by funding projects and setting operational standards through its regulatory power – just as it previously did with, for example, electricity grids. Alongside this, the EU aims to protect European companies from unfair competition and support their expansion outside the bloc by setting rules and interoperability standards. As in the energy sector, the EU could work with states in its neighbourhood to set similar legislative standards on privacy and ownership. In doing so, it has the potential – still largely untapped – to facilitate European companies’ investments in the region and curtail the efforts of hostile powers.
The EU is slowly moving towards setting a political strategy for the sector. It has started to promote itself as a key political actor by providing financial support to digital infrastructure projects through a funding mechanism: the Connecting Europe Facility 2 (CEF2), which it has just adopted. This allocates €3 billion to internet infrastructure over the next six years. Its launch confirms that the EU is aware of the digital realm’s political importance, especially in relation to regulatory policy and frameworks, as well as third countries and the diversification of connection routes. However, business sources complain that this level of funding is too low to match the EU’s ambitions.
There are other approaches that the EU could test in the coming years. For example, in terms of financing, the European Commission is the lead investor in the BELLA consortium, which financed an undersea cable connecting Portugal to Brazil through EllaLink, with the cable constructed by Alcatel Submarine Networks. The EU could adopt a similar framework for the Mediterranean region, potentially financing new internet infrastructure there.
If the EU were to begin playing a greater role in this domain, its efforts would have shared benefits for member states and advance the role of Europe as a global player in the innovation sector, as part of its promotion of its digital sovereignty. Stronger EU involvement will, however, only come about if it works with the power that states retain in this area.