From the seabed to satellites, a covert battle for control of data flow is unfolding!

Digital connectivity is evolving from a public infrastructure into a core battleground for geopolitical competition.

According to a recent report by Deutsche Bank Research Institute, submarine cables carrying over 99% of global intercontinental data traffic and increasingly critical communication satellite networks have become strategic strongholds for various forces vying for control—and the protagonists of this game are quietly shifting from traditional telecom operators to tech giants.

The explosive growth in demand for AI computing power is reshaping the power landscape of global connectivity infrastructure. Hyperscalers like Google, Meta, Microsoft, and Amazon are vertically integrating into the submarine cable and communications satellite sectors at an unprecedented pace, with content and cloud networks now accounting for nearly three-quarters of global international bandwidth demand. Meanwhile, geopolitical tensions continue to escalate—earlier this year, Iran threatened to cut the Red Sea submarine cable, which carries approximately 17% to 25% of global internet traffic, and the consequences of its disruption would be extremely severe.

The impact of this competition has directly spilled over into the capital markets. According to estimates by Deutsche Bank equity analysts, the communications satellite market is projected to grow by over 35% year-on-year in 2025, reaching a size of nearly $26 billion, leading to a significant surge in related space connectivity stocks. Meanwhile , between 2025 and 2027, an estimated $14 billion will be invested in the construction of new submarine cables, primarily driven by technology content companies rather than traditional telecom operators.

Submarine cables: a fragile lifeline of the global economy

There are approximately 500 active submarine cables worldwide, with a total length exceeding 1.8 million kilometers. They handle about $10 trillion in financial transactions daily and support SWIFT data transmission between more than 8,300 financial institutions in 195 countries. However, the vulnerability of this system is as prominent as its importance.

According to a Deutsche Bank report, a 2026 study found that a typical submarine cable disruption would immediately reduce the per capita GDP growth rate of the affected economy by about 2 percentage points; if the disruption continues, the per capita GDP of that economy will be about 9 percentage points lower than that of unaffected neighboring economies within three to six years. Data from the International Cable Protection Committee shows that approximately 150 to 200 cable faults are recorded globally each year, with about 70% to 80% originating from accidental factors such as fishing gear and anchors, but the threat of deliberate sabotage is rising.

The severe lack of repair capabilities exacerbates this risk. Globally, there are only about 40 specialized cable repair vessels, belonging to a few companies such as SubCom, Orange Marine, and HMN Technologies, all operating on a first-come, first-served basis. The cost of a single submarine fiber optic cable repair is estimated at between $500,000 and $1 million, and in geopolitically sensitive areas, the process of obtaining repair permits often significantly delays the start of operations.

Geographically, a large number of intercontinental cables converge on a few strategic corridors, forming highly concentrated "bottleneck" nodes. The GIUK gap between Greenland, Iceland, and the United Kingdom is not only a key channel for NATO maritime surveillance but also an important data transmission corridor. Its dual military and digital sensitivity makes it a potentially high-risk area.

Regulation and Legislation: All Parties Accelerate the Construction of Defenses

Faced with rising infrastructure security threats, several major economies are accelerating legislative and regulatory actions.

In February of this year, the U.S. Congress introduced the bipartisan Strategic Subsea Cables Act of 2026. Its core provisions require the president to impose sanctions on foreign actors who intentionally damage critical undersea infrastructure. This act complements the Subsea Cable Control Act of 2020, jointly building a legal deterrent against potential "shadow wars." Meanwhile, the Federal Communications Commission (FCC) recently voted to extend cable regulation to terrestrial endpoints, including cable landing stations and their internal hardware, and to provide a fast-track licensing process for hyperscale technology companies, while foreign competitors must apply for licenses individually and face the risk of rejection.

The EU launched the "Cable Safety Action Plan" in 2025, but its implementation has been slow. In June of this year, the European Commission finally decided to provide €5.8 million in funding to establish regional cable hubs in the Baltic and Mediterranean Seas, and to set up a €40 million special fund to improve submarine cable repair capabilities.

At the multilateral level, an alternative known as the "fourth route" is taking shape. The Far North Fiber project will be the first long-haul submarine cable to traverse allied sovereign waters and connect Europe and Asia. It is expected to cost $1.17 billion and is led by Far North Digital, an Alaskan company, in collaboration with companies from Canada, Japan, and Finland. The cable will be supplied by Alcatel Submarine Networks and is expected to be operational by the end of 2026.

Satellite Race: Low Earth Orbit Becomes a New Strategic Height

Communication satellites are evolving from a supplement to the traditional internet to a new frontier in the battle for digital connectivity in the AI era. Deutsche Bank analysts predict that satellite communication market revenue will grow from approximately $26 billion in 2025 to $65 billion to $70 billion in 2030.

The strategic value of low Earth orbit (LEO) satellite constellations is particularly prominent. Operating at altitudes of 160 to 1500 kilometers, LEO satellites can reduce signal latency to near fiber optic levels and achieve coverage of virtually any location on Earth. This characteristic makes them irreplaceable in scenarios such as military communications, access to remote areas, and AI data transmission.

In terms of commercial competition, Amazon filed an application with the FCC in July 2026, planning to deploy over 5,100 satellites with the goal of providing direct-connect device services by 2028, directly challenging the existing market structure. Blue Origin announced Project TeraWave in January of this year, planning to deploy a multi-orbit communication network consisting of 5,280 LEO satellites and 128 MEO satellites. Deutsche Bank analysts estimate the capital expenditure required for this constellation to be approximately $18 billion. Furthermore, Starcloud, backed by Nvidia, has applied for regulatory approval to deploy orbital data center satellites and plans to launch AWS Outposts hardware on its second satellite in October 2026 for early testing of its space-based AWS infrastructure.

Hyperscale technology companies: reshaping the landscape of connectivity power

AI-driven data demands are accelerating the vertical integration of global connectivity infrastructure by hyperscale technology companies, fundamentally altering the decades-old hierarchical structure of the telecommunications industry.

In the submarine cable sector, Google, through its Pacific Connect Initiative, and Meta, through Project Waterworth, are investing heavily to shift the primary funding source for $14 billion in new cable construction between 2025 and 2027 from traditional telecom operators to content and cloud service providers. Hyperscale tech companies are bypassing traditional Tier 1 backbone operators, directly interconnecting with consumer internet service providers, and even deploying their own servers within these ISP networks, thus squeezing the space for traditional telecom tiers.

This trend is forcing traditional telecom operators to seek solutions through mergers and acquisitions. Major deals in recent years include: the $7.3 billion merger of Viasat and Inmarsat (2023), SES's $3.1 billion acquisition of Intelsat (2024), and the $8 billion integration of Rocket Lab and Iridium (2026).

Europe is in the most passive position in this new landscape. According to the European Centre for Development Policy Management, the increasing concentration of ownership and operational control of submarine cables by hyperscale technology companies is creating structural dependence and eroding Europe's digital sovereignty. Unlike the United States, which has a unified regulatory framework from the FCC, Europe currently lacks a unified governance structure for its submarine cable ecosystem. In the satellite sector, the EU is advancing the IRIS government-controlled constellation project (approximately 290 satellites, aiming for service by 2029), but progress has been slow, and friction has already arisen with the US FCC over potential protectionist measures.

Whoever controls the "data railway" controls the future.

The core judgment of the Deutsche Bank report is that in the era of "infrastructure realism," the key to power lies not in how many cables or satellites one owns, but in controlling the critical nodes and architecture of networks—from the seabed to low Earth orbit. Submarine cables have virtually no practically viable alternatives—new cables cannot be laid temporarily during a crisis, and a major disruption would simultaneously damage payment systems, financial markets, military command, and basic communications.

For investors, the core logic of this game is clear: the strategic value of digital connectivity infrastructure is being repriced, the vertical integration of hyperscale technology companies will continue to compress the market space of traditional telecom operators, and the rapid growth of the satellite communications market and the related wave of mergers and acquisitions will continue to provide structural investment opportunities in the coming years.

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