“API GeoEconomic Briefing” is a weekly analysis of significant geopolitical and geoeconomic developments in the post-pandemic world. The briefing is written by experts at Asia Pacific Initiative (API) and includes an assessment of burgeoning trends in international politics and economics and the possible impact on Japan’s national interests and strategic response. (Editor-in-chief: Dr. HOSOYA Yuichi, Research Director, API & Professor, Faculty of Law, Keio University)

This article was posted to the Japan Times on February 23, 2021:

https://www.japantimes.co.jp/opinion/2021/02/23/commentary/world-commentary/api-network-building/

API Geoeconomic Briefing

February 23, 2021

Digital network building in the Pacific

MURAI Jun,
Dean, API Institute of Geoeconomic Studies; Senior Fellow, Asia Pacific Initaitive (API)
Distinguished Professor, Keio University
Co-Director, Keio University Cyber Civilization Research Center
Special Advisor to the Cabinet

 

 

Over the past few years, undersea cable projects, the key infrastructure for internet access across the globe, have become increasingly important for regional security and infrastructure with companies in the United States, Japan and Australia teaming up not only to ensure a stable telecommunications market, but also to approach geoeconomic concerns.

On Jan. 13, the Palau government and the Belau Submarine Cable Corp. signed a series of agreements for the Palau Submarine Cable Project with financial institutions from Japan and Australia in a ceremony held at the president’s office in Koror.

It is the first project conducted under the Trilateral Partnership for Infrastructure Investment in the Indo-Pacific, signed last year by Tokyo, Canberra and the Washington.

“It will be a symbolic project of the trilateral relationship between Japan, Australia and the United States for their pursuit of a Free and Open Indo-Pacific,” the Japanese Embassy in Palau said in a statement.

In July, RTI Connectivity Pte. Ltd. (RTI) and NEC Corp. jointly announced the completion of the Japan-Guam-Australia North Cable System (JGA North), an approximately 2,700-kilometer undersea cable that connects Minamiboso, Chiba Prefecture, and Guam.

JGA South, the southern segment of the system, had already been completed by a consortium including Australia’s Academic and Research Network, RTI and Google.

The JGA network is the latest fiber optic submarine cable system to link Japan and Australia at the shortest distance and will become the new bond and artery for Japan-Australia relations in the digital era.

There are some geoeconomic factors behind such active moves among the public, private and academic sectors of Japan, Australia and the U.S. regarding undersea cables.

Until now, the largest flow of internet traffic in the Pacific has gone through a route that links the west coast of the United States with Japan, and with Hong Kong and Singapore via a route off the coast of Taiwan. Dozens of old and new cables were installed along the route.

Since around 2000, however, cases of cables being cut in areas south of Japan have become conspicuous.

Cables can be cut as a result of earthquakes, fishing nets or the dragging of anchors by ships in shallow seas. While the frequent occurrence of earthquakes can often be the cause, it has been said that the rising number of cable failures is largely attributable to an increasing number of pirate ships in the areas.

The JGA, namely the section directly linking Japan and Australia with Guam as a hub, was planned along with the Southeast Asia-United States (SEA-US) Cable System that links the continental U.S., Hawaii and Guam, and also connects Guam with Southeast Asia. They are meant to provide an alternative route which can avoid the aforementioned unstable sea areas.

A major change surrounding cable systems in the Pacific is also occurring in Hong Kong, which has served as an important internet exchange hub along with Singapore.

In 2019, the Pacific Light Cable Network (PLCN), built by Facebook and Google to offer direct submarine cable connectivity between Los Angeles and Hong Kong and spanning nearly 13,000 km, was near completion.

Many had high expectations for the services that would be provided by the two firms using the network. But on June 17, Team Telecom, a multiagency body under the U.S. Federal Communications Commission (FCC), recommended that the FCC deny the licensing application of the cable system based on national security concerns heightened by China’s recent actions to remove Hong Kong’s autonomy.

The operation of RTI’s new submarine cable that connects Guam and Hong Kong, which had been scheduled to start in 2019, was abruptly postponed as well, upsetting parties involved.

The Australian government, which supports the aforementioned project in Palau, also decided in 2018 to finance a project to construct an undersea cable between Sydney, Papua New Guinea and the Solomon Islands. It shut out Huawei Marine which had originally been contracted by the Solomon Islands government to lead the project.

Huawei Marine was Chinese telecommunications firm Huawei’s submarine cable manufacturing and laying subsidiary, but in June 2019 Huawei announced it would sell the business. Now it is owned by Hengtong Optic-Electric Co. based in China’s Jiangsu Province.

 

Cable landing points

The undersea cable business is a relatively unrestricted sector except for landing points.

Huawei Marine has increased its share mainly in the market for shorter distance cables to compete with the top three submarine cable manufacturers — Alcatel-Lucent of France, SubCom which used to be AT&T Inc.’s cables unit, and NEC Corp.

The firm was seen to be focusing on the Middle East and Africa, but recently it appears regularly in reports on cable projects in the South Pacific.

Geoeconomically speaking, what is important is not the companies conducting projects or the technologies used, but where the cables are landing and what kind of telecommunications services are offered there.

When assessing cybersecurity risks, it is necessary to look at the landing points, rules and services related to data access in the areas and how consistent they are with international standards.

NTT Docomo Inc. in 2006 purchased Guam Cellular & Paging and established a wholly-owned subsidiary, Docomo Pacific Inc., in Guam, quickly expanding digital services including the internet and digital TV on the island.

By 2017, the firm was leading a business to operate an undersea cable connecting Guam to the Northern Mariana Islands.

It is possible to provide through such small-scale projects a submarine cable system for island regions like the Mariana Islands. And what is significant about this project from a geoeconomical standpoint is the fact that Japan and the Mariana Islands are adjacent to each other, as Japan’s exclusive economic zone around the Tokyo islands in the Pacific Ocean borders that of the Northern Mariana Islands — located 500 km south of the Tokyo islands — and that of Guam.

 

Landing Chilean cables

Moreover, in July, it was reported that a consortium including a Japanese firm had been selected for a project to build a long-distance submarine cable connecting Chile and Asia.

It is said that Huawei Marine was one of the other candidates to be contracted with the project, proposing a route landing at Shanghai and Hong Kong.

If the consortium backed by Japan officially wins the contract, the cable will land at Sydney and Japan will also become a landing point via the JGA system, which has significant implications in terms of geoeconomics.

Chile hosts the Atacama Large Millimeter/submillimeter Array (ALMA) radio telescope observatory, a project conducted by international partners including the National Astronomical Observatory of Japan, located in the Atacama Desert at an altitude of 5,000 meters.

Japan’s supercomputer and optical network technologies are used in the heart of the telescope, composed of 66 high precision antennas.

Where the trunk cables that carry digital data produced at the telescope will land and how we can access the data is one factor that affects the fate of the information technology industry in the future.

This year, active debate is ongoing in Australia on the issue of whether the Australian government should get involved in the purchase of Papua New Guinea’s largest telecommunications company, Digicel.

Digicel, which has its headquarters in Jamaica, is a mobile service provider with a large share in the South Pacific island countries such as Fiji, Samoa, Vanuatu, Nauru and Tonga.

It was reported last year that the firm is planning to sell its Pacific business.

Many Chinese telecom firms, including China Mobile Ltd., Huawei and ZTE, are showing interest.

The South Pacific islands, with a population of diverse nationalities, hold an important position geographically and in terms of security. This issue regarding telecom business shifting from telephones to the internet has significant policy implications for the digital society which will play the main role in the economy from now on.

The issue continues to be at the center of debate regarding political intervention and the economic significance of paying a geopolitical premium on the backdrop of various factors — the fact that Digicel is operating a large-scale business using obsolete technology, that the firm is a major customer of Huawei in telecommunications equipment purchasing, and that the Australian government is planning to provide support to private bidders for the sale of the company from security concerns.

 

New roles

Australia and Japan share close time zones, located roughly north and south of each other.

This is extremely important at a time when people are being encouraged to work together online amid the COVID-19 pandemic.

A time difference of about five hours is the maximum gap that allows people’s lives to match on a real-time basis. For Japan, areas from the east coast of Africa to Hawaii fall in that zone.

Australia and Japan are gradually becoming the center of a new network of people who can lead a life and work together in the same time zone.

There are three new roles which Japan and Australia can play geoeconomically in the digital society.

First, they have a role to play in building a data artery in Southeast Asia and its surrounding sea area — namely the Indo-Pacific — using the Mariana Islands as a hub for economic cooperation between the northern and southern regions of the West Pacific.

Second, Japan can play a geoeconomic role in the digital era arriving at the South Pacific islands where the U.S. and Australia are facing tensions with China.

Third, they should cooperate with the United States to implement digital governance in the region. In order to do so, Japan for its part must establish a system to bear responsibility for global governance in the digital society.

 

Disclaimer:
The views expressed in this API Geoeconomic Briefing do not necessarily reflect those of the API, the API Institute of Geoeconomic Studies or any other organizations to which the author belongs.