Daily Brief : July 27: FCC Locks Down Submarine Cable Security

FCC FINALIZES SWEEPING NEW SUBMARINE CABLE SECURITY RULES

The FCC's Second Report and Order, published in the Federal Register today, establishes a complete security framework covering physical infrastructure, equipment, operators, and customers for all submarine cables landing in the United States.

THE BIG PICTURE

The rules represent a structural hardening of US digital infrastructure at a moment when hyperscalers are racing to expand transoceanic capacity. Chinese equipment makers, Huawei, ZTE, and HMN Tech, are systematically excluded from new US-landing cable projects, and any cable project with Chinese investment below a 10% threshold faces a 'presumptive disqualification' hurdle. This closes a long-standing gap in US foreign investment screening for submarine cable systems, which carry roughly 99% of global internet traffic.

WHAT HAPPENED

The FCC released its Second Report and Order (FCC-26-42) responding to the June 4, 2026 draft order on submarine cable landing licenses. The order, published today in the Federal Register as Document 2026-15123, applies new national security vetting to every submarine cable project seeking US landing rights.

The core mechanism is equipment certification and operator vetting. Covered List exclusions apply retroactively to legacy systems: existing Chinese-made equipment in deployed cables cannot be upgraded or expanded, effectively stranding billions in sunk infrastructure and forcing operators to choose between abandonment or replacement. Investor screening broadens the net beyond traditional foreign direct investment thresholds, creating a de facto 10% Chinese-ownership trigger for disqualification.

Hyperscalers with active submarine cable programs, Google, Meta, Microsoft, and Amazon, now operate under a single, harmonized compliance architecture rather than ad-hoc reviews by the State Department and Department of Defense. The order also streamlines timelines for licensing cables that exclude Chinese supply chains, offering speed as incentive for compliance.

WATCHING

Watch for the first cable operator or hyperscaler to formally challenge the retroactive application of equipment exclusions to existing systems. That litigation will determine whether the FCC can force mid-deployment replacements or whether existing installations grandfather under pre-2026 rules. Also track whether this model extends to satellite constellation licensing, the FCC's next regulatory frontier for physical infrastructure.