 All right, I think we're good to go. Good afternoon, welcome everybody to the Carnegie Endowment for International Peace. My name is Jim Schof. I'm a senior fellow here in the Asia program, run the Japan program, and it's my pleasure to welcome you to today's event, The Geopolitics and Geoeconomics of Submarine Cable Networks. We'll be looking at this through a particularly kind of US-Japan alliance lens, and today's event is part of our pretty much ongoing annual collaboration with Keio University and Professor Tsuchiya, who's been a good friend for a long time. And we're also adding today the Mitsubishi Research Institute is a supporter in the Japan's Ministry of Internal Affairs and Communications to bring this to you. And this is, we're gonna talk about an issue that is quite literally out of the public eye undersea communication cables. I must admit my own kind of lack of expertise in this area. I knew they existed. They've been around since the mid 1800s with the first transatlantic telegraph, and I assumed that they were important, but in preparing for the event today, I've gained a new appreciation for the importance of these cables in both an economic and a geopolitical context. You'll hear a lot today about how much international communications rely on undersea cables, and you can probably imagine how much more data keeps flowing around the world. As IBM estimated, I think just a couple of years ago, we are generating roughly 10 times more data every two years, which is pretty much the definition of exponential growth. We're now concluding digital trade agreements, negotiating global data rules, considering new ways of taxing the economic activity, the transfers, the transits, these pipelines, these are really the super highways for a new era of international exchange and commerce, and so they are coming under greater scrutiny. And I think it's an issue that is going to be land more squarely on the agenda in an alliance context. So I was very happy when Tsuchiya-sensei suggested we collaborate on this, and I appreciate all of his partners being with us here today to help us. We have two main presenters today, and then we'll have a panel discussion and then open it up for Q&A with the audience. But first, I'd like to introduce the Deputy Director General for International Economic Affairs from the Global Strategy Bureau at the Ministry of Internal Affairs and Communications in Japan, Mr. Mitsuhiro Hishida. Prior to assuming his role now at MIC, he was the Director for Multilateral Economic Affairs Office from 2012, and he's been responsible in charge of negotiation for a wide range of multilateral issues in the information communications technology field, and I'm really pleased to have Hishida-san with us today, so he's gonna offer a few additional opening remarks, and then we'll get to our presentations. Hishida-san? Hello, good afternoon. My name is Mitsuhiro Hishida. I'm a Deputy Director General from the MIC, Ministry of Internal Affairs and Communications. I'm in charge of the US and Europe and Russia, and since I took my office last July, I have been talking with our US colleague about the digital economy in Asia-Pacific. How is the potential area of the collaboration between Japan and the US? And one of the topic is these connectivity issues. How can we, for example, connect the Pacific Islands to the network or the fiber undersea cables? This can be one of the issues. And talking about this while discussing these issues, we think it might be a good idea to have some survey concerning this, the survey concerning the environment and what is the key market players there fiber optic cables. So we, actually we don't actually prepare the, some slides but it didn't show up. Anyway, it's coming. It's coming, oh yeah, you like it. Look at this map, world map. This shows that that world traffic that is on the five-spice submarine cables in the world. And since the data, data is increasing and the cross-border data is also increasing and you can see the bigger line between transatlantic ocean, trans-Pacific oceans between the continent, South American continent and so on. And the global market size of the global in the traffic is also, the size of the global in the traffic is growing. And for the importance of the international the submarine cable is growing. And I also see the, while the market changes the cable suppliers and the cable owners are also changing. The cables, in terms of the cable suppliers, there's three major people players, cable suppliers, subcom, NEC and Alcatel. And we are seeing the new market players there that are far away marine. So Chinese, there are emergence of the Chinese companies in these cable suppliers. And in terms of the cable owners, the traditionally the cable owners is a major international telecom carriers. But recently there are two changes. First, you can see the emergence of the Chinese players. There are three Chinese telecom carriers who is now becoming the cable owners. And also we can see the emergence of the content providers. You can see the Sproogoo and Facebook are not there sponsoring this deployment of the fiber cables and the sea cables. Is it possible to go next page? Oh, we go. So as for the research of this project, we are now, there are two works. One is to convey the international survey. And the theme of the survey is, for example, what is the current status and trend on installation of the submarine cable? And what is the current status of the major players in the submarine cable market? And what is the risk? You know, there is always a risk. Well, while we are discussing these issues, we identify that there is a significant kind of risk surrounding the submarine cable. One is a physical risk. That cable deployed under the sea might be disturbed, might be disrupted by the, for example, some physical accent while they are doing the mining officially. That might be some physical disruptions. And other case may be the stealing of information. They might have some apparatus on the landing station. They might steal the information from the submarine cable. It can be a big, serious security breach. So I think it can be a potential topic between the Japan and the US, concerning how to secure, how to make sure that the information flow under the cable can be securely and stable offered. And so one plan is to undertake this international survey. And the second plan is to do some workshops. And as for the workshop, I asked Professor Tsuchiya and he's kindly prepared a series of workshops. First one was held in Hawaii in January. And the second one is now we are having this one. This one we are having in Washington DC in collaboration with CEIP. And we are now expecting the third one soon in Singapore. And because when we talk about this fiber undersea cables, it's quite important to engage in other Indo-Pacific ocean countries in the discussion. So I'd like to thank Professor Tsuchiya for preparing this workshop. And also I'd like to thank Jim for preparing everything here. And I'd like to thank everyone who came to this room and participate in the discussion. Thank you very much. Thank you very much, Hishida-san. So our first formal presentation today is from Mr. Motoyoshi Tokioka, who's a man with a lot of experience with NEC and the International Telecommunications System Supply Business. He's been based previously in Mexico. He's been based in the United States, now currently based in Japan where he's Executive Director of Global Sales for Submarine Networks at NEC. So Tokioka-san. Good afternoon, everyone. Thank you for coming. My discussion today is about the submarine cable system supply dynamics. But I also tried to talk a bit about how the submarine cable systems are made, I hope. As many of you are aware today, many submarine cable systems are in operation in the world. And every semester, new systems are being built somewhere in the world, right? And when we talk about submarine fiber optic system, we are basically talking about the telecommunication use cable which has both the repeated system as well as repeated less system. That's depending on the distance of the cable. And also, there are systems for specifically oil and gas offshore connectivity. Some of the oil platforms use fiber optic connectivity. And also, there are some systems for the purpose of earthquake and the tsunami monitoring. This is especially very much used in Japan. And what makes submarine cable systems very special are from technical aspects are basically the large capacity and long design life and high reliability. And that makes the wet plant, the submarine cable and repeaters, also branching unit, those are called wet plant, need to be made very robust and reliable. ITUT recommends 25 years of the useful life of this kind of system. And for the repeated system, high voltage power feeding technology is also required. Until some years ago, our satellites communication was considered to be the main means of international communications. But today, most of the international communication is handled by the submarine fiber optic cable. And especially compared with the satellite, the latency of fiber optic cable is very much superior than that of satellite. In case of satellite, you need to go up and then need to come down. So that process will require much longer the latency. While for the case of submarine cable, if you go to the distance of 900 kilometers, for example, between Tokyo and Los Angeles, it's just the straight line, right? So this is making the submarine cable technology is very fit for, especially for the financial transaction today. NEC has been building lots of submarine cables and this is more or less what we have built in the last several years. What is required for building submarine cable systems? Basically, you need the fiber optic cable and also you need some other wet plant like repeaters and branching units. Also the land equipment is required, including submarine line terminal equipment and power feeding equipment. And also you need to have the marine installation capability with the specially designed cable installation process, right? And also you need good capability project management backed by the R&D. So there are many submarine cable owners in the world today. This is just example of some of the NEC customers for submarine cable. In recent years, companies like Google and Facebook as well as Amazon, those are relatively new owners of the submarine cables but very big owners in today's market. Also from the supply side, there are several companies in the world. Subcom from the US is a company with long history, very strong technical background and it's a representing company from the US of course. And also we have Alcatel submarine networks from France. They also have very long history and very big presence in this supply market. Our company NEC is a division of the big NEC group. NEC group itself has over 120 years of history and our submarine business has over 50 years of history. And newer entrant is Huawei Marine. This is a joint venture between China and the UK. UK's global marine group has about 50% of the share of this company but there has been the news that majority of such share will be sold to the Chinese part and also Huawei's share will be, is being transferred to Hentong also from China. So what are required for being a good supplier? Some of my own view, the organizational capabilities are very important part of being a capable system supplier in this field. So you obviously experience is important. Also the financial capacity sufficient to finance the long-term project when our payments from the customers are divided into various phases. And also of course production, assembly capability, long-term credibility and customer relationship and also engagement is very important because the relationship is going to be long. And also I see customers have some regional or cultural preference. So it's important to manage those aspects as well. From a technological point of view, newer technologies for larger capacity and also the lower cost per bit is important today. And for making that kind of requirement is possible newer technology like SDM, multi-core fiber cable and higher fiber count cable with lots of fiber pair in the same submarine cable being required. Open cable is today's trend not to have the station equipment, line terminal equipment from the beginning at the time of the system builder contract but the owners can choose at a later date the best land equipment system. This has been a trend for the last three, four years. I'd like to comment on some of the cable systems which are a bit different from majority cables. This is an example of the government initiated submarine cable. This was completed about 18 months ago by our company NEC but the owner of this system is practically the government of Angola. Angolan government is trying to become the hub in the western part of Africa. And with their plan, the government themselves planned this system and made it real. Even though this cables runs from Angola to Brazil, there's no Brazilian government or Brazilian private landing party. The Angola cable is the Angola's company. They made the Brazilian entity for landing in Brazil. So this is an interesting example. And this project was financed by JBIC, Japan Bank for International Cooperation. Also, the NECC is the export insurance company of Japan. So this is supported by the Japanese government. And in similar way, this could be another government initiated project. The Chilean government has been working on this plan, going from the South America to Asia. And when this is realized, this will also be another case of government initiated project. Okay, and finally, I would like to also introduce a different use of submarine cable systems. This is an example of the system in Japan with close to 6,000 submarine cable, just to cover a small area from the northern part of Japan to close to the metropolitan area of Japan. This system is for monitoring the earthquake activities on the ocean bed. And also when tsunami happens, the sensors can detect very subtle movement of tsunami. So this is not for all the country, but the Japanese government has been spending a lot of money on this kind of system. Thank you very much. That's great, Tokio Kazan, thank you. That was a really interesting and concise summary of key industry background of dynamics and kind of teased us a little bit with some of the geopolitical issues there at the end. And so now I'm gonna turn to Professor Motohiro Tsuchiya, the graduate school of media and governance at Keio University. He's also Dean for the Faculty of Policy Management there. He's been a visiting scholar at the University of Maryland, the GW, MIT, East West Institute, and he's always been very well connected, kind of straddled both the policy world and the academic research field and the private sector as well. So I always enjoy listening to him. Professor Tsuchiya. Good afternoon, so this is Motohiro Tsuchiya. I'm an international relations scholar but focusing on cybersecurity these days. But cybersecurity, so people tend to talk about the software size of penetration, hacking, or something like that, but I'm also interested in physical side of cybersecurity, so hardware side of cybersecurity. So cyber attack? Maybe, okay, sorry. So people tend to talk about the changeable operational domains. So conventional operational domains is lancy and air, but today we talk about the fourth operational domain is outer space and the fifth is cyberspace. How do we protect cyberspace? That's our concern these days. But what is cyberspace? That's my first question today. So cyberspace, I say, this is just a combination of communication devices, communication channels and storage devices. So it's not something floating in the sky. So cyberspace is a physical entity actually. So people say, so the internet is a cloud, cloud services is very, very important, but the real figure of the cloud services is this. So this is a data center of Google. Many of you are using the Gmail, but Gmail is, Gmail message is stored in the servers owned by Google. And I took a sabbatical leave in Hawaii a few years ago. So everybody at my university are angry with me. So what do you do in Hawaii for one year? So I said no Fula, no Ukulele, no beach. But actually I went to, I had enough time. So when I was walking on the streets in Honolulu, so I found a discover on the street. So it says traffic signal. Oh, it's interesting. What is in size? I opened up. I found this. So this is a cable. And this is not part of the internet, but this is a cyber system. So they are using the similar technologies. This is part of the cyber space. Cyber space is becoming much larger than the internet. These are not connected to the internet, but we are using the same kind of technology these days. And you will see this kind of box on streets. And I opened up. So you will see this kind of thing. So this is computers to manipulate, control the traffic signals. So this is also part of the cyber space. And if you go down underground of the Tokyo city, so you will see this kind of big tunnels actually. So we call it Todor in Japan. But so there are a lot of pipes and communication cables. So if you go underground of Tokyo streets, you will cut the cable, so the function of communication systems in Tokyo will be lost. So we were talking about hacking malware or computer violence, but this kind of physical attack is also dangerous to stop the communications in the city. And so if you want internet services at home, you will ask your computer service provider to hook up optic fiber at home. But if I know your address, I go there and cut your cable. You will lose your cable. You will lose the internet connection. So this is applicable to whole Japan because we are dependent on undersea cables. Tokiyoka-san mentioned that 99% of international traffic goes through undersea cables, submarine cables these days. So here's a map of the East Asia. We have a lot of cables in this area. And but actually where are those cables? That's my question these days. So in Hawaii, so I said I do not want to go to beach, but actually I did. So I went to Hanauma Bay. This is a very famous spot for tropical fish. But people are going to the left side of this bay, but I went to this place because I found a picture online. So 1956, they blow up corals to place undersea cable there because I had enough time in Hawaii. So I took a video tape of undersea cables. This is not me. I'm taping. But you will see two cables on the bottom of the sea. It was quite easy to identify the location of undersea cables. This is a very old cable. So it was installed in 1950s. And so we are not using this anymore in 1970s. So it's, at that time, it was easy to identify the location of undersea cables. So cables are lost. They were disrupted in a few places. So in 2013, so a cable was cut in Egypt. And so three people were arrested during cutting the cable, actually. So it's a strange faces, but so it really happened. And so this is a 2015 New York Times. It says Russian submarines and spy ships are aggressively orbiting near the vital undersea cables to disrupt US economy. It might happen in the future. And actually it happened during the First World War. So British cut cables, German cables, to disrupt German communications. And here's an imaginary picture of CNN. So they might use the undersea drones to cut cables or disrupt the cables near the east coast or west coast of the United States. But in Hawaii, I had another idea. So we don't need to go down to the bottom of the sea. So I went to the Makaha beach, very local beach on O'ahu. And because I found a map in the library, it says here's the coastline. So left side is the ocean. So right side is land. There are many, many cables at the bottom of the sea. But it also says here is a manhole for maintenance. I went there, I found a manhole, and I opened it. No, I didn't. So I found this picture online, but something like this. So it's quite easy to cut cables. But if you throw a bomb into the manhole, maybe so these kind of cables are lost. I'm an ordinary man. I'm tracking the public records. It's easy to identify the cable landing points. So here's a map again. We know where our cables are landed. So in Japan's case, Tokyo and Shima. In Korean case, Busan. In Taiwan, north and south. In China, Shanghai, Shantou, and Hong Kong. We know each other. Where to attack, actually. My hobby today is to visit cable landing station all over the world. This is Japan. This is in UK. So it's a very old one during the Cold War. So they are a big, big facility underground, actually. And this is Singapore, very close to the Changi Airport. And this is Singapore, no, no, sorry, Taiwan. It's easy to identify cable landing station these days. So here's a map of the Belt and Road of the Chinese government. So China is trying to build landline and sea line. But their third way is digital secret road. So there are three levels of communication roles. And this is a map of the sale cable between Cameroon and Brazil. So Tokyoko-san mentioned the cable by JVIC, Japanese Bank of International Corporation. So China is also investing, so actually owning this cable. China Unicom is a part of the owner of this cable. But it's not related to China at all. So China is investing far away from their homeland. And so China is planning another cable between China and Chile. So they are trying to expand their cables in the ocean. But they have digital secret road and they have the digital landing system to monitor people's activities online. So there might be another version of cyberspace in the world if they try to expand their networks. And so they are trying to expand the cables. But on the other hand, so as we know, the stability is warm that they might cut the cables during the wartime. So we have to be careful how to maintain these kind of critical infrastructure in today's world. So here is a map of the Indo-Pacific. Indo-Pacific is our common agenda between Japan and US governments. So how do we have a better, secure critical infrastructure is a policy agenda these days? So cables are a very, very important strategic asset. But islands such as Japan, Taiwan, Hawaii need to protect cables physically. So United States itself are dependent on undersea cables in the Atlantic and the Pacific. We have to think about the physical protection of these important assets and how we can govern the use of undersea cables. This is a very important agenda. So ICPC International Cable Protection Committee is in charge of the protection of cables, but it's a private organization. Of course, some members are government entities, but we have to coordinate private and public governance of undersea cables for our today's information society. Thank you very much. Okay, thank you very much. So now I'd like to start our panel discussion and invite our panelists to come up and I'll facilitate the work. So Tsuchiya, Tokyoka, Irene, Tim, and we'll see if our technology takes over as the personal mics kick in. How are we doing? Good, okay. Great, so thank you very much for getting us started. And I wanna bring two more voices into the conversation introduced to you, Irene Wu, who's a senior analyst at the U.S. Federal Communications Commission. She's also teaches at the Communications Culture and Technology Program at Georgetown University, and she's authored a variety of books and articles, including from Iron Fist to Invisible Hand, The Uneven Path of Telecommunications Reform in China, and also more recently, article about soft power and its great power competition. And then we also have Tim Strong with us from telegeography. He's the vice president of research there. Telegeography is a firm heavily focused on communications, telecommunications, and he's been involved with this industry for 25 years. His areas of expertise include international voice traffic, terrestrial, and submarine cable systems and international bandwidth markets, and we're really pleased to have him here with us as well. Irene, I'm gonna turn to you first to bring in to start off kind of the U.S. perspective on some of this. Maybe focus on the geopolitical aspects, some of the issues raised today, and then I'll turn to Tim on some of the industry side. What are some of your impressions as you see these presentations, and then also that you're thinking about or that the U.S. is thinking about in this field? Well, thank you for having me. It's great to be here at the Carnegie Endowment for International Peace, and thank you for including me in this panel. I'm just gonna make two brief separates, but related points. For the past couple of years, I've been doing some research on how to measure soft power in the international system. Oh, I should also begin. I wear many hats, and the presentation that I'm making today reflects my own views only and not those of the Federal Communications Commission, the StaffWords members, before I go off on some kind of tangent, but as I was mentioning, my research on measuring soft power in the international system was spurred by my observation that for economic power, we often use GDP to measure the influence of the country and for military power, we have quite a few metrics, the number of military bases, the number of military personnel, but for soft power, which I usually think of as one country's ability to persuade in other countries to its point of view using non-coercive methods, so not using economic sanction, not using military power, but rather cultural influence, maybe social values. How can that be measured? Seems like an impossible task, how to measure a cultural influence, but I've spent the last couple of years developing a database on the assumption that we have in communications research that you can only achieve cooperation in the international system if you have some form of communication. The communication in itself is not sufficient to lead to cooperation, but definitely if you're not talking to other people, then you're not gonna get anything done. So what are the kinds of social interaction that lead to cooperation that are observable? So if I'm interested in a foreign country, maybe one thing I could do is watch a movie from that country, another thing I could do is maybe visit that country, and even greater commitment would be to enroll in a university in that foreign country and the biggest thing perhaps is to emigrate to that country. For those of you when you came in at registration, there was a handout that has that diagram of a soft power rubric. And basically by collecting the data from about 1960 to 2015 on about 100 different countries, I've been able to map out soft power relationships among different countries, and it is what you might expect. One of the strengths of the United States is that it's the host to many immigrants, certainly for Japan, the number of visitors to Japan has really increased in the last few years. Another country in the region, Australia, also welcomes a lot of visitors and not so many visitors, I misspeak, but a lot of students. China has really welcomed far, far more visitors and students in the past few years and it certainly superseded Russia and many other powers, but it welcomes fewer immigrants. So this kind of data does give you some idea of what the relationships are in one country with another. Now the second point I wanted to make is the second diagram on this sheet, which is about submarine cables directly. Submarine cables is a basic infrastructure and I think of it the way I think of airports or shipping lanes. You can have direct routes, you can have indirect routes, the direction and flow of that traffic is really driven by the market. And submarine cables is a technology in the study of communications infrastructure, we talk about the affordances that a technology provides. Well, submarine cables, one of the affordances it provides in terms of social and political relationships that it enables communications. And part 43 here is the regular data collection that the FCC undertakes of all US licensed submarine cables and the diagram there is data from our part 43 report, which is public on our website and the link there is at the bottom of the page. And this is a map of the number of specific landing points for US international submarine cables as of the year end 2018. And you can see that the country in the Pacific with the largest number of landing points for US international submarine cables is Japan with nine. And there are two in China, there are three in Taipei, there's one in Hong Kong and so on and so forth. So I just wanted to this audience bring to your attention the fact that there is public data on submarine cables as they are licensed here and a couple of other regulatory authorities around the world do publish that data. Oh, great, thank you Irene. And that's a good segue into Tim and some of the work that telegeography does in this sphere. And I wondered if you wanted to comment a little bit on some of the industry aspects and how you see this industry evolving and some of the issues we should be thinking about around the corner. Sure, well, just to follow on one of the things that Irene said about soft power. My company collects a lot of information from the submarine cable operators and the people who are the companies that use those cables. The United States, I'm a fellow American, we're not only host to a lot of immigrants but we're host to a lot of internet servers. In a way that may be another metric you could use for soft power is how central a country is to the global internet. The US has been and remains the center of the global hub of the internet. And that's waning a bit. For example, I believe about five years ago Asian countries, about 60% of their international internet capacity went to the United States not to each other but to the United States. So if I'm in Japan and I want to get to an internet host to go to a website, sometimes I would go, log on and it would go all the way across the Pacific of California and then come all the way back. And naturally that's begun to change. There's more interconnectivity within Asia. But one thing we kept a close eye on a few years ago was after the Snowden revelations about the extensive wiretapping by some US government agencies. A number of people came up to me in the submarine cable industry saying, we're never gonna build a cable to the United States again, I said, yeah, okay, well we'll see. And guess what? They kept building the United States. They're just the economies of doing that is so strong. The value in connecting to US hubs, it was such so alluring that they didn't stop. However, there has been a trend in the last few years that's a little bit concerning. The US government is very presumably naturally concerned about security on these vital assets and is looking to make sure that certain vendors from China stay out of US territory. But the national security review as part of allowing new cables into the United States is becoming so onerous that there have been a lot of delays in building new cables. Not just in planning, but sometimes these cables hundreds of millions of dollars have been allocated. They've been mostly laid all the way across the sea except for the last little bit. In fact, some of these cables have been connected but they're not allowed to have full service because they don't have the full permit to do so. If this continues, there's talk in the industry of moving away from the United States, literally picking up a cable and moving it to Mexico or building new cables rather than to the Northwest part of the United States instead going to British Columbia. And if I'm an American, a government agency that's worried about security, that would concern me. It's a helpful to be central. So I think that's one interesting trend that we're seeing in the last few years that kind of touches on your soft power analysis. Thanks, Tim. Can I ask kind of both of you or anyone who wants to jump in? Shia Sensei, you might have some knowledge on this area too. But what is kind of the state of play of the bilateral, when these projects are planned or applications or licenses are sought, I'm sure a lot of it is state to state, is bilateral. But what's the multilateral dynamic because it seems that there's, as Tim is saying, there's a real multilateral playing field in terms of how things are financed, how things are licensed, how things are regulated and what kinds of rules govern them. So usually cable owners making a consortium. So for example, from West Coast of the United States to Japan and maybe Taiwan and Southeast Asia. So there are many, many companies are involved. So AT&T, so KDDI and Chunhua Telecom of Taiwan and China Telecom from mainland China and maybe Singapore Telecom or something like that. So they are making a consortium and they try to buy the capacity based on the investment. So it's a very international cooperation. It looks very good actually, very ideal. But now, so security concerns are coming in. And so, and there are another content providers coming in. So Google, Facebook, they want to have their own cables. So those kind of things are changing the industry, I think. Do you agree with that? Yes, yes, yeah. I think, yes, as mentioned, there has been a very good collaboration among cable owners. And actually that has been promoting the International Submarine Cable. But yes, the recent concerns at the government level and very carefully observing how that will change the industry dynamics, I would say. And from the supplier perspective, for example, if the less new cables will be built because of such new concerns, then at least it's not a welcoming thing for the supply path. So we had a workshop that we held right before this public event and it was interesting to me because a lot of trends or key issues came up and changes in the industry. One of them is this real growth of the internet content providers being the owners and the major drivers, financiers of some of this. The other is the shift in where cables are being located. They used to be from population center to population center to facilitate telephone calls and interaction between people. Now it tends to be from data center to data center which can really change the trajectory or where these go. And so you have an option to potentially send your cable to a cable center, a data center in Canada instead of sending it to the United States if you wanted to. The International Cable Protection Committee, the ICPC, was something else that came up in our workshop as a kind of international body that helps facilitate best practice and oversees some aspects of the industry. But I wonder this issue of, if we get into the issue of security. And so there are many aspects going on here. One is country to country competition. So countries trying to finance certain connection points between other countries or certain countries to shape how the telecommunications traffic is going. Countries trying to promote their own industries in this arena. But then there's also just as was mentioned, a large percentage of the disruption to submarine cables happens by accident, by fishing, mining, other things that are governed by different people. So Tokyoko-san, when NEC builds something and delivers a submarine cable system to an owner, do you remain involved in kind of the maintenance of that system on an ongoing basis? How are disruptions or accidents or incidents kind of reported or handled or managed? Do we have good data on how this industry is performing overall in the area of security or reliability? I think such data can be better provided by ICPC. But NEC as the systems builder, supplier, we are not involved in the post-delivery maintenance. That's mainly the responsibility of the cable owners, right? But we are concerned about the any accidents during the construction phase. Typically the submarine construction takes 24 to 30 months when the system is larger. It could take more, right? So during that period, whatever happens, accidents, you know, that sort of disaster could be treated as forced matured depending on the contract. But if the cable cut happens by accident, that's our responsibility while we are constructing. So we are concerned in that extent, at least, about the maintenance maybe or the healthy state of the cable. Yeah, Tim, do you have some? Yeah, I think talking about the physical security of cables is really interesting and how fragile they are. One thing we do when we hire new analysts is to show them what an actual cable looks like and I brought a sample with me today if I could get it open. Unfortunately, this is from Subcom, your competitor, Tokioca. So you may not want to look. Yeah, if you want to give me a cable sample from NEC, you're welcome to do that. So this is what the fiber is. It's less than the width of a human hair if you had any hair on your head. And obviously this is really fragile, but you might think, well, you're not laying an actual fiber on the sea floor. You have a protective cable around it. But this is the cable itself. This is a lightweight cable, correct me if I'm wrong. And it would be armored with steel wire wrapped around it as it gets closer into shore, but in deeper areas where there's less fishing and shipping and where it's geologically stable, this is what it would be. It's not much, it's about a finger width. And if it looks fragile to you, it's because it is. We occasionally get questions from journalists. What would happen if a terrorist blew up a cable? Well, the answer is cables break all the time. On average, there are about 100 a year broken, and that works out to be two every week. Why don't we hear about them? Well, and how do we mitigate against that? The first is safety in numbers. You just build a bunch of cables. And if one breaks, you have failover to the others. The problem with that is, what if all the cables are routed through the same geographic area? And that becomes a problem when you're talking about the Ring of Fire across the Pacific where it's seismically active. Three events come to my mind. One is almost 10 years ago, I guess nine years ago in March was the tsunami event off of Honshu. Obviously, great loss of life and destruction on land, but it also tore off a number of cables shredded, kilometers worth of cables, very destructive. Similarly, there's a straight called the Luzon Strait between Taiwan and the Philippines. A lot of intra-Asian cables are sort of herded through there. There was a big earthquake in 2006 that damaged 22 cables at the same time. And it's not always just geological events that can cause these damages. It can be meteorological events too. In 2009, I think, again off the coast of Taiwan, there's a typhoon that created so much rain that there were essentially mud flows on the ocean floor that ripped up up to leave nine cables simultaneously. So how do you avoid that? What the industry has sort of settled on is not just having a large number of cables but physical diversity in the routing of the cables. So it's no longer acceptable just to rely on connecting the United States to Japan and then sending the cables from Japan down the Luzon Strait to Southeast Asia. There's a lot of interest nowadays in building cables directly from California to Singapore and California or Guam to Hong Kong. So when we get back to the concept of public-private partnership, I would say that one of the most important things that governments can do is to help facilitate that to make sure that the cable operators have access to a wide variety of landings in that they're not being herded into one or two little locations. No, that's a good point. Yeah, I was tempted there for a little while to think that Professor Tsuchiya is the most dangerous potential threat to cable systems with all his poking around and opening up boxes. But clearly there are other challenges as well. I mean, things that come to my mind then are an increasingly complex system and network, an increasingly important international network, if you think of the volume of data and the role that it plays in commercial activity today. So that does suggest that this kind of nonprofit or kind of government hands-off governance approach could use some extra robust help from countries in terms of forming coalitions to promote better information sharing, mitigation perhaps. I mean, I don't know, how do things get reworked if everybody owns different cables and somebody has a problem? Do they have a deal with another cable provider and they just switch the data over or is that? Maybe I can bring up a historical case because Tim reminded me of the good old days, maybe for some people, when traffic between two points in Southeast Asia would actually come to California and go back out. That was determined, that happened for a couple of reasons. One important reason was that at that period of time in Southeast Asia, most of the markets were monopoly telecommunications markets and so that there was one company on that foreign end that had control over the number of cables and also very crucially the pricing of that traffic. And what you had in the United States was a very competitive telecommunications market that was very open to new entry and so that the price of traffic traveling from Southeast Asia to California and back was actually cheaper than traffic traveling between two points in Southeast Asia. So the liberalization of telecommunications, the opening up of markets in Southeast Asia has really loosened that market, enabled new entrants into the market, enabled new infrastructure build and really changed the pattern of traffic there. And so I think that's an important lesson for us to remember about international traffic at that time, mostly telecom, now telecom and data is that there are market forces at play. The traffic is going to move one place another. It's just a question of which route is the fastest and the cheapest and the telecom systems do have in place, the switching capability to make that determination at any given point in time. So that's something that goes on in the network all the time and every country wants to be in a position where you benefit from that business. Are we reaching a point and I wanna bring the China piece into this where the geopolitical competition or the strategic competition with China is perceived such that this becomes yet another venue for that competition in terms of competing with each other to out subsidize the other in terms of certain types of routes. Is there a decoupling potential or aspect in the way we've seen talked about in Huawei and 5G and other areas of new emerging areas of technology, two internets and such is, to what extent is it warranted to kind of put this on the agenda in a bilateral sense of thinking about this competition and to what extent does that actually inhibit some of the free market, you know, more efficient investment and completion of these networks. So, Hishida-san showed up a slide. So there are three competitors, so NAC, Subcom and Alcatel. But so Huawei, Marine Networks, they change the name but so it's less than 10% but they are fourth provider of the cables these days. And before I ask a question to the owner of cable, so do you want to use the Chinese products? If cheap enough, they might buy cables from China or NAC or Subcom or other operators, they don't mind it. But the problem is that land equipment, inside a cable landing station, so it's very competitive these days. And people say, so Tokyo-Kusan showed a slide, so it says S-L-T-E or P-F-E, so it's a very strange name, but so it's a big machine inside a cable landing station. Those are very competitive these days, Chinese, Huawei products are coming into cable landing station. So those products are more important than cables themselves, I think, because you're inside a cable landing station, you can have data, you can collect data, you can monitor data. Maybe you have to convert optic signals to electronic data. So optic data cannot be processed in computers, so you have to use the electronic data to use computers. But so those kind of machines are becoming more important for government agencies, including intelligence and law enforcement agencies. So this is a hot spot, I think, so for competition between China and the other countries' providers. Yeah. Any other thoughts on that? Well, I think you kind of almost have to separate these into a couple of different issues. One is the vendor issue, and I get the sense from talking to people in the subsea industry, they've largely accepted that they cannot use Huawei gear if they're going to connect to Australia, the U.S., or United Kingdom, and people sort of understand that, and they have a number of other options, such as NEC, to go to. But there's another issue that's sort of come up the last few years, and that's general connectivity to China and to Hong Kong. And I briefly mentioned the very slow or absent permitting for cables going to Hong Kong from the United States. As an outsider, I don't fully understand it. There may well be some good reasons why those are being held up. That's, I'm not privy to that information, but as an outsider, it doesn't make a lot of sense. These cables are not being largely or not driven by Chinese entities. Who are the largest owners? They're American companies. It's mainly Google and Facebook. They're investing hundreds of millions of dollars, and they're not doing it just for the fun of it. That's because they need to deliver their services, so it's impairing their ability to compete. So to a certain extent, it may be a case of government regulation permanently harming the industry. Yeah, no, that's interesting. When you combine that with Irene's point about the soft power connectivity in terms, to some extent, we would want to maximize US company interaction or access in China, I would think. I want to give people a chance in the audience to ask questions of the group, and well, it looks like I was gonna let people begin to think about it while I jumped into the next point, but we might as well turn to the audience and other issues may come up. So we'll have a microphone come to you. We need that for the recording. We'll start up here with these two gentlemen, and wait for the microphone, let us know who you are, and ask your question. I'm Mark Browski, retired CEO, physicist and engineer. I have a question about the money, following the money. When I make a, do something on the internet, and it's gonna flow through one of these cables, how does the cable owner get paid? What is the trail of the money that eventually pays for the cable across the water? Okay, I'll start with that, because Tokyoko-san mentioned the cost per bit being a key factor. Who wants to? I'll try to tackle that. Have you ever bought crap on the internet? Have you ever looked at ads on the internet? That's what's funding submarine cables now. How it flows is the advertiser pays Google or Facebook for ad space, or to identify what you're interested in. They get $100 billion in revenue from ads. They, in turn, they're building data centers to process all the information they're serving to you to make you want to continue to use their social media or their web search. But that takes investment, and they also need to connect these big data centers. So they're building submarine cables to do that. I believe last year they spent, or Google spent $20 billion in CapEx. Only a small of that was on submarine cables, but it was still a large amount. So that's how it's flowing. It's from the end users, and a lot of it's ad driven, honestly. To a certain extent it's also ISPs, but not as much. The data center or the... So the cable owner is now increasingly Google and Facebook. Build their own cables. And they pay a company like NEC to build that cable for them. The money they get to pay NEC comes from all the people who use Google and Facebook and the advertisers, et cetera. Before that, I was listening to something. I sent an email to Europe. Well, we need the microphone, sorry, I'm sorry. Sir, can you wait for the microphone, please? Before Google and Facebook, I mean, these cables have been around a long time. My supplier, Comcast, for example, takes my email and sends it off to Europe somewhere. What's the flow to money to the cable owner, not to the one who built it, to the cable owner that owns that cable across the Atlantic? I'm missing something here. Well, we'll try to get to that. I also want to get to other questions, but correct me if I'm wrong. I mean, I think, in many cases, the older owners were the telecommunications companies. So AT&T and NTT and others built the cables to connect phone lines, for example. People paid, so they paid for the cable to provide the service, and so it was a delivery of service to people, in many cases. Now, increasingly, it's data, and I think it's worthwhile bringing into this equation. The other issues that are on the agenda for the US-Japan alliance, I think, because data center location is driven in part by cost considerations. So where is it the cheapest to build their data center, wherever electricity is cheaper and other types of regulatory processes are cheaper? But also now that we have increasingly different rules governing privacy, data privacy, data portability, data localization. So how some of these questions get solved will actually influence where companies will decide where Google will put their data centers. So that's another part of this equation in thinking about competition. Let me turn to the gentleman behind. Daimuchinaga, K.O. Research Institute at SFC. I'd like to ask about the strategic purpose of the developing the international submarine cable. Why Japan or China developing cable such as between Africa and South America? Okay, so Japan's case, we are doing the kind of ODA, so official development aid. So we want to have more capacity for developing countries. So we are doing the official aid. But in China's case, they are something different. So they are offering packages or everything. So for example, so China says we want to offer 5G handsets and 5G terrestrial communication systems and maybe base stations and the landline. And after that, they will say so we can provide a cable landing station and the undersea cables too. So whole packages. And maybe they can say we can add something good for your authoritarian government. So if you use a Chinese system you can monitor people's communications. So that's good deal for the authoritarian government in Africa or other countries. So we cannot compete actually. So Japan cannot offer such kind of big deal. So. I have a question in the back. My name is Roger Cochetti. I work with investors in the technology sector. I have two questions. The first is the roster of owners and operators of undersea cable for decades was pretty stable. ATT, cable and wireless, Deutsche Telecom. But today it's not clear from what the panel said. What is the roster of the principal owners of undersea cables today? With the introduction of China, Google and all these others, could any of the panelists just tell us who are for example the top five owners and operators of undersea cable today? The second question is the geometry one of the speakers explained earlier satellites versus cable is fairly obvious. Sending a signal 23,000 miles up and 23,000 miles down is a lot longer than sending a signal 6,000 miles across the Pacific. So you're going to have issues of latency with the geostationary satellites but there's a new generation of satellites that's sort of advancing or coming upon us and the geometry of satellites is that I can go directly from Osaka to St. Paul or I can go directly from Toronto to Bangkok and I don't have to go point to point but I can do multi-point to multi-point. So satellites have certain geometric advantages if you don't have a round trip that takes a quarter second what do any of the panelists think about this new generation of satellites which has the potential to eliminate the latency benefit of cables and does that suggest a change in the distribution of traffic between satellites and cable? Thank you. Okay, thank you very much. So we're going to have a top five owners question and then questions of satellite competitiveness and role in the international communication space down the line, who would like to? So I don't have a list of top five owners but if you go to the part 43 report every year you list all the submarine cable operators, they're there and actually if you use the telegeography map you can see for any given cable who the owners are so the data is out there. Yeah, so it's very rare to have a single owner for an entire cable. Usually it's most are still consortia. So even it gets confused in the press a lot. They talk about the Google cable or the Facebook cable. That's pretty rare still and usually what they do is that they're limited number of fiber pairs in a cable and certain entities will take a number of fiber pairs and then some will take others and then another company will take the remaining. Almost like buying box cars on a train in a sense. Yeah, exactly. It helps distribute the risk and the cost of doing it that way. But if you count up the fiber pair ownership right now for newer cables, Google and Facebook would be near the top and then companies like CenturyLink which I don't know if you remember Global Crossing from two decades ago but they own the Global Crossing assets. They're large, an Indian based company called Tata is still very large. And we're expecting as time goes on especially in the Asian market I would think Alibaba, Tencent, Baidu, Xiaomi would all be essentially the Chinese equivalents of some of these companies would become increasingly would rise up the ranks. And we haven't seen that yet. It seems there's a mandate for them to buy through the Chinese carrier. So China Telecom and China Mobile are provisioning on behalf of the bats so far. But it may be that Alibaba will end up with direct fiber ownership at some point. What about the issue of satellite competitiveness? Do you worry about that at all? Yeah, satellite, we need to see how the newer technologies for satellite move on. It is true today, there are newer technologies for satellite, bigger capacity and lower latency as you mentioned. But the issue of the capacity, size of capacity is still far behind of that the submarine cables can provide. And also the durability of the entire system. Satellite communication is basically made up with the satellite in the air and the earth stations. And the life of the actual satellite today is around 10 years, up to 15 years, right? So someday, one day it will come down. And then before that happens, you need to launch another satellite. That process push up the entire cost of the satellite communication system, right? We need to see how the newer generation of satellite technologies can push down the entire cost of satellite communication. So as submarine cable system supplier, we are very careful about disruptive technologies which may replace submarine cables. So far, we do not see the new generation of satellite as immediate the game changer in this field. Another question in the back? Yeah, Rick Fisher, International Assessment and Stratitude Center. Just to follow up on the previous question, have you specifically examined the potential of laser communications, laser communication link satellites as a near term or medium term disruptive technology? Oh, do we have that expertise on the panel? Okay, okay. We have not particularly looked into that technology. I don't know, is it actually used? Chinese have been developing a data, Chinese have been developing a data relay satellite system based on laser links. It hasn't been lofted yet. It's a bit behind the schedule that was explained to me a few years ago. You mean quantum communications? No, no. So in terms of thinking of this ever present competition between wire line and wireless, right? So what we're talking about here today are submarine cables, which is between points along the coast, right? Which is a particular kind of traffic. And satellite, of course, may or may not be competitive in that particular segment, but on land, there are other kinds of communications where new satellite technologies may be far more disruptive sooner, right? So in that sense, satellite would be competing with mobile terrestrial, would be competing with landline terrestrial. So just to map out for you the different parts of the market, but today we're talking about submarine cables, right? We haven't done an extensive analysis, but from what we've seen, the companies like Laser Light and other, the Chinese entity you mentioned, that would use laser signals to lower orbit satellites. It has a lot of promise, but even then it still could not match the economies of scale you get through fiber optics. I have another question here. Thank you, Julio Juliesa, King's College London. I'd like to follow up on Mochina Gassan's question. And Gassan or Sensei, or anybody else if possible could expand on it. I understand that the Japan China competition is playing up as evident from the presentations. Also with regards to the Chile China cable and the proposed possibly government supported cable between Chile, Australia, connecting Japan. And I understand that there are neutral concerns between the US, Japan and Australia. What is it? I don't still understand, because you mentioned the authoritarian challenge on China in Africa, but with regards to Chile, I would imagine that's not possibly the case. So what is it in this particular case that is worrying policymakers in these countries? Thank you. So maybe the question is related to the soft power idea. So China, so Chinese services by the Alibaba Tencent are closed in the mainland China. So they are not exporting those services to other countries, but they are thinking about this. For example, Alipay, so it's a mobile payment system. They want to export those services to other countries. But so Europe, Japan, so United States might not be competitive. So maybe they can export to developing countries in South America or Africa or other countries. So if the cables are connected, they can have communications. So I'm not sure so South American people are wanting to use Chinese services. Maybe they want to use Google, they want to use YouTube or Facebook, but if there's a connection, so there's maybe more flow between the two areas. So China might be thinking about exporting their ideas, their philosophies, their services, or their money, or something like that. So I'm not sure, but so I mean, do you agree with that? So connection and soft power. I think a lot of countries would like to be hubs. Yeah. Right? And there's competition within a region, among countries, among cities even, to be hubs for their regional network. That would be very attractive, right? And I think Chile is in the running, right? Yeah, this is my speculation. Well, we certainly saw that, it wasn't that many years ago when the rush to be the hub airport in Asia, whether it was Chubu, Osaka, Kansai, Incheon, and then everybody was trying to be the hub. Often technology ends up leapfrogging over this and then the planes fly far enough, they don't need to use the hubs, but I could see how that connects in a data side. It just seems to me there are these other factors though, in terms of you're overlaying them, there are the marketplace factors, but if the big owners are private companies essentially being funded by what they earn from data moving around, then how that data is governed is going to be a big factor and then it's the other cost of regulatory issues surrounding that as well. Yeah, I would add one thing, so this should not be a direct connection between Chile and China. So as far as I understand, so they are trying to build a network first between the French, Polynesia, and Chile. So French Polynesia is dependent on cables between Hawaii, Hawaii, and French Polynesia. So they are dependent on the United States, but now they are trying to build a cable between French Polynesia and Chile. It means that French Polynesia have alternative rule and so those cables might be going through the Pacific Island countries. So some of the Pacific Island countries still have a lot of cables, so some of the Pacific Island countries still are struggling to get new cables. They are dependent on satellites, so they are very, very slow and some of the Pacific Island countries has a diplomatic relations with Taiwan, not China, but China might turn over those kind of diplomatic relationships. So Pacific Island countries are very competitive places those kind of competition. We have time for another question or two. I'm gonna bring one from over here and then we'll try to collect the other questions. Maybe we'll do them all. Hi, Riley Walters, Heritage Foundation. Can you talk about sort of the capacity of underwater cables? I mean, as we talk about how more things are connected and more information's being shared across seas, on land, but mostly in the context of this event across seas and sort of meeting that demand through under submarine cables. Okay, let's just collect the last two questions. I have a gentleman here. Oh, hands keep going up. Oh, sorry, I had that gentleman there. It was his hand up before. I'm Bob Hershey, I'm a consultant. If there's a break in a cable, how does it get repaired? Okay, let's take those two quickly if we can and then I'll try to squeeze in the last two. Capacity, meeting the demand with submarine cables? Not equal, I think. So maybe, Kim? Yeah, I think you do know. A contemporary cable can handle maybe 200 terabits per second. It's hard to put that into meaningful terms, but more meaningfully is when we run out of capacity if we stop building cables. It depends on the route, but that could be as soon as maybe three or four years. So it's fairly urgent that new cables continue to be built. The one exciting thing in terms of new technical developments that I think, Tokiyoki, you just touched on briefly, I think during your presentation, is there's a trend now being pushed by the content providers of Google and Facebook to greatly increase the number of fiber pairs that we can squeeze through a cable. And why that's interesting to other people is that as opposed to a six fiber pair system, if you could have a 24 fiber pair system, fiber pair ownership suddenly becomes a lot less expensive. So regular companies or governments, instead of leasing capacity from an internet provider, they can own a fiber pair of their own. So that's a really cool thing that's coming down the pike in the next few years. Tokiyoki-san, do you wanna address how a cable is repaired? I imagine only rescue submarine goes. Yes, cable repair, you need to, well, first you need to identify the location of cable fold, right, and that's relatively easy. We have established the technology to detect where the cable fold is occurring. Then you need to send a special vessel to the location. And then the vessel need to pull up the cable and on the vessel, you need to reconnect the cable. There's also established ways of putting cable together, but the entire process takes time. And that's how the cable owners are employed and keep repair vessel in each location of the submarine cables existing. That's very roughly the way. Great, I picture a big roll of electrical tape. Yeah, basically. All right, we're gonna take these two questions very quickly if we can keep them very brief so that we can wrap up here today. Hi, I am Pascal Sigo from Ankara Consulting. We briefly touched on the SplinterNet, this idea that there will be two internets, basically one US, one Chinese dominated. I want to know if the industry is worried about that and is doing, what is the mitigation? Okay. James saying, you mentioned that the one US company in this area, Subcom, is owned by Cerebus now. Cerebus in general sells their companies off. Will the US government have any interest in what happens to Subcom when Cerebus sells it off? This is a version of the 5G situation where the US has no incumbent. But anybody like to address one or those questions? Pick one. Cerebus is a three headed dog that guarded the gates of Hades. Usually you don't want that kind of creature owning your company. But from all that I've heard, Cerebus has been a very benign new owner for Subcom and they've helped inject new cash into them for new R&D. So it seems fairly stable right now. I can't really answer the question about whether the US government would permit it going to other owners. I suspect that would be a concern. Cables are a vital asset and we've seen the Japanese and French governments want to protect their suppliers. Anybody have thoughts on the, oh. So the submarine cable system, the internet network is all connected together. So the fact that you have more or less cables on a particular route does not necessarily affect the total connectivity. The traffic will move from one place to its destination. It just depends on how many stops it makes along the way. The more of an end user issue on the splinter net than the infrastructure. Well, there's a lot of issues to cover but I really appreciate the opportunity to begin to scratch the surface. Under the surface on some of these issues together in the US-Japan context. And I look forward to following your exploits, Shiya sensei, of may you visit every landing station in the world, you got a little sticker on your laptop for all this. My son wants to go to every baseball stadium to see one game eventually, we'll see if we can do that. But thank you all for joining us today and please join me in thanking our panelists and speakers. Thank you very much. Thank you very much. Thank you very much, it was very nice.