TOKYO — To counter a rapidly emerging Chinese presence in the submarine cable market, Japan intends to provide aid to companies exporting optical fiber submarine cables, The Yomiuri Shimbun has learned.
While Japanese, U.S. and European firms have almost dominated the market in these core components of communications infrastructure, the government is rushing to support exports due to concerns that a China-led worldwide submarine cable network could lead to security problems such as data eavesdropping, according to sources.
Led by the Internal Affairs and Communications Ministry, the government plans to formulate as early as this spring an “overseas expansion action plan” covering areas such as the export of telecommunications infrastructure. The plan would include specific policies to support submarine cable exports.
At present, the core of the new policies is likely to establish a system in which overseas submarine cable projects by private companies such as NEC Corp., NTT Communications Corp. and KDDI Corp. receive investment and financing from the public-private Fund Corporation for the Overseas Development of Japan’s ICT and Postal Services (JICT).
In addition, the policies would take advantage of forms of indemnity provided by Nippon Export and Investment Insurance, which is fully funded by the Japanese government, to ensure Japanese companies are not reluctant to pursue exports due to worries about nonpayment by the partner country or other such trouble.
Cabinet minister-level officials are expected to play a leading role in promoting Japanese cables overseas.
Ninety-nine percent of communications and data that travel around the world pass through submarine cables. Currently, there are about 400 submarine cables worldwide, with an estimated total length of more than 1.2 million kilometers, or enough to circle the Earth 30 times.
This submarine cable network was created mainly by three telecommunications equipment manufacturers: NEC of Japan, SubCom LLC of the United States, and Alcatel Submarine Networks of France.
These three companies have more than 90% of the submarine cable market, much more than the 3% held by a subsidiary of Huawei Technologies Co. of China.
However, Chinese companies are rapidly expanding by offering low-cost components to Southeast Asian and African countries.
In particular, Chinese companies showed improved technological capabilities by successfully building a long-haul submarine cable stretching about 6,000 kilometers between South America and Africa in 2018, which shocked industry insiders in Japan, the United States and Europe.
Chinese firms are becoming major rivals in the laying of intercontinental submarine cables, which have been dominated by the three companies from Japan, the United States and Europe.
The government wants to support NEC in its bid against Chinese companies regarding a submarine cable that the Chilean government is planning to connect with Asia via Australia.