Subsea Cable Nightmares: Elm Street Comes To The Middle East

In a conversation I had today with the editor of Capacity Media, I suggested the top challenge for the global subsea cable industry over the next five years is how to thread intercontinental traffic through the Middle East to Europe, India, and Asia. Trump's attack on Iran has shut down the Persian Gulf, which many subsea cable consortiums viewed as their best hope for a Red Sea bypass route. If wet segment outages happened, there would be no way to repair them today, just like the Red Sea off Yemen. Thank you, Donald. 

In fact, SWM6 goes up the Persian Gulf and lands at Bahrain. It is linked to fibre along a highway from Bahrain to the cable landing station in Saudi's Arabia's resort city of Jeddah. So the SMW6 bypass uses the Persian Gulf up to Bahrain, traverses the Desert, and then rides the Red Sea to an Egyptian CLS. In addition, persistent rumors suggest that Blue-Raman will traverse Kuwait as part of a terrestrial route to reach the Red Sea.

I don't think there is any victory in this American-Iranian conflict. The American government thought Iran would be Venezuela 2.0. In contrast, Iran has much stronger institutions, a bigger economy, and the Revolutionary Guard controls 40% of the economy. Stocks of expensive precision American weaponry are running low because they are being used much faster than they can be replaced.

So what should the industry do?
1. No one likes the Red Sea.
2. No one likes Egyptian transit fees.
3. Going forward the Persian Gulf is no better than the Red Sea. Indeed, it is today worse.
4. No one wants to build routes that include Israel because as the Israel Defense Forces themselves admitted, they killed over 70K Palestinians civilians in their Gaza strip invasion. In fact, Saudi Arabia just cancelled a terrestrial route into Israel in favor of one through politically stable, peaceful, and prosperous Syria.

The only path makes any sense long term given the chaos and confusion of this misguided war on Iran is to land cables at Oman and traverse the Saudi Arabian desert in a Northwesterly direction until they reach Egypt or Israel. Such a route keeps a good deal of distance from Iran and Yemen. Are there drawbacks? Maps suggest that almost all the fibre runs up from Oman via UAE to Saudi Arabia. In fact, there are virtually no roads from Oman into Saudi Arabia, probably no existing fibre routes, and hence probably no rights of way for new fibre deployments.

Just as Singapore stole the Crown of the Pacific from Hong Kong due to Chinese political arrogance, there is an opportunity for Saudi Arabia and Oman to become major transit and subsea hubs. It requires the two countries to cooperate. Moreover, a liberalized telecom sector would help to bring down the exorbitant costs of Middle East connectivity. Right now politically privileged oligopolies with strong ties to the monarchies and regulations limiting competition constrain the region's potential.