The next phase of global business is being shaped by infrastructure most executives never see. Undersea cables form the backbone of the global internet. They carry the vast majority of the world’s international internet traffic and support the systems that modern companies depend on every day: banking, cloud computing, logistics, customer service, e-commerce, remote work, digital trade and, increasingly, artificial intelligence. The International Telecommunication Union describes these cables as critical infrastructure that carries approximately 99 per cent of the world’s internet traffic.
From Connecting Markets to Connecting AI Infrastructure
For decades, the logic of undersea cable routes was largely commercial. Cables were built to connect major population centres, reduce latency, keep costs down and move data efficiently between customers. The routes connecting Asia, Australia and Europe often followed the Asian coastline, moving through places such as the Strait of Malacca, the South China Sea and the Red Sea before continuing on towards Europe. That made sense in an earlier phase of globalisation, when the primary goal was to connect people, cities and markets as efficiently as possible. But Artificial Intelligence (AI)has changed the equation.
AI requires enormous volumes of data to move between data centres, cloud regions and high-performance computing clusters. It needs power, chips, cooling, land, water, fibre and secure international connectivity – requirements which are changing the calculus when it comes to undersea cable routes. If the purpose of a cable is to support AI workloads, it’s no longer enough to ask where the largest customer markets are. Cable providers like Google, Meta, Microsoft and other major technology companies are much more directly involved in financing, building and controlling the infrastructure that carries their data than they were in the past. They care about different things – where the data centres are, where the power is, where the political risk is manageable, and where the route can be made resilient.
A recent example is the I-2SEA cable system, which is being developed by Lightstorm, Microsoft, Singtel and Tata Communications. The system is designed to connect India, Malaysia and Singapore, and has been described as supporting hyperscalers, GPU infrastructure providers and enterprises with AI training and inference workloads across the India-Southeast Asia corridor.
This new map of the internet is being drawn around data centres, cloud regions, AI workloads and political risk, and the route a cable takes is as much a geopolitical decision as it is a technical or commercial decision.
Chokepoints, Leverage and Political Risk
The political risk matters because cables pass through real places. They run across the seabed, land in particular jurisdictions, require permits and depend on access for maintenance and repair. That makes them vulnerable to more than physical damage. They can also be affected by state pressure, regulatory delay, conflict, sabotage and disputes over control.
The Red Sea has already shown how exposed the system can be. The Strait of Hormuz is another emerging concern. Recent reporting has highlighted how dependent Gulf AI ambitions are on a small number of undersea cables running through geopolitically sensitive waters. WIRED has reported that, amid regional tensions, Iranian media claimed lawmakers were considering measures to take control of undersea cables passing through the Strait of Hormuz.
Even if those threats never become policy, they still affect risk calculations. Governments and companies have to plan for the possibility that digital infrastructure can become a source of leverage.
That is particularly important for the Gulf states, which are investing heavily in AI, data centres and digital infrastructure as part of a broader shift away from oil dependence. A country can build data centres, attract cloud providers and secure access to chips, but if its international data routes are concentrated through vulnerable chokepoints, the business model remains exposed.
The same logic applies in the Indo-Pacific. The South China Sea is an obvious example. China claims vast areas through its nine-dash line, and the region is already one of the world’s most contested maritime spaces. Even where a state does not fully control the surface, it can influence approvals, repairs, access and commercial behaviour. A cable fault in calm political conditions is an engineering problem, but in contested waters it may become a diplomatic problem. This is why routes that avoid contested waters and chokepoints are becoming more attractive, even when they are longer or more expensive.
Australia’s New Position in the Digital Economy
Australia sits directly inside this shift. The Oman Australia Cable, for example, links Muscat and Perth via the Indian Ocean, creating a route between Australia, the Middle East and Europe that avoids some of the traditional pathways through Southeast Asian chokepoints. Submarine Networks describes it as a 9,800 kilometre cable between Muscat and Perth, with branching units designed for future extensions to Salalah and Djibouti.
Google’s Australia Connect initiative points in the same direction. Its Bosun cable will connect Darwin to Christmas Island, with onward connectivity to Singapore, while an interlink cable will connect Melbourne, Perth and Christmas Island. Google says the initiative is intended to improve reach, reliability and resilience across Australia and the Indo-Pacific.
Google’s South Pacific Connect initiative adds another layer. The Honomoana and Tabua cables are designed to connect Australia and the United States through French Polynesia and Fiji, creating new transpacific pathways and improving resilience in the Pacific.
Taken together, these projects are changing Australia’s position in the digital economy. For a long time, Australia was treated as being on the edge of the global digital map. It was connected, but distant and its geography was often seen as a constraint. These days, Australia is increasingly part of a new digital corridor linking the Middle East, India, Southeast Asia, the Pacific and the United States. Its value is not just as a safe domestic market, but as a secure, stable, energy-rich and strategically aligned node in the global digital system.
The Opportunity Comes With Obligations
Unsurprisingly, this shift creates opportunities and data centres, cloud infrastructure, AI, cyber security, energy, professional services, digital trade and defence-adjacent technologies could all benefit from Australia’s changing position. But it also creates obligations. If Australia wants to become a serious digital infrastructure hub, it needs to think beyond cables as private assets laid by commercial operators. It needs to think about cable protection, landing approvals, energy supply, Pacific relationships, defence cooperation, cyber security, data regulation, environmental approvals and community acceptance of large-scale data centre development.
The private sector is already making these calculations and governments must now do the same. The United States has already moved in this direction through its submarine cable licensing rules. In 2025, the Federal Communications Commission adopted rules designed to protect submarine cable systems from foreign adversary threats. The rules create a presumption against granting applications involving certain foreign adversary ownership or control, and new cable landings in foreign adversary countries.
This is regulatory fragmentation in action. The internet may still feel global to the user, but the infrastructure behind it is increasingly being filtered through national security rules, alliance structures and sovereign risk assessments. The East Micronesia Cable is another example of this strategic logic. It is a collaborative project involving Kiribati, the Federated States of Micronesia and Nauru, and is funded by Australia, Japan and the United States. The project is intended to provide secure and reliable telecommunications connectivity across those Pacific states. China is notable absent,
Why This Matters for Companies Going Global
For companies operating across borders, this changes the risk equation. A business may never own a submarine cable, negotiate a landing licence or deal directly with a cable repair vessel. But it may still depend on global cloud platforms, offshore teams, AI tools, international payment systems, customer service centres and digital supply chains that rely on this infrastructure every hour of the day.
That makes connectivity a commercial issue, not just a technical one. The resilience of the systems behind a market now matters alongside the size of the opportunity, the quality of the partner and the strength of the margin. Cables, ports, energy grids, cloud regions, payment systems, data centres and semiconductor supply chains are all part of the operating environment – business-critical systems shaped by governments, alliances and geopolitical pressure. If your business depends on global cloud platforms, AI tools, cross-border data, international payments, offshore teams, remote customer service or digital supply chains, then political infrastructure risk is part of your strategy. It may affect where you host data, which cloud provider you use, how resilient your systems are, which markets you enter, how you structure customer service, whether you need redundancy across regions, and how you assess supplier exposure. For companies expanding internationally, this is now part of the due diligence.
The Seabed Is Now Strategic
The ocean floor is becoming the next frontier, the place where commercial strategy, national security and digital infrastructure meet. Where the next phase of globalisation is being quietly built. And where the map of international business is being redrawn. The companies that understand this shift will make better decisions about markets, partners, systems and risk. The companies that ignore it may find that the infrastructure they assumed was invisible becomes very visible when something goes wrong.
