Reported: EU proposes subsea cable upgrade with state aid

Reported: EU proposes subsea cable upgrade with state aid

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The European Commission has reportedly produced a proposal which suggests that Europe should start to build or upgrade its subsea cables with the support of state aid if necessary.

According to Reuters, which has had site of the document, the proposal comes as concerns about vulnerabilities in existing subsea cable infrastructure was exacerbated by the damage to two Baltic subsea cables in 2023.

In addition, with the rising geopolitical uncertainties and conflicts, digital infrastructure has become critical asset in need of added safeguarding.

Due to published at some point today, these concerns prompted EU officials to develop a strategy that includes measures to protect and secure the bloc's subsea cables.

"This Recommendation aims to encourage the deployment or significant upgrade of submarine cable infrastructure via CPEIs [Cable Projects of European Interest] in compliance with EU law, including state aid rules," the Commission document states.

It also states that funding could come from EU programmes, the European Investment Bank, National Promotional Banks, development and public financial institutions, private-sector finance institutions and private-sector investors as well as equity funds.

Commenting on the soon to be published report, Ciaran Delaney, COO at Exa Infrastructure, said:

“Submarine cables are like the internet’s main arteries, carrying data around the world, so it’s only natural that the EU Commission is looking at ways to secure these vital pieces of infrastructure.

“Private investment is flowing into the subsea industry all the time to create more diverse paths from A to B and provide resiliency should a specific cable be damaged but any legislative support to make upgrading and securing network infrastructure easier is welcomed.

“While it is right to consider the possibility of deliberate sabotage, it is important to remember that submarine cables are most often damaged by accident when a ship drags its anchor along the seabed for example, so any policy or funding support should also take this into account.”

In addition, the proposal recommends establishing a board of experts to help the Commission identify strategic CPEIs, enable information exchange between EU countries and assess risks, vulnerabilities and dependencies as well as suggest measures to mitigate these risks.

"This Recommendation invites Member States to adopt measures to ensure that submarine cable infrastructure operators meet the highest security standards (including defence-level standards, where appropriate)," the document states.

In related news, today the European Commission is also expected to release its report on clearing the path for greater telecoms M&A. The news follows on from the announcement that it had approved the merger between Orange and MasMovil in Spain.

Whether this report will form part of the aforementioned subsea recommendations or as a standalone document is unclear, but response to the rumoured publication has been positive.

“We need to make sure the European telecoms industry does not regress to the monopoly days of the 1990s,” commented Keri Gilder, CEO of Colt Technology Services.

“The European Commission is correct to identify fragmentation as a source of weakness in the European telecoms industry: M&A allows merging entities to gain greater economies of scale and scope, and to become more powerful and effective competitors. It’s important to note that investment in infrastructure and product innovation has largely been driven by new entrants’ market presence and business models.”

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