Invest1 publisher3 min readPublished
Washington funds study on possible $14 billion subsea cable to Thailand, as state telco seeks co-investors
The US Trade and Development Agency agreed on Sept. 14 to fund a feasibility study for a trans-Pacific cable routed clear of the South China Sea. National Telecom in Bangkok has to assemble the consortium that pays for it.
The Investor · Invest desk
What happened
- USTDA said on Sept. 14 that it would fund a feasibility study for a subsea cable connecting Thailand, the United States and five other Southeast Asian countries on a route that bypasses the South China Sea.
- Estimates cited by Bloomberg put the cost of the proposed Thailand-to-US system at more than $14 billion if it is built.
- The proposed route may also pass through Indonesia, Singapore, Malaysia, Vietnam and the Philippines.
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Why it matters
- constraint American money stops at the study, so the project advances only if National Telecom can assemble Asian co-investors willing to underwrite a system priced above $14 billion.
- contradiction A route chosen to avoid Chinese-claimed water would still carry traffic for Indonesia and Malaysia, both listed as members of Beijing's AI organisation. That weakens the reading of two sealed digital ecosystems.
- exposure For as long as the project sits in study phase, traffic through Cambodia and Malaysia keeps depending on a single 2009 cable with few options for rerouting when it goes down.
- precedent Washington has already forced a private cable to change its landing point once, so consortium investors have to price the chance that a security review redraws the route after capital is committed.
The instrument is a feasibility study. Washington is paying for paperwork on a system somebody else in Asia has to fund. National Telecom, the Thai state-owned telco leading the project, aims to raise capital through an international consortium of co-investors from neighbouring Asian nations [4]. The estimate above $14 billion comes from figures cited by Bloomberg [2]. USTDA has not given a cost estimate of its own [3].
Subsea cables carry more than 99% of the world's internet traffic [13]. The commercial case for a second Thailand link does not need a war scare. The Asia-America Gateway has been the only cable between the United States and Thailand since 2009 [5], and its intra-Asia section between Singapore and Hong Kong fails repeatedly, with most faults on the segment near Vietnam [6]. Cambodia and Malaysia have few alternatives for rerouting when it goes down [12]. Asha Hemrajani, a senior fellow at Singapore's Nanyang Technological University, said "It is only natural that a new cable be built, both for resilience and capacity reasons" [10].
The routing is both the political choice and the underwriting one. China claims sovereignty over much of the South China Sea, overlapping with claims from Vietnam, Brunei, Indonesia, Malaysia and the Philippines [21]. Chinese domestic rules require prior approval and notification for cable work in its inland waters, territorial sea and continental shelf [8]. Hemrajani said cable operators and insurers "prefer to avoid the South China Sea due to additional uncertainty and trouble" [9]. Muhammad Faizal Bin Abdul Rahman, a research fellow at the same university, said "It makes practical and economic sense for new subsea cables to avoid the South China Sea" [17].
The two-blocs reading gets harder at the landing list. The route may also pass through Indonesia, Singapore, Malaysia, Vietnam and the Philippines [7]. By Fortune's account, Indonesia and Malaysia are part of the China-led World Artificial Intelligence Cooperation Organization, while the Philippines has joined the US-led Pax Silica [15]. Singapore joined Pax Silica last December and is reportedly considering an invitation from the Chinese-led body [14]. Two of the five candidate countries on a US-funded bypass sit inside Beijing's AI grouping [2]. Muhammad said Southeast Asian countries "need to re-evaluate what neutrality means today for each of them" [16].
Precedent says Washington can move a landing point. It also says that takes time. Pacific Light was initiated in 2015 with backing from Meta and Google, originally set to link California with Hong Kong's Deep Water Bay [18]. Washington blocked the US-Hong Kong connection in 2020, citing national security concerns over the project's China-based parent, Dr. Peng Telecom & Media Group, and the cable now links the US with Taiwan and the Philippines [19]. Five years passed between the plan and the redirection [4]. Bifrost and Echo run further south through the Celebes Sea to Singapore and Indonesia [20].
I'd expect the study to be the cheap part and the consortium to be the test. If co-investors based in WAICO member states fund the bypass, the split-ecosystem reading loses most of its force. If they do not appear, the project ends as a study.
What to watch
- Whether National Telecom names co-investors, and whether any are based in WAICO member states.
- Whether the study puts a cost on the system that holds the Bloomberg-cited figure above $14 billion.
- Whether Singapore accepts the reported invitation from the China-led AI organisation while staying in Pax Silica.