Chile chose a route proposed by Japan for the first fiber-optic cable to directly connect South America and the Asia-Pacific region, designating Australia and New Zealand as end points while s stopping before landing in China, Nikkei learned.
The route to Japan beat Chinese terrain that would have made Shanghai the final landing point. The move comes amid a campaign of US pressure to prevent China from participating in global telecommunications projects.
According to the Japanese proposal, the submarine fiber-optic cable would stretch approximately 13,000 km across the Pacific Ocean, pass through New Zealand and then arrive at its terminus in Sydney. The Chilean government claims this route is the most recommended based on cost and feasibility.
Japan and Australia completed their own submarine cable connecting the two countries in July, meaning Japan could easily connect to the trans-Pacific cable. Australia and New Zealand share close ties with Chile under the Trans-Pacific Partnership, the trade deal that Tokyo has advocated.
The Japanese proposal in Chile took into account Australia’s tough stance against Beijing, exemplified by Canberra’s decision to blacklist Chinese Huawei technologies from its 5G infrastructure.
This article is taken from the Nikkei Asian Review, a global publication with a unique Asian perspective on politics, economics, business and international affairs. Our own correspondents and external commentators from around the world share their perspective on Asia, while our Asia300 section provides in-depth coverage of 300 of the largest listed and fastest growing companies from 11 economies outside of Japan.
Subscribe | Group subscriptions
Chile has been caught in the geopolitical crossfire as China, its biggest trading partner, lobbied a lot for the cable to consider having Shanghai as its terminus. When Chilean President Sebastián Piñera visited Beijing in April last year, Huawei pledged to invest in data centers in Chile.
Huawei initially emerged as the main contender for submarine cable. But the South American country could not ignore American intentions in matters of diplomacy and trade.
Just before Mr Piñera’s visit to China, US Secretary of State Mike Pompeo arrived in Chile and accused Huawei of being controlled by the Chinese government, which would put Chileans at risk.
Last June, the US Department of Justice released a case recommending that a separate Pacific submarine cable backed by Google and Facebook bypass Hong Kong. The document cites the risk that the Chinese authorities collect sensitive data.
Submarine cables carry 95% of international communications, including Internet data. With the advent of smart devices and 5G communications, expanding the capacity of optical cables has become a pressing issue.
Gloria Hutt, Chilean Minister of Transport and Telecommunications, said her goal was to transform her country into a digital hub of South America. The government is expected to release its technology report in the third quarter. A fund dedicated to the project will be set up at the end of the year.
Tenders are expected to go out next year, with an initial investment scale estimated at $ 500 million.
As Chile has adopted the Japanese route for cable, Japanese companies will have an advantage in winning equipment supply contracts. In the event that Japanese companies are awarded contracts, Tokyo plans to invest and extend financing to a special purpose vehicle through the Japan Bank for International Cooperation and the Japan ICT Fund.
Japan’s NEC is one of the top three suppliers of submarine cables, alongside the American company Subcom and the French company Alcatel Submarine Networks. NEC recently completed a transatlantic cable between Angola and Brazil.
Huawei, which originally focused on short-haul cables, has expanded in recent years to include submarine cables connecting Africa and Latin America. The company announced last June that it would sell its submarine cable assets, but business will likely continue under the auspices of another Chinese telecommunications giant.
A version of this article was first published by Nikkei Asian Review on July 29, 2020 © 2020 Nikkei Inc. All rights reserved.
