Iranian lawmakers have discussed a plan to begin charging tech companies like Google, Meta, and Microsoft annual fees for fiber-optic cables that run beneath the Strait, according to Iranian state-affiliated media. The vast majority of the world’s internet communications are transmitted via undersea cables, and the Strait is a critical corridor, connecting India and Southeast Asia with Europe as well as supplying internet to Gulf countries and Egypt. Disruptions to these cables could slow or interrupt internet services, as well as affect military communications, financial transactions, cloud computing, and digital services like e-commerce, social media, streaming, and online gaming.
Iran’s apparent ambition to charge fees for the undersea cables mirrors its effort to institutionalize its control over shipping through the Strait. In retaliation for the U.S. and Israel launching the war on Feb. 28, Iran effectively closed the Strait of Hormuz to most ships and said it intends to charge tolls for safe transit through the Strait after the war ends, which have been key sticking points in peace negotiations with the U.S. Iran previously condemned the U.S. naval blockade, which began April 13 as an effort to forcefully reopen the Strait, of its ports as a violation of the cease-fire, which took effect on April 8.
At the same time, Islamic Revolutionary Guard Corps-linked media outlets have suggested that Iran could take steps to generate revenue from the internet cables in the Strait of Hormuz.
“The Strait of Hormuz is not just an energy chokepoint,” says Mostafa Ahmed, a senior researcher at think tank Al Habtoor Research Center. “It is one of the world’s most critical digital bottlenecks.”
Undersea cables are fiber-optic or electrical lines installed along the ocean floor to carry data, telecommunications, and electricity between countries. The United Nations’ agency for digital technologies, the International Telecommunication Union (ITU), estimates that 99% of international internet traffic is transmitted by undersea cables. The cables are also critical to cloud services, which is how many people and businesses store and access their data over the internet.
These include systems connecting Asia to Africa to Europe (AAE-1) and Southeast Asia to the Middle East to Western Europe (SEA-ME-WE 5). Another two systems—FALCON, which connects India and Sri Lanka to Gulf states, Sudan and Egypt, and the Gulf Bridge International Cable System (GBI), which connects all Gulf countries—also run through Iranian territorial waters, according to telecom research firm TeleGeography.
And at just 21 nautical miles wide at its narrowest point, Ahmed says the Strait is a chokepoint.
Gulf states “would face severe operational bottlenecks,” Ahmed says. Countries with limited submarine cable diversity—Qatar, Bahrain, and Kuwait—would be the most immediately impacted, Tara Davenport, deputy director of the Asia-Pacific Centre for Environmental Law at the National University of Singapore, tells TIME.
Some countries, like the United Arab Emirates, can rely on their terrestrial connections in neighboring countries, which provide back-up data transmission, and submarine cables that land along the coast facing the Gulf of Oman, reducing risk, Davenport says. Saudi Arabia, meanwhile, relies more on cables passing through the Red Sea.
But severe enough disruptions could still overload terrestrial connections and other submarine cables, says Davenport.
While the subsea cables running through the Strait account for less than 1% of global international bandwidth, Ahmed tells TIME that the impact on economies in the Middle East and Asia could have knock-on effects for the rest of the world.
With global energy and shipping facing continued disruptions through the Strait, “a coordinated disruption would trigger a global ‘dual-shock’—paralyzing both energy supply chains and digital infrastructure,” he adds.
Cable faults are common, with around 200 incidents per year, largely due to anchor drags, says Elina Noor, a nonresident scholar at Carnegie Endowment for International Peace’s Asia Program. Mauldin tells TIME that most of the time internet users don’t notice any impact from these faults.
Can Iran charge fees?
Commentary published by state-linked news agency Fars on Monday argued that, “a $10 trillion treasure lies at the bottom of the Strait of Hormuz.” The article cited the 1982 United Nations Convention on the Law of the Sea, which Iran has signed but not ratified, as providing Iran the right to impose “licenses, supervision, and sovereign fees” on cables in the Strait. According to Article 79 of the UNCLOS, all states have the right to lay submarine cables on the continental shelf of coastal states, although coastal states are allowed to impose certain conditions—mainly related to environmental and resource protection—for cables entering their territorial waters.
Submarine cables already usually require permits or government approval in order to be laid in territorial waters, and some countries, including the U.S., impose regulatory fees, says Mauldin. In the U.S., companies must pay an administrative fee to obtain an administrative cable landing license issued by the Federal Communications Commission.
Another article published by state-linked outlet Tasnim argued that while international law asserts the freedom to lay telecommunications cables on the seabed, this should not mean “transferring ownership or depriving the coastal state of its jurisdiction, and the state can still establish the necessary rules for infrastructure activities within its territory.”
Iran has repeatedly said the blame for any disruptions in the Strait lies with the U.S. and Israel as aggressors in the war.
“Their authority to adopt laws and regulations is subject to general international law principles of reasonableness, necessity and proportionality,” she says. “While it is not entirely clear what Iran is proposing and what its purpose would be, retroactively imposing transit fees on cables already laid in Iran’s territorial sea as ‘protection’ fees” would likely not be considered reasonable or proportionate.
“The suggestion by Iranian lawmakers to charge ‘fees’ is legally baseless and functionally an extortion tactic,” he says. “Any attempt to enforce ‘tolls’ would be an act of coercion backed by military threat.”
“Refusal, however, increases the risk of physical sabotage, which would drive insurance premiums to prohibitive levels and ultimately force tech giants to redirect future infrastructure investments entirely away from the region,” says Ahmed.
The last method may have been used before. In February 2024, several subsea cables were severed after the anchor of a bulk carrier dragged along the seabed as the ship sank. It was suspected that Iran-aligned Houthis had targeted the vessel amid their broader attacks on commercial shipping through the Red Sea in protest of Israel’s bombardment of Gaza, although the Yemeni government denied allegations of sabotage. Internet service provider HGC initially estimated that at least 25% of internet traffic was affected by the cable cuts, while network provider RETN later said the actual disruption may have affected closer to 70% of Europe-Asia traffic. Across India, Pakistan, and parts of the Middle East and Africa, internet users reported disruptions and slower connectivity for days, while traffic was rerouted and repairs were carried out with some delay due to continued security risks in the region.
“In times of peace, states are prohibited from intentionally damaging submarine cables or interfering with their operation under customary international law,” she tells TIME. “In times of armed conflict, … the situation is governed by the law of naval warfare and is more complex.”
However, Davenport caveats, “these rules are old rules adopted in the context of submarine telegraph cables at a time when communications only served the two States that were physically connected by that cable. Today, submarine cables are connected to many states.” There are likely to be more limits on the legal right to target subsea cables in that context. It can also be argued, she adds, that “the scale of impact on civilian social and economic infrastructure and the possibility of this damage spreading beyond the targeted state to neutral third states is not proportionate in relation to any perceived military advantage that may be gained by cutting such cables.”
How would disruptions affect Gulf states?
While Iran’s threat to impose fees for subsea cables in the Strait may be bluster, it could nevertheless hamper neighboring Gulf countries’ efforts to diversify their economies away from oil, which is ever-more pressing given the disruptions their oil and gas industries have faced.
A.I. infrastructure, especially data centers, “are best served by low latency connections from subsea data cables,” says Noor. Satellite internet cannot provide the capacity that these data centers need, Ahmed says.
Already, several undersea cable installation projects have stalled amid risks of attacks on vessels. Meanwhile, potential unexploded missiles and mines on the seabed may delay projects further, according to Bloomberg, or even make investors think twice about building in the region.
“If subsea cables are severed, these multi-billion-dollar AI infrastructures would be effectively isolated from the global network, rendering them paralyzed and severely undermining investor confidence in the region as a secure technological hub,” Ahmed says. Any disruption to subsea cables therefore poses “an existential threat” to the economic diversification efforts of the region.
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