Iran Moves to Levy Fees on Hormuz Subsea Cables, Raising Global Digital-Security Concerns

Iranian lawmakers have discussed a plan to charge licensing fees for the use of undersea internet cables that cross the Strait of Hormuz. The proposal would obligate major technology firms—including Google, Microsoft, Meta and Amazon—to comply with Iranian law and pay usage fees, while granting Iranian companies exclusive rights to cable repair and maintenance. State-linked media have warned that non-payment could trigger disruptions of the “digital corridor.”

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Tehran frames the move as an exercise of sovereign rights under Article 79 of the United Nations Convention on the Law of the Sea (UNCLOS), which Iran has signed but not ratified. International law professor Irini Papanicolopulu notes that Iran must honor existing contracts for cables already laid, yet may set conditions for any new installations within its territorial sea.

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TeleGeography estimates that cables traversing the Hormuz corridor account for less than 1 % of global international bandwidth as of 2025. Two systems—Falcon and Gulf Bridge International—are confirmed to run through Iranian territorial waters. In 2024, a Houthi-linked vessel severed three cables, disrupting roughly 25 % of regional internet traffic. Of the five maintenance vessels normally operating in the Gulf, only one remains inside the Persian Gulf.

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Analysts warn that a large-scale attack could trigger a “cascading digital catastrophe” across continents, slowing financial trading, cross-border payments, and oil-export communications. India’s outsourcing sector could lose billions, while parts of East Africa might face internet blackouts. Military and cloud-based AI services would also be vulnerable.

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Experts highlight legal ambiguity and U.S. sanctions that prohibit American firms from transferring funds to Iran, limiting the practicality of fee collection. The modest share of global bandwidth and the need for cable operators to honor pre-existing contracts suggest the proposal may be more a political signal than a viable revenue stream. Industry sources describe the plan as largely declarative.

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Sources differ on how many cables lie within Iranian waters and the extent to which Iran can compel payments. Iranian media claim the cables handle transactions exceeding $10 trillion, yet independent assessments stress the less-than-1 % bandwidth figure. No official U.S. response has been recorded, leaving enforcement mechanisms uncertain.

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• “We will impose fees on internet cables,” — Ebrahim Zolfaghari, Iranian military spokesperson

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• “It aims to impose such a hefty cost on the global economy that no-one will dare attack Iran again,” — Dina Esfandiary, Bloomberg Economics, Middle East lead

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• “Of course, for existing cables, Iran has to abide by the contract that had been made when the cable was laid,” — Irini Papanicolopulu, professor of international law, SOAS University of London

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Negotiations between Tehran and Washington remain stalled, and Iran has tied any future talks to confidence-building steps, including sanction relief. Continued monitoring of Iranian statements and the operational status of Hormuz cables will determine whether the fee scheme becomes enforceable policy or remains a strategic warning.

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