For decades, the global economy has viewed the Strait of Hormuz primarily through the lens of oil and energy security. But Tehran is now signaling a shift in strategy, eyeing a different kind of power: the invisible network of subsea cables in the Strait of Hormuz that carry the lifeblood of the modern digital economy.
In a move that blends economic extortion with asymmetric warfare, the Islamic Republic has indicated it intends to charge the world’s largest technology firms for the passage of internet and financial data through its territorial waters. The plan, discussed by lawmakers in Tehran last week, targets the submarine cables that link Arab nations to the massive data hubs of Europe and Asia.
The proposal is not merely a request for payment. State-linked media outlets have issued veiled threats that data traffic could be disrupted if companies do not comply. Iranian military spokesperson Ebrahim Zolfaghari confirmed the intent on X, stating, “We will impose fees on internet cables.”
According to reports from Revolutionary Guards-linked media, the plan would require tech giants—specifically naming Google, Microsoft, Meta and Amazon—to comply with Iranian law. Submarine cable operators would be forced to pay licensing fees, while the rights to repair and maintain these critical lines would be granted exclusively to Iranian firms.
The Digital Toll Booth: Leverage and Constraints
The strategy represents a calculated attempt to turn geographic leverage into long-term strategic power. By targeting the infrastructure of the internet, Iran is signaling that its tools of influence extend far beyond the blockade of oil tankers.
However, the plan faces a significant practical hurdle: U.S. Sanctions. Because strict sanctions bar American companies from making payments to the Iranian regime, tech giants may view these demands as political posturing rather than a viable policy. It remains unclear how Tehran could actually force these companies to pay without triggering a diplomatic or legal crisis.
Despite these constraints, the threat of physical interference remains a potent deterrent. State-affiliated media have warned that damage to these cables could disrupt trillions of dollars in global data transmission, impacting everything from AI cloud infrastructure and military communications to global banking systems and remote work.
Mapping the Vulnerability
Most international cable operators have historically avoided Iranian waters due to security risks, clustering their infrastructure in a narrow band along the Omani side of the waterway. However, total avoidance has not been possible.
Alan Mauldin, research director at the telecom research firm TeleGeography, notes that two major cables—Falcon and Gulf Bridge International (GBI)—do traverse Iranian territorial waters. While these cables represent less than 1% of global international bandwidth as of 2025, their regional importance is immense.
The Islamic Revolutionary Guard Corps (IRGC) possesses the specialized tools necessary to threaten this infrastructure. According to Mostafa Ahmed, a senior researcher at the Habtoor Research Center, the IRGC’s arsenal of combat divers, tiny submarines, and underwater drones makes these cables vulnerable to targeted sabotage.
Such an attack could trigger what Ahmed describes as a “digital catastrophe.” The immediate impact would be felt most acutely by Iran’s neighbors in the Persian Gulf, potentially crippling banking and oil exports. Beyond the region, India’s massive outsourcing industry could face losses amounting to billions of dollars if a large proportion of its traffic is severed.
A Strategy of Asymmetric Cost
This move is part of a broader effort to ensure regime survival by imposing an unsustainable cost on the global economy. Dina Esfandiary, Middle East lead at Bloomberg Economics, suggests that Tehran’s goal is to create a deterrent so costly that foreign powers will be discouraged from attacking Iran.
The precedent for such disruption is already visible in the Red Sea. In 2024, three submarine cables were severed after a vessel struck by Houthi militants—who are aligned with Iran—dragged its anchor across the seabed. That single incident disrupted nearly 25% of internet traffic in the region, according to HGC Global Communications.
Adding to the risk is the current fragility of the region’s repair capabilities. Maintenance vessels must remain stationary for long periods to fix faults, making them sitting ducks in a conflict zone. Currently, only one of the five maintenance ships normally operating in the region remains inside the Persian Gulf.
The Legal Battle over the Seabed
Iran has attempted to frame its demands within the context of international law, citing the 1982 United Nations Convention on the Law of the Sea (UNCLOS). Although Iran signed but did not ratify the convention, it is often viewed as binding under customary international law.
Under Article 79 of UNCLOS, coastal states have the right to establish conditions for cables entering their territorial sea. Iranian media have pointed to Egypt as a successful model, noting how Cairo generates hundreds of millions of dollars in fees from cables passing through the Suez Canal.
Legal experts, however, argue the comparison is flawed. Irini Papanicolopulu, a professor of international law at SOAS University of London, notes that while a state can set conditions for new cables, they must generally abide by existing contracts for cables already laid. The Suez Canal is an artificial waterway, whereas the Strait of Hormuz is a natural strait governed by different legal frameworks.
| Feature | Suez Canal (Egypt) | Strait of Hormuz (Iran/Oman) |
|---|---|---|
| Waterway Type | Artificial/Excavated | Naturally Occurring |
| Legal Basis | Territorial Sovereignty | International Strait Framework |
| Revenue Model | Established Transit Fees | Proposed Licensing Fees |
| Primary Risk | Traffic Congestion | Asymmetric Sabotage |
As geopolitical tensions rise, the subsea cables in the Strait of Hormuz have evolved from mere utility lines into strategic chips in a high-stakes game of brinkmanship. The world’s dependence on seamless data flow has created a new vulnerability that Tehran is now eager to exploit.
The next critical checkpoint will be the response from the targeted tech firms and the U.S. Treasury Department, as the international community determines whether to treat these demands as a legal dispute over territorial waters or a direct threat to global communications infrastructure.
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