The FCC Will License the Box at the End of Every Undersea Cable. Most of That Rule Isn't Switched On Yet.

At each end of an undersea cable there’s a rack of submarine line terminal equipment, or SLTE. It turns light into electrical signals and back, and it’s where the cable meets the networks on land [1]. The company running that rack often doesn’t own the cable. It might lease a fiber pair or a slice of spectrum and bring its own gear.

Starting with an order the Federal Register published today, the FCC wants every one of those companies on a license [1].

What the FCC adopted

The Commission voted June 25 on a Second Report and Order and Second Further Notice of Proposed Rulemaking, FCC 26-42, in OI Docket No. 24-523 [1, 3]. Chairman Carr and Commissioners Gomez and Trusty approved it [3]. The order does three things [1]:

• Licenses SLTE. Any entity that owns or operates SLTE on a cable landing in the U.S. becomes a licensee under the Cable Landing License Act. Those not already licensed get a blanket license by rule. Entities that are foreign adversary-controlled, or that fail the character test, don’t get the blanket license for new SLTE and must apply individually.
• Adds security conditions for cable licensees. No new principal equipment produced by foreign adversary-controlled entities, no third-party service providers that are foreign adversary-controlled, on the Covered List or able to reach the cable from a foreign adversary country, and no capacity deals that would let a Covered List entity install, own or manage SLTE.
• Creates a fast lane. Applicants that certify to ten national security standards would be presumptively exempt from referral to the Executive Branch agencies known as Team Telecom.

The blanket license comes with a subset of the routine conditions: follow FCC rules, file annual circuit capacity reports, and keep a cybersecurity and physical security risk management plan [1]. The plan has to cover logical access, physical access and supply chain risk, and it goes to the FCC only if asked [1]. SLTE operators with foreign adversary ties, or that use Covered List gear, also file an SLTE Foreign Adversary Annual Report [1, 5].

The FCC estimates 3,136 SLTE owners and operators, which it gets by multiplying 98 licensed cables by 16 fiber pairs by two SLTEs per pair [1]. It calls that number conservative and probably too high [1]. Total cost: about $39.2 million in the first year and $10.7 million a year after [1]. Each risk plan runs about $9,100, by the FCC’s math [1].

The part that starts September 25, and the part that doesn’t

This is the detail I’d put at the top of the compliance memo. The order is effective September 25, 2026, except for a long list of sections “delayed indefinitely” pending Office of Management and Budget review under the Paperwork Reduction Act [1]. The delayed list includes the SLTE licensing rule itself (section 1.70003), the new certifications, the SLTE annual report and the whole fast-lane exemption [1]. The FCC’s Office of International Affairs will announce those dates later [1].

What does start September 25 [1]:

• New definitions. “Principal equipment” now covers the cable’s DCI, wet plant, SLTE, servers, routers, switches, repeaters, multiplexers and “all equipment (including hardware, software, and firmware) and Network Management Systems” used to run or monitor the system. “Access” includes any logical ability to read, change or reconfigure the system.
• The SLTE capacity bar. Cable licensees can’t enter or extend an IRU or capacity lease that would give a foreign adversary-controlled entity the ability to install, own or manage SLTE. A waiver requires “clear and convincing evidence.”
• Information sharing. The FCC can pass confidential filings to Team Telecom and other agencies, with notice at the time of disclosure.

So the rule everyone will describe as “the FCC now licenses SLTE” doesn’t license anyone yet. It decides who will be licensed and what they’ll owe once OMB signs off.

What it means if you build on this infrastructure

My read, and it’s opinion.

Most of you will never touch this, and a few of you will touch all of it. If you buy cloud regions, nothing here lands on your desk. If you run an AI or cloud company that leases spectrum on a transpacific or transatlantic cable and operates its own terminal gear, you’re about to be an FCC licensee, probably without filing anything. Greenberg Traurig notes the rules reach downstream IRU, lease, vendor and colocation agreements, including SLTE in inland data centers [5]. The FCC frames the whole order around AI and data centers, and it quotes an Anthropic filing: “Adversarial SLTE or fiber owners could selectively deny service, degrade performance, or power down infrastructure supporting AI workloads” [1].

The definition is doing the work, again. Last week I wrote about the FCC’s component ban hanging on “logic-bearing” hardware. This order’s principal equipment definition also reaches “logic-bearing service,” and it includes the software that monitors the cable [1]. If your network management stack has a vendor with foreign adversary ties, that’s now a cable equipment question. The FCC delegates authority to its staff to decide categories by declaratory ruling and “further guidance” [1]. I’d rather see that list in the rule.

The fast lane is fast for big operators. The ten standards require a U.S.-citizen Security and Compliance Officer eligible for a Secret clearance, a NIST CSF-structured risk plan filed with the application, 72-hour incident reports, quarterly lists of foreign individuals with access, on-site inspections, and audits up to every two years [1]. You must already hold a license granted after November 27, 2020 with a mitigation agreement [1]. That’s a reasonable trade for a hyperscaler or a cable consortium. A new entrant can’t qualify for it at all.

Fiber sensing startups, read section 1.40001(b)(9)(x). Exempt-track licensees must give 30 days’ notice and get written non-objection from a majority of the Committee Members before anyone tests or adds distributed acoustic, thermal or other sensing on the cable, including firmware upgrades that expand data collection [1]. If you sell “Sensing as a Service,” the order uses that phrase [1].

No rip-and-replace. The FCC declined to make licensees pull existing Covered List gear, citing cost and investment, and it kept repair ships with foreign adversary ties available for wet-segment repair because there aren’t enough repair ships [1]. The bet is that obsolescence plus a ban on new purchases does the work over time [1]. Carr said at the vote that submarine cables “face greater threats than ever” [4]. For gear already in the water, the order’s answer is patience.

What I’m watching

• August 26. Comments on the further notice, which asks whether cable licensees should have to impose the conditions on SLTE operators through contracts, whether the ten standards should apply to every licensee, and whether existing licensees could opt into them instead of their current mitigation agreements [2]. Replies are due September 25 [2].
• The OMB notice. Nothing in the SLTE license, the certifications or the fast lane works until the FCC publishes an effective date [1]. Greenberg Traurig expects this “may not be the end of the FCC’s reform effort” [5].
• The one-time SLTE information collection. The FCC says it will run it “in the near future” and use the results to decide what else SLTE operators owe [1, 2].