The Pacific Communications Race

The Pacific Communications Race

Australia is investing heavily in Pacific telecommunication networks in a rivalry with China for regional influence.

WHAT’S HAPPENING?

Australia is investing heavily in Pacific telecommunication networks in a rivalry with China for regional influence.

KEY INSIGHTS

– Telstra will acquire Digicel with significant support from the Australian government
– Australia has mostly focused on ground-based telecommunications networks while China has an advantage with space-based networks
– Australia is likely to build up its satellite capability, meaning China will need to respond or risk foregoing power in the region

A GEOPOLITICAL ACQUISITION

In October 2021, Telstra announced that it acquired the Pacific branch of telecommunications company Digicel. Digicel Pacific is the largest telecommunications provider in the Pacific with a presence in Papua New Guinea, Nauru, Samoa, Tonga, Vanuatu and Fiji with 2.5 million corporate and individual customers. The Australian Government contributed approximately 80% of the $1.36 billion purchase price for the acquisition, representing a major geostrategic move in the competition for communications primacy in the Pacific Islands. 

Communications are vital for maintaining ties in the Pacific and are considered a major political and national security matter for Australia and regional small island governments. As a result, the communications industry has become a major source of competition between Beijing and Canberra. 

For Australia specifically, there is concern that Chinese regional telecommunications projects will provide a backdoor into Australian and Pacific Island communications networks, allowing for espionage, control over the flow of information and disruption of Australian relations with its neighbors. Chinese telecommunications company Huawei has already been banned from the Australian 5G network rollout in 2018 for concerns over national security.

A COMPETITION FOR LAND AND SPACE

The vast majority of data transmission occurs over communication systems that are either space-based satellite networks or ground-based cable networks. Historically, space-based communication systems have relied on large satellites placed in geosynchronous orbit. Previously, these satellites were too expensive to justify usage over the Pacific Islands. Now, with the rise of smaller low-earth orbit (LEO) satellites, the use of satellite communications is becoming a reality. As such, it is likely that these smaller LEO satellite constellations, matched with the ground-based undersea cables, will create the future backbone of communications infrastructure in the region.

In recent years, Australia has only focused on developing ground-based systems through a network of undersea cables and local telecommunications providers. Because of this, Australia has enjoyed an unrivaled advantage in regional ground-based systems due to its close geographic proximity and the country’s major Pacific internet cable hub in Sydney. 

Conversely, China’s ground-based communication hubs are not regional and must extend a long distance to maintain connectivity. Thus, connecting telecommunications networks through existing hubs in the Pacific can effectively only be done with Australia’s approval, giving it the leverage to block proposals for expansions of existing cable networks.

Further complicating Beijing’s efforts in securing regional influence is its reputation surrounding its “debt-trap diplomacy.” China’s overseas infrastructure development investments have gathered a reputation of overloading countries with unmaintainable levels of debt, often resulting in a default that gives Beijing leverage or ownership over portions of the country’s infrastructure. 

Comparatively, Australia is seen as a trusted partner that has been willing to intervene and replace similar Chinese projects. For example, the Australian Government funded the Coral Sea internet cable — a project connecting Sydney with Papua New Guinea and the Solomon Islands — largely to impede China-based Huawei from completing a similar project which the Solomon Islands had signed on to in 2017. More recently, Australia, Japan and the US committed to jointly fund a fiber-optic cable to cover Nauru, Kiribati, and Micronesiato to fulfill those countries’ communication needs to prevent China from establishing a foothold. 

On the space front, Beijing is winning the competition in the satellite communication arena with its Beidou GPS satellite constellation. This upper hand will only be strengthened as China has plans to expand the Beidou system. In 2021, Beijing announced the development of a LEO megaconstellation in support of its goal to provide domestic satellite internet coverage to China. This constellation, comprising of over 13,000 satellites, aims to bridge gaps in ground-based communications systems under China’s National Development and Reform Commission. 

The Pacific Islands are a natural extension to China’s LEO satellite internet coverage due to their relative geographic proximity for space-based systems. Supporting China’s regional ambitions is an advanced domestic launch capability. China holds the advantage of being able to build out its space-based communications systems from the ground up without the risk of relying on third parties.

Australia has significantly fewer capabilities in space-based communication technology than China and is seeking to narrow this gap. Tasked with supporting the country’s space industry, Australia established the Australian Space Agency (ASA) in 2018. While the ASA has financed a booming satellite building industry, including many LEO satellite companies, its domestic space launch capability is still in its infancy. Despite this, it appears that Australia is aggressively pursuing its launch capabilities. In 2021, it opened a spaceport in East Arnhem Land and the company Equatorial Launch Australia landed the first Australian contract by NASA to provide satellite launches. 

While the Australian satellite capability is still growing to build out capacity, Australia has actively sought to fill in gaps by partnering with major companies such as SpaceX to launch new satellites. Another recent example of a successful Australian space partnership is that with the Luxembourg satellite company SES. During the recent volcanic explosion in Tonga, Australia’s Digicel partnered with SES to provide Tonga with satellite communications connectivity. For the near term, Australia’s efforts in this domain require close cooperation with its allies and partners until it develops sufficient capabilities to act on its own accord.

THE DECIDING CLASH

Australia is likely to find alternative ways to narrow its gap in space-based communication capabilities with China. In doing this, Canberra can potentially leverage its partnerships with allies to provide the Pacific Islands with satellite communication coverage in the short-term. This would entail further cooperation with the US-based SpaceX, which is already cooperating with Canberra for its Starlink initiative, or with the US government. Until Australia’s nascent space launch capabilities reach capacity, these partnerships will be important to maintaining the edge for Australia’s space-based communications.

For Australia’s telecommunications industry, more investments are expected to follow. Canberra may leverage Digicel’s expertise and bandwidth to lay more undersea cables to establish greater control over the flow of information. Network traffic going in and out of China over undersea cables is also heavily monitored and at risk of being severed. To counter this, should Beijing make any more attempts to establish its own ground-based networks in the region, Canberra is likely to intervene with a more attractive offer. 

The battle for communications primacy is not solely for commercial or diplomatic reasons. Both undersea cables and satellite constellations also provide critical communications infrastructure for military use. These systems support overseas operations and provide critical links between dispersed forces.

In the context of the Pacific Islands, distance plays an outsized role in communications. Satellites provide wide coverage but can suffer from various connectivity issues, whereas undersea cables provide highly reliable, but limited connectivity. Both are needed to establish dominance in regional communications systems. Together, the two provide dual-use commercial and military capabilities which can tip the scales in the competition for regional influence.

Ultimately, the competition for control of communications in the Pacific Islands will come down to a race against the clock. In this race, the first country to field a working satellite communications constellation is likely to win partnerships with the Pacific Islands.