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.

The Iranian government has not yet adopted any official policy or passed legislation related to charging fees or requiring permits for the subsea cables.

“The Strait of Hormuz is a God-given treasure, like other mines and reserves placed at Iran’s disposal,” Hossein Ali Hajideligani, a member of Iran parliament’s presiding board, said last week. Iranian military spokesperson Ebrahim Zolfaghari posted, “We will impose fees on internet cables.”

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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.

According to state-linked media, Iran could charge foreign companies licensing and annual renewal fees, and require them to operate under Iranian law. At the same time, it could give Iranian companies exclusive rights to maintain and repair the cables. While Iran has not directly threatened the cables, state-linked media outlets have suggested that “direct or indirect damage” to the cables could cost the global economy tens or hundreds of millions of dollars per day.

“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.”

“Because modern global economies rely on submarine cables for over 95% of international data transmission,” Ahmed adds, “the clustering of these multi-terabit cables in such a shallow, volatile maritime corridor creates a massive single point of failure for the global internet backbone.”

How much of the internet runs through the Strait of Hormuz?

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.

Five commercial submarine cable systems transit through the Strait, ITU Deputy Secretary-General Tomas Lamanauskas tells TIME.

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.

“The broader corridor linking the Red Sea to the Gulf of Oman and the Arabian Sea,” which includes the Strait of Hormuz, “carries a vast majority of the data traffic between Europe, Africa, and Asia,” Ahmed says.

And at just 21 nautical miles wide at its narrowest point, Ahmed says the Strait is a chokepoint.

Middle Eastern and Asian countries would be disproportionately affected by any disruptions, such as damage, to the cables.

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.

Broadly speaking, the global network is resilient, with the ability to reroute traffic through alternative cables or terrestrial fiber paths when a segment is disrupted, Alan Mauldin, research director at TeleGeography,

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.

“Across the industry, operators build in significant redundancy, enabling traffic to be dynamically rerouted within seconds to minutes in the event of disruptions. In regions such as the Gulf, providers mitigate potential risks through route diversity, alternative corridors including trans-Pacific paths, and regional partnerships,” says Genius Wong, executive vice president of network provider Tata Communications.

But severe enough disruptions could still overload terrestrial connections and other submarine cables, says Davenport.

South and Southeast Asia are also more exposed to disruptions. “A 24-hour internet disruption in India could cost its IT and services economy an estimated $920 million,” Ahmed says. “Southeast Asian hubs like Singapore would experience severe latency spikes communicating with European markets.”

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.

“The global financial system, which processes roughly $10 trillion in daily transactions via cables, would face settlement failures and frozen liquidity. The energy sector would also be blinded” as modern oil extraction and LNG logistics rely on automated digital control systems, Ahmed says.

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.

The internet is designed to reroute traffic, but “the sheer volume of data in the Middle East corridor exceeds the capacity of alternative routes,” Ahmed tells TIME. “Networks would face extreme congestion, packet loss, and latency.”

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.

Cable repairs typically take around 40 days, but this can be extended to months due to security risks. There are only around 60 specialized cable repair ships in the world, Ahmed says, and these would require military escorts to carry out repairs in an active war zone, while marine insurance companies are likely to suspend coverage during that time.

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.

“Iran has the capacity to exercise sovereignty, oversight, and legislation over every part of its territory, and the seabed of the Strait of Hormuz is no exception,” the article said.

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.

It is not clear what Iran’s system would look like—whether it would be a similar administrative fee or a toll system as it has suggested for shipping through the Strait.

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 previously cited similar reasons for its effective control of shipping through the Strait, arguing that “as the main coastal State within whose territorial sea the Strait of Hormuz lies, Iran has the legitimate and legal right to take necessary and proportionate measures to address emerging security threats, ensure safe navigation, and prevent the misuse of the Strait of Hormuz for hostile or military purposes.”

Iran has repeatedly said the blame for any disruptions in the Strait lies with the U.S. and Israel as aggressors in the war.

Davenport tells TIME that cables traversing Iran’s territorial waters in the Strait of Hormuz are in principle subject to Iran’s sovereignty under UNCLOS. But there are limits to the types of conditions that Iran can impose, she says.

“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.

Iran would also not legally be able to impose conditions for cables laid in the Strait outside of its territorial waters, which is most of them, according to Ahmed. “Due to historical geopolitical tensions, international network operators have deliberately routed the vast majority of cables through the southern half of the Strait—within Omani territorial waters, not Iranian waters,” Ahmed says, and Iran would not have legal jurisdiction to impose permits or fees on those cables.

“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.”

American tech companies are also prohibited from paying Iran due to U.S. sanctions, and foreign companies that pay Iran also risk facing secondary sanctions.

“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.

Can Iran deliberately interfere with undersea cables?

According to Ahmed, Iran could interfere with the cables in three main ways: using combat divers to make precise, non-explosive cuts to the cables in shallow waters; using autonomous unmanned underwater vehicles like the Nazir-5 or Azhdar, which can loiter for days before deploying explosive payloads; and by using tactical mini-submarines to lay intelligent mines that sink commercial ships, causing their anchors to drag and sever cables.

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.

Whether Iran would have the legal basis to deliberately damage submarine cables in its waters is uncertain, Davenport says.

“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.”

Historically, says Davenport, cutting subsea cables that connect the territories of two belligerent nations outside neutral waters “has traditionally been understood as serving legitimate military objectives.” But cutting a cable between a neutral state and a belligerent state was legally permissible “only if it was strictly necessary.”

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.”

As of yet, Iran has not directly threatened to target undersea cables, and Davenport caveats that any damage to these cables would also affect Iran, mitigating the risk of deliberate damage.

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.

The current tensions over the Strait’s undersea cables point to a new frontier in conflict: digital infrastructure. Iran has retaliated against the U.S. and Israel by targeting AWS data centers in the U.A.E., which Iranian state TV said was due to the centers’ role “in supporting the enemy’s military and intelligence activities.” And Iran has previously threatened to attack tech firms in the U.S. over their alleged involvement in enabling the U.S. and Israel’s bombings of Iran.

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.

Iran’s desire to impose conditions on subsea cables in its waters may exacerbate that.

“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.