Iran is reportedly considering imposing charges on submarine fibre-optic cables through the Strait of Hormuz. This could potentially raise billions of dollars for Iran while also putting pressure on Tehran’s ruling party’s enemies worldwide.

Announced via the Iranian Revolutionary Guard-linked Tasnim News Agency the move would see “transit fees” imposed on international consortia that own and operate the cables. This would include companies like Google, Meta, Microsoft, and Amazon, which would be required to operate under Iranian regulations.

Such a move would likely also see Tehran monitor data traffic through the cables, too. At present, around seven major subsea cables traverse the strait, with most clustered around a narrow band along the Omani side of the waterway.

Some, however, serve the Gulf states via the strait, including FALCON, GBI, and Gulf-TGN, which do run through Iranian waters. These cables connect data centres across Asia, Europe, and the Middle East.

Cables of this kind are vital for internet traffic, cloud services, banking transactions, military communications, data centre traffic, and SWIFT financial messaging. They are also vital for corporate traffic between Europe, Asia, India, and the Gulf. This makes it something of a digital artery for the region.

Tehran threatens undersea cables

CNN highlights that Iran is no explicilty saying that it would sabotage the cables, though it is known they can do so. A mixture of combat divers, small submarines, and drones poses a very real threat to the cables if Iran puts its money where its mouth is.

There are also the issues of Iran’s proxies in the region, who could also damage the cables. In fact, in 2024, three submarine cables where servered by Yemen’s Iran-aligned Houthi militants using a vessel’s anchor.

This caused a 25% drop in regional internet traffic, a major headache for all concerned. It is important to note, however, that global internet traffic is less dependent on the region, with it accounting for around 1% of global internet bandwidth.

What Iran proposes would be something of a digital toll road where cables that cross in or near its waters must pay to ensure continued operation. It can, in a sense, be likened to the Suez Canal, where Egypt earns huge revenues from allowing shipping transit.

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

“But for new ones, any state, including Iran, can decide if and under what conditions cables can be laid in its territorial sea,” she added.

Just hot air?

However, this may just be hot air as international maritime law currently prevents such measures from being imposed. Under internationally agreed law, strategic straits used for international transit are generally protected.

Freedom of navigation and communications is strongly supported, and existing submarine cables have protections. This means it has no real legal authority to do so, even if it wanted to.

Other issues would make such a move nearly impossible for tech companies to comply. Many Western countries have imposed sanctions on Iran that prevent payments from being sent there.

Seen in this light, the announcements from Iran are likely more signaling than a genuine policy proposal. In other words, Iran is basically hinting that it can damage the global economy in ways other than just oil exports.