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Economy , Investing

This War Is Being Fought With Wires

July 24, 2018
wires war

During the summer of 1858 the first telegraph message was sent across the Atlantic, from Ireland to Newfoundland. The message was transmitted in less than a day, which was lightening speed compared to the normal 10 days it took to send information via ship.

That message was carried by copper wires wrapped in tarred hemp that were laid across the ocean floor. It was the first of many wires to be laid across the Atlantic and the rest of the world.

By the late 1800’s, Britain had telegraph wires stretching all over their vast empire. They were able to communicate with their colonies throughout India, Asia, Australia, and even in South America.

At the time, the Brits controlled over two-thirds of the world’s telegraph cables, giving them superiority in trade, politics, and warfare.

Today, Britain no longer controls the world’s communication lines. Instead, a variety of private companies (which are often suspiciously funded by certain governments) have laid an incredible amount of undersea cable.

It’s estimated that over 1.2 million kilometers of communication cable lay on our ocean floors. The longest is the Asia America Gateway Cable System at 20,000 kilometers.

Source: SCM

Incredibly, 98% of world information is transmitted through these lines, while satellite communication only accounts for about 1%.

As our world gets more and more connected, the messages that are communicated to the masses become more and more important.

Even though many private companies are now laying their own cables, the desire for governments to have control over these communication lines is more important than ever. That’s why many private companies receive incredible government grants or permits that would normally never be given out.

Right now, this is most obvious on the tiny island of Guadalcanal, which is located in the South Pacific. China and Australia are battling over who gets to lay an undersea fiber-optic cable to the tiny island.

The story sounds almost too strange to be true. But, if you take a step back, it’s glaringly obvious what’s going on. The world is in a massive power struggle, and right now China is starting to win.

Chinese foreign investment is staggering. This is primarily a result of China reestablishing the Silk Road, better known as their One Belt One Road initiative.

Source: MR

Much of their investment can be seen in the form of new shipping ports throughout Africa, railways across Asia, and in many companies that will support the physical build out of these mega projects.

But, something that is harder to see is the actual transmission lines that are being built. These new communication networks will be the way that enormous amounts of money are transferred on a daily basis. For perspective, the US currently transfers about $10 trillion every day on undersea internet cables.

The infrastructure of ‘wires’ that China is building out will be the backbone of their future success… where are you investing?