Data Centers and Submarine Cables: A Tax of Nearly 10 Euros per Meter for Big Tech Is Imminent
In Oregon, authorities have initiated a formal review of the regulations governing the laying of submarine fiber optic cables on their seabeds, establishing for the first time in the state a fee based on the length of the infrastructure. The State Lands Department (DSL) has proposed a one-time fee for telecommunications and technology giants to lay cables within three miles (4.8 km) from the coast. The goal is to collect millions of dollars, with the proceeds directed to the Common School Fund to finance primary and secondary public schools in the state.
Until now, local regulations have been anchored to an economic model dating back to 1989, last updated in 2001, which provided exclusively for a fixed application fee of $5,000.
The proposed new fee structure increases the initial application fee to $15,000 and the renewal fee to $7,500, extending the duration of the concession from 20 to 25 years. In addition to this amount, there will be a compensation of $3 for each foot of cable (more than 8.50 euros per meter) laid in territorial waters, along with $7 for each section of the protective conduits near the shoreline. According to technical estimates, the mere project of Amazon's Bifrost cable would generate a total compensation fee of about $1.45 million spread over twenty years.
Despite the changes to the fees, Oregon maintains an economic profile calculated to stay competitive with neighboring California, where companies pay estimated annual fees of about $5 per foot (almost 15 euros per meter). With around 140 operational data centers and 16 active submarine cables along the coastline, the state confirms itself as one of the preferred landing points for data headed towards Asia. Brands like Google, Microsoft, and Amazon benefit from the absence of a sales tax, tax incentives from foreign trade zones, and the Hillsboro hub, preferred to Los Angeles due to lower energy costs and fewer bureaucratic complexities.
After all, facing total investments ranging from $250 million for transatlantic connections to $400 million for transpacific ones, a contribution of one million dollars represents a marginal impact on the coffers of tech giants.
The acceleration towards the new regulations stems from an incident that occurred in 2020 at Tierra Del Mar caused by a Facebook subsidiary. During operations to drill the seabed, a drilling head broke, forcing the company to abandon over 330 meters of pipes and about 24,000 liters of drilling fluid at sea, causing subsequent leaks and holes along the route in 2021. To resolve the dispute, the company paid $250,000 to the state department, as well as $135,700 to leave the damaged equipment on the seabed for 50 years.
The episode prompted the state legislature to update the territorial waters management plan, introducing the obligation for companies to submit detailed decommissioning plans and emergency protocols to manage potential seismic disasters related to the Cascadia subduction zone. The final decision on the new regulations will be up to the State Land Board by the end of the year.