Google, Facebook to Invest in U.S.-China Data Link

Facebook Inc. and Google owner Alphabet Inc. will partner with a little-known Chinese company to build a ultrafast internet cable between Los Angeles and Hong Kong, the latest sign of its U.S. backers' insatiable appetite for bandwidth.

The 12,800-kilometer Pacific Light Cable Network would use new fiber-optic technology to support the region's highest-capacity route, according to TE Connectivity Ltd., the U.S. company under contract to build the link. TE says it expects to launch the system in 2018.

Funding the project along with the U.S. tech giants is a new Hong Kong company called Pacific Light Data Communication Co.

"It is certainly gratifying that global technology companies like Google and Facebook have become co-investors" in the project, the Chinese company's chairman, Wei Junkang, said in a statement.

Financial terms weren't disclosed. A Facebook spokeswoman declined to comment on its Chinese partner in the project. Representatives for Google and Pacific Light Data didn't respond to requests for comment.

Pacific Light Data is a newcomer to the industry with no previous experience building networks. Mr. Wei earlier this year paid $11.3 million to acquire the company's interest in the project from China Soft Power Technology Holdings Ltd., whose chairman is Mr. Wei's son, according to company filings.

China Soft Power, a holding company that is listed in Hong Kong but incorporated in Bermuda, told investors on Oct. 7 that it expected to "record a significant decrease in its net loss" for the six months ended Sept. 30. The company reported a loss of 1.2 billion Hong Kong dollars ($161 million) on negligible revenue for the fiscal year ended March 31.

Google, Facebook and Microsoft have invested hundreds of millions of dollars in the underwater cables that carry most of the world's internet traffic, an effort by the technology companies to ensure they have enough network capacity to cheaply shuttle information between their data centers. The investments have pushed aside the telephone companies that have dominated the capital-intensive market for more than a century.

Google is no stranger to the Pacific market. Pacific Light would be its third publicly disclosed investment in a data route across the ocean. Facebook earlier this year revealed plans to build a new trans-Atlantic cable with Microsoft and Spanish telecom provider Telefonica SA.

Facebook and Google have struggled to make and maintain inroads into mainland China, where both companies' flagship websites are usually blocked by the country's national firewall. Hong Kong is a major regional network hub outside that firewall, however.

"If you can get a good reliable cable into Hong Kong, it really puts the content providers in a really good position to serve those lucrative Southeast Asian markets," said Michael Ruddy, director of international research for industry consultancy Terabit Consulting.

Write to Drew FitzGerald at [e-mail]

(END) Dow Jones Newswires

October 12, 2016 16:35 ET (20:35 GMT)

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