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A study of the effects of water in polyethylene has shown that small concentrations of microdroplets (~100 p.p.m.) can increase the dielectric loss in the megahertz range by a Maxwell-Wagner process. The work concentrates on the cause and effects in the low-loss polyethylene used in the manufacture of SG-type submarine telephone cables and relates to the behaviour of the transatlantic cable TAT6 immediately after production and during its life on the seabed. Treatments to inhibit the effects are also discussed. The first part of the paper covers experiments on plaques of SG low-loss polyethylene, simulating the outer layer of cable core, and the second part describes more recent work on specimens made from actual cable.