Second cable moves closer
Stuff reports:
Kiwi startup Pacific Fibre yesterday announced a deal with Asian telco Pacnet to share the US$400 million (NZ$548m) cost of building and operating its proposed 13,600-kilometre cable joining Australia, New Zealand and the United States. The project aims to be a competitor for the Southern Cross Cable, half-owned by Telecom, and reduce the price of international data traffic a major part of internet service costs because Kiwis download more than 85 per cent of their net content from overseas.
Well done to Rod, Lance and the team for turning what was ambitious talk into almost reality. This is a big step forward.
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Tags: fibre
July 29th, 2010 at 12:10 pm
One of the reason of course is that it costs way much more to host in NZ.
Hostgator does uup to 500 sites per hosting for $9.95 per month whereas local rates appear to be about 22.5 for one site. No contest.
July 29th, 2010 at 12:28 pm
Bet ya $550 squillion does not get useful hard copper to my street frontage.
July 29th, 2010 at 1:30 pm
This is great news, currently NZ is dependant on a single cable. Although the likelihood is slim, it still presents a single point of failure. A new cable will provide real diversity for NZ, as well as introduce more competition and drive down pricing.
In the past Southern Cross Cable has responded to threats of competition by dropping their pricing. I expect when the Pacific Fibre cable comes closer to completion we’ll see some real movement in internet pricing.
I know our company (we provide voice, data and internet services to businesses) will be looking to have our international circuits balanced across Southern Cross and Pacific Fibre, to provide real diversity (i.e. if one fails all traffic is automatically routed over the other). I’d expect the same from other ISP’s who run a decent network also.
DPF – this must be good news from your POV as a director of NZRS.
July 29th, 2010 at 2:09 pm
RightNow “This is great news, currently NZ is dependant on a single cable.”
A single cable company but the “cable” itself is several cables in self healing rings. With Pacific’s single cable you’d need a Plan B with someone else if you needed diversity. Wouldn’t that cost you?
July 29th, 2010 at 2:25 pm
Paul, currently we buy bandwidth from PacNet and Vocus. While that is a form of diversity, and while SCC has had a great track record from our perspective, ultimately it is still a single point of failure. I have seen quite a few failures on CityLink in spite of their ‘self healing’ rings.
As I already said, we’d be looking to have one circuit over SCC, and one over the new cable.
Yes, it costs more for diversity, but that’s a reflection of our market. We offer carrier diversity. It comes at a price.
Really though it will cost the same (or less) as it costs us now, since we buy bandwidth from two international providers, and balance our traffic across the two. If one fails we route all traffic over the other, and while it means we run congested (i.e. slower) for that period it means we (and our customers) don’t lose service completely. The likelihood is few of our customers notice, as we run a 50% headroom policy anyway (i.e. when our running averages exceed 50% of capacity we buy more capacity).
July 29th, 2010 at 2:39 pm
Great for competition… but the (NZ$548m) building and operating cost will have to be reclaimed before mark up and profits are made for the investors, no doubt from potential users reducing the competitor edge and price some what… when the Southern Cross Cable, half-owned by Telecom is already owned and paid for so they have the advantage and wriggle room to bring down their service costs… all good for Kiwis overseas download costs.
July 29th, 2010 at 2:46 pm
Yeah, it’s likely to have quite a long ROI. 15 year contracts (a la SCC) are a possibility. Will be interesting to see what Pacific Fibre offer closer to the time, and what SCC do in response to the competition. I wouldn’t be surprised if we get offered some good pricing in the next 24 months, conditional on longer contract terms.
July 29th, 2010 at 2:49 pm
Great news, seems our tech entreprenuers are putting their big boy pants on, great stuff…
Who owns the other 50% of the SSC..?
Are they looking at getting that French ocean fibre company (the name escapes me) to lay the cable..?