Sep 19, 2013

The Government has earmarked $15 million towards a second international internet cable between New Zealand, Australia and the United States

As well as the $15 million contribution, the Government would also commit to being an anchor customer on a new cable fit for research or education purposes, says Communications and Information Technology Minister Amy Adams.

Adams is calling for expressions of interest from companies considering building a cable, she said in a statement today.

The cable would need to meet requirements of education and research communities, as well as commercial traffic, she said.

“To ensure we have sufficient international capacity in the medium to long term, the Government is making a $15 million contribution available, and would commit to an anchor tenancy on a new cable for research and education purposes,” she said.

“In order to take part in global research projects, our research and education communities need dedicated capacity that can handle huge data volumes, and provide high levels of reliability. International, collaborative projects are characterised by intermittent, high-throughput, multi-terabit data flows that may last for days.

Building a new cable will further increase the resilience of New Zealand’s international telecommunications links and also introduce more competition on the route, as well as providing additional capacity,” Adams said.

The Crown had also committed at $15 million grant to Pacific Fibre, the abandoned cable project which was backed by Facebook billionaire Peter Thiel, Trade Me Founder Sam Morgan and Xero’s Rod Drury.

Pacific Fibre hoped to rival the Southern Cross Cable Networks’ pipe, which is the only link transporting internet traffic in and out of New Zealand. The second cable would bring competition to the market and bring the price of international internet capacity down, Pacific Fibre argued.

Pacific Fibre co-founder Lance Wiggs said today that $15 million just isn’t enough money to make a difference to any cable:

“The Government has a lot more resources that they could apply, particularly they could provide a guarantee around capacity…or could have guaranteed loans. It’s nice to have but you know, insufficient. Hopefully it is sufficient for Hawaiki, but we’ve been down this route before,” Wiggs said.

Pacific Fibre announced in August last year that the project would not go ahead.
While Pacific Fibre no longer has a pipe in the works, another company – Hawaiki – is planning one.

The Auckland-based company is planning to build a 14-000km cable system between New Zealand, Australia, Hawaii and the US west coast and said earlier this year that the project could be operating within two years.

TPG Telecom, an ASX-listed IT and internet company, has issued a letter of intent saying it plans to acquire fibre capacity on the Australia-United States leg of Hawaiki’s proposed cable system.

The main cable would also have branches running to Norfolk Island, New Caledonia, Vanuatu, Fiji, Wallis, Samoa and American Samoa.

Adams said that Southern Cross is expected to meet New Zealand’s capacity needs until 2020.