Head-to-head battle for faster web

Warehouse founder Sir Stephen Tindall is among those backing the cable venture. Photo / Dean Purcell

A multimillion-dollar fibre internet link to the United States is likely to provoke a strong response from the existing Telecom-backed cable company.

Technology entrepreneur Rod Drury, Trade Me founder Sam Morgan and Warehouse founder Sir Stephen Tindall yesterday announced plans for a high-speed fibre cable linking New Zealand with Australia and the United States.

Branded Pacific Fibre, it would compete directly with the Southern Cross cable, the only international link from New Zealand, which is 50 per cent owned by Telecom.

State-owned communications company Kordia had been planning to build a transtasman link and was in the process of signing up foundation customers.

Kordia chief executive Geoff Hunt said preparatory work done for the link to Australia would go into the bigger project.

He said the economic climate had made it quite hard to nail down interested customers for the proposed link with Australia.

"We've learned a fair bit about submarine cable projects over the last couple of years, getting each one away is quite tough. It's a very competitive space and the people who are going to be foundation parties are being wooed by other parties," said Hunt.

He said in the time Kordia had been firming up plans for its connection, Southern Cross had cut prices by 75 per cent, which he believes was a direct response to the threat of a new cable.

The project's manager, former Vodafone executive Mark Rushworth, said the focus now was on talking to potential investment banks, customers and investors.

Drury said the financial sector has suffered a shortage of quality, long-term infrastructure debt products.

Drury said the cable would cost under $900 million and with debt and operating costs he expects the annual revenue hurdle to be around $100 million. "As far as we can see it it is very possible to sell that amount of traffic so the broad numbers look to stack up," said Drury.

A Vodafone spokesperson said the company would welcome the opportunity to buy from more than one provider.

"We will be working with existing players to see if we can aggregate all the different initiatives into one unified project for the benefit of both New Zealand and Australia," said Rushworth.

Rushworth said it would take 22 months to gain resource consent approvals and lay the cable. Completion is scheduled for 2013.

Rushworth said the key difference with the new venture was the single uninterrupted cable up to the United States that gives it a speed edge over competing cables connecting Australia and New Zealand.

SECOND CABLE

* 5.12 terabits per second capacity - a terabit is a trillion bits.
* Connects New Zealand with Australia and the United States.
* 13,000km long.
* Completion scheduled for 2013.
* Backed by Sir Stephen Tindall, Rod Drury, Sam Morgan, Mark Rushworth, Lance Wiggs and John Humphrey.