Telecom, Vodafone and Telstra have announced a deal to build a new undersea telecommunications cable between Auckland and Sydney, which should dramatically increase the amount of internet data able to be sent to and from New Zealand.
The companies say the new cable, tentatively titled the "Tasman Global Access" cable, will "significantly improve New Zealand's international telecommunications connectivity as well as strengthen links into fast-growing Asian markets."
The total cost of the cable is expected to be less than US$60 million ($NZ70.9m).
A design is expected to be finalised within the next few months, with a likely completion date of mid to late next year. The cable will incorporate three fibre pairs with a current design capacity of 30 terabits per second - approximately 300 times the current internet data demand out of New Zealand.
Last month, Southern Cross Cable, which counts Telecom as an owner, announced it would cut its capacity prices by a fifth. The cable runs in a figure-eight loop between New Zealand, Hawaii, Fiji and the US mainland, is nearing completion of its eight capacity upgrade, taking total lit capacity to 2 Terabits a second.
Telecom chief executive Simon Moutter and Vodafone New Zealand CEO Russell Stanners issued a joint statement this morning, saying:
"The business case for a new cable between New Zealand and Australia is compelling, providing greater capacity and global redundancy capability. It also reflects the growing importance of trans-Tasman internet traffic: for example, around 40 per cent of both Telecom and Vodafone's international internet traffic is now Australia to New Zealand, versus just 10 per cent in 2000," they said.
"We are seeing increased data content being provided from Australia-based servers by global companies and being accessed by New Zealand internet users. An additional cable connection with Australia will strengthen the business case for international data servers to be located in New Zealand."
Asia-Pacific Cable Connections:
Telecommunications Users Association chief executive Paul Brislen, who lobbies on behalf of consumers, said he was supportive of the project but that questions still hung over it.
This was because Telecom also owned half of the Southern Cross Cable system - the only existing link out of New Zealand.
"Will we see real wholesale competition between the networks or will Telecom's role in this stymie that? That's a question they'll have for answer if not for us then I presume it's possible the Commerce Commission could look at it, although it's tricky because Southern Cross is domiciled in Bermuda," he said.
Brislen also said a trans-Tasman cable would make it more difficult for a player to get a cable between another link to the United States off the ground.
Amy Adams, Minister for Communications and Information Technology, said the new cable would provide the market solution the government always expected would happen.
"There has been rapid growth on the trans-Tasman route in recent years and this will only continue as New Zealanders access high-speed broadband," Adams said.
"It is estimated that about 40 per cent of New Zealand's international traffic is on the trans-Tasman route and this volume is growing more rapidly than traffic on the trans-Pacific route to the US, due to an increasing amount of content being hosted on servers in Australia and Asia."
NZ company Pacific Fibre hoped to build a 12,950km fibre cable between Auckland, Sydney and Los Angeles at an estimated cost of $NZ400 million but announced in August last year it had failed to raise enough capital for the project.
Pacific Fibre hoped to rival the Southern Cross Cable Network's pipe, which is the only link transporting internet traffic in and out of New Zealand.
Internet entrepreneur Rod Drury, who was involved in the failed Pacific Fibre project to connect Auckland Sydney and Los Angeles, said it was "great news" but tinged with a "bit of emotion".
"This is just the next best option and it's going to be very good for internet business and exporters," he said.
"Clearly the business case for Pacific Fibre was pretty good. I still think for New Zealand this is vital infrastructure I would have much preferred we did a PPP (Public Private Partnership) with the New Zealand SuperFund investing and we step-changed by connecting Australia through New Zealand up to the USA.
That would have generated a lot of economic activity and built some competitive advantage for New Zealand. It's a shame it's hard to do these really bold things," Drury said.