NZ firms square off in Tasman cable race

Dylan Bushell-Embling
11 Oct 2010

Two New Zealand companies – Kordia and Pacific Fibre – are planning subsea cables linking Auckland with Sydney. But the CEOs of both acknowledge that there's only room for one.

State-owned Kordia is the former Television New Zealand transmission arm that now operates on both sides of the Tasman. Pacific Fibre is a private company founded this year by six NZ entrepreneurs.

Kordia's project is OptiKor, a planned $100 million cable connecting Sydney with Auckland. It would link with PIPE Networks' PPC-1, which runs from Australia to Guam.

The Pacific Fibre cable is slated to run from Sydney through Auckland to the US. The project, worth an estimated $400 million, would use two fiber pairs with initial capacity of 40Gbps.

Kordia CEO Geoff Hunt said the cable would take advantage of the lack of competition in New Zealand's international bandwidth market. Southern Cross' SXC is currently the only cable with spare capacity linking Australia and New Zealand, he said.

“There's a lack of diversity for the Auckland to Sydney route, [and] SXC is the only game in town, so competition was needed to bring bandwidth pricing out of New Zealand to realistic levels,” he said.

The mere threat of competition from the two projects has already brought capacity prices down significantly, he said. Southern Cross has slashed its fees by 75% since the OptiKor project was announced.

Although Hunt said OptiKor is in an “advanced stage of preparation,” with surveys completed and landing routes planned, he said the project has faced delays reaching the construction phase.

“We need foundation customers in place to underpin the financing of the project and we don't have them in place,” he said.

“Prospective customers are being very careful about signing,” he added. “Launching the project at the beginning of the global financial crisis wasn't the best time.”

High-probability customers include Kordia itself - for its operator arm Orcon - and the New Zealand government, through the REANNZ project to provide high-bandwidth services to universities, Hunt said.

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