--New under-sea cable to have design capacity of 30 terabits per second
--Cable to cost less than US$60 million
(Adds further details, comment from the head of the
telecommunications users' association.)
By Rebecca Howard
WELLINGTON--Three major regional telecommunications companies
will join forces to build an under-sea cable linking Auckland and
Sydney, capable of handling 300 times New Zealand's current
internet data requirements.
Telecom Corp. of New Zealand Ltd. (TEL.NZ), Telstra Corp.
(TLS.AU) and Vodafone Group PLC's (VOD.LN) New Zealand unit Tuesday
said they had signed a non-binding memorandum of understanding to
invest in the construction of the so-called "Tasman Global Access
cable" that will then connect to four international cable systems
currently serving Australia. The cost of the cable is expected to
be less than US$60 million and it will have a design capacity of 30
terabits per second.
"It makes good economic sense to leverage existing cable
networks at a fraction of a build cost of a new cable directly
across the Pacific or into Asia," Telecom Chief Executive Simon
Moutter told a media briefing. Also, according to Telecom and
Vodafone, around 40% of their internet traffic is now trans-Tasman,
versus just 10% in 2000.
New Zealand currently relies on one high-speed fiber-optic cable
between Australasia and the west coast of the United States. The
Southern Cross international cable is half owned by Telecom, which
also has a 33% stake in a second, limited-capacity cable connecting
New Zealand and Australia. Telstra has a 36% stake in the second
cable.
Telecom, Telstra and the Vodafone unit expect to finalize the
design of the new cable within the next few months, with a likely
completion date for construction of mid to late 2014. The project
will be overseen by a joint venture company equally owned by the
three partners. A decision has yet been taken on where it will be
based.
While the new cable would increase New Zealand's internet
capacity, Paul Brislen, chief executive of the Telecommunications
Users Association of New Zealand, said there are some caveats.
He said the new cable might block any competitor from building a
new trans-Pacific cable. "It is possible that we would end up with
capacity into Australia and nothing else and that is a big concern
as it adds a lot of latency and delay to our connections up to
North America."
Telecom (TEL.NZ) shares were 0.2% higher at NZ$2.26 after the
news.
Write to Rebecca Howard at rebecca.howard@wsj.com
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