The Pacific Fibre cable is estimated to cost US$400 million and will deliver much needed network capacity between Australia, New Zealand and the US
SYDNEY, 28 July 2010 – Pacnet, Asia’s leading provider of telecommunication services, and Pacific Fibre Limited today announced plans to jointly build the Pacific Fibre cable, a city-to-city, low-latency subsea fiber optic cable that will boost connectivity between Australia, New Zealand and the US.
The total project cost of the new cable is estimated at US$400 million, and comprises of at least two fiber pairs with 64 wavelengths per fiber pair. By using the latest 40 gigabits per second (Gbps) per wavelength technology, the cable is expected to have a capacity of up to 5.12 terabits per second (Tbps), and will be further upgradeable to beyond 12 Tbps with future 100 Gbps per wavelength technology.
The 13,600 km cable will land in Sydney, Auckland and Los Angeles, and will also offer the most direct route between these landing points, delivering the lower latency connections that are being demanded by core customers.
“As Australia and New Zealand look towards deploying national broadband networks that will raise broadband penetration and access speeds, this new cable that we are building with Pacific Fibre will deliver the enhanced international connectivity that is essential to support these broadband initiatives,” said Bill Barney, Chief Executive Officer of Pacnet. “This investment is also an integral part of our overall strategy to expand our subsea cable infrastructure into the Australasia region, to complement our pan-Asian and Trans-Pacific network coverage and boost broadband connectivity into Asia.”
“It’s great to have Pacnet join us as equal partners,” said Pacific Fibre CEO Mark Rushworth. “This even further validates the need for a new cable to Australia and New Zealand, and will ensure the success of the Pacific Fibre system. Pacnet has done this before as the largest investor within Unity cable group, and we are already benefiting from working with them. We are also very happy to announce a further reduction in our estimated system build costs to around US$400m.”
The new cable will be built on a partnership model that allows Pacnet and Pacific Fibre to each own and operate a fiber pair on the new cable system, but share responsibility for the cable supply contract as well as operations and maintenance costs. This model allows partners to complement each other’s expertise and resources while reducing costs and risks, and has been proven through a number of successful precedents including the US$300 million Unity cable connecting Japan and the US, where Pacnet was the largest investor with ownership of two of the five fiber pairs.
Pacnet and Pacific Fibre will begin the process of selecting a vendor to build the new cable shortly and will announce the award of the contract in the coming months. The new cable is expected to be ready for service in 2013.
About Pacnet
Named “Company of the Year for Excellence in Growth” by Frost & Sullivan in 2009 and “Best Wholesale Carrier” at the Telecom Asia Awards 2009, Pacnet is Asia’s leading independent telecommunications service provider, formed from the operational merger of Asia Netcom and Pacific Internet. Pacnet owns and operates EAC-C2C, the region’s largest privately-owned submarine cable network at 36,800 km, with a design capacity of 10.24 Tbps, as well as EAC Pacific, which spans 9,620 km across the Pacific Ocean and delivers up to 1.92 Tbps of capacity between Asia and North America. The company offers a comprehensive portfolio of industry leading IP-based solutions for carriers, large enterprises and SMEs. Pacnet is headquartered in Hong Kong and Singapore, with offices in all key markets in Asia and North America. For more information, please visit: www.pacnet.com.
About Pacific Fibre
Pacific Fibre was formed in early 2010 and is backed by a number of New Zealand and Australian technology and business leaders, including The Warehouse’s Stephen Tindall, David Kirk, Xero’s Rod Drury and Trade Me founder Sam Morgan. They are committed to building a new fiber optic cable between Australia, New Zealand and the USA. Pacific Fibre sees a new cable as necessary to unleash the full capability of the NBN and UFB efforts in Australia and New Zealand. They look forward to a future of high speed, ubiquitous and increasingly uncapped internet capacity, which will allow for tremendous economic benefit in each country.
For more information, please contact:
Lorain Wong
Pacnet
Tel: +852 2121 2973
Email: lorain.wong@pacnet.com
Roland Lim
Pacnet
Tel: +852 2121 2975
Email: roland.lim@pacnet.com
Mark Rushworth
Pacific Fibre
Tel : +64 21 244 0777
Email: mark.rushworth@pacificfibre.net
A group of seasoned investors have thrown their weight behind trans-pacific data cable company Pacific Fibre. They join a strong founding team including Sam Morgan, Sir Stephen Tindall and Rod Drury.
Mark Rushworth, former ihug CEO and Vodafone marketing director has been appointed full-time CEO and former Fairfax chief executive officer David Kirk has joined the Board.
“My priority as chief executive is meeting with potential customers,” said Mr Rushworth. “Over the past three months I have met with Asian, Australasian and North American companies and we’ve been very encouraged by the response we’ve been getting.”
Alongside further investment by Morgan, Tindall and Drury, a new group of seasoned investors have also taken stakes, including David Kirk, economist and investment adviser Gareth Morgan, Seaworks chairman Bill Day and MYOB founder Craig Winkler.
“This project is important for New Zealand, commercially viable and we’re excited to be able to broaden our shareholder base with people who can make this happen,” said founding director Rod Drury.
Mark Rushworth and other Pacific Fibre executives have attended submarine cabling conferences in Japan and United States over recent months. They have met with vendors, customers and industry experts; and received strong support for the project and the need for increased competition and route diversity.
Pacific Fibre will connect Australia, New Zealand and the USA with a fibre cable delivering 5.12 Terabits/sec of capacity in 2013. The Pacific Fibre cable will be five times the total current capacity of the existing data cable to the United States operated by Southern Cross.
Mark Rushworth, John Humphrey and Laurent DuPlantie represented Pacific Fibre in Tokyo and Yokohama, Japan last week for the SubOptic submarine industry conference. It’s the key technical conference, held only every three years and everyone who is anyone in the industry (from over 120 countries) was there. The team met many of them, including a number of Kiwis and Australians who are deeply involved in the industry.
It was the perfect platform for John and Mark to meet customers, vendors and submarine cable specialists.
As Mark said:
“It was great to see the overwhelming support for Pacific Fibre from the industry. We were able to present the business case for Pacific Fibre, and we amazed at the response from vendors, customers and industry experts. It seemed like everyone wanted to help us make this happen.”
The team was impressed, and a little sad for NZ and Australia, with the free uncapped 75Mbps down and 65Mbps up broadband in the hotel. As Mark said “If there hadn’t been a fantastic conference on in the hotel with plenty of potential customers to see, it could have been very easy to stay in my room for the four days.”
Japan can enjoy all this cheap bandwidth because it has at least 19 cables heading out of the country. Also for a country that has been in recession for the last 20 to 30 years it was amazing to see the state of infrastructure and the wealth in the streets. They have the population, and vibrant export industry and a good focus on infrastructure as an enabler of economic success.
Our timing for Pacific Fibre is based on three things – the NBN and Ultra Fast Broadband network initiatives in Australia and New Zealand, the technology move to 40Gbits/sec per wavelength and the emerging ability for vendors to deliver a single cable from New Zealand to the USA. We should add SubOptic to the list, as attending helped our sales and technology efforts along considerably . Mark and the team were impressed with the quality of people and companies that they met, and made many promising customer engagements.
Next up Mark Rushworth and John Humphrey will be joined by Mark Kuper at the ITW conference in Washington DC next week. It’s the biggest conference of its type each year with over 4,000 attendees from 1,300 companies and 130 countries. The conference is the venue for meeting potential customers and capacity suppliers, and Pacific Fibre has a busy schedule planned.
There is lots of awareness out there that there is a problem with the demand side of Fibre to the Home (FTTH). Why will people pay extra to connect to super high speed services? In many countries overseas the ‘tripleplay’ of Internet, Voice and TV is required to get consumers connected.
The question, for say New Zealand, is whether consumers will spend $50 for Sky + $30 for voice + $40 for Internet, or $99 for everything. In my view Foxtel/Sky’s back catalog, ABC/SBS/TVNZ and iTunes are important content stores that need to be delivered to the home for FTTH to work.
Google’s latest announcement also helps.
Right now this just won’t work in New Zealand. Until we have uncapped plans we will continue to enjoy what is being made available in other countries.
Wouldn’t it be interesting if TVNZ or ABC were one of the first national broadcasters to change from being a full service broadcaster – to focus on delivering great local content globally over IP?
<edited by LW>
To me this is another step in the critical move of IP traffic from the small screened computer to the big screen TV. The big screen by its nature is more about video and less about text, and as we all know video drives capacity demands these days.
At Pacific Fibre we see the relentless rise of end-user demand for capacity, and are working to help the industry by unlocking the international bottleneck that we see now, and most certainly see in the future.
We are, however, relying on the rest of the industry to provide us with that demand, and the infrastructure between the POP where the Pacific Fibre cable will terminate and each premise needs to be able to absorb the increase in capacity.
The NBN and Ultra Fast Broadband initiatives, along with substantial industry investments (by Telstra and Telecom in particular) are making giant steps towards delivering that infrastructure.
We are also relying somewhat on the ISPs and Telcos to progressively change their deals to push higher speed services and help change end-user behaviour. Again this is not a problem that we seek to solve ourselves, but one in which we have a role to support the industry.
Enter the first disruptive player – Exetel. Exetel are going to offer 25Mbps connections over the NBN fibre in Tasmania for no monthly charge – charging $1 per GB downloaded. They will offer even higher speed connections for a fixed price plus the $1/Gb/sec, though they anticipate a fixed price of just $15 for 50Mb/sec and $25 for 10Mb/sec.
Their pricing is aimed at the majority of people that are not super-heavy downloaders, and that’s going to make it an easy decision for those customers to switch to fibre. However once they experience the speed of fibre we anticipate that the natural increase in demand for data will drive some very positive economics for Exetel. Exetel do have some cost issues to deal with – the Bass Straight cable is expensive and of course they need to pay for that international capacity.
It’s only 2010, and we are expecting a lot of changes to happen in the market before our main cable to the USA goes live in 2013. This is just the beginning.
Our driving motivation for Pacific Fibre is a sense of frustration, of being left behind. This chart from the OECD Broadband Portal shows one measure of that.
There are others – one favorite is this spreadsheet which rather cruelly shows how many days it would take to hit the limit at the fastest advertised speeds for sampled providers in Australia and New Zealand. The worst plans get consumed in less than a minute, while 93% of the plans hit the bit cap in less than a day of continuous use at advertised maximum speeds.
This implies two things – firstly that there is a lot of contention for the same bandwidth, and that actually getting that maximum speed is unusual, and secondly that customers are going to be hitting those limits pretty frequently.
I’d like Australia and New Zealand to become places where low datacaps are a distant memory – and where ISPs are able to deliver uncapped high speed broadband for reasonable prices.
A compelling chart from NBNco CEO Mike Quigley from a presentation (PDF) he gave to Infrastructure Partners Australia. There is more in the Computerworld article.
This chart shoiws the growing demand for broadband capacity, all of which needs to be accommodated by infrastructure within the country that the NBN is providing, but much of which also needs to be accommodated by international capacity.
A great quote from iPrimus CEO Ravia Bhatia in an excellent* article on Computerworld:
“Demand is rising at a rate of four to five per cent a month from end users. That’s a stupendous number. By the time the proposed cable is ready in 2013, the existing cables will be close to saturation”
“No matter how much capacity you put out there, it’s going to get used up because it will stimulate applications and usage.”
It’s what we believe as well – but the challenge is now to get hard numbers, and customer orders to back them up.
Ravia demonstrated his industry experience:
Whenever a new cable is announced, all the major telcos attack it,” he said. “They’re going to attack it and try to prevent it from happening.”
..and his prescience:
Internode and iPrimus have both expressed interest in negotiating with Pacific Fibre once the company is ready to begin wholesaling capacity.
Thanks Ravia, and thanks also to journalist James Hutchinson
*excellent except for one thing:
“Southern Cross had not yet linked directly to the US mainland due to a “partner that failed to get the appropriate permits,” Wiggs wrote.”
is incorrect – I was referring to the debacle when Southern Cross had to change the landing point of their cable at the last minute (and at considerable cost) not to the ability or otherwise of them to lay a direct cable.
The NBR published another critical headline today. Chris Keall was the writer again.
Telecom exec: Pacific Fibre needs a geography lesson
Chris spoke with Telecom Wholesale chief Matt Crocket:
His message, in short, is that Southern Cross has a load of unlit fibre, and has been reducing prices by around 20% per annum for the past few years.
While it is good that Southern Cross prices have dropped over time, we would contend that it is mostly in response to competitive threats – like that of Kordia’s proposed cable to Australia and that there is still plenty of scope left to reduce prices. Some evidence of those high prices later in the article:
So why do things slow down during the evening rush-hour, as Pacific Fibre co-founder Mark Rushworth highlighted yesterday?“Because so much of traffic goes from the US here at peak hours and a lot of people trying to use it at once. People [ISPs] could buy more capacity on Southern Cross to address that – and they have been – but to make it completely uncontended, quite frankly, is not realistic.”
That pretty much says that the ISPs are unwilling to buy more capacity because the price is too high. And that’s exactly the problem we are trying to solve.
We also see the demand for capacity rising sharply as the Australian and New Zealand fibre initiatives move forward and want to make sure that they are able to use a competitive market to source international bandwidth.
Now we turn to the headline topic:
Earlier, in an email, Mr Crockett said of Pacific Fibre’s claim it’s Auckland-LA route would have lower latency, “If they think there is a more direct, lower latency route then they must know something about the seabed and broader geography of the Pacific that we’ve missed!”
There is – the direct distance from New Zealand to the USA is substantially shorter than the distance from New Zealand to Hawaii to the USA – the route that the Southern Cross cable takes. (The amusing Southern Cross map may not make it that obvious though)
Southern Cross’s shortest route from New Zealand is 8002 km to Hawaii and a further 4125 km to the USA mainland for a total (exclusing land-based cables) of 12127km. In contrast the direct route to LA or San Francisco from Auckland is about 10500 km. That’s a lot shorter, and also there is no lag associated with a landing station in Hawaii.
We hear again that this is not easy:
Mr Crockett said he could write a book about the unexpected logistical problems companies encounter in the world of sub-sea cabling – and another about the resource consent battles Southern Cross has been through, especially with its US landing.
Indeed the submarine cabling industry has these horror stories, and Southern Cross has a particular shocker – they were let down by a partner that failed to get the appropriate permits to land in the USA. We are aware of these stories and are working with and will always work with experienced campaigners that have been through a few of them. Permitting is very early on our project plan.
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