New trans-Tasman cables ‘to slash pricing’

The pricing of capacity between Australia and New Zealand, across the Tasman Sea, will fall substantially once two new cables planned for the route are completed, an analyst has predicted.

In July, Pacific Fibre announced that it had plans to rival the existing Southern Cross cable with a new 12,750km system, connecting Australia and New Zealand before going on to Los Angeles in the US.

Pacific Fibre claimed that once the cable is completed, which it expects to happen during 2014, it will offer the world’s highest capacity per fibre pair, with a full potential of 12.8Tbps. It predicted that demand for capacity on the trans-Tasman route will rise to match supply once national broadband projects in the two countries are completed.

Now China Communications Services Corporation, a subsidiary of China Telecom, has said it will build another Australia to New Zealand cable, and will beat Pacific Fibre to market if plans to light it by 2013 are realised. It said Huawei has already been commissioned to build the 2,300km link between Auckland and Sydney.

Financing for the $121 million project has already been agreed with the Export-Import Bank of China allowing work to start before the end of 2011, the project’s backers have said. Axin, an agent for China Communications Service Corp, has been appointed to oversee the build.

The Chinese cable will launch with 40Gb transmission speed, giving it a 3.2Tb potential capacity, smaller than the Pacific Fibre system. Southern Cross has said it will have upped the performance of its own assets to 40Gb by 2013, and to 100Gb by 2015, taking network potential to 6Tb.

“This Chinese cable is different to the Pacific Fibre one in that it only serves New Zealand and Australia,” said Alan Mauldin, research analyst at consulting firm TeleGeography. “It is certainly going to provide some wholesale pricing pressure on that route. More diversity will in any case be very welcome. This was a surprising announcement in some ways, coming so soon after the Pacific Fibre one.”

Mauldin said he understands that the Chinese project may gain New Zealand state-owned telco Kordia as an additional backer, with its own cable plans currently on indefinite hold.