Entrepreneurs announce $900m fast broadband plan

The proposed 13,000km link would be five times bigger than the existing Southern Cross cable and could unleash billions of dollars of economic potential by connecting NZ businesses to global markets by the internet. Photo / Kenny Rodger

Businessmen Sam Morgan, Stephen Tindall and Rod Drury are part of "an early stage" venture to build a submarine fibre cable between Australia, New Zealand and the United States, with five times the capacity of the existing Southern Cross system.

The group went public today under the name Pacific Fibre and it wants to talk to potential partners and funders. The 13,000km cable could cost just under $900 million and be ready by 2013.

Other group founders include Mark Rushworth, former Vodafone chief marketing officer, technology industry veteran John Humphrey, and entrepreneur Lance Wiggs.

The initiative was today welcomed by state-owned Kordia, which has been working on establishing a submarine fibre-optic cable between Auckland and Sydney.

Kordia chief executive Geoff Hunt said his company had been in discussions with the group and looked forward to working with it.

Southern Cross had dropped its prices in excess of 75 per cent since Kordia announced its plan, Mr Hunt said. Southern Cross Cable Network is 50 per cent owned by Telecom New Zealand.

National Communications Corp Ltd also today welcomed the initiative.

"Rod and Sam have been very vocal on this for a couple of years and about four months ago they said in order to make this a reality we are going to have to do this ourselves," said Mr Rushworth.

They had assembled a team and become serious about the project in the last five to six weeks, he said.

Mr Rushworth said 90 per cent of New Zealand's internet volume was to the US. The New Zealand government was investing in its ultra-fast broadband initiative and Australia had its Australian National Broadband Network.

"You can build a big fibre network connecting all the homes but unless you have a big fat pipe out of each country there's a problem," he said.

Pacific Fibre wanted to break the digital divide between New Zealand and Australia and the rest of the world.

"It is using the most direct route. It is one hop from New Zealand to the US, which from a technical perspective is very important because it means it is a lower latency cable, that is, it is faster than other cables," he said.

"Prime Minister John Key is talking about establishing New Zealand as a financial hub and this cable will be faster than other cables out of New Zealand or Australia," he said.

The group had completed early feasibility work. The next stage was to develop a full business case, risk assessment and proof of concept to take to investors and bankers.

Mr Morgan commented: "We desperately need a cable that is not purely based on profit maximisation, but on delivering unconstrained international bandwidth to everybody, and so we've decided to see whether we can do it ourselves".

Mr Rushworth said the project was a commercial one. A driver for the project was restrictive data caps on existing cable, which had bottlenecks at certain times of the day.

"We hope to bring in extra capacity at a low price, which our carriers and ISP customers can end up passing on to their customers," Mr Rushworth said. It was too early to give an estimate of price.

"We all know that in any market as soon as you introduce competition prices tend to drop and volume goes up," he said.

Mr Tindall commented: "This is necessary and basic infrastructure - we must decrease the distance between New Zealand and the international markets.

"If we are able to deliver on this cable this it could be as valuable to our New Zealand economy as the quantum leap refrigerated ships were to our export trade many years ago."

Mr Rushworth said businesses wanted high resolution multi-party video conferencing, while grandparents expected to be able to Skype video their grandchildren in high definition or better.

The current proposed cable configuration would have two fibre pairs with 64 wavelengths (lambdas) each at 40 gigabits per second per lambda. The maximum lit capacity initially would be 5.12 terabits per second, but would be upgradeable to over 12 terabits per second as emerging technology became a reality.

Mr Morgan founded internet auction site Trade Me, Mr Tindall founded the retailer The Warehouse and Mr Drury developed a range of companies, including listed accounting software firm Xero.

- NZPA