Sea cable pulls in a fast profit

By RICHARD BRADDELL Telecoms writer

Telecom's half-owned Southern Cross cable has moved firmly into the profit zone with the $US1.1 billion ($2.5 billion) project reaching $US1.6 billion in sales.

The high-capacity fibre-optic cable network linking Australasia with North America has picked up another $US443 million in sales following a meeting of potential buyers in Hawaii last August.

Asia Pacific market director Ross Pfeffer said capacity was sold for 15 years and payments were received as soon as use began.

Users also made quarterly payments to cover the upkeep and operation of the cable.

He expected that payments not yet received would be made within a year to 18 months.

Despite the project more than covering costs already, there is still plenty of capacity to spare because only 40 per cent of the present 120Gbits/s (gigabits a second) available has been sold.

The cable is scheduled to go to 240Gbits/s by the end of next year, and there is still the option to go to 480Gbits/s.

Mr Pfeffer said improvements in technology allowed more colours of light, and thus more information, to be fired through the cable.

This meant that upgrading to a higher capacity than initially contemplated would not cost a great deal more, he said.

An upgrade would not be particularly expensive either because it required only modification of land-based facilities.

"When Southern Cross entered into service in November 2000 we expected capacity to be exhausted by end-2002," said Mr Pfeffer.

"We now have the ability to provide for the internet bandwidth needs of the region for the next four or five years."