Pacific Fibre gets first big customer

Pacific Fibre, the local start-up looking to build a second internet cable linking New Zealand to the world, has secured its first customer and will supply broadband capacity to the nation's research and education network.

Broadband network manager Research and Education Network New Zealand Ltd. (REANNZ) has agreed key commercial terms with the fibre company to supply international capacity on the international cable once it's up and running.

Government-owned REANNZ will invest some of its own operation funding along with crown support of $15 million in Pacific Fibre's first contract.

"At current market rates, the value of the capacity available to KAREN (Kiwi Advanced Research and Education Network) is over $400 million, though obviously we are paying far less than that," REANNZ chief executive Donald Clark said in a statement.

"This is a long-term commitment, and one that recognises our support for the crown's policy goals of increased international cable competition at the right stage in the market process."

Pacific Fibre, which is backed by heavyweight venture entrepreneurs Sam Morgan, Stephen Tindall, Rod Drury and Peter Thiel, want to build a 5.12 terabits a second cable system running some 13,600 kilometres across the Pacific, and will include landing stations in each country, at a cost of some US$400 million.

The deal will enable REANNZ-operated-KAREN, the broadband network for schools, universities, polytechnics, government agencies and Crown Research Institutes, to tap capacity of an initial 40 gigabits a second from the current 1 Gb/s, rising to 160 Gb/s over time.

The final terms are under negotiation, and no more information will be released until it's completed.