KEY POINTS:
A New Zealand state owned enterprise and an Australian telecommunications company have teamed up to bring faster, cheaper, safer internet to New Zealand through a new submarine cable to be laid across the Tasman.
Australian listed subsidiary Pipe International today signed a memorandum of understanding with the government's telecommunications business Kordia Group.
The companies agreed to collaborate on a project for a new fibre optic cable linking Australia and New Zealand.
The memorandum, sets out plans to lay the submarine cable to "increase international capacity and competition in the New Zealand marketplace".
Pipe's managing director and co-founder Bevan Slattery said the cable, which he hopes to see operational by 2010, will completely change the competitive environment in New Zealand.
"We expect it will have a significant change on the cost of bandwidth in New Zealand.
"We had similar problems (with internet speeds) in Australia because of a lack of competition."
Mr Slattery said consumers will get "more bang for their buck" once the new cable was operational.
He predicted consumers would get more download quota for their plan and cheaper downloads.
Cluster applications for the Australasian region may even be housed in New Zealand, he said, using video site YouTube as an example he said the most popular feeds would come from New Zealand rather than America.
The extra capabilities will have a "transformational affect on movie studios", allowing New Zealand film makers to transport content quickly and cheaply over the internet, Mr Slattery said.
"I heard one story about it being cheaper to fly the tapes to Los Angeles, rather than do it over the internet."
Education will be another major benefactor of the increased bandwidth, Mr Slattery said.
He declined to say how much the cable would cost but said coupled with Pipe's Australia to Guam cable the new trans-Tasman cable would connect not just New Zealand and Australia but New Zealand and Japan and New Zealand and America.
"This is a competitive cable, an alternative path of competition. It will be a boost to the New Zealand economy."
Mr Slattery said the memorandum was the "first step" and Pipe was now looking for tenders and pricing from vendors.
Kordia Group general counsel Michael Jamieson said Kordia was a "major partner" in the laying of the new cable and would be responsible for "the New Zealand end" including consents and sales to the New Zealand market,
"We see this as a natural extension to our existing business... We are very serious about it. We have some hurdles to get through, but we're serious about the opportunity for diversity and further competition."
Mr Jamieson was not willing to discuss how much the project would cost or when it would be completed.
"I can't put a time frame on it but as fast as possible. We believe we can achieve the funding we require."
He said the benefits of the cable would include greater choice, diversity, "downward pressure" on prices and the security of an extra route.
"What we're trying to do here is provide more competition."
Editor of PC World magazine Ted Gibbons said the main problem with the current Southern Cross cable, owned by a consortium with Telecom as a major shareholder, was that it was "basically a monopoly".
"The owners can charge what they like. The speed and charges only increase at their will."
Anyone providing an extra cable was great for the consumer, he said.
He estimated the new cable would cost "hundreds of millions, but I don't know how many hundreds of millions".
"All-round it's great for us, as end users, if they do it and I assume they will...I've never heard of anyone getting this far down the track and not going through with it."
Telecommunications Users Association of New Zealand (TUANZ) chief executive Ernie Newman said the major benefit of the new cable would be the security of having a second cable.
If there were any problems with the Southern Cross cable New Zealand would be cut off, he said.
Another benefit would be increased capacity.
"We don't really know what the Southern Cross' capacity is because they're quite coy about it, there's (currently) no reason for alarm bells, but extra cable means extra capability."
TUANZ has been "watching this space" with interest and it was "moving quite fast up our list of concerns", Mr Newman said.
"We were hoping someone would come up with the initiative...I don't remember anyone else looking at connectivity".
- NZPA
