Pacific Fibre in talks with the government over a public-private partnership that could see taxpayers investing in a second international telecommunications cable between New Zealand, Australia and the US.
Founder Rod Drury says the company – started by Drury, Sam Morgan and Stephen Tindall – has a proven commercial model but it is seeking government involvement to ensure the cable is a New Zealand based project.
“We are now know we can build the project commercially, we’re comfortable with the business case,” he told Computerworldat the Rural Broadband Sympsium in Rotorua. “We’re now in the philosophical debate about how the sector works things out.”
Drury says the latest estimate is it will cost US $400 million to build the cable. With the initial funding in place – the most recent round raised $5 million – as well as partnership with international cable heavyweight PACNET, Pacific Fibre is on track to finalise contracts in March next year.
A purely commercial model would see demand heavily weighted in favour of Australian customers, and it’s likely the company would need to be registered outside of New Zealand, possibly in Bermuda.
“It would become just another Southern Cross – that would be good for competition up to a point but you can see this as a bit of opportunity to step change our connectivity,” he says.
Pacific Fibre is exploring the idea of per-connection pricing. For example an ISP would purchase a connection, and receive as much bandwidth as was able to be supplied. Drury says this is a different model to the way international connectivity is charged today – ISPs have to estimate how much capacity they require, and if they need more, they pay more – hence the primary reason why they impose data caps on end users.
“We’d run this (Pacific Fibre) as a PPP – as well as it being a commercial project you would also have some NZ Inc type goals, that’s kind of interesting. Because the government’s got to realise that without fixing international, the $1.5 billion (government funding for its Ultra Fast Broadband plan) is at risk,” he says.
“I’m on the phone to the US every day and the call quality is just not reliable. To me the one thing the government can do to help exporters and make NZ better is to put us on the same level as the US. That’s why we’d love to explore per connection charging.”
Drury told the audience at the Rural Broadband Symposium he felt frustrated by the Government’s handling of the UFB and the Rural Broadband Initiative (RBI).
“I think it’s a really scary time for the industry, there’s a lot of uncertainty and I think everyone’s scared that there’s winners and losers. Standing back from it, the bit that frustrates me is that there doesn’t seem to be a national technology plan. We’re in a process and the process means that people can’t actually talk to each other so it’s quite frustrating.”
“What really scares me is the demand side’s not there, so if the government is putting fibre past the curb, what’s the reason for a consumer to connect to that? As important as the work that’s happening in the industry, somebody should be out talking to Apple and working out how do we actually get at all that US content onto our networks, how do we buy that stuff rather than an arcane little company in the middle of Newmarket that’s got some distribution rights. We’ve got to work out where these content pools are so that consumers want to spend $100 or $150 a month on broadband, because it’s going to need that sort of money for the business case to work.”
Earlier, Drury told Computerworld that what’s required is a circuit breaker: “We need to get the industry in the room. I think the industry’s pretty motivated to work out a solution but you need someone strong enough to actually run the process.”
“It’s good that we’re focused on it but you’d hardly say it’s a coordinated national strategy would you?”
Attending the Symposium are some of the country’s top executives in ICT, including Vodafone CEO Russell Stanners. He told Computerworld the reason he’s attending the two-day conference is to because the telco is wants to participate in the RBI, tenders for which close next month.
“I think it’s a big opportunity and we’re going to put a bid in for the rural broadband initiative so being here is two things. It’s a learning experience for me just to get a feel for what they’re talking about and hopefully it demonstrates that we’re very serious.”
ICT Minister Steven Joyce gave a presentation by video link. When asked whether there would any further announcements on who Crown Fibre Holdings intends to partner with in the UFB, he was told the audience it would be soon.
“We are expecting announcements on the first partners shortly, as I’ve said all the way through that doesn’t mean we’ll have announcements on every partner,” he says.
“I will make announcements shortly, they might not necessarily be by the end of this month but they won’t be too far away.”
A spokesperson for CFH says it is on track to deliver recommendations to the shareholding Ministers by the end of October.