A fresh effort is under way to break Southern Cross Cable Network's near-monopoly over New Zealand's international telecommunications.
Representatives of the South Pacific Island Network (Spin) visited Wellington recently to discuss the feasibility of a new submarine cable to New Zealand.
TelstraClear is understood to be one of the parties involved in talks.
Southern Cross has meanwhile approved plans to upgrade the capacity of its cable by about another 50 percent, by the first quarter of next year.
Spin intends to build a cable, subsidised by the French Government, that will run from Noumea to French Polynesia, linking several island nations.
The NZ$400 million cable, due to be commissioned in 2011, will link up in Noumea with Gondwana-1, a cable subsidised by the Australian government that would carry traffic on to Sydney, and in Tahiti to a cable to Hawaii that is due to be completed next year.
It is understood any cable to New Zealand would probably branch from Norfolk Island, which is seeking to improve its international communications links, partly to support the development of a gaming industry attracting overseas clientele.
State-owned enterprise Kordia is continuing to develop a business case for a trans-Tasman cable, expected to cost $200 million, that would link with a cable being built by Pipe Networks between Sydney and the regional hub of Guam.
Sources in the internet industry say it is not clear whether Kordia's business case will stack up, especially if it is assumed its cable would elicit a competitive response from Southern Cross. A separate source speculates government support for Kordia's cable might be less likely if there was a commercial alternative, effectively subsidised by the French and Australian governments.
Spin would not prove a perfect substitute for a high-capacity cable direct to an Asian hub or the US, but could provide backup for Southern Cross's trans-Tasman link.
Kordia spokeswoman Susie Stone doubted that, saying the cable was not designed for that purpose. Its capacity would be limited to about 600 gigabits and it would not scale to meet the future needs of non-island customers.
Southern Cross has slashed prices in recent years as broadband has taken off and new technology has allowed it to push more data through the cable, but smaller internet providers in particular can pay comparatively high prices for international bandwidth they have bought through resellers under old contracts.
Marketing manager Ross Pfeffer says the cable loop that connects New Zealand, Australia and the United States will have a total lit capacity of 1.24Tbit/s following its latest upgrade, which was approved last week.
That would be enough to simultaneously carry five million songs streamed from Apple's iTunes music store or 100,000 high-definition television programmes. Further price cuts are in the offing.
A report prepared for the Commerce Commission this month said broadband speeds slowed for most customers the further they were from Auckland, where both legs of the Southern Cross Cable come ashore. Kordia would also land its cable nearby.