Cable plan failure disappoints industry

Increased competition and resilience will have to wait

The decision not to proceed with a second trans-Tasman cable in the foreseeable future is described by industry leaders as “disappointing” but not surprising in the current economic climate.

$15 million was allocated in the 2008 Budget to support the development of the new cable. The Research and Education Advanced Network (REANNZ) was appointed the lead agency for the project and was to act as an anchor tenant.

The project was effectively killed yesterday after only one of four responses to a request for information was compliant, and that one – from Kordia – was still in the planning stages and would not be implemented for some years.

REANNZ decided not to proceed with a request for proposal and will now evaluate its on-going international connectivity options to ensure trans-tasman connectivity for its KAREN members when the current arrangement expires in September.

TUANZ CEO Ernie Newman says he is naturally disappointed but that the recession and “tightness of finance” means funding for such large capital projects will be very hard to get.

Computerworld is reliably informed that the cost of laying the cable alone is in the vicinity of US$120 million.

Newman says the second cable is “unfinished business” and a necessary part of the broadband picture. “We have to have robust network connectivity with the rest of the world, and it will happen in time.”

He won’t hazard a guess at when that will be but says the alternative prospect of New Zealand moderating its demands and tolerating inferior connectivity in the longer term is not a viable scenario.

“A single cable means vulnerability both in terms of a possible failure and in terms of realistic pricing, which requires competition,” he says.

Internet New Zealand president Peter Macaulay is similarly disappointed.

“We would benefit from the competition and from the resiliency,” he says.

“We’re at risk by having just two connections to the world.

“Capacity will be an issue in the future, and a second cable would give us much better links to Asia.”

Kordia was also not surprised at the decision.

General manager-Strategic Development Susie Stone says in a press release that Kordia has always said its submarine cable would not be ready for service until 2011.

“We are going to our board in September with a business case for the cable project as planned,” she says.

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