FX Networks starts bandwidth price war

Auckland to Wellington route offered at half price

The large telcos have a major challenge on their hands with the emergence of FX Networks and its Auckland-Wellington broadband backbone. FX is offering up to 20Gbit/s broadband at rates less than half those charged by the incumbents.

The company is also providing the backbone for the Government Shared Network, which several departments are scheduled to cut over to early next year.

The story really began when founder Roger de Salis obtained a 35-year lease three years ago from OnTrack for its fibre optic pipe, installed by the then-NZ Rail two decades ago.

Around $16 million of investment later, FX Networks completed the upgraded link in August and has spent the past few months quality testing the entire route. It already has six customers up and running though it has yet to advertise its services.

“We’ve been overwhelmed with inquiries,” says managing director Murray Jurgeleit. “We’re offering very economical high-speed transport. Our prices provide all sorts of options around re-architecting things like datacentres.

“When you can basically turn the North Island into a wide-area network, it gives you all sorts of options.”

One obvious one is the ability, through unrestricted bandwidth, for organisations to rely much less on distributed computing. That means major savings in things like servers.

FX Networks is currently offering 10Mbit/s, 100Mbit/s, and up to

20Gbit/s. Jurgeleit’s view is that a modern company needs at least 100Mbit/s to operate efficiently.

None of this is capped, and each fibre is dedicated, so there is no loss of bandwidth because of multiple parties sharing the circuit.

Currently, there is 320Gbit/s available but Jurgeleit says this will grow exponentially as the technology improves over the next two years.

Plans are in place to complete a ring around the North Island, linking in places such as Tauranga, Rotorua, Taupo, Napier/Hastings and Masterton. A spur to Christchurch is also planned within the next two years.

De Salis bought ISP Comnet in 2004. “Now we’ve got economical transport, the ISP will come into its own,” Jurgeleit says.

He expects the business to be cashflow positive by March and profitable by June.

“We’re expecting turnover of $25 million in two to three years.”

Though the company is focusing initially on top 50 organisations, longer term domestic users will be able to access the high-speed broadband through planned arrangements with other ISPs.

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