Ihug lines up with the big boys

The Internet Group (Ihug) has confirmed that it will stand alongside 27 international carriers in taking a stake in the proposed Southern Cross cable. Outlining the venture to investors last night, Ihug director Nick Wood said it was the first time companies from outside the carrier business had been invited to join a carrier consortium. The company also showed off its new multicast TV-to-PC service, announced a deal to use Telecom's IPNet, launched an in-house travel agency and said it expects about 80% of its customers to move to a 'completely consumable' high-speed service later this year.

The Internet Group (Ihug) has confirmed that it will stand alongside 27 international carriers in taking a stake in the proposed Southern Cross cable.

The cable project is being mounted by New Zealand Telecom, Optus and the giant WorldCom to ease a looming shortage of bandwidth in the region. It will offer about 40 times the capacity of existing cables such as PacRim West. The first half of a loop connecting Auckland and Sydney with base stations in California is due for completion by the end of next year.

Ihug has entered the project in a joint venture with a Perth-based company, Cape Range and its US affiliate, Wild Link. Outlining the venture to investors last night, Ihug director Nick Wood said it was the first time companies from outside the carrier business had been invited to join a carrier consortium.

Wood said his company began looking at Southern Cross in October last year "because we were concerned that there wasn't the capacity we'd need to continue growing. I think there's going to be an awful scramble among Internet providers in the next few years."

Ihug currently takes the bulk of its international bandwidth from the PanAmSat satellite, and Wood expects its allocation to grow to 56Mbit/s in two weeks time and 100Mbit/s by Christmas. Extra capacity from a new satellite and, later the cable, would be required as "a large percentage" of Ihug's 45,000 dial-up customers moved to one of its new high-speed products, he said.

"We're expecting to need at least 18 times our current bandwidth in 18 months time," said Wood. "And for the first time we will have access to that capacity at carrier prices," which, he said, would be around 10% of retail rates.

Among other announcements made last night were:

• The rollout of new multicast software from StreamWorks, which sends out an MPEG1 video signal which can be received by customers of Ihug's wireless StarNet service without the need to be logged on. The TV-to-PC broadcast service will include "a variety of local and offshore programming."

• A June launch date for a nationwide direct-from-satellite version of StarNet.

• A deal with Telecom to use IPNet to reach rural areas. Dial-up pricing will be $45 a month, and rural customers will also be able to use IPNet as the upstream component of a StarNet service.

• A "completely consumable" high-speed service expected to launch in several months. The service will entail no hardware costs to customers and Ihug expects 70% to 80% of its existing customers to move to it.

• The launch of Ihug's own in-house travel agency which will allow Ihug customers to book travel online and, in some cases pay via their subscriber accounts. Other e-commerce products soon to launch include Web-to-pager facilities and an automated snail-mailing service.

• The shift of the homepages.ihug.co.nz machine across the water to the site of Ihug's satellite uplink in California, in response to outbound traffic volumes which hit 131Gb last month.

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