Auckland ISP the Internet Group (Ihug) is set to become one of the region's major traders in international Internet bandwidth.
Ihug is about to begin onselling satellite bandwidth to four Australian ISPs. If interest from half a dozen more is carried through, it will double its current reservation on the private PanAmSat satellite to own one full transponder, providing bandwith of 54Mbit/s, or more than double what all other ISPs in New Zealand are using between them.
Ihug director Nick Wood is also flying to Sydney next month to discuss buying a share in the new Southern Cross fibre-optic cable project, alongside Telecom New Zealand, Optus and WorldCom. The 40Gbit/s cable will connect Australia, New Zealand and the South Pacific with the US.
Ihug originally began buying satellite capacity earlier this year — to the derision of many local experts, who said it would not work. Since then, it has become US-based PanAmSat's largest customer by far, and has plans for direct satellite delivery to individual users.
Wood says he originally offered to onsell bandwidth to New Zealand ISPs, but outside Clear and Xtra, which were not interested, none could afford to buy in the 1Mbit/s increments he was offering.
Ihug launched its Sydney business in Feb-ruary this year and is expanding its Australian operation to Melbourne at the end of this month. It expects to operate next year in Perth, Adelaide and Brisbane. Wood says when he decided to offer Australian ISPs some bulk bandwidth — and told them the price — they were enthusiastic. The ISP's decision to bypass Telstra and other carriers has caused something of a stir across the Tasman, and one ISP, Zip Internet Professionals, has said it expects to save 20% to 40% by switching to satellite. Another ISP is reported to have been able to reduce its costs from $A55,000 to $A16,000 for 1Mbit/s of bandwidth.
Ihug may now have tied up most of the available capacity on the PanAmSat satellite until the company's new satellite launches next year, at which point the Australians would be free to deal direct with PanAmSat, although, says Wood, “they probably won't get it as cheap as they do from us”.
Zip appears to be adopting the same routing model as Ihug in its use of satellite, with downstream traffic coming via satellite, and upstream traffic (which is more affected by the latency or delays associated with satellite transmission) over fibre, in this case that owned by either Connect or Telstra, whose charges are based on incoming traffic.