Writings on technology and society from Wellington, New Zealand

Thursday, April 10, 2008

Good news – competing cables

It seems that a new cable is to be built between New Zealand and Australia and on to Guam, by Pipe Networks and Kordia. This is excellent news because it provides competition on international cables. Kordia is the State Owned Enterprise formerly known as BCL, and it now owns the retail ISP Orcon, so this move makes sense for them. It also makes sense for New Zealand Internet users.

We already have the Southern Cross which is an excellent cable system, and that keeps being upgraded so that it has ever-increasing amounts of capacity – currently it’s up to 860 Gigabits of traffic which is huge, and the company that owns it say they can double that. And that cable has redundancy – traffic can get from New Zealand to California directly or through Sydney, through different parts of the cable. That makes it unlikely to be cut accidentally.

But the problem with Southern Cross is that it’s, well, it’s all the Southern Cross. It’s all owned and run by the one company. It’s 50% owned by Telecom. Other the other companies that want to sell you Internet are screaming about the price they pay to use the Southern Cross – and they don’t have anywhere else to go. That’s partly why in New Zealand Internet users mostly have data caps on our accounts. Perhaps the new cable will change that.

There’s no guarantee that competition will bring prices down – but it generally does in practice. Getting rid of a monopoly will prevents anyone overcharging. So if Internet data costs don’t come down after the new cable comes in we will know that’s what it really costs to deliver Internet in New Zealand and no one is making monopoly profits.

Don’t expect overnight change. It takes a while to lay this cable. Don’t hold your breath. I’d guess about three to four years, and several hundred million dollars. But things should eventually change as a result.

posted by colin at 7:16 am  


  1. Isn’t it true that the reason we pay so much for, and have so much, international traffic is because the major ISPs in NZ don’t peer at local peering exchanges?

    Comment by Peter Lynch — 10 April 2008 @ 1:42 pm

  2. It’s good to see a 2nd provider heading into the wholesale department. Colin, I would like to hear a daily tech pod from you. A weeks along time.

    Comment by hellonearthisman — 10 April 2008 @ 4:18 pm

  3. Peter – the collapse of open peering agreements is a big problem, and it’s the 2 big Telcos’ ISPs which have depeered. The effect of depeering is to force ISPs to buy a transit service from those telcos whose price is the same as, or nearly the same as, importing the data over Southern Cross. So, indirectly, the price of international data drives the costs imposed by depeering.

    That said, Telecom is looking to reintroduce open peering for local traffic. That’s a good thing. Telstra refuses to peer openly at all. That’s bad, and it’s the main reason I don’t use Telstra’s broadband or phone despite having Telstra cable in my house.

    Hell – thanks for the encouraging comment! Unfortunately, 5 podcasts a week would leave me no time to earn a living :-(



    Comment by colin — 10 April 2008 @ 7:16 pm

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