New Zealand’s internet centre of gravity is shifting.
Until now New Zealand data traffic was mainly east to and from the US. That’s changing. Increasingly our traffic goes west across the Tasman to Australia and Asia.
This will probably accelerate now cloud computing giants like Amazon and Microsoft offer data centres in Sydney and Melbourne.
The graph shows the trend is clear.
International cable trends – click on image to enlarge
Things have moved on since the last, 2013, data point.
Spark says last week the traffic was 56–57 percent trans-Pacific, and 43–44 percent trans-Tasman. Spark’s spokesman says if anything the trans-Tasman figure is lower than usual because of the holiday lull in work traffic.
Enter the TGA
The graph goes part way to explaining why Spark, Vodafone and Telstra plan to spend NZ$90 million building the Tasman Global Access cable.
The cable will run from Raglan to Sydney’s northern suburbs.
Alcatel-Lucent has the contract to build the submarine cable. Work starts soon. If it goes to plan, the TGA cable will be open by mid–2016.
That’s an interesting moment. Because if you extrapolate the graph data, it coincides with the time the two lines crossover.
Southern Cross holds the fort
Until then New Zealand will depend on Southern Cross Cable Network: a single cable network operating two links; one heading west, the other east.
The existing network has served New Zealand well, but having all your economic eggs in one basket is not the best strategy.
Southern Cross argued there’s little need for more international capacity. It has upgraded network capacity as demand has increased. There’s plenty of headroom for the near future.
That’s needed. International data traffic out of New Zealand is increasing at about 60 percent year-on-year.
Southern Cross hits 100 Gbps
Today Southern Cross CEO Anthony Briscoe said in press statement that the network had recently completed live system trials with multiple vendors using 100 Gbps technology. This beats Southern Cross’ previous projections of potential capacity for the system
He says the network will support 12 Tbps capacity later this year up from the current potential of 7.8 Tbps and 14.4Tbps is achievable. That’s up from 240 Gbps when the network was first switched on.
Life in the old dog yet
Submarine cable networks have a use-by date but there’s plenty of life left in the Southern Cross network.
Despite the lack of competition here, New Zealand network customers pay the same price as Australians to use the Southern Cross network. Australia has competition between international cable networks. In effect, this means New Zealand already gets any savings we might get from competition.
And anyway, there’s something of a competitive question mark over TGA. Spark owns 50 percent of Southern Cross and around 45 percent of TGA. That means a race to the bottom on price is unlikely.
If it ain’t broken…
Why build a new cable if it isn’t needed for immediate added capacity and prices are already competitive?
Two main reasons:
First, New Zealand’s economy depends on international data connections.
The chances of both legs of the Southern Cross failing at once are slim. The network has a figure of eight design and the owners describe it as self-healing. That makes it reliable. There hasn’t been much downtime, but the chances of something going wrong are not infinitesimal.
Adding a third link boosts security. It means New Zealand is less likely to face catastrophic disruption.
Second, submarine cables don’t last forever. A new cable gives us more options for dealing with a replacement when the time comes.
The Southern Cross network started operating in 2000. Typically cable operations expect their networks to last 25 years at first, but if everything goes well they can then realistically extend the lifespan.
Southern Cross recently went through this exercise and now says the network is good until 2030. From day one the TGA will promise an extra decade or so of international links and it could be good until 2045.
An extra link also means there’s more capacity should circumstances change and the demand outstrips cable technology’s ability to deliver more. And adding capacity will give some service providers more confidence in either basing services here in New Zealand or providing services to this market.
If there’s a downside to the TGA project, it’s that the trans-Tasman link reduces the likelihood of a third player servicing New Zealand. It doesn’t help the economics of Hawaiki’s plans for a trans-Pacific cable.
2015 promises an interesting year for submarine cable companies with an official Netflix service arriving in New Zealand. The service accounts for about 35 percent of all downloads in the US. Even with caching, it will mean a jump in international data traffic. Southern Cross is confident it will cope with any surge in demand, even so, it looks like a good time to build an alternative cable.