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Topic # 113339 14-Jan-2013 13:30 Send private message

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Southern Cross prices have again fallen and the company continues to expand its international capacity as it continues to upgrade the network. “We have reduced our capacity prices by another 20%”, said Sales and Marketing Director Ross Pfeffer. “This will be our tenth major price reduction since 2000 and over the period our price decline has averaged more than 22% per year.

“It’s been pleasing to see big increases in data caps and declines in retail data cost for internet users in both Australia and New Zealand over the last year. Our continued initiatives to increase supply and reduce price are designed to encourage this process and to support the needs of Australia's NBN and New Zealand's UFB” Pfeffer noted.

The Southern Cross Network provides uninterrupted hi-speed connectivity to US based internet content. Constructed as a protected twin cable network of 28,500 kilometres of undersea cable the Southern Cross cable network has become a major regional asset for reliable high-speed broadband.

The latest price decline marks the second stage of the eighth major capacity expansion programme since 2001 and it is due for completion in February 2013. This Stage is based on Ciena’s 40Gbps transmission equipment and takes total lit capacity on the Southern Cross Network to 2 Tbps.

The third stage of the current expansion programme is being implemented concurrently and it is based on Ciena's 100 Gbps transmission equipment. 100G technology is already installed on some network segments and will take lit capacity to 2.6 Tbps by June 2013.

Ross Pfeffer commented that, “the increasing simplicity of equipment upgrades provides Southern Cross with the ability to frequently and rapidly expand capacity. We currently have the potential to go to at least 7 Terabits per second, about 30 times higher than our original design capability.”

“Our capacity potential will increase dramatically over the next few years when transmission equipment speeds are expected to quadruple. With ongoing and dramatic advances in technology Southern Cross has the ability to stay well ahead of demand over the longer term”. While continuing to reduce cost and to expand supply, Southern Cross remains dedicated to continuous circuit availability. “Our protected circuits continue to provide 100% availability and the performance of the six fibre pairs and 500 repeaters on the diverse cable network is better today than when constructed more than 10 years ago” he noted.

• Private company owned by Telecom NZ, Singtel-Optus and Verizon Business
• Offices in Bermuda, Wellington, Sydney and Auckland
• Dual Cable network constructed between 1998 and 2000.
• 28,500 Kilometers of submarine cable with 3 fibre pairs
• Construction and upgrade cost exceeds 1.4B USD
• Ring Network Architecture based on completely diverse submarine cables and landing stations
• 12 Access points: (2 in NZ, 3 in AU, 1 in Fiji, 2 in Hawaii, and 1 in Oregon, 1 in
Washington state and 2 in California)
• Major suppliers include Cables and Repeaters  Alcatel and Fujitsu; Transmission Equipment:  Alcatel and Xtera (10Gbps)  Ciena (40Gbps and 100Gbps)
• Consistently ranked the most preferred submarine cable system in the Asia Pacific Region (according to customers participating in an annual satisfaction survey conducted by Neilson).
• Eight capacity expansion programmes since 2000, from 80 Gbps to 2 Tbps in January 2013 and 2.6 Tbps by June 2013
• Ten price reductions since 2001. Price has fallen at an annual average of 21% over the total period.
• 95% of active ANZ <–> US Capacity is operated by our customers in a fully protected configuration


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  Reply # 744518 14-Jan-2013 13:42 Send private message

cool.

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  Reply # 744532 14-Jan-2013 14:02 Send private message

Hmmmmm :) Guess everyone who said they only dropped prices because of PF we're wrong.


Good to see another price reduction (As we have been seeing for 6+ years now from my memory)




All comment's I make are my own personal opinion and do not in any way, shape or form reflect the views of current or former employers unless specifically stated 


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  Reply # 744536 14-Jan-2013 14:11 Send private message

It'll be nice when ISPs pass on this reduction to their customers.

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  Reply # 744539 14-Jan-2013 14:14 Send private message

I don't mean to be the pessimist, I prefer to think of myself as a realist:

If the average is 22% a year, then how is 20% a major price reduction? It's average, and slightly less by it's own stats.

I have to question though, exactly when do these price reductions have an effect, how many years down the track for ISP's currently under contract? How long after that until it filters down to consumers?

It sounds great, but it just looks like getting some press to me.

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  Reply # 744542 14-Jan-2013 14:16 Send private message

kiwirock: I don't mean to be the pessimist, I prefer to think of myself as a realist:

If the average is 22% a year, then how is 20% a major price reduction? It's average, and slightly less by it's own stats.

I have to question though, exactly when do these price reductions have an effect, how many years down the track for ISP's currently under contract? How long after that until it filters down to consumers?

It sounds great, but it just looks like getting some press to me.


I was wondering this also, and how many ISPs (when they came up with their new plans late last year) factored this in?

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  Reply # 744547 14-Jan-2013 14:23 Send private message

DarthKermit: It'll be nice when ISPs pass on this reduction to their customers.


the cost reduction will likely come in the form of increased caps, rather than decreased price.  that is what has happened pretty much every year for as long as I can remember in NZ.

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  Reply # 744548 14-Jan-2013 14:24 Send private message

At this rate international transit will soon cost less than domestic transit..


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  Reply # 744550 14-Jan-2013 14:24 Send private message

Can't imagine this got nothing to do with the whole ComCom decision and John Key's decision on the matter

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  Reply # 744553 14-Jan-2013 14:27 Send private message

alliao: Can't imagine this got nothing to do with the whole ComCom decision and John Key's decision on the matter


I can.  the two things are almost certianly unrelated seing as the comcom thing is to do with the wholesale price of broadband from chorus,  and this is to do with the price of international transit from sothern cross, which is 50% owned by Telecom and nothing to do with Chorus.

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  Reply # 744561 14-Jan-2013 14:32 Send private message

sbiddle: At this rate international transit will soon cost less than domestic transit..



but it's been like that for some time now...

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  Reply # 745204 15-Jan-2013 16:32 Send private message

I too am curious why something which is dropping at 20% per year seems to have no impact on the final consumer price.

Strange that.




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  Reply # 745207 15-Jan-2013 16:37 Send private message

jpollock: I too am curious why something which is dropping at 20% per year seems to have no impact on the final consumer price.


Well, one could argue that increased data caps do represent a decrease in consumer price when you measure what you're paying in $ per GB.

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  Reply # 745222 15-Jan-2013 17:22 Send private message

jpollock: I too am curious why something which is dropping at 20% per year seems to have no impact on the final consumer price.

Strange that.


Because the cost of international transit only makes up a VERY small part of the total cost of delivering broadband, ISPs still have to cough up for the following:

Port price
National Backhaul
Network Equipment
Systems
Staffing
Office
Marketing





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  Reply # 745372 15-Jan-2013 22:15 Send private message

sidefx:
jpollock: I too am curious why something which is dropping at 20% per year seems to have no impact on the final consumer price.


Well, one could argue that increased data caps do represent a decrease in consumer price when you measure what you're paying in $ per GB.


Actually, on Vodafone/TelstraClear, it's only when they brought in the latest plans that it dropped below $1.50/GB for included data, a price it had been at for at least 5 years.  Before that, their plans were $1.50/GB even for the data in the base block.  They are still charging $1.50/GB for overage.

Even now, at the lower tiers, it ends up being $3-6/GB.




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  Reply # 745374 15-Jan-2013 22:19 Send private message

insane:
jpollock: I too am curious why something which is dropping at 20% per year seems to have no impact on the final consumer price.

Strange that.


Because the cost of international transit only makes up a VERY small part of the total cost of delivering broadband, ISPs still have to cough up for the following:

Port price
National Backhaul
Network Equipment
Systems
Staffing
Office
Marketing


port price - fixed per customer/month, mostly sunk cost on TCL.
national backhaul - slightly marginal, mostly sunk (their own network)
network equipment - slightly marginal, mostly sunk (their own equipment)
systems - fixed
staffing - largely fixed, if your costs are anywhere near linear in data transferred instead of customers on your network, you are doing it wrong.
office - fixed (same as staffing).
marketing - fixed (same as staffing).

So, where's the marginal cost per unit of traffic?  Where is the cost that you wouldn't have to pay if you didn't transfer the traffic?




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